Skip to comments.How Media and Attorney General Demonized Power Companies During 2001 California Energy Crisis
Posted on 12/31/2006 11:30:58 AM PST by WayneLusvardi
How Media and Attorney General Demonized Power Companies During 2001 California Energy Crisis
The Pasadena Pundit
Below is an excerpt from "Can Electricity Restructuring Survive? Lessons from California and Pennsylvania" in Electric Choices: Deregulation and the Future of Electric Power (2006) by Andrew N. Kleit.
(At the peak of the California Energy Crisis)"...on January 17, 2001, Duke Power offered to operate an inefficient and polluting (fossil fuel) generator for $3,880 per megawatt hour with most of the proposed fee representing a 'credit premium,' because it estimated that there was only a 20% chance that it would ever get paid. The California grid operators reluctantly agreed to pay this high price, figuring that this amount would be far less than the costs of a blackout. The Federal Energy Regulatory Commission (FERC) determined that a 'just and reasonable' price would have been $273 and ordered Duke to return the excess. Ironically, there was nothing to return because Duke received only $70.22 per megawatt, precisely the type of result it had feared."
The San Francisco Chronicle reported the above story in 2001 describing how then California Attorney General Bill Lockyer was using the price Duke charged for electricity to launch a grandstanding investigation that was only meant to portray Duke Power as greedy (see below):
How energy giant tried to cut a deal Duke Inc. offered to reduce bill if state halted probes - Christian Berthelsen, Chronicle Staff Writers Thursday, May 3, 2001
A major electricity generator sought to end state investigations and lawsuits into price gouging last month, offering in exchange to take less money than it was owed, according to documents made public yesterday.
Duke Energy Inc. of Charlotte, N.C., offered in April to stop imposing premiums on electricity prices and said it would accept less than the full amount it was owed for power sales. But in exchange, the state would have to drop all investigations and curtail litigation surrounding the pricing of electricity.
The proposal, which the company made public yesterday, also sought to restrict the governor's comments on the crisis and bar him from blaming the state's energy problems on an unregulated energy system.
"Governor will continue to indicate that the California crisis is an aberration due to flawed legislation of Gov. Wilson, not a necessary consequence of deregulation, and will not advocate scrapping deregulation in wholesale power markets," the proposal said.
Officials said yesterday that the request never made its way to Davis himself. Instead it was passed on to the office of California Attorney General Bill Lockyer.
"(Duke) called us, and we referred it to the AG," said Steve Maviglio, a spokesman for Davis. "They came to us. We had a couple of meetings. There was no negotiation about any of the points. We don't have the power to call off any of the investigations, nor would the governor under any condition do that. This is their wish list."
A Lockyer spokeswoman, Sandra Michioku, would only say that the attorney general's investigation into power generators is continuing.
Federal energy regulators have ordered Duke to return $20 million in what it described as overcharges in the California power market in January and February.
Thanks for posting this....brought back some memories.
California created the crisis, made it worse, and then blamed everyone but themselves.
It's really a textbook example of how not to interfere in the free market.
They need to undergo a "goldern shower!" (Stand on the edge of a giant urnial until they git pist off!!!)
HAPPY NEW YEAR EVERYBODY!!!
Happy New Year, SW!
Happy New Year from the Beach...needs to warm up though!
But, but, but... we cain't afford the energy to turn up the heat for ya! Guess you'll have to depend on that dreamy solar stuff!!! HNY!!!
What if the power companies just shut down while the lawyers argue it out in court? Freezing in the dark, by candlelight...might be just what the enviro-flakes need as an education...
Happy New Year, back at ya SW!
There's a reason why we have an excerpt rule for some publications.
Do not try to circumvent it by posting the rest of the article as a reply.
It makes us angry. It makes our lawyers angry.
It will get you suspended or worse.