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State Lists Fines in Energy Crisis

Power: Generators were assessed $122 million for failing to provide electricity in 2000-01.


SACRAMENTO — State grid operators fined a dozen companies and utilities a total of $122 million for failing to deliver electricity from December 2000 to June 2001, according to information released Wednesday by the California Independent System Operator.

Those penalized include major power plant owners, such as Duke Energy and Reliant Energy, and the operators of publicly owned systems, such as the city of Pasadena and the State Water Project.

The companies and agencies were punished for not generating electricity when called on to do so by Cal-ISO, which is responsible for maintaining an even flow of power on the transmission grid serving three-quarters of the state.

Cal-ISO disclosed the fines, which were imposed at the height of the state's electricity crisis, in response to requests by the news media. Officials with the agency said the fines were not necessarily evidence that energy companies had shut down power plants to drive up prices.

"Our rules are very clear," said Cal-ISO's executive director, Terry Winter. "We called you; you didn't perform. We're making no judgment on why you didn't perform."

Federal regulators gave Cal-ISO the ability to impose such fines in December 2000 as many power generators avoided selling to the state's utilities for fear that they would not be paid. The utilities were on the verge of bankruptcy after several months of paying exorbitant prices for wholesale electricity in the market that California had created under a 1996 deregulation plan.

Cal-ISO's penalty authority was revoked by the Federal Energy Regulatory Commission after June 2001.

The trading arm of Houston-based Dynegy got the steepest fine--$44.8 million--followed by Tulsa-based Williams Cos., which sells energy from three major Southern California power plants and was penalized $25.5 million.

Reliant Energy paid $25 million in penalties, Duke Energy paid $4.5 million and the city of Pasadena was fined $359,000. The power-trading branch of the State Water Project was charged $1.4 million.

A Williams spokeswoman, Paula Hall-Collins, said the company had contested the fines for months.

"We never refused to dispatch," she said. "We on occasion, because of some kind of physical plant limitation, may not have been able to fulfill the entire offer originally made."

Such penalties will be considered by FERC later this summer when it holds hearings on California's request for nearly $9 billion in refunds from companies that earned handsome profits in the state's electricity market.

If FERC retroactively reduces market prices to give California refunds, the penalties also will be reduced. For each megawatt-hour that the companies failed to deliver to Cal-ISO, they were charged twice the market price at the time.

"All of this is very much tied up in the FERC refund resolution process," said Richard Wheatley, spokesman for Reliant Energy of Houston.

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