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 network.

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 rate authority.

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 and greed."

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."

Susan Parker

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