Subj: CA Says Secret Power Company Cartel Caused Rate Increases
Date: 5/21/01 7:39:19 AM Pacific Daylight Time

CA Says Secret Power Company Cartel Caused Rate Increases

LOS ANGELES (Reuters) - State investigators have found evidence that "a cartel'' of power companies closed plants for unnecessary maintenance in order to inflate prices, the head of California's Public Utilities Commission said in an interview published Friday in the Los Angeles Times.
Public Utilities Commission President Loretta Lynch told the Times that her agency, along with the California attorney general's office, is investigating patterns of plant outages that have created ``artificial shortages,'' particularly when the state has issued emergency alerts due to seriously low electricity levels.
``There are instances where plants could have produced, and they chose not to,'' Lynch said.
``And it is clear that there are instances that plants, when called to produce, chose not to produce,'' even when they were obligated to do so under special contracts with the state and utility companies, she said.
California officials from Gov. Gray Davis on down have insisted that the state's electricity crisis is aggravated by price gouging by electric generators.
Lynch told the Los Angeles Times that the investigation by the commission and the attorney general's office has already produced enough evidence to warrant taking legal action against the generators as early as next month.
She declined to name the generators and said that the nature of the legal action was still under review.
The Times said that plant shutdowns are a key factor in soaring power prices that have gone from $200 a megawatt hour in December to $1,900 a megawatt hour last week.
In her interview with the Times, Lynch said of the high prices, ``I would argue that it's no accident. That in fact it's (due to) the coordinated behavior of a cartel.''
Power generators, on the other hand, have repeatedly said they acted within the parameters of California's flawed deregulation program and denied that they were illegally manipulating the power market. The plants, they have said, were so old, breakdowns were a recurring problem, especially during the recent power crisis.
Gary Ackerman, executive director of Western Power Trading Forum, a trade association of large power producers, told the Times that Lynch's allegations were ``the height of idiocy.''
``My members do not make money by shutting down their plants so their competitors can make money,'' Ackerman said.