Williams, AES Ordered to Justify Plant Outages in CA
FERC last week ordered Williams Energy Marketing & Trading
and AES Southland Inc. to show cause why they shouldn't be found in
violation of the Federal Power Act (FPA) for allegedly engaging in
actions that drove up power prices in the California bulk market
and potentially compromised the reliability of the transmission
If Williams and AES are found in violation of the terms of their
filed tariffs, the Commission could order the two companies to
return profits of more than $10.8 million from the April-May period
last year, and could condition the companies' future market-based
Williams and AES have 20 days to show cause why they shouldn't
be held in violation of the FPA. FERC indicated last week that more
punitive orders could be in the offing.
The Commission's probe centered on the unavailability of certain
so-called must-run generating units owned by Orange County,
CA-based AES Southland. As a result of the units' unavailability,
the California Independent System Operator (Cal-ISO) was forced to
dispatch power from other AES generating units at much higher
prices, according to FERC.
In California, Williams markets power produced from two
generating units owned and operated by AES, Alamitos 4 and
Huntington Beach 2. FERC said its investigation showed that
Williams and AES appeared to have prolonged outages at the two
generating units to drive up prices.
FERC announced plans to conduct a formal, non-public
investigation into the operation, maintenance and sales of power
from the Alamitos and Huntington Beach facilities during other
times in 2000 and 2001. Depending on the results, it said it may
issue more orders.
Bob Filner (D-CA), who has asked the San Diego District
Attorney's Office to undertake a criminal investigation of several
power generators and marketers, said last week that the
AES-Williams order "confirms what I have been saying for months ---
that the state's energy crisis was caused by market manipulation
In fact, "if FERC's investigation holds true --- and AES and
Williams companies are unable to justify their prices for last
April --- it will further prove that we must investigate all of the
wholesale generators and marketers for all of the past year," he
said. "If it was true for last April --- before the crisis hit ---
it's very likely the same types of activities were going on during
the peak of our crisis last summer."
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