It’s been a decade since energy companies took advantage of California deregulation to generate price spikes, cause rolling blackouts and rip the state off for billions of dollars.
Last week, an administrative law judge for the Federal Energy Regulatory Commission (FERC) recommended that a dozen companies that participated in some of those schemes pay back $1 billion to the state as compensation for their misdeeds along with $600 million in interest. The case was brought by the California Public Utilities Commission (CPUC) and two electricity providers.
“This money was stolen from ratepayers in California by a bunch of sellers who conducted business like pirates,” CPUC Commissioner Mike Florio said in a prepared statement.
If the recommendation by Judge Philip Baten is approved by FERC, the money will be used to offset future electricity bills. The losing parties have 30 days to appeal the ruling, during which time the five-member FERC board can review the case.
For years after the initial crisis in 2000-2001, FERC refused to hear complaints from the state that it was due compensation for the blatant market manipulation. But a federal court in 2006 said FERC was wrong and the process for reviewing claims began in earnest.
To date, more than 30 companies have been forced to cough up $5.3 billion in settlements with the state, and more settlements loom. Another case of alleged market manipulation is set to begin in April before a different judge and could net the state another $1 billion. The CPUC has announced at least 13 investigations since 2011.
The wholesalers cited in the decision include the Bonneville Power Administration, a federal entity operating hydroelectric dams in the Pacific Northwest, Powerex, a subsidiary of a government-owned public utility in British Columbia, and Shell Energy North America of Houston.
The Shell subsidiary is now helping to set up and run San Francisco's electricity-buying program, CleanPowerSF.
–Ken Broder
To Learn More:
Enron-Era Ruling Signals $1.6 Billion California Refunds (by Brian Wingfield, Bloomberg)
Energy Companies Might Repay California (by David R. Baker, San Francisco Chronicle)
California Wins Ruling on 2000-2001 Energy Crisis (by Dale Kasler, Sacramento Bee)