PUC releases accused supplier's identity (TXU)

AUSTIN — TXU Wholesale was named on Friday as the mysterious energy supplier linked to possible anti-competitive practices similar to those associated with Enron during the California power crisis.

The Texas Public Utility Commission had withheld the identity of the North Texas company for months, saying that it would only release only it if the agency launched an enforcement action.

But on Friday, in the face of mounting public information requests from media outlets, the agency relented and named TXU Wholesale as the operation identified only as ``Company C” in a July consultant’s report on the Texas energy market.

On the last page of that report, the consultants stated that Company C had engaged in practices “that raise substantial competitive concerns.” Elsewhere, the report states that ``given the large size of Company C’s portfolio, the pattern observed ... raises significant concerns.” The consultants, Virginia-based Potomac Engineering, also urged regulators to take a closer look at Company C’s activities during 2005.

A spokesman for TXU could not be immediately reached on Friday. A TXU spokesman said earlier that he didn’t know whether TXU was Company C, but that at any rate the report was flawed.

``They are looking back with the benefit of 20/20 hindsight as to what could have been done, while ignoring consideration for the real-world information,” spokesman Chris Schein said in September. ``The report assumes that generators have perfect foresight.”

Commissioned by the PUC, the report references wholesale market activity from 2005 only, and in one section examines the potential for companies to drive up wholesale electric prices by holding back energy from more efficient generators.

Two years ago, the PUC issued a similar report from Potomac Economics that also concluded that TXU can unilaterally drive up wholesale power prices. It noted that if left unchecked, the utility could use such monopolistic power to block out competition.

Although it then found no evidence of undue profits, ``TXU clearly had the ability to substantially increase ... energy prices,” the earlier report said. It characterized TXU’s trading practices during a six-week period in 2004 as ``non consistent with competition” and said the company sometimes acted as a pivotal supplier of electricity — meaning it had the ``absolute” ability to substantially increase prices.

It called for additional monitoring but stated that it appeared that TXU had reduced or eliminated the questionable trading practices. At the time, Schein said that ``there’s a lot of innuendo in the report that isn’t fair” and that the company never engaged in improper activities.

The company’s trading practices also came under regulatory scrutiny after a cold snap in February 2003, when energy that typically sold below $50 a megawatt-hour shot up to $990.

But the latest report comes at a particularly awkward moment for the company. TXU is seeking permits to build a batch of new coal plants — an initiative that has become an issue in the Texas governor’s race.

The new plants would increase its generating capacity by half, but environmental groups also say the facilities would dramatically add to the type of air pollution that causes global warming.

Separately, an Aug. 27 report by a Michigan State University researcher has noted the potential for market manipulation in deregulated markets across the country. It noted that electric prices have gone up faster in deregulated states that have lifted price caps than prices in states that remained regulated.

It noted that electric prices have gone up faster in deregulated states that have lifted price caps than prices in states that remained regulated.

They also fall faster, too.

"when energy that typically sold below $50 a megawatt-hour shot up to $990."

I wish deregulation never happen in Texas. It has been nothing but greed driving the market.

What has always puzzled me is my local electric Co Op buys their electricity from TXU and then sells it to me at a profit and is still 20% cheaper than TXU sells electricity to customers only 3 miles away. Something is not right at TXU.

Competition is great and the customer benefits. TXU has very little competition and is a near monopoly.

4 posted on 10/20/2006 6:10:27 PM PDT by cpdiii (Oil Field Trash and proud of it, Geologist, Pilot, Pharmacist, Iconoclast)

I can believe it. Someone ought to go to jail over this price gouging. I have never seen such ridiculous energy prices in an energy rich state. Time to take action and put the evil doers behind bars.

Someone ought to go to jail over this price gouging

That's a good start. It's been a hectic week for me and I'm trying relax, but I'm glad to finally see some exposure on this. Many Texans already knew of their deeds.

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