California Municipal Utilities Should Be Probed, Lawmaker
Says
By Daniel Taub
| Sacramento,
California, Aug. 20 (Bloomberg) -- California's municipal power utilities
have charged the state more for electricity than some out-of-state
generators and should be investigated by the Legislature, a state senator
said. The Senate Select
Committee to Investigate Price Manipulation of the Wholesale Energy Market
should subpoena documents from the municipal utilities, as it has from
such private generators as Dynegy Inc. and Duke Energy Corp., said State
Senator Ray Haynes, a Republican from Riverside. ``California taxpayers
and ratepayers overpaid these government entities for electricity,''
Haynes said in his report to the committee. ``The account can be balanced
by action from the Legislature or the governor acting by executive order.
The question is whether they will do so.'' California has spent
more than $9.6 billion buying energy on behalf of its three investor-owned
utilities. The state entered the electricity-buying business when the two
largest utilities, units of PG&E Corp. and Edison International,
became insolvent after accruing more than $14 billion in power-buying
losses. The Sacramento
Municipal Utility District and the city of Glendale were among municipal
utilities that charged California the most for power, Haynes said. Each
charged more than $300 a megawatt-hour, on average, from January through
March, compared with an average of $181 charged by Houston-based Enron
Corp., the largest U.S. wholesale energy trader. One megawatt-hour can
light 750 typical California homes for an hour. Peak Demand The prices charged by
the municipal utilities aren't unusual because they typically sell the
state power only during times of peak demand, said Jerry Jordan, executive
director of the California Municipal Utility Association. Other power
providers sell energy during off-peak hours as well, he said. ``The fundamental
thing that Mr. Haynes doesn't seem to understand is, if we're making so
much money, why are we raising rates?'' Jordan said. The association
represents Sacramento's utility, which raised its customer rates 21
percent in May, and other municipally owned utilities. State Senator Joe
Dunn, chairman of the committee investigating price manipulation in the
state's energy market, has received a copy of Haynes's report and is aware
of Haynes's concerns, said Alexandra Montgomery, a consultant to the
committee. ``From the very
beginning of the committee's formation, it's been the intent to cover as
many aspects of the energy situation as possible, including the
municipals,'' Montgomery said. |