UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
BC Hydro, PowerEx, Southern Co. )
Energy Marketing, now called Mirant, )
And the Bonneville Power Administration )
Pursuant to Section 206 of the Federal Power Act, 16 U.S.C. § 824e, and Rule 206 of the Commission’s Rules of Practice and Procedure, 18 C.F.R. § 385.206, CAlifornians for Renewable Energy, Inc. (CARE) hereby petitions the Commission to rectify unjust and unreasonable prices stemming from the wholesale markets for energy and ancillary services operated by the California Independent System Operator (CAISO), and investigate its relationship to market practices by BC Hydro, PowerEx, Southern Co. Energy Marketing, now called Mirant, and the Bonneville Power Administration. CARE hereby petitions the Commission make findings that BC Hydro, PowerEx, Mirant, and the Bonneville Power Administration violated the Federal Power Act by with holding power during a period of peak demand to contrive an outage to create a shortage and test their market power. CARE alleges that in addition to violations of the FPA these market practices violated federal and state anti-trust laws, the civil rights of Californians (now a majority minority population state) under Title VI of the Civil Rights Act of 1964, and the international free trade law NAFTA. CARE further alleges that these generators or marketers acted with impunity for their actions irrespective of the loss of life and associated run-up in price of power and the economic repercussions nationally that resulted. CARE contends that FERC’s failure to determine the just and reasonable price of power and impose refunds enabled these generators and marketers of power to contrive a now long-term shortage of supply. To date California faces a repeat of the events and circumstance of the June 14, 2000 outages, but on a statewide and continuing basis, as the Investor Owned Utility PG&E is now in bankruptcy. CARE calls on FERC to take immediate action to create certainty in the market through the enforcement of its statutory responsibility to protect consumers from unjust pricing, while protecting reliable delivery of power. California, now faced with little or no imported power, faces a more serious threat as other generators follow suit and withhold power through planned and unplanned outages. As of this filing 13,000 megawatts of generation remain off line, as California’s power markets are no longer reliable to meet baseline demand of 35,000 megawatts. (35GWh) Immediate market incentives need to be provided to encourage imports and in state production now. With California facing rolling blackouts this summer FERC failure to immediately act to rectify these existing market conditions will result in a nation wide economic recession and the threat of the worst depression since the 1930s.
CARE first became aware of these matters and began our investigation on January 6, 2001 when we intercepted from a YAHOO Message Board the following article from an alleged power trader in Spokane Washington.
Canada Steels $3 billion from CA by: larstrader (39/M/Spokane, WA) 01/06/01 07:55 pm EST Msg: 2736 of 5810
The lines are not "maxed" out, in fact they are operating at less than
25% load factor. The reason is simply the system is not tight right now. Energy everywhere other than CA, is trading for $150-180, the PX is $250-300. That is the credit premium the market in is charging CA.
The real story here is what Powerex did this year. BC Hydro has over 10,000 MW of hydro capacity. They have multi-year storage capacity in their reservoirs. This allows them to simply not generate and not sell if they don't like the price. Powerex in the past has been the butt of jokes for their incompetence in managing their resources to maximize their return. Many trades made fortunes off of Powerex. Not this year.
Powerex locked up transmission, sold very little energy forward, and became the swing resource in CA. If they didn't like the price, they didn't sell, didn't generate, and stored their potential energy as water behind their reservoirs. When the price was at the cap, they filled the lines from the Canadian border to CA exporting all they could.
I estimate Powerex has earned over $3 billion this year off of sales to CA and the PNW. This foreign country was the big winner this year, and these people are the true energy bandits. More power to them, but the west has paid dearly for their sudden increase in trading prowess.
Could CA help mitigate the energy crisis. Absolutely, they are not regulated under FERC and have not been subject to Richardson's emergency order. They are still selling spot in the PNW, but are not exporting to CA. In effect, BPA is acting as the credit filter to CA for Powerex. They are picking up the energy at MidC and wheeling to CA.
BC Hydro's incredible hydro system was financed in part by the US back in the 40s-50s. There is an international treaty that exists between the two countries that provides the US pay back BC Hydro thousands of MWs per year for the reservoir capacity created upstream from Grand Coulee.
The US govt should tax invoke an excise tax on imported energy from Canada to recoup the billions our neighbors have fleeced from our pockets. If they don't sell to us, they will end up longer than dirk digler on six viagra.
If you want to point a finger at the true energy villains of 2000, it isn't ENE or any other trading concern here, it is Powerex. Too bad we stopped at the 49th parallel.
CARE continued to research these allegations and found the following information.
While checking BC Hydro documents we found that 2,000 MW of transmission capacity was available for export where it states.
“When: North to South: The 3150 MW path rating was established in December 1997.
South to North: The 2000 MW path rating was established by internal studies conducted jointly by B.C. Hydro & Bonneville Power Administration.
North to South: Studies were conducted on the heavy load summer and light load spring conditions. The ability of B.C. Hydro to deliver 3150 MW is limited only when its system load is above 6300 MW. This limitation is usually only during on-peak hours over the winter months.”
withhold ~2,000 MW over a six month period in 2000 to drive up the clearing price for power they sold in California. Figure 2, from the Cal-ISO on California Oregon Intertie Congestion Frequency demonstrates that while BC Hydro had more than enough load Capacity, they failed to import significant power during the months of May, June, August, and September 2000.
In a 4-11-01 LA Times News Article titled Energy Cost Study Critical of Public Agencies Too, by Robert Lopez and Rich Connell states,
“A confidential document obtained by The Times names power providers that have allegedly manipulated the electricity market. While the document does identify out-of-state merchants criticized for gouging, it also discloses for the first time the extent to which public entities allegedly have maximized profits in the volatile spot market.
The document--which decodes the identities of unnamed suppliers in a recent state study--singles out three government-run agencies as consistently trying to inflate prices. They are: the DWP, the federally owned Bonneville Power Administration in the Pacific Northwest and the trading arm of Canada's BC Hydro in British Columbia”
This news article also states,
“ The study by the California Independent System Operator, or Cal-ISO, analyzed thousands of hours of bidding practices for 20 large suppliers in the spot, or "real-time," market from May to November. The study accounted for factors such as rising production costs, increased demand, periods of scarcity and profits that would be earned in a healthy, competitive market.
Money earned above that was called excess profits.
No entity--public or private--earned as much in alleged excess profits as British Columbia's Powerex, the state records show.
"They were the most aggressive bidders," said Anjali Sheffrin, author of the coded study.
"They had the most amount to bid and the most freedom to bid it in," said Sheffrin, who did not discuss any companies by name.
BC Hydro’s rate schedule lists the average price for power it produces for its domestic customers as $0.0577/kwh which is a fraction of what PowerEx’s clearing price was for sales in the Cal-ISO control area. The Cal-ISO report titled, The Firm Transmission Rights Market Review of the First Nine Months of Operation February 1 – October 31, 2000 Prepared by the Department of Market Analysis California Independent System Operator November 30, 2000 lists PowerEx as the marketer with the highest clearing price in the ISO control area with a price $2.25/kwh. The Commission has a statutory duty to protect consumers from unjust and unreasonable rates. The Commission may only allow market-based pricing when there is empirical evidence showing that the market is capable of restraining prices to just and reasonable levels. The Commission has found that in California, rates have been, and have the potential to continue to be, unjust and unreasonable. The Commission has failed to take immediate action to create certainty in the market through the enforcement of its statutory responsibility to protect consumers from unjust pricing, while protecting reliable delivery of power. The Los Angeles Times
Table 1 BC Hydro's Residential Rate Schedule
article previously sited points to the discrepancy in pricing between BC Hydro’s domestic rates and rates to California’s consumers where it states,
“But BC Hydro officials acknowledge that they did anticipate periods of severe power shortages and planned for them by letting their reservoirs rise overnight and then opening them to create hydroelectricity, which could be produced inexpensively but sold for a premium.
"It was the marketplace that determined what the price of electricity would be at any given time," said BC Hydro spokesman Wayne Cousins. "We helped keep the lights on in California."
And the rates low for their own customers. During the past year, BC Hydro has stashed hundreds of millions dollars in a "rainy day" account to ensure that it has among the lowest rates in North America.”
BC Hydro’s PowerEx apparently exercised “market power” in violation of the FPA. Additionally these actions violated article 605 of the North American Free Trade Act (NAFTA), which states,
“Subject to Annex 605 b), a Party may adopt or maintain a restriction otherwise justified under Articles XI:2(a) or XX(g), (i) or (j) of the GATT with respect to the export of an energy or basic petrochemical good to the territory of another Party, only if the Party does not impose a higher price for exports of an energy or basic petrochemical good to that other Party than the price charged for such good when consumed domestically, by means of any measure such as licenses, fees, taxation and minimum price requirements.”
Under such emergency authority the US government should tax invoke an excise tax on imported energy from Canada to recoup the billions our neighbors have fleeced from our pockets.
Under such emergency authority the FERC should demand immediate refunds for overcharges by BC Hydro, PowerEx, Mirant, and the Bonneville Power Administration.
Under such emergency authority the US Government should seek enforcement and just compensations for damages resulting from BC Hydro, PowerEx, and the Bonneville Power Administration’s violations of the FPA, and seek enforcement of NAFTA article 605 (b) in the international court.
Michael E. Boyd – President, CARE 4-12-01
 CARE is a non-profit public benefit corporation. Legal counsel was not retained to prepare this complaint.
 This is the subject of CARE’s complaint EL01-2 currently under rehearing by the FERC.
 This is the subject of CARE’s complaint EL01-2 against Mirant currently under rehearing by the FERC.
 Source BC Hydro Interim New Northwest US-Canada WSCC Path Rating at http://gridops.bchydro.bc.ca/studies/newnwuscan.pdf
 BC Hydro’s residential rates may be viewed at its web site http://www.bchydro.bc.ca/customerservice/rates/residential.html
 See Section 206(a) of the FPA mandating, “[w]henever the Commission…shall find that any rate…charged or collected by any public utility for any…sales subject to the jurisdiction of the Commission…unjust and unreasonable, unduly discriminatory or preferential, the Commission shall determine the just and reasonable rate...to be thereafter observed and in force, and shall fix the same by order”.
 FPA Section 202(c) Temporary connection and exchange of facilities during emergency
(16 U S C Sec. 824a c) …” whenever the Commission determines that an emergency exists by reason of a sudden increase in the demand for electric energy, or a shortage of electric energy or of facilities for the generation or transmission of electric energy, or of fuel or water for generating facilities, or other causes, the Commission shall have authority, either upon its own motion or upon complaint, with or without notice, hearing, or report, to require by order such temporary connections of facilities and such generation, delivery, interchange, or transmission of electric energy as in its judgment will best meet the emergency and serve the public interest. If the parties affected by such order fail to agree upon the terms of any arrangement between them in carrying out such order, the Commission, after hearing held either before or after such order takes effect, may prescribe by supplemental order such terms as it finds to be just and reasonable, including the compensation or reimbursement which should be paid to or by any such party.”
 This is the subject of CARE’s complaint EL01-2 against Mirant currently under rehearing by the FERC.