Sen. Dianne Feinstein (D-CA) on Friday asked FERC to strip Reliant of its authority to sell energy at market-based rates, saying that recently released transcripts of traders at the energy company show evidence of “fraud and manipulation” of the Western power markets during the region’s energy crisis of 2000-2001.

“If ever there was a time when FERC should use its strongest enforcement mechanism, Reliant’s intentional withholding of power in the California markets is it,” Feinstein wrote in a letter to FERC Chairman Pat Wood.

Without admitting any wrongdoing, Reliant and five of its California power generation facilities recently signed off to a consent agreement with the Federal Energy Regulatory Commission that orders it to pay $13.8 million for withholding electricity from the state’s market to affect prices on two days in June 2000 (see Daily GPI, Feb. 3)

The agreement, which was approved by the Commission, resolved all issues arising from actions taken on June 20 and 21, 2000, when certain Reliant employees withheld 1,000 MW from customers of the California Power Exchange (Cal-PX) apparently in an attempt to ratchet up prices for electricity [PA02-2-001].

But Feinstein pointed out that FERC-released transcripts show that Reliant plant operators “deliberately took steps to intentionally hold power offline and increase energy prices at the height of the Western energy crisis — with the knowledge of Reliant senior executives.” The lawmaker said that the transcripts “reveal one of the most egregious examples of fraud and manipulation that affected the Western energy market during the energy crisis.”

Feinstein also asked FERC to use its subpoena power to conduct a “thorough review of the withholding by Reliant and other power generators” in the Western energy market. “I do not believe the behavior documented in the Reliant transcripts was limited to only these two days in June and to only one company.”

Meanwhile, Feinstein on Thursday urged FERC to remove any confidentiality blocks on market information being collected as part of ongoing investigations into the causes and major perpetrators in the 2000-2001 wholesale energy market meltdown in the western states.

A FERC spokesperson indicated the federal regulators will give the senator’s request “all due consideration.”

Feinstein indicated she was not sure that FERC could meet its self-imposed deadline for wrapping up the California power market investigations by the end of March, noting that two former Enron traders have now pleaded guilty to manipulating the market, and the federal commission last week announced a settlement with Reliant Resources, prompting more reason to make public its findings.

Feinstein demanded in a letter to Wood that a protective order it invoked over public access to information gathered in the ongoing investigations be released. California continues to press forward for up to $9 billion in refunds. A FERC administrative law judge in December ruled that California should be entitled to $1.8 billion in refunds of overcharges, but that will only be a “credit” against some $3 billion outstanding that suppliers are still owed, according to the judge’s proposed ruling, which ultimately needs to be upheld by the FERC commissioners.

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