Posted on 03/12/2007 5:20:07 PM PDT by Dysart
AUSTIN -- TXU Energy engaged in unfair trading practices and improperly profited through its manipulation of the wholesale electricity market, Texas regulators have concluded.
In a blistering report issued today by the Texas Public Utility Commission, the North Texas utility also was found to have improperly driven up wholesale electric prices by 15.5 percent during the summer of 2005 and made about $20 million more as a result.
Regulators reviewed a three-month period in 2005 during which some wholesale electricity prices were found to have spiked to unusual levels. A previous consultant’s report commissioned by the PUC had found "substantial competitive concerns,” but had not gone so far as to allege market abuse by the company.
The PUC must still make a determination whether to fine the company and by how much. The company may also face tougher prospects at the Capitol, where key state lawmakers have filed several bills that would require TXU to divest itself of major holdings.
"I am outraged that TXU would intentionally manipulate prices in the wholesale market to create higher profits,” said state Sen. Troy Fraser, R-Horseshoe Bay, who had filed legislation that would require the breakup of TXU. "Consumers of this state deserve to be treated fairly, and for a company that delivers an essential service to millions of Texans, this behavior is unacceptable.
"This report only further strengthens my argument for reducing market power of the electric companies who are continuing to abuse the public,” said Fraser, the chair of the Senate Business and Commerce Committee.
His counterpart in the Texas House, state Rep. Phil King, R-Weatherford, said he was angered by the report. He noted that he has filed legislation that would help prevent market manipulation.
“The bad news is that we had a bad buy -- and the question is: ‘Do we have sufficient penalties in place to deter this behavior?”’ said King, chairman of the House Regulated Industries Committee.
Some of the bills pending in the Legislature would prohibit companies from controlling more than 25 percent of electric generation within specific geographic regions in the state. This would greatly impact TXU, which controls at least 45 percent of generation in North Texas.
Legislation would also bar so-called vertical integration in the electric market; where a company could no longer control a retail electric provider, a wholesale generation firm and a transmission company. TXU is the only electric utility in the state that controls all three.
TXU did not immediately return calls for comment.
The Texas Market(henhouse) was designed by the stakeholders (foxes). I am shocked to hear there was market abuse. /s
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