Posted on 06/03/2002 11:53:42 PM PDT by lewislynn
br>June 4, 2002, 12:54AM
AUSTIN -- Enron should be fined $7 million and return money it made by manipulating power prices in North and West Texas last summer, according to a staff recommendation released Monday by the Public Utility Commission.
The PUC report said Enron Power Marketing, or EPMI, a unit of Enron Corp., engaged in "enormous overscheduling" of power during a test of the deregulated market.
"EPMI's anti-competitive behavior threatened the integrity of the electricity market, while unjustly enriching the company," said PUC Executive Director Lane Lanford in a May 29 letter to Edward Baughman of Enron Power Marketing.
The PUC has been investigating Enron and five other electric companies for market activity during August.
The PUC has said it believes the companies artificially created shortages on transmission lines by overscheduling power at certain times. Those companies were then paid to remove electricity from the state's power grid so other providers could meet their demand.
The PUC's market oversight division recommended a penalty of $5,000 for each 15-minute interval in August 2001 for which Enron overscheduled load. The staff identified 1,416 such intervals.
The companies received overpayments of nearly $29 million. Rules that provided a financial incentive for overscheduling have been changed since the market fully opened in January.
The other companies being investigated are Reliant Energy Services, TXU Electric, American Electric Power Service, Mirant Americas Energy Marketing and Constellation Power Source. Those five companies have been working with PUC staff to try to negotiate a settlement to redistribute the $29 million.
But Enron has not cooperated with the PUC, a fact the staff took into consideration in recommending the hefty fine. Lanford said other factors are the "egregiousness and repetition of the violations" and "previous history of violations."
Enron officials did not return phone calls about the case. Their options are to agree with the fine, request a settlement conference or request a hearing.
Danielle Jaussaud, director of economic analysis for the market oversight division, said in a report that Enron scheduled load more than 500,000 percent over its power needed to cover the demand in the north zone and more than 1,000,000 percent over its actual load for the west zone.
Lack of generating capacity and transmission lines created bottlenecks moving power from South Texas to North Texas during peak demand last summer.
"The enormous overscheduling of load in the high-cost north zone brought EPMI large revenues, while relying on balancing energy to serve its load in the low-cost south zone ensured minimal costs," said Jaussaud.
The PUC did not say how much Enron profited from its overscheduling. Texas Attorney General John Cornyn is deciding whether the PUC -- which has already released data on the other five companies -- can make public information about Enron's overscheduling.
Reliant Energy Services earned $3.5 million by overscheduling power last summer. Reliant officials told the PUC last month that it overscheduled its power needs in North Texas to make sure it would have enough to avoid paying high prices if demand was higher than expected.
Federal regulators are investigating Enron and other companies for allegedly manipulating electricity prices in California.
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Federal regulators are investigating Enron and other companies for allegedly manipulating electricity prices in California.
Oh come on...Enron and other energy companies (Enron has never produced one volt of electricity) only pulled their little fraudulent underhanded schemes on their home state and the citizens of Texas...Why would anyone suspect they did it in California too?...We all know Gray Davis did it. Not the saintly energy companies. < /sarcasm >
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