Asserting that it is seeking to prevent anticompetitive activities, widespread market manipulation and collusion to fix electricity prices, retail electric provider (REP) Utility Choice Electric (UCE) on Thursday said that it has filed a lawsuit in the U.S. District Court-Houston Division against TXU, American Electric Power (AEP), APX and Reliant, among other defendants.
The complaint alleges violations of the Racketeer Influenced and Corrupt Organizations Act of 1970 (RICO), mail fraud, wires fraud, state and federal antitrust laws, unlawful anticompetitive conduct and prices under the Texas Public Utility Regulatory Act ( PURA) and tortious interference with UCE’s customers, among other claims. UCE also claims that many of the defendants, namely TXU, engaged in further wrongdoing in fraudulently covering up such unlawful conduct, even retaliating against certain informants who had previously brought such wrongdoing to TXU’s attention.
“The modern-day Michael Milkens have left Wall Street for the energy markets, establishing home base in Texas,” said Rob Potosky, UCE’s general counsel and senior vice president-legal. “These wrongdoers have perfected the process of covertly and unlawfully extracting millions of dollars per hour through schemes targeting the energy markets. Some of the same companies and individuals who fraudulently gamed the California and Canadian electric markets have moved on to playing the same games in Texas.”
Potosky said that the complaint “brings to light new claims and new evidence relative to any previously filed complaints against these defendants. We believe the evidence likewise will enable us to show the involvement of some of the defendants’ top brass.”
UCE alleges that Texas residents and businesses have suffered as a result of the unlawful behavior. If not for the activities of the defendants, UCE believes electricity prices for all Texas customers would be, on average, at least 20% lower.
“The example described in pages 26 through 36 of the complaint, which is just a small piece of recent evidence obtained concerning the relationships between those who manipulated the California and Canadian markets and defendants in this case, shows collusion to fix electricity prices via the Enron-concocted ‘Project Stanley’ scheme,” said Potosky.
Project Stanley activities have come under scrutiny in recent months in the wake of what the Snohomish (WA) PUD said was fresh evidence of Enron’s manipulation of power markets in the western U.S. and Alberta.
“This suit is not an attack on deregulation,” said Potosky. “We still strongly believe that deregulation is in the best interests of all electricity consumers. Yet the core evidence set forth in UCE’s complaint is a result of the efforts of private individuals with no help from the Public Utility Commission of Texas or ERCOT.”
He said that this “emphasizes the crucial importance of private rights of action for damages in investigations and in policing the markets for complicated market fraud and anticompetitive conduct.
“We thus also seek to clarify that Texas consumers and businesses are permitted to employ the same enforcement tools that are available to those in the interstate commodities and securities markets governed by the CFTC and SEC, in which private parties are permitted to seek recourse in the courts when harmed by anticompetitive and fraudulent conduct. The courts, which are independent, fair, and just dispute resolution forums, are direly needed to provide this natural check on, and complement to, enforcement efforts of administrative agencies such as the PUCT.”
Â©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |