Avista in holding mode on FERC action

The Spokesman-Review | March 27, 2003 | Alison Boggs

[lilylangtree]

It's unclear whether action taken by federal regulators Wednesday will affect Avista Corp., a spokesman for the Spokane energy company said. FERC ruled Wednesday that California is due a refund of more than $1.8 billion because of market manipulation by several companies during 2000 and 2001.

FERC investigated Avista last year because of a series of trades between Enron Power Marketing Inc., Portland General Electric Co., and two Avista entities. FERC's staff investigation concluded that no one at Avista Utilities or Avista Energy knowingly engaged in improper trading. An agreement between FERC staff and Avista exonerates the Spokane energy company, but is contingent upon the approval of FERC Administrative Law Judge Curtis Wagner, Jr.

Even though the case is on track to be resolved, it's possible FERC could require Avista Energy to refund money, Avista spokesman Hugh Imhof said Wednesday. Avista Energy is the company's energy trading subsidiary. "We conducted our business properly and followed the rules and tariffs that were set," Imhof said. But he said, "we participated in a market where prices were ruled to be too high."

Avista Energy set aside $40 million from its 2001 budget as a "disputed amoount," Imhof said. That's how much the company feels it is owed by California in power bills the state didn't pay. However, that is also money that would be used to pay any refund," Imhof said.

FERC's investigation into Avista focused on the company's role as a middleman between Enron and Portland General, an Enron subsidiary. Avista was paid $2,500 to act as a "sleeve," simultaneously buying from Enron and then selling to Portland General. The transactions were then reversed, bringing the power back through Avista to Enron. The transactions helped create the illusion that the grid was overloaded. To ease the congestion, California paid utilities to not ship power over those lines. Enron collected $33 million in such payments in July and August 2000 alone.

"We are one of the smallest players here," Imhof said. "They are focusing on much bigger fish to fry."

[lilylangtree]

Two days before the public announcement of the investigation by FERC a member of Avista's board that specialized in energy futures up and quit. This appears suspicious. Avista, who gave assistance to Enron along with others, helped create the energy crisis in California. Now, FERC is going to give them a clean bill of health. And if approved, Avista will bill California for $40 million for an unpaid bill that Avista helped to create. As a Washingtonian, I'm amazed and aghast at the audacity. Surely California won't stand by and let this happen. This is truly ludicrous.