Posted on 07/14/2002 12:06:30 AM PDT by lewislynn
July 14, 2002, 12:25AM
CHARLOTTE, N.C. -- As California reeled toward blackouts early last year, Duke Energy Corp. raised its wholesale power prices, some nearly sixfold in just weeks.
On the first day of blackouts, Duke sought to sell the state power for $1,170 per megawatt hour, according to documents the Charlotte Observer analyzed. Six weeks earlier, Duke offered the state power from the same plant at $200. Duke also raised prices from its other California plants.
With the price increases, Duke became one of the state's most expensive bidders, according to state documents, which used codes to keep bidders' identities secret. The Observer identified Duke's bids by deciphering those codes.
The Observer also found bids matching sales that another generator has acknowledged making. That data show that Houston-based Reliant Energy may have offered the state power at an even higher price than Duke did.
Critics say the price run-ups support earlier claims that California power producers, including Duke, manipulated the state's electricity market for excessive gain. Generators deny the accusations.
"The bids are a very good indication of what generators believed the state was willing to pay," said Christian Schreiber, an investigator for the California Senate committee investigating the role generators played in last year's power crisis. "In addition, it indicates the generators' priority here was never to serve California in a time of need but to exploit California at its darkest hour."
Charlotte-based Duke, one of California's largest generators, denies it raised prices to take advantage of the state's crisis.
Duke says it marked up its prices as much as 80 percent because the agency buying power for the state wasn't paying its bills. Because of that credit risk, Duke says, it tried to sell all its California power to its other customers in the state. But, like other generators, Duke had to sell any available power to the agency when it was needed -- usually when the state's supply was low.
Duke says it is still owed $266 million for power sold to the agency, the California Independent System Operator, or ISO.
"The fact that our prices went up was related to the (ISO's) credit crisis, not the shortage of power," said Duke spokeswoman Cathy Roche. "These (ISO) bids were a last resort after we tried desperately to sell the power to anyone that would pay us for it."
The state reports do not show whether California actually bought power at the higher rates, only the prices at which Duke and other energy traders offered to sell it. But federal reports show the state did buy Duke's highest-priced power. And the bids -- some soaring far above Duke's -- provide the closest look yet inside the financial strain California faced as it sought power.
Critics, including lawmakers and lawyers, have decried the secrecy surrounding generators' pricing. The Observer analysis is the first to match a generator with its full bid history. A new federal reporting system starting this month will provide more details on generators' sales.
"The idea that people will be able to hide the truth indefinitely is a gamble that will be lost," said Michael Aguirre, a former federal prosecutor who has filed one of several lawsuits against generators. "They won't be able to hide anymore."
California's crisis eased last summer as the state signed long-term power contracts and federal regulators capped prices. Plant fuel costs also dropped, new power plants increased supply, and conservation and unusually cool weather reduced demand.
Last week, record temperatures pushed the state's power reserve to the lowest level since last year, prompting calls for conservation. State officials say supplies are adequate. Even Wednesday's breakdown of a large plant didn't tip the state into crisis.
"It's a sea change from last year," said Steve Maviglio, a spokesman for Gov. Gray Davis.
But the industry remains haunted by the disaster that plunged the state into darkness, cost California tens of millions of dollars in higher power prices and derailed electric deregulation in many states, including the Carolinas.
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You're in North Carolina, Duke is in North Carolina, Duke traded to the best of their ability when the price of NG went wild in late 2000-early 2001. They, and Dynegy, and Calpine, and -- Heaven forbid -- Enron made a profit during that period.
Did all these folks conspire to limit the supply of NG? Did these firms specifically conspire against Calbania?
Whatcha smokin', honey? Never mind all the 'exotic' strategies MISreported by those who misrepresent themselves as 'the financial media'. 95+% of them couldn't find their butts with a mirror and both hands on a sunny day. Incompetence isn't NEARLY a strong enough term for these turds.
The power crisis in Calbania from roughly July 2000 through Mar 2001 was due to NOTHING, say again NOTHING, other than the Calbanian Dissembly's utterly moronic actions in 1996, and Grayout Doofus' successive psychosis, or perhaps psychoses.
You can't, and the Calbanians can't, and Grayout can't deregulate ONE PART of a multi-phase mkt and rationally expect the effort to succeed, unless EVERYTHING goes perfectly. Pete the Putz Wilson gets part of the blame, too -- he instigated this nonsense.
Here's the bottom line, hon. If population is growing, and industrial demand is growing, then YOU, as the Governor of a state, must bend efforts to see that the availability of power grows right along with these two trends. Neither Pete the Putz OR the Doofus did so. They both caved to the greenie weenies and, as a result, precisely ZERO generation capacity was added in the state for a decade.
Result? They got stabbed w/the highest power charges in history AND MADE IT WORSE BY NOMINATING THE JERKS FROM THE ISO to trade in real-time against people who actually knew what they were doing. And, within the last month, we've learned that the laughably incompetent ISO traders actually CONSPIRED with trading firms to raise prices for the energy they DID buy.
I won't even mention the long-term power contracts that Doofus once touted loudly as the 'solution' to the problem, that he and his flunkies have been trying to crawfish out of since January.
Take your denial somewhere else, Stella; maybe to N.O., maybe you can still ride the streetcar named Doofus.
Anyone remember how that went?....
Duke price gouged, THEN they claimed the state owed them for the fraud.... You got it backwards.
Yes, when the dust settles and the history books find what really caused the California power crisis, the California ISO will have its fingerprints all over the causes and that will lead back to Gov. Davis.
I had forgotten the ISO credit worthy aspects to the increases in price during parts of the power crisis in California. Yes, people who buy on credit and don't pay are not folks who deserve the lowest prices.
I think that one of the best quotes that came out of those times was published Sunday, May 6, 2001, in the Contra Costa Newspapers in an article by Rick Jurgens,
When the shareholders of Duke Energy Corp. gathered for the company's annual meeting, Chief Executive Richard Priory
likened California's business climate to that of a Third World country: "It's no different than if it was Ecuador or Peru and we had investment decisions to make in those countries."
Ah, yes…..how business is really done in California under Gov. Davis. I suspect that the third world comparison also includes bribes to local officials or members of their families.
Don't try to re-write history to fit your agenda AGAIN. The power producers were NOT being paid even when prices were relatively low.
I think if one remembers the history correctly, the first witch hunt was why were all the power plants not operating and a big reason was that a lot of QF renewables were not operating because they could no longer afford to pay maintenance workers, because they were not getting paid by the ISO and by PG&E
I also vividly remember BC Hydro/PowerEX at the height of the crisis cutting off all power delivery to California until an electronic wire transfer "cleared" their bank, because they were not going to supply power without being paid. California (I think it was DWR as opposed to the ISO) quickly paid their bill to Hydro and within a 15 minutes of the transaction clearing the bank, power again flowed south to California
Gov. Davis caused the orginal problem by mis-management, by forcing PG&E and Edison to sell power for a price lower than they had to pay for it. They quickly ran out of money which made it impossible to pay the generators. That caused the shortage. The socialists, whether they live in Moscow or Sacramento, have a 100% failure rate running any economy.
I hope that if it gets to court Duke wins and California has to pay costs.
BTW I live in California.
Yep. My take is they got concerned about the un-paid bills, and since all power producers are required to bid, Duke jacked up the bid to make it less likely that it would be accepted or the last bid to be accepted ...
Let the Reliant and Enron get some un-paid invoices too.
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