California sues firms over energy trades

Two power providers conspired to drive up electricity prices during California’s energy crisis in 2000 and 2001, Attorney General Bill Lockyer alleged Wednesday in a lawsuit seeking more than $1 billion.

The suit accused a Canadian power firm, PowerEx, of “megawatt laundering” — purchasing electricity produced in California, exporting it out of state, then selling it back to state grid managers.

The practice violated state antitrust laws, limited the supply of electricity and drove up wholesale prices, costing the state $1 billion in price gouging, Lockyer’s office said.

The suit, which said a New Mexico utility, Public Service Company, or PNM, conspired with PowerEx to complete the trades, is the latest brought by the state to recoup billions of dollars lost in the crisis as energy prices skyrocketed and blackouts rolled across the state. PowerEx is a defendant in two previous suits.

PowerEx is a subsidiary of BC Hydro of Vancouver, British Columbia. BC Hydro spokeswoman Elisha Moreno said the lawsuit was “just another move in California’s desperate attempt to blame everyone else for their poor electricity planning and market design.”

“We actually helped California keep the lights on during the energy crisis,” she said.
A PNM spokesman said the company did not manipulate the wholesale energy market in California.

“We firmly believe our wholesale market activities are above reproach,” said spokesman Frederick Bermudez.

The attorney general said PowerEx bought California power, exported it to PNM and to the Colorado River Commission, an electricity generator and marketer run by the state of Nevada.

The Colorado River Commission was not named in the lawsuit, but is referred to in court papers as a co-conspirator in a scheme to restrain trade.

The state is seeking damages of more than $1 billion, said Tom Dresslar, a spokesman for Lockyer. California officials are still trying to recover additional billions they say is owed by energy companies because of price gouging during the crisis.

The Federal Energy Regulatory Commission is requiring a number of companies, including several subsidiaries of bankrupt Enron Corp., to pay about $3 billion, but the state claims the amount should be closer to $9 billion.