Continuing its aggressive public relations campaign against allegations from three former workers at its San Diego power plant, Duke Energy Monday used a conference call with news reporters to go through detailed explanations of its power plant operations on three days last January, when the former workers contend the generator manipulated the plant operations to drive up wholesale power prices at a time of acute shortfalls.

While lamenting the fact the company has yet to be able to state its case face-to-face to a state legislative committee or the governor, Jeff Stokes, Duke’s executive vice president for western gas and power in Salt Lake City, said the company has not asked the governor or lawmakers for a chance to state its case.

Meanwhile, a spokesperson for the state grid operator, Cal-ISO, expressed surprise that a staff engineer’s memo to the state Electricity Oversight Board (EOB) verifying that Duke’s logs are corroborated by Cal-ISO has caused major news media coverage. The spokesperson said that is only a narrow part of the allegations by the workers, and as Duke’s Stokes acknowledged, the generator could have caused the Cal-ISO to shut down or ramp up the generation units in question through price and bidding manipulation.

“There is still a whole lot more to be investigated,” the Cal-ISO spokesperson said.

In a separate action, Duke filed with the Federal Energy Regulatory Commission, agreeing to offset its receivables from Cal-ISO and the now-defunct California Power Exchange by about $18 million, responding to FERC’s June 19 order in which the generators are required to offset any invoiced amounts they have outstanding above a $273/MWh “proxy price” for last January, along with another $2.1 million for prices invoiced above a FERC-established $430/MWh proxy last February.

The Duke move Monday was aside from the ongoing 15-day FERC settlement negotiations in which California is contending Duke alone owes the state $804 million in overcharges from the period of May 2000 through February of this year. The earnings (before interest and taxes) for all of Duke Energy North America’s operations last year were $418 million, said Stokes.

State officials have seized on the former power plant workers’ allegations as proof generators have been manipulating the wholesale power market through their operation of older, gas-fired power plants to drive up prices in the midst of recent severe shortages of power reserves.

“We followed the instructions of the Cal-ISO for the operation of our plant, Duke’s Stokes said. “It is unfortunate that unfounded allegations against us were permitted, and they were highly publicized as if they were fact, while we were given no opportunity to respond. We look forward to when we will be given the opportunity to present the facts to the investigators.”

Duke, which has only about 10% of its plants’ output available to sell into the spot market on any given day, contends that the Cal-ISO directs its generation plant operators to ramp up or down the generation operations. “The records (Cal-ISO and power plant logs) clearly refute allegations made by the three former San Diego employees that reductions in our output at the South Bay Plant during Jan. 16-18 were made at Duke Energy’s own directions,” Stokes said.

The Cal-ISO maintains that it gives its instructions based on how Duke’s marketing/trading arm bids into the various reserve markets (spinning, nonspinning and replacement reserves).Under questioning from the media, Stokes acknowledged that some of the times Cal-ISO refused to take power from the Chula Vista plant, it could have been for price and bidding reasons (the prices were too high), but most of the time it was for grid reliability reasons. The Cal-ISO officials consider this an important concession by Duke.

“Duke, in effect, has acknowledged that prices could have been a factor,” said Stephanie McCorkle, a Folsom-based Cal-ISO spokesperson, noting that it is up to other parties, not the grid operator, to resolve the dispute between the former workers’ contentions and Duke’s adamant denials of any wrongdoing.

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