Staff at the Texas Public Utility Commission (PUC) is considering a recommendation to penalize six power companies for overscheduling power requirements in the Texas wholesale energy market during the early stages of the state’s retail electricity pilot program last summer.

“There were price spikes in the wholesale market here in Texas in August 2001,” Terry Hadley, a PUC spokesperson, noted. “And the concern is that these market participants overscheduled the load and that resulted in more congestion and that drove up the price,” he told NGI.

At the start of this year, Texas opened up large swaths of the state to retail electric competition.

Hadley said that the “indication” is that the PUC’s market oversight division is preparing to seek fines against the six companies. “The final staff report isn’t due for about a month,” he noted. According to the PUC spokesperson, the overscheduling of power requirements totals about $43 million.

“From what the market oversight division has reported to the commission so far is that it looks like penalties would be appropriate and that it expects to make a recommendation of this before the commission next month…in late April,” Hadley said.

Mirant on March 22 issued a press release confirming that it is one of the six companies identified by the PUC as having overscheduled power requirements in the Texas wholesale energy market during the state’s retail electric competition pilot program last summer.

Mirant said that it was notified by the PUC in December of last year that irregularities in scheduling data had been discovered during August 2001. Mirant said that it conducted a review of its data and determined that inadvertent power scheduling errors did occur.

“The errors were unintentional and resulted from miscommunication during a complex pilot project,” said Rick Pershing, executive vice president of Mirant’s North American operations. “Pilot projects give all parties an opportunity to work bugs out of systems and processes,” Pershing added.

“We acknowledge that errors were made during the pilot period and we moved quickly to fix them once they were identified,” the Mirant executive said. “By the nature of our contracts, Mirant would not benefit financially from any overscheduling, including the overscheduling that inadvertently occurred during the pilot program. We are anxious to provide the [PUC] with any or all data it wishes to review.”

Local news outlets in Texas quoted spokespersons for TXU and American Electric Power (AEP) as acknowledging that their companies were also getting a closer look from state regulators over the overscheduling controversy. But the Fort Worth Star Telegram also reported that both TXU and AEP deny intentionally manipulating the state’s energy markets.

NGI asked Hadley whether all six companies would be publicly identified if PUC staff recommended that the PUC penalize the companies. “Yes, that would be expected,” he responded.

“In fact, on a separate track, we’re negotiating and working with the companies that they would all remove any of their concerns about confidentiality,” Hadley added.

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