California’s Attorney General last Wednesday attempted to open another chapter in the state’s wide-ranging attempts to secure billions of dollars of refunds for the wholesale power it and the state’s major utilities purchased in 2000-2001, filing a new request with the Federal Energy Regulatory Commission for refunding alleged overcharges paid by San Diego consumers. An ongoing FERC refund investigation covering the entire western power markets does not cover the summer period in question because of what the federal agency claims are legal restrictions preventing it from doing so.

Bill Lockyer, California’s attorney general, filed a request for $12 billion in refunds that would cover charges paid by San Diego Gas and Electric Co. utility customers during that summer and before, however, FERC has argued that it cannot consider refunds in that time period because under federal law the suppliers must know that they are selling power subject to future refunds before the sales take place. In this time period, there was no such notice given to the power suppliers.

“California wants full refunds from power companies that charged unjust and unreasonable prices for short-term sales in California before October 2001,” Lockyer said. “Under the Federal Power Act and FERC’s own orders, California energy wholesalers should have filed every rate they charged in California with FERC so that the regulatory agency could do its job of determining whether the prices were just and reasonable. The power companies have not filed any of their market-based rates, making every sale illegal and subject to review and refund for excessive charges.”

FERC served notice on the potential refunds Oct. 2, 2000, and it is considering some $30 billion in refunds to California for power purchases since that date, including $9 billion in power purchases through part of the 2000-01 period and $20 billion in alleged overcharges that California is now claiming from the $42 billion in long-term contracts signed by the state’s Department of Water Resources (DWR).

Power suppliers repeatedly have denied any wrongdoing and say prices soared because of supply-demand imbalances. Lockyer will argue that the refund period should begin earlier because electricity suppliers violated federal law and thus are required to return ill-gotten gains, according to news reports last Wednesday coming out of San Diego.

Consumer advocates, who say suppliers manipulated the market during the crisis, applauded the attorney general’s push for additional refunds. The Foundation for Taxpayer and Consumer Rights in Santa Monica noted that SDG&E customers should have a particular interest in the initiative because it involves billions of dollars and they were the first consumers in the state to be hit by the sky-rocketing wholesale prices that surfaced in mid-2000.

According to the state attorney general’s announcement on the state’s FERC filing, experts estimate that rates charged before October 2001 exceeded just and reasonable levels by $1.8 to $2.8 billion. The new complaint filed with FERC seeks refunds of those illegal charges.”The largest sellers in the California market – Mirant, British Columbia Power Exchange, Williams, Dynegy, and Reliant – alone may have overcharged California electricity purchasers by billions of dollars. The Cal-ISO, which manages the power grid delivering electricity to the state, has estimated total power company overcharges at nearly $6 billion.”

Lockyer said that before his new complaint, FERC proposed refunds for only $124 million in alleged overcharges for energy sales in January and February 2001 when power reserves in the state dropped below 1.5%.

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