Supporting the current CEO of the state’s electric transmission grid operator, Cal-ISO, and the ultimate need to make it a regional, multi-state entity, the state operator’s former stakeholder board chair, Jan Smutny-Jones, was among the energy industry representatives subjected to public depositions by a California senate investigative committee last week in a process that will continue later this month with further hearings. Subsequent hearings are suppose to look at some of the grid operator’s market practices, particularly allegations that it is giving “preferential treatment” to the state power-buying agency, the Department of Water Resources (DWR).

“It is clear the committee is looking extensively into the decision last year by the Cal-ISO CEO to ask for removal of the so-called hard wholesale power price caps that were subquently replaced with the (Federal Energy Regulatory Commission) market mitigation measures, said Smutny-Jones, long-time executive director of the California Independent Energy Producers.

“The decision was made by the ISO management at that time as being necessary to keeping the state’s power system reliable. I don’t think there is much more to it, and obviously I am cooperating fully with the investigative committee.”

The Cal-ISO CEO Terry Winter was questioned for six hours last Tuesday by the state senate committee examining the causes for high wholesale power prices last winter and potential market abuses by generator/suppliers, zeroing in on actions last December to unilaterally lift price caps with no oversight from the state’s elected leaders.

Winter told the legislative committee he lifted the price restraints to get adequate emergency supplies sold into California’s real-time spot market, and he did not inform Gov. Gray Davis or two oversight boards because he knew he would get “a resounding no,” according to a report in last Wednesday’s Los Angeles Times.

Davis’s press spokesman, Steve Maviglio, has been quoted as characterizing Winter’s action as “throwing gasoline on fire,” noting it helped put an already dyfunctional wholesale market totally out of control, eventually leading to the state’s two major private-sector utilities’ insolvency. But Winter told legislators that the frustration of Cal-ISO grid managers was so high in trying to avoid massive power blackouts in early December last year that he felt compelled to take the action he did.

“I certainly hope that Terry Winter does not turn into the scapegoat for the energy problems that California faced,” Smutny-Jones said. “It would be inapprorpriate, unfair, and inaccurate, so my hope is that is not where (the state senate investigation) is headed.”

With a Stage 3 power alert declared last Dec. 7, placing the state on the verge of rolling blackouts, Winter petitioned the Federal Energy Regulatory Commission to lift a price cap as a means of encouraging more sellers into the Cal-ISO emergency supply spot market, according to the LA Times report.

“In my view it was action that needed to be taken in a real-time decision, and I don’t think that should be second-guessed,” Smutny-Jones said.

Although the ongoing state senate investigation of alleged price manipulation in the state’s wholesale power market has included subpoenas, a celebrated legal fight with Enron Corp. and secret depositions, Winter and other Cal-ISO employees have requested that their testimony be done publicly.

The legislative committee attorney who questioned Winter focused on whether merchant power plant operators, some of whom had representatives on the old Cal-ISO stakeholder board in place at the time, unduly influenced Winter’s action. A Cal-ISO attorney argued that Winter had authority to petition FERC to lift the price cap without consulting the board.

While the action reportedly upset the governor, who in January disbanded the old board and replaced it with a state-mandated five-person panel, all appointed by him, Winter said three days after his action the price of emergency spot power supplies began to fall in line with declining natural gas prices at that particular time (mid-December 2000).

########

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.