State to Oppose Avista Finding
The California attorney general’s office said Thursday that it would oppose a proposed agreement between federal utility regulators and Avista Corp. that would clear the energy company of wrongdoing during California’s electricity crisis, contending there is evidence that Avista aided Enron Corp. in gaming the market.
Avista, a Spokane, Wash.-based utility that also trades energy, was among the companies named in a report released Monday as possibly engaging in market manipulation tactics similar to those used by Enron during the energy crisis of 2000-01. Although the report by the California Independent System Operator found that several energy companies and municipal utilities used trading tactics that resembled Enron’s, the state’s electricity grid operator stopped short of accusing other traders of gaming the market, saying further investigation was needed.
The state Department of Justice, which is conducting its own investigation of market behavior during the energy crisis, pointed to that report and other evidence to bolster its contention that an inquiry into Avista’s energy trading operation by the Federal Energy Regulatory Commission should remain open.
A preliminary FERC investigation released in August found evidence that Avista acted as a intermediary for electricity sales between Enron and its utility subsidiary, Portland General Electric. Such transactions between a parent company and a subsidiary are forbidden by FERC rules, and in the case of Enron and Portland General, may have helped the companies hide “ricochet” trades in which electricity was shipped out of California and then sold back into the state’s energy market to avoid price caps.
Avista announced last month that it had reached a preliminary agreement with FERC’s trial staff that, among other things, said investigators “found no evidence that Avista ... engaged in any efforts to manipulate the Western energy markets during 2000 and 2001.” As part of the agreement, Avista would continue the practice of recording trader conversations and would maintain a training program on FERC’s code of conduct.
Vickie Whitney, a deputy attorney general with the state Department of Justice’s energy task force, said FERC staff has presented no evidence to support the preliminary finding clearing Avista of wrongdoing and has prevented other parties to the proceeding from examining evidence.
“It is clear to us that the staff did no investigation of Avista at all,” she said. “There is stuff that is public that implicates Avista and there is stuff that is not public that implicates Avista.”
Avista spokesman Hugh Imhof said FERC staff thoroughly investigated the company and found nothing wrong. “They’ve gone through an enormous amount of material,” he said.
FERC spokesman Kevin Cadden said he could not comment.
Separately, the state Senate select committee investigating market manipulation got permission from the Senate Rules Committee to subpoena former Enron trader Timothy Belden.
