Energy Gougers Must Pay
The federal government’s energy bureaucracy spent two years pretending that California’s inept energy deregulation was the sole reason for the state’s costly power crisis. But the growing mountain of evidence that Enron Corp. and other companies disrupted energy markets to pick billions of dollars from Californians’ pockets finally could not be ignored.
In a meeting today, the Federal Energy Regulatory Commission can help repair some of the damage done when dramatically inflated energy prices bankrupted the state’s largest electric utility, triggered widespread blackouts and forced state government to pay for electricity while Washington turned away. Since then, investigators have shown that energy suppliers apparently colluded to raise prices by, for instance, arbitrarily closing electric plants for “maintenance” and slowing delivery of natural gas.
The federal regulators, slow to admit that manipulation, not market forces, caused much of the problem, want to get this mess behind them. California Public Utilities Commission President Michael Peevey has described today’s meeting as an acid test of whether the regulators can stand up to the ferocious lobbying of energy companies, power traders, municipal utilities and others that want to avoid more liability for the huge sums owed Californians.
Federal regulators initially laughed off Gov. Gray Davis’ description of energy traders as “gougers” and “pirates.” Now, with boxes of evidence in hand and billions already paid out by natural gas suppliers in legal settlements, commissioners must right the agency’s past failures, under different leadership, to protect consumers.
Much of the evidence of manipulation is public, but thousands of pages of documents that California submitted as proof of chicanery are still sealed. The commission should open them. Truth should be accompanied by dollars. Specifically, the commission should order companies to refund illicit energy overcharges to utility customers. The state’s figure of $8.9 billion is reasonable. The companies must also be required to renegotiate or cancel about $20 billion in long-term, high-cost energy contracts signed at the height of the crisis. The commission’s final report should describe in detail what Enron and the others did during the crisis.
Any less will send the message that what happened in California was business as usual and that the rest of the country remains fair game for an unreformed energy industry.