Posted on 02/21/2004 5:39:04 AM PST by calcowgirl
U.S. regulators rejected a proposal by the operator of California's electricity grid that would have allowed it to fine companies $110,000 a day for instances of power-market manipulation.
The Federal Energy Regulatory Commission said in an order posted on its Web site Friday that the fines as proposed weren't "just and reasonable." The City of Santa Clara had argued in filings with the commission that clauses in the proposal would have allowed fines to grow as large as $95 million a day for "unproven allegations of harm."
The fines were also opposed by power generators and marketers in the state, including units of Reliant Resources Inc., Mirant Corp., Dynegy Inc. and Williams Cos.
"We have concerns with the level and administration of the proposed penalties," the commission said in its order. "Many of the proposed penalties are not commensurate with the conduct to be deterred."
The system operator's proposal also didn't provide "objective" criteria for evaluating the amount of any fines, the commission said.
The system operator had argued the fines were needed to prevent a repeat of the California energy crisis of 2000-01, which left millions of customers without power during six days of rolling blackouts and caused power prices to soar.
The state's largest utility, PG&E Corp.'s Pacific Gas & Electric, declared bankruptcy in April 2001 after racking up $13 billion in debt buying power on the open market.
The Folsom-based system operator, formed in 1998 under the state's power-industry restructuring law, coordinates electricity flows over 25,500 miles of high-voltage transmission lines, including the systems of Pacific Gas & Electric and Edison International's Southern California Edison.
The operator has accused Enron Corp. and other power companies of contributing to the energy crisis through fraudulent trading strategies and by shutting down power plants to boost prices during shortages.
The power producers say the crisis stemmed from flawed market rules and the state's failure to build new power plants, rather than wrongdoing by traders.
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