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State Seeks Court Help on Power Refunds

March 31, 2004|Jonathan Peterson | Times Staff Writer

WASHINGTON — California Atty. Gen. Bill Lockyer said Tuesday that "renegade" federal regulators were improperly limiting refunds due the state from the energy crisis of 2000 and 2001 and he asked a federal court for help.

In a filing with the U.S. 9th Circuit Court of Appeals in San Francisco, Lockyer argued that the Federal Energy Regulatory Commission had short-changed Californians through "piecemeal" settlements with energy companies and had violated an August 2002 court order that should have led to larger refunds.

The attorney general also contended that federal regulators had failed to properly weigh evidence of market manipulation by power companies when deciding the refunds due California ratepayers.

"What this motion shows is a frustrating reality Californians have lived with for four years," Lockyer said in a statement. "And that reality is this: FERC is a renegade regulator that has little regard for consumers, Congress or the courts."

Lockyer maintained that FERC's "circumvention" of 9th Circuit rulings could cost Californians billions of dollars "owed them by the companies that ripped them off during the energy crisis."

In his filing, the attorney general asked the appeals court to compel FERC to comply with the court's earlier orders.

The dispute stems from soaring energy bills paid by Californians during the energy market meltdown that began in the summer of 2000 and continued into the middle of the following year.

The wave of regulatory and legal battles that followed focused largely on how much money the energy companies should return to the state and its major utilities.

In the biggest case, FERC is expected to rule shortly on a refund total for the period of Oct. 2, 2000, through June 20, 2001. That figure could exceed $3 billion.

Federal regulators have already entered into various individual settlements with companies that now total more than $100 million.

FERC addressed the earlier phase of the crisis, prior to October 2000, through a flurry of settlements that have angered consumer activists. Those settlements are likely to total more than $20 million, but critics contend the figure should be much higher and that the individual settlements have failed to consider the market-wide effect of gaming strategies practiced by the power providers.

In June 2003, FERC notified about 54 energy sellers that they were being investigated for market-gaming and improper partnerships in those early months of the energy crisis. Since then, the regulatory commission has reached final or tentative settlements with almost all of them -- for amounts far less than what consumer activists considered appropriate.

A FERC spokesman defended the commission's actions Tuesday, saying Lockyer was in effect hyping a procedural legal maneuver.

"The commission has been bending over backwards to rectify unjust prices in California during the crisis," said Bryan Lee, a FERC spokesman.

In Tuesday's filing, the attorney general complained of "backroom deals" with power companies that didn't stand up to "the scrutiny of judicial review, and that unlawfully dispose of the rightful claims of millions of California consumers to billions of dollars."

FERC insisted it was abiding by the 9th Circuit's orders, which were issued in August 2002 in response to complaints by California officials that federal regulators weren't doing their job. The court told the agency to keep it apprised of regulatory actions, while also giving it some discretion in how it handled refund decisions.

"The bottom line is the commission is fully complying with the August 2002 court mandate," Lee said.

Much of the legal dispute centers on how regulators responded to evidence of misconduct by energy companies in California's deregulated marketplace.

State officials were allowed to provide such evidence to federal regulators only after the 9th Circuit authorized them to do so in its August 2002 ruling.

California officials unveiled their findings in March 2003, contending among other things that the state was saddled with $2.4 billion in excessive charges for electricity between May and September 2000.

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