Senator accuses grid operators of manipulating energy market

By Jennifer Coleman, The Associated Press
Wednesday May 22, 2002

SACRAMENTO — California grid officials asked state energy traders to buy unnecessary power at above-market rates, which the state later had to sell at a loss, a senator investigating California’s energy market said Tuesday. 

Sen. Joe Dunn, D-Santa Ana, said the transaction amounts to the Independent System Operator manipulating the state’s energy market and he called for the resignation of ISO chief Terry Winter. 

In a transcript of a telephone call between the ISO and the state’s energy traders at the Department of Water Resources last November, ISO officials asked the state to buy more power than they need. 

Federal regulators had required generators to keep their plants operating at a minimum level, but ISO officials were concerned that some generators weren’t obeying that order, Dunn said. 

To compensate for that, the ISO asked DWR to schedule “fictitious load” to make it seem as if more energy was needed, said Dunn, chairman of the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. 

Gregg Fishman, spokesman for the ISO, said officials there were investigating the transaction, but “they represent what appears to be standard industry practice.” 

The ISO is in a different situation than energy marketers and generators who have been accused of manipulating the state’s power market to increase profits, said Michael Kahn, chairman of ISO Board of Governors. 

“Our only job is to get reliability to this system at the least possible cost,” Kahn said. “Our activities were to ensure reliability.” 

Dunn said ISO asked the state to schedule these transactions on numerous occasions. He couldn’t say how much the state lost on those transactions. 

He said if the ISO was having problems with generators not responding to the Federal Energy Regulatory Commission’s order, officials there should have made an emergency filing with the commission, not “adopted counter strategies.” 

An ISO resources coordinator was fired in April for contacting Enron in an attempt to influence bid prices offered in California’s electricity markets. 

ISO officials said the employee called the Enron trader last July 3 from the ISO control room. The conversation was recorded by Enron and a transcript was supplied to Dunn.