"This shows that FERC, despite all of its promises, is not doing its job," Lynch said. "FERC, even when they catch the energy suppliers in shenanigans, they slap them on the wrist."
Lynch said the new evidence would not aid California's demands for power refunds because FERC ruled Nov. 1 that the state could not present evidence of market manipulation in the proceeding.
A FERC spokesman declined to comment.
Williams and AES denied wrongdoing Friday, and Williams said the state was aware of the FERC findings when it negotiated the settlement announced Monday. That deal requires $417 million in concessions from Williams, including a $147-million cash payment.
Williams, in a statement, acknowledged that some employees engaged in "an inap- propriate conversation" about whether to extend the maintenance period at the Long Beach plant. But both companies said the outages were legitimate and were conducted during the normal spring maintenance period.
Morgan was disciplined and later fired as part of a recent downsizing of the company's troubled trading operation.
Overall system reliability and the prices paid to other market participants were not affected by the outages, Williams said.
The FERC investigation concerned the operation of the AES-owned Alamitos power plant in Long Beach and AES' Huntington Beach plant -- both large facilities containing several smaller plants. Both plants had generation units under contract with Williams to provide electricity to Cal-ISO at $63 a megawatt-hour -- enough power to supply about 750 typical homes for an hour.
The shutdowns allowed Williams to sell power to Cal-ISO from other AES plants at a premium price -- $750 a megawatt-hour, FERC documents show.
The FERC report, which had been under seal, was released Friday in response to a court order sought by the Wall Street Journal, which first reported details of the investigation.
The probe made use of telephone conversations between workers, which are routinely tape-recorded in the energy trading industry.
At Huntington Beach, an unnamed AES worker told a Williams employee that AES wanted to shut down one of its generation units on May 6, 2000, because Cal-ISO was not paying enough for the unit's electricity to cover the air pollution credits that AES would have to buy to run the unit, the documents show.
The request was unusual because the unit in question was required to operate under contract to Cal-ISO to provide a reliable source of electricity.
"The Williams employee laughed, saying, 'That's weird,' " the FERC report said. "The AES employee responded, 'Yeah, They're playing games.' The AES employee added that AES was 'mad because of emission credits, or afraid they're all going to get used up or something.'
In a later conversation, a Cal-ISO coordinator objected to shutting the unit to conserve pollution credits. In a taped conversation with Morgan, who monitored AES outages for Williams, the Cal-ISO coordinator said: "So take some of that money that you just raped us out of Alamitos 4 and buy some damn credits."
Morgan laughed and said, "Good answer, man," the report said. Morgan later confirmed to the Cal-ISO official that there was nothing wrong with the unit.
Williams subsequently changed its reason for the outage, saying the company needed to dredge mussel shells and other debris that were clogging cooling seawater tunnels that fed the power plant.
The Cal-ISO coordinator refused to accept that reason, saying he had worked at the plant when Southern California Edison owned it and mussel shells had never been a problem because Edison routinely flushed the tunnels with hot water. AES did not take that precaution, the FERC report said.
Williams later changed its explanation again for the outage, saying it was not for maintenance but was instead an unspecified "forced outage," which Cal-ISO accepted.
FERC's previously sealed report on Williams and AES can be viewed at www.latimes.com /fercreport.