It’s taken almost 13 years, but justice finally may be coming to California consumers victimized by the federal government during California’s energy crunch of 2000 and 2001.
Yes, by the federal government.
For folks who weren’t in California or don’t remember, that was the time when power prices here soared as electricity-trading companies like Enron, Reliant Energy, the Williams Cos. and several others conspired illegally to take advantage of this state’s abortive deregulation plan.
“Buccaneers from out-of-state” caused the problem, then-Gov. Gray Davis complained at the time. Few took his charge seriously, least of all the Federal Energy Regulatory Commission, which could instantly have stopped the illegal practice of making fake, phantom shipments of power out of California and then selling the same power back to California utilities at vastly inflated prices.
One result was that Davis’ public approval ratings dropped severely, leaving him vulnerable to the recall election of 2003.
So this energy crunch had political consequences. At the same time, politics had major consequences for consumers. When Republican George W. Bush won the presidency in 2000 without help from California, the state no longer got much sympathy from presidential appointees of most sorts.
No matter how often Davis and other state officials protested the power profiteering, FERC did nothing, and eventually Californians were bilked of more than $10 billion in excessive electricity prices. Super-high prices continued for years after the crunch, as Californians paid for the long-term power supply contracts forced on the state’s Independent System Operator during the crisis.
It wasn’t just through FERC that the federal government persecuted and cheated every residential and commercial electricity customer in this state.
California also bought power at that time from two federal agencies operating dams on major Western rivers. Those were the Bonneville Power Administration based in Portland, Ore., and the Western Area Power Administration in Lakewood, Colo.
Davis at the time charged these federal agencies with profiteering similarly to Enron and other private companies whose executives later were convicted of illegal market manipulation.
The criminal trials of Enron chieftains and others proved Davis correct about those “out-of-state buccaneers,” and now he’s been proven right about the federal agencies, too.
This happened when, in what may have been the most under-reported story of the spring, the U.S. Court of Federal Claims in Washington, D.C., ruled that both the Bonneville and Western Area power administrations bilked Californians of more than $2 billion during and after the electricity crunch. In a separate ruling about the same time, a FERC administrative law judge found that private companies cheated Californians out of at least $1 billion more than they’ve already been forced to refund.
Even after the end of rolling blackouts deliberately created by market manipulators to sow public panic and desperation that left Californians susceptible to gouging, both the federal and private outfits continued to take advantage, the judges ruled. The exact amounts of their liability will be determined in separate court proceedings this month.
After that, the state Public Utilities Commission will decide how to return the money to consumers. Only part of past settlements with private companies has been returned directly to customers who were cheated, with portions going to fund new generating capacity.
Because every region of the state now possesses power plants with the potential to produce at least 15 percent more power than projected maximum demands, all of the new refunds ought to go straight to consumers, applied to their monthly bills.
But the PUC, which was a big supporter of deregulation before the energy crunch despite warnings from consumer groups that large-scale market manipulation surely would follow, has never before given much back to consumers.
The bottom line on all this is an old lesson: Eternal vigilance is the price of freedom.
Because of the complexity of the energy regulatory process, power companies and the federal and state agencies that regulate them get little public attention. Operating out of the news-coverage spotlight, they sometimes try to take advantage. The only way to avoid future crises and cheating, then, is to shine that spotlight on them continually.
— Reach syndicated columnist Tom Elias at [email protected]