Duke: South Bay Power Directed by Cal ISO

Returning fire in the continuing war of words, a Duke Energy official refuted claims by South Bay power plant ex-employees Friday, and said that output at the company's plant was actually directed not by Duke, but by the California Independent System Operator (Cal-ISO) to track fluctuations in electricity demand. The plant, he said, operated at top reliability at all times.

Bill Hall, vice president of Duke Energy's western operations, sharply denied allegations by three former South Bay plant officials, who charged last week that power output was reduced at Duke Energy's direction. Hall said the employees had worked for San Diego Gas & Electric Co., who, according to Hall, were not hired as part of the new operating team when Duke Energy assumed full control of the South Bay power plant in April.

"These allegations represent just one more page in a very long chapter of misinformation disseminated by people who don't know the full story," said Hall. Reviewing the litany of charges and offering Duke's account of what it said actually happened, Hall first refuted a charge that output from South Bay was "ramped up and down" to manipulate prices when energy supplies were tight.

In fact, said Hall, "the units were operated under the direction of the Cal-ISO to meet system reliability and Duke Energy's contractual commitments." He said that "while the three ex-workers allude to logbooks from the plant control room with notations from Duke Energy Trading & Marketing (DETM), the former SDG&E South Bay employees apparently did not know that the ISO directs output through the DETM coordinator. Our records of ISO directions match up perfectly with the logbook notations."

A second charge, that the "most expensive unit was run at South Bay to drive up ISO charges" also is false, said Hall. "South Bay's 15 MW, jet-fueled unit was designed principally to provide start-up power to the station's steam units. This unit has been made available to provide as much energy as possible to California during the state's energy crisis."

Also, he said, "during the period in question, the jet-fueled unit was being operated because the price of jet fuel was substantially less than the cost of natural gas. This resulted in lower marginal costs. The 15 MW unit was being run to provide electricity to cover Duke Energy's California contractual commitments. This electricity was not being bid into the ISO market, so there was no way it could have influenced ISO market prices."

A third charge focuses on inventory management at South Bay, which Hall said alluded to the company allegedly "throwing out spare parts," resulting in increased outage time to accomplish repairs. "At no time did lack of inventory result in a unit being unavailable for service," said Hall. "The inventory management practices at South Bay represent standard industry practices. Duke Energy purchased the entire inventory for South Bay when we assumed operations for the plant in 1998. We retained the parts and tools we deemed useful and disposed of inventory that was damaged or obsolete."

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