Sen. Dianne Feinstein (D-CA) is urging FERC to reject a recently announced settlement between Dynegy Inc. and FERC staff aimed at resolving charges that Dynegy tried to manipulate California’s electricity markets in 2000-2001.

In her Jan. 29 letter to Federal Energy Regulatory Commission (FERC) Chairman Pat Wood, Feinstein noted that on Jan. 21 it was reported that FERC staff had entered into a settlement with Dynegy for the “disappointing sum” of just over $3 million for charges that Dynegy may have engaged in manipulative behavior, such as load shifting, false reporting and double selling.

“I continue to believe that FERC needs to provide the citizens of California with the justice they deserve,” wrote Feinstein. “Unfortunately, FERC staff continues to enter into settlements with companies such as Dynegy that fail to represent the damages these companies brought upon California and its citizens.”

She noted that in the first quarter of 2001, Dynegy posted a recurring net income of $137.5 million, a 73% increase in net income from the $79.4 million it reported in 2000 and a 102% increase from the company’s reported first quarter income in 1999.

“Surely, such an exorbitant jump in profits merits a more thorough investigation and illustrates that the $3 million agreement does not come close to representing the true fraud and manipulation Dynegy engaged in during the Western energy crisis and the damage it caused to the California economy,” Feinstein argued.

“Knowing that the Dynegy settlement is still subject to the approval of the full Commission, I strongly urge you and your fellow Commissioners to reject this settlement and order this agreement to be renegotiated by staff to properly reflect the damage that was inflicted upon California and its citizens.”

The lawmaker also noted that FERC on Jan. 22 granted motions to dismiss allegations of improper activities against 31 companies and accepted settlements of manipulation claims against another five companies (see NGI, Jan. 26).

“These five settlements totaled a mere $142,000,” wrote Feinstein. “The continual reports of such meager settlements have me concerned that the Commission is simply allowing companies that illegally manipulated the California energy market to get away with a mere slap on the wrist. These meager settlements would be one thing if the companies at least admitted that they acted illegally. However the settlements let these companies off the hook by allowing them to circumvent any admission of wrongdoing.”

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