CA Merchant Generators Not the High-Priced Sellers

California-based independent merchant generators charged less than the average of purchases by California's Department of Water Resources (DWR), according to a consultant's analysis of state power purchases in the first quarter.

"Despite the political rhetoric to the contrary, we have data that show that our member companies are actually below the weighted average price of what DWR has been paying for power," said Jan Smutny-Jones, executive director of the California Independent Energy Producers (IEP), who commissioned a study from the Oakland, CA-based energy consultants, MRW & Associates, headed by an energy economist and former state energy commission official, Robert Weissenmiller.

MRW's analysis identified $269/MWh as the weighted average price DWR paid in its first three months buying bulk wholesale power supplies for the state, mostly on the spot market. It identified many private sector generators, who state officials have criticized for alleged market manipulation and price gouging as selling below that weighted average price -- in contrast to major public sector suppliers, such as the marketing arm of Canadian BC Hydro, the City of Los Angeles Department of Water and Power (LADWP) and Bonneville Power Administration (BPA), all of which sold above that level.

"Virtually all of the (private sector) generators in California sold below that figure," Smutny-Jones said.

However, the IEP head said he wasn't trying "to point fingers," or allege any unethical or illegal activity, but just underscore that everyone has been working very hard to come up with solutions to California's energy crisis. MRW's analysis uses information made public by DWR to calculate the weighted average price. It then identified specific generators and determined their individual weighted averages. Different suppliers, of course, sold different amounts of bulk power.

No text or analytical methodology was released, but IEP did release a chart showing five public sector generators and two private sector suppliers over the $269/MWh price, with Portland General Electric being the highest at $680/MWh and Sempra Energy Trading coming in at $450/MWh. LADWP and BPA, were around $300/MWh.

Among the major private sector supplier/generators, Williams was the highest right at the weighted average (about $270/MWh), followed by Dynegy, Reliant Energy, Mirant, Calpine Corp., El Paso Merchant Energy, Enron, Duke and Constellation. Duke ($150/MWh) and the Constellation ($100/MWh) were the lowest for the first-quarter.

"There has been a lot of rhetoric in recent months about out-of-state generators gouging California," Smutny-Jones said. "If there are these alleged 'gougers', they are not the generators we have here in California. They have worked very hard to stabilize prices over the last six months."

Smutny-Jones said that IEP members have helped build the added baseload and peaking generation that has come on line in the past month, and have tried to offer short- and long-term supply deals to the state and municipal utilities..

"Our hope is that when state legislature comes back (from recess Aug. 20), we can actually spend the rest of its session trying to fix the problem and stop the finger-pointing. We are here ready, willing and able to be part of the solution," he said.

In response to a specific question, Smutny-Jones said he has not been part of the so-called legislative working group that is trying to craft alternative solutions to Southern California Edison Co.'s financial problems, and he understands that different parts of the legislature are at odds over what to do.

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