FERC last week ordered Williams Energy Marketing & Tradingand AES Southland Inc. to show cause why they shouldn’t be found inviolation of the Federal Power Act (FPA) for allegedly engaging inactions that drove up power prices in the California bulk marketand potentially compromised the reliability of the transmissionnetwork.

If Williams and AES are found in violation of the terms of theirfiled tariffs, the Commission could order the two companies toreturn profits of more than $10.8 million from the April-May periodlast year, and could condition the companies’ future market-basedrate authority.

Williams and AES have 20 days to show cause why they shouldn’tbe held in violation of the FPA. FERC indicated last week that morepunitive orders could be in the offing.

The Commission’s probe centered on the unavailability of certainso-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 todispatch power from other AES generating units at much higherprices, according to FERC.

In California, Williams markets power produced from twogenerating units owned and operated by AES, Alamitos 4 andHuntington Beach 2. FERC said its investigation showed thatWilliams and AES appeared to have prolonged outages at the twogenerating units to drive up prices.

FERC announced plans to conduct a formal, non-publicinvestigation into the operation, maintenance and sales of powerfrom the Alamitos and Huntington Beach facilities during othertimes in 2000 and 2001. Depending on the results, it said it mayissue more orders.

Bob Filner (D-CA), who has asked the San Diego DistrictAttorney’s Office to undertake a criminal investigation of severalpower generators and marketers, said last week that theAES-Williams order “confirms what I have been saying for months —that the state’s energy crisis was caused by market manipulationand greed.”

In fact, “if FERC’s investigation holds true — and AES andWilliams companies are unable to justify their prices for lastApril — it will further prove that we must investigate all of thewholesale generators and marketers for all of the past year,” hesaid. “If it was true for last April — before the crisis hit —it’s very likely the same types of activities were going on duringthe peak of our crisis last summer.”

Susan Parker

©Copyright 2001 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.