Head of PUC show companies cut power generation for more money

The Associated Press
Monday May 21, 2001

LOS ANGELES – The head of the California Public Utilities Commission provided a state Senate committee with evidence showing three power generators reduced electricity production and then benefited from the resulting high prices. 

While testifying before the committee Friday, PUC President Loretta Lynch displayed charts that tracked electricity prices and power generation at three plants on a single day last November. 

According to the graphs, after the plants reduced production during the middle of the day, the state was forced to declare two separate power emergencies which indicate electricity reserves had fallen seriously low. 

After the shortfall in supply helped cause a spike in prices, the companies operating the three plants suddenly increased their electricity production to almost full capacity, allowing them to capitalize on the much higher rates. 

“We certainly see a pattern,” Lynch told the committee, which is investigating alleged manipulation of the state’s wholesale power market by energy suppliers. “Many generators are playing on their experience and playing, to an extent, California.” 

Maintenance records reviewed by investigators show that there were no valid reasons for the plants to cut back production, Lynch said. 

She would not identify the power plants involved, however, Lynch did say that they are owned by at least two companies. 

Sen. Joseph Dunn, who heads the special committee investigating alleged market manipulation, said Lynch’s testimony, on its face, is “very damning.” 

He said his committee has uncovered additional preliminary evidence showing that several power companies have allegedly engaged in similar behavior. 

During a break in Friday’s hearing, a spokeswoman for a trade group of major power suppliers told the Los Angeles Times that there have been no coordinated efforts to shrink supplies to increase profits. 

“There has been no collusion,” said Jean Muoz of the Independent Energy Producers Association. 

The PUC and state Atty. Gen. Bill Lockyer are jointly investigating the exorbitant wholesale power prices that have cost California billions and brought major utilities to financial ruin.