Shares of Williams Cos., Avista Corp. and El Paso Electric Co. suffered big losses Wednesday, the day after federal regulators threatened to revoke the power-trading licenses of the three companies.
Shares of other power companies also were hard hit, continuing a dismal stretch for an industry under investigation by regulators and suffering harsh scrutiny by credit rating agencies.
In the latest blow to the industry, the Federal Energy Regulatory Commission said Tuesday that it may pull the trading licenses of El Paso Electric (ticker symbol: EE), Williams (WMB), Avista (AVA) and Portland General Electric Co., owned by bankrupt energy trader Enron Corp., for failing to properly respond to a sweeping probe.
FERC said responses by the firms to its probe of energy-trading practices in California and other Western states "are indicative of a failure by these companies to cooperate" with its investigation.
Williams, based in Tulsa, Okla., fell $1.89, or 17%, to $9.12, while Avista, based in Spokane, Wash., dropped $1.89, or 13%, to $12.26. Shares of El Paso Electric, which has no relation to El Paso Corp. (EP), were down $1.14, or 8%, at $13.31.
FERC gave the firms 10 days to show why the commission should not revoke their "market-based rate authority," which would be a major blow to their ability to conduct business in the $220-billion U.S. wholesale electricity market.
FERC's threat comes as it probes whether more than 100 energy companies contributed to skyrocketing California electricity prices in 2000 and 2001 with their trading practices.
The agency also is examining sham or "wash" trades that some energy companies--including CMS Energy Corp. (CMS) and Reliant Resources Inc. (RRI)--have admitted to using. Those trades, involving the simultaneous sale and purchase of power, artificially pumped up revenues and also are under investigation by the Securities and Exchange Commission.