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Improper Power Data Sale Alleged

Electricity: Bidding system 'holes' reportedly were revealed to energy companies by computer firm Perot Systems.


Perot Systems Corp., a Texas company that set up the computer systems behind California's electricity markets, peddled a detailed blueprint of how to exploit market loopholes to raise power prices--a clear conflict of interest, a state senator said Tuesday.

Sen. Joseph Dunn (D-Santa Ana), who chairs a committee investigating price manipulation in California's energy markets, released a document by Plano-based Perot Systems that discusses "holes" in the bidding systems of the California Power Exchange and the California Independent System Operator, the two markets set up in 1998 to trade power under California's newly deregulated electricity business.

The document consists of 43 graphics from a computerized presentation made to Reliant Energy and other sellers in California's electricity market.

A Perot Systems spokesman said: "While we have not had the opportunity to review these documents, we are proud of the work we did for California consumers."

The firm, which designs and maintains computer systems, was founded in 1988 by H. Ross Perot, the former presidential candidate. He remains chairman of the board.

Perot Systems did not create the rules governing California's electricity markets but did design the computer systems for the PX and Cal-ISO and continued to offer technology services for a time.

The Perot Systems presentation appears to be a primer on California's markets for electricity that seeks to answer the question: "What strategies will help you prosper in the California market structure?" It notes that "strategies can affect prices" and "a small participant could control prices in CA and destabilize the PX market."

The final pages of the document map out a "game" to create congestion on the electricity grid that could significantly increase the price that the seller would receive for electricity--a strategy similar to one Enron Corp. used in California, as detailed in recently disclosed memos.

"It is the ultimate of conflicts of interest. It could open them up to civil and criminal liability issues," Dunn said, adding that Perot Systems had the duty to alert the PX and Cal-ISO to loopholes, not sell the information to market participants. The undated presentation appears to have been created early in the markets' life, Dunn said.

Reliant included the Perot presentation in documents it sent to Dunn's committee and to the Federal Energy Regulatory Commission, which also is investigating manipulation of Western energy markets. Dunn released the document after Reliant waived confidentiality, noting that the presentation had been made to other California market participants.

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