Returning fire in the continuing war of words, a Duke Energy official on Friday refuted claims by former employees of its South Bay power facility that the company was manipulating plant output to drive up prices. The company called the charges unfounded, noting that the plant was actually directed by the California Independent System Operator (Cal-ISO), not Duke, to track fluctuations in electricity demand.

Bill Hall, vice president of Duke Energy’s western operations, deflected the allegations of three former South Bay plant officials last week, as well as the fallout that ensued. Hall said the employees had worked for San Diego Gas & Electric Co., the previous owner of the facility, and were not hired as part of the new operating team when Duke Energy assumed full control of the South Bay power plant in April.

“These allegations represent just one more page in a very long chapter of misinformation disseminated by people who don’t know the full story,” he said. Reviewing the litany of charges and offering Duke’s account of what it said actually happened, Hall first disputed a charge that output from South Bay was “ramped up and down” to drive up prices when energy supplies were tight.

In fact, said Hall, “the units were operated under the direction of the Cal-ISO to meet system reliability and Duke Energy’s contractual commitments.” He said that “while the three ex-workers allude to logbooks from the plant control room with notations from Duke Energy Trading & Marketing (DETM), the former SDG&E South Bay employees apparently did not know that the ISO directs output through the DETM coordinator. Our records of ISO directions match up perfectly with the logbook notations.”

A second charge, that the “most expensive unit was run at South Bay to drive up ISO charges,” also is false, said Hall. “South Bay’s 15 MW, jet-fueled unit was designed principally to provide start-up power to the station’s steam units. This unit has been made available to provide as much energy as possible to California during the state’s energy crisis.”

Moreover, he said, “during the period in question, the jet-fueled unit was being operated because the price of jet fuel was substantially less than the cost of natural gas. This resulted in lower marginal costs. The 15 MW unit was being run to provide electricity to cover Duke Energy’s California contractual commitments. This electricity was not being bid into the ISO market, so there was no way it could have influenced ISO market prices.”

A third charge focused on inventory management at South Bay, which Hall said alluded to the company allegedly “throwing out spare parts,” resulting in increased outage time to accomplish repairs. “At no time did lack of inventory result in a unit being unavailable for service,” he said. “The inventory management practices at South Bay represent standard industry practices. Duke Energy purchased the entire inventory for South Bay when we assumed operations for the plant in 1998. We retained the parts and tools we deemed useful and disposed of inventory that was damaged or obsolete.”

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