Agency tables Avista probe (FERC says enough is enough on Enron witch hunt)

Seattle Times ^ | December 10, 2002 | By John K. Wiley, AP

[Robert357]

The Federal Energy Regulatory Commission has agreed to suspend its investigation into allegations that a Spokane utility participated in deceitful electricity-trading schemes with an Enron subsidiary.

Commission staff members and Avista filed a joint motion yesterday asking a federal administrative law judge to suspend the FERC investigation.

The commission staff found no evidence that Avista knowingly engaged in improper trading or efforts to manipulate the market, the filing stated.

FERC also concluded Avista did not withhold relevant information in the commission's investigation into wild fluctuations in the Western energy markets in 2000 and 2001.

The commission in June announced it was investigating allegations that Avista subsidiaries acted as go-betweens for Enron subsidiaries Enron Power Marketing and Portland General Electric, which were not permitted to deal directly with each other.

Avista officials said tariffs on file at FERC appeared to allow the transactions involving the Spokane company, which took place in the spring of 2000.

Avista officials contended the so-called "sleeve" trades netted only $2,500 during 18 days of trading by employees of Avista Utilities and Avista Energy.

Avista has said it was an unwitting participant in a scam called "Death Star," which involved energy trades calculated to fool operators of California's energy grid into thinking parts of the system were near overload.

FERC estimates that Enron collected $33 million in such fees in July and August of 2000 for just one transmission path.

Enron, which two years ago ranked No. 7 among the Fortune 500 companies, with $100 billion in revenues, filed for bankruptcy protection Dec. 2, 2001, haunted by shady accounting, hidden debt and inflated profits.

If Administrative Law Judge Curtis Wagner in Washington, D.C., approves, FERC will suspend its investigation of Avista, which could have faced the loss of its right to sell wholesale power at fixed rates. That lucrative market makes up as much as 80 percent of the company's sales.

[Robert357]

OK, so FERC has been investigating price gouging schemes that netted some of the participants $2,500.00. Wow, I wonder how much of our tax money was spent to conclude that AVISTA's participation in a questionable power transaction made them about $2,500 in gouging profits? (/sarcasm)

Clearly, FERC is investigating any and all possible wrongdoing. It is also pretty clear that FERC has gone out of its way to give the California claims of massive price gouging a fair hearing.

What I find interesting in this article is how little Enron really earned during the California power crisis and yet is held out as the "boggy man" that is responsible for most of the $8 billion in overcharges that Davis is claiming and that FERC said (statewide from all power marketers) might reach $200 million.

This article says that Enron (or the crooked E as it is now being called) was paid $33 million for two months to relieve congestion on the transmission system. That is a gross figure and there were probably costs associated with redispatch of power flows, so for two months congestion pricing power gouging profits were likely no more than say $20 million. That is hardly a dent in the $8 Billion that Davis claims California was overcharged.

The article also says that Enron had about $100 billion in revenues. We know that Enron was an international company with holding in India and around the world. We also know that Enron's accountant allowed it to greatly overstate its revenues by moving future revenue into the current year. An educated guess then might place actual worldwide annual revenues at say something like $20 or 30 billion. Further speculation might place Enron California revenues at something on the order of a few billion a year. Again, even if there were ten firms as crooked and the crooked E, it hardly seems likely that they could have illegally pulled the $8 Billion excess and illegal "profits" out of California.

California customers may have spent $8 billion more than it normally spends on electricity during the power crisis, but lots and lots of things were purchased with that money. Licensing and permitting on lots of power plants that have now been canceled. Overtime and expedited installation of pollution control equipment at old California power plants. Lots of diesel generators at businesses and utilities. Emergency & expedited upgrades to natural gas pipelines. Fines paid to California Air Pollution Boards. Money spent on round the clock natural gas well exploration. And a never-ending payment of attorney fees and political patronage to special consultants to Gov Davis. Oh, yes, I almost forgot some of that extra $8 billion was spent on high priced electricity because the lack of hydro in the PNW made the really cheap stuff unavailable.

[Robert357]

I am wondering if FERC is winding down on the witch hunt or if they truly feel that AVISTA was just a relatively inocent victim.

My wager would be that the witch hunt is being called off and FERC will be looking at getting on with life and trying to set thing right in a number of areas.

[Grampa Dave]

You don't think that Davis and the criminal posing as the Kali Attorney General will ever forget about Enron and trying to prove that energy companies dared to make a profit.

Nah, they will continue this witch hunts until they can somehow blame the entire problem on President Bush and any energy company evil enough to try and make a profit.

[Robert357]

Kind of makes one glad that the Dem's don't have any committee chairs from which to mount publicity stunts in Washington DC doesn't it!

[Grampa Dave]

That is just one more positive result from the November election. No more Rats chairing a witch hunt to advance their agendas via the phoney PR generated by them and their media buddies.

[Ernest_at_the_Beach]

Thanks for the ping!

Will get back later today!

Calpowercrisis:

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[NormsRevenge]

Bump

[randita]

FERC keeps telling CA: "Show me the money!" (when it comes to proof of "gouging")

And CA keeps showing up, pockets empty (no proof).

You're darned right FERC is getting tired of this political charade.

[Eva]

A large part of the shortage of hydro-power was the result of environmental regualtions which required a release of water over the dams to save the salmon, which were never really endangered in the first place.

What we are seeing is a collusion between energy companies and environmental entities to raise prices.

[Tunehead54]

How 'bout this list: AEP ARLP AYE CMS CNP DYN EP LNT NBP XEL

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All picked up in late August when they looked like the oil sector had turned around ... Don't worry we'll still all celebrate Christmas with a sprig of pine I found at Target and a carton of eggnogg ;-)

[snopercod]

The defenestration of Enron has been political all along.

I won't bore you by reposting the analysis from the Political Professional.

[Robert357]

Very nice description of how this has been argued.

[Tunehead54]

Oops - forgot the main point - Thanks for your Calpowercrisis Bump List - I really appreciate it as I'm sure other do!

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[Robert357]

What we are seeing is a collusion between energy companies and environmental entities to raise prices.

We do some hydro consulting to electric utilities and not many of them will do things that will cost a lot of money to help fish if they don't have to.

I was with a team talking to Seattle City Light folks about the relicensing of their Boundary Hydro project in eastern Washington and they really wanted to keep costs down. While Seattle City Light has been forced to pick up the tab on some Skagit River stuff by the City Government, the internal management team I suspect is not thrilled about buying the land on the Skagit.

Again, most electric utilities I know, want reasonably priced power. I don't see any of them colluding with environmental groups with the goal of raising the price of power. There was a guy from Oregon, who spoke up in Everett about that topic, but I didn't take what he had to say as gospel.

While it may seem that there is collusion, I see environmental groups not caring about the cost, or for some evil enviornmental groups hoping that they can raise the price so high that conservation and elasticity will drop the need for powerplants. Again, utilities may give into environmental groups, but it is only because they think they will save money in the long run. I don't see any colusion.

[Robert357]

The defenestration of Enron

OK, I have to confess my ignorance. Could you educate me as to what that means. It sounds really good, but I would sleep better knowing what it means. It sounds like a cross between castrate and make defenseless. I am not sure there is enough left of Enron for either.

Thanks.

[Eva]

There was an article in the Bellingham Herald, last year, about how Puget power was more than happy to lower the water on the dams to comply with environmental regulations, but that the cost would be passed on to consumers.

[Robert357]

how Puget power was more than happy to lower the water on the dams to comply with environmental regulations, but that the cost would be passed on to consumers.

What I remember is that Puget kept running its Baker Lake hydro project full tilt to sell extra power into the California market a little over a year ago. They kept that up week after week until the reservoir was real low, then they just turned everything off over the Thanksgiving weekend. There were massive fish problems because both Seattle City Light reduced some generation, but Puget just immediately turned things off to save water for their own customers. They got in so much trouble over that.

When Puget got it's Lake Tapps hydro license from FERC, they said they could not accept the license because the power out of Lake Tapps (their White River Project) would be too expensive. They then threatened to drain the Lake. The City of Bonney Lake has been working with PSE and the Legislature to try to figure out a way to get Puget (PSE) more money. They are now looking at selling water from Lake Tapps to boost Puget hydro project revenues.

No, I don't think Puget or PSE (Pissy as we like to say) just passes costs along for fish hydro reasons. I will say that I never though PSE was really into being cost effective though.

[snopercod]

Defenestration is the act of falling, or being pushed, from a window. In Chekoslovakia, it has been employed as a method of political assassination for centuries.

[snopercod]

From Forbes, yesterday:

Gainers also included Avista Corp. shares of which rose $1.06, or more than 10 percent, to $11.07 after the Federal Energy Regulatory Commission cleared the utility of any wrongdoing in connection with Enron Corp.'s alleged schemes to manipulate the California electricity market.