To catch a thief
This is no longer a matter of mere allegation. During the past year or so, as investigations have continued into the power crisis that sent blackouts rolling and energy bills skyrocketing across the state, the facts have emerged: The crisis was caused by manipulation of the newly deregulated energy market by companies like Enron and El Paso Electric Co. And it cost us billions. That’s no conspiracy theory; it is the conclusion of investigations conducted by the Federal Energy Regulatory Commission.
So why won’t FERC do anything about it?
Under the Federal Power Act, FERC is charged with preventing runaway energy costs. It has the power to levy fines and extract refunds from utility companies that gouge their customers. Yet, even as the agency’s investigations have produced more and more shocking proof of market manipulation, FERC commissioners have continued to state publicly that California would be better off cutting a deal with the utilities than waiting for FERC to act.
That’s unbelievable. We wouldn’t allow law-enforcement officials to tell a robbery victim he’d be better off cutting a deal with the person who mugged him than waiting for the police to take action, and we shouldn’t stand for federal regulators shunning responsibility when it comes to penalizing utility companies that rip off consumers.
Make no mistake about it: The utility companies in question did rip you off. Using scams they jokingly referred to with nicknames like “Deathstar” and “Get Shorty,” companies like Enron shuffled energy derivatives from one subsidiary to another, artificially increasing the price with each transaction. According to legal claims the state has filed, such practices helped produce overcharges of about $9 billion.
That figure may even turn out to be conservative in the wake of recent revelations that at least one company, El Paso Electric, was actively manipulating natural-gas prices. Because much of California’s electricity is produced by burning natural gas, the increase in gas prices and artificial shortages in supply had a domino effect on the electricity market. By withholding gas from California, El Paso Electric drove prices up by 600 percent, which added an estimated $3.7 billion to state energy costs.
The accumulating evidence should be good news for California, which has filed claims in federal court asking FERC to order $9 billion in refunds. Yet FERC’s response has been little more than a promise to continue investigating and a suggestion that California use the evidence against the utilities as leverage to try to reach an out-of-court settlement.
That’s just not enough. FERC commissioners possess enough evidence to justify billions in refunds. They should go after it.