Sunday, December 22, 2002

It's like the highwayman robbed us and then spent all the money on booze…"


Legacy of Power Cost Manipulation
At the height of the rise in energy costs in early 2001, the Bush administration said the West Coast's troubles were a precursor of what would happen if the nation did not build 1,900 power plants over the next 20 years.

But state officials in the hardest-hit areas say the crisis was never about energy shortages so much as it was about an epic transfer of wealth. They want payback — in some cases for immediate relief to consumers who cannot pay their bills this winter.

Last month, the Williams Company, in Tulsa, Okla., agreed to a $417 million settlement with Washington, Oregon and California. While admitting no wrongdoing, Williams agreed to pay refunds and other restitution to the three states; in return, the states dropped an antitrust investigation.

Among large energy companies, the states are seeking refunds from the Mirant Corporation, Reliant Resources Inc., Dynegy Inc., Duke Energy and Enron.

Mr. Beuscher said he would like to see money from the Williams settlement be used to help people who cannot afford the rate increases. Consumers in Oregon and California have made similar pleas. But officials in all three states say that until there are larger settlements with the energy companies, consumers are unlikely to see relief.

"We hope that the Williams case serves as a template," said Tom Dresslar, a spokesman for the California attorney general's office, "because California was monumentally ripped off by these energy traders."

About seven million consumers in California, who were initially shielded from having to pay for runaway energy costs during the worst part of the state's deregulation debacle, are paying rate increases averaging 30 percent more than the pre-deregulation prices of 1996. The state has the highest energy rates in the nation, consumer advocates say, although the structure of the rate increase allows poor people and low energy users to escape the recent increases.

"I don't hold out a lot of hope that we will ever get significant refunds," said Doug Heller of the Foundation for Taxpayer and Consumer Rights, a nonprofit group based in Los Angeles. The group calculates that California power customers overpaid a total of $70 billion.

At the height of the energy troubles, the trading companies boasted of record profits in their quarterly reports. But many of those companies are now near bankruptcy as they cope with a downturn that has caused the energy trading sector to lose 80 percent of its value, according to Wall Street analysts.

"It's like the highwayman robbed us and then spent all the money on booze," Mr. Heller said.
http://www.nytimes.com/2002/12/22/business/22POWE.html?pagewanted=all&position=top

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