Attorney General files a lawsuit against PowerEx
Attorney General Bill Lockyer has filed a lawsuit against PowerEx and Public Service Company of New Mexico (PNM) in which the state alleges for the first time that Enron-devised trading schemes used to inflate prices during the Energy Crisis – in this case "ricochet" transactions – constituted a conspiracy to restrain trade that violated California antitrust laws.
"Ricochet was one of the power companies' favorite Enron games, and they used it to gouge Californians by more than $1 billion dollars," said Lockyer. "Our evidence shows PowerEx was the most prolific practitioner of ricochet. This lawsuit seeks to hold them accountable for their rampant antitrust violations and recognizes a fundamental reality – they couldn't have done it without co-conspirators."
The complaint filed in Sacramento County Superior Court seeks treble damages that could total billions of dollars. PowerEx, a wholly-owned subsidiary of BC Hydro headquartered in Vancouver, British Columbia, and PNM sold more than 800,000 megawatt-hours (MWh) of power through illegal ricochet transactions during the Energy Crisis, the complaint alleges. One MWh is enough energy to power 1,000 average California homes for one month.
During the Energy Crisis, sellers used the ricochet scheme, also known as "megawatt laundering," to evade price caps in the market operated by the California Independent System Operator (ISO). During supply shortages, ISO paid premium prices far exceeding caps for energy imported from outside the state. These sales were completed outside ISO's centralized market and were called "out of market (OOM)" transactions.
Ricochet refers to the tactic of buying power in the state, "exporting" it outside ISO's control area, then "importing" it back into ISO's area and selling it at inflated prices as OOM transactions.
"Ricochet was one of the power companies' favorite Enron games, and they used it to gouge Californians by more than $1 billion dollars," said Lockyer. "Our evidence shows PowerEx was the most prolific practitioner of ricochet. This lawsuit seeks to hold them accountable for their rampant antitrust violations and recognizes a fundamental reality – they couldn't have done it without co-conspirators."
The complaint filed in Sacramento County Superior Court seeks treble damages that could total billions of dollars. PowerEx, a wholly-owned subsidiary of BC Hydro headquartered in Vancouver, British Columbia, and PNM sold more than 800,000 megawatt-hours (MWh) of power through illegal ricochet transactions during the Energy Crisis, the complaint alleges. One MWh is enough energy to power 1,000 average California homes for one month.
During the Energy Crisis, sellers used the ricochet scheme, also known as "megawatt laundering," to evade price caps in the market operated by the California Independent System Operator (ISO). During supply shortages, ISO paid premium prices far exceeding caps for energy imported from outside the state. These sales were completed outside ISO's centralized market and were called "out of market (OOM)" transactions.
Ricochet refers to the tactic of buying power in the state, "exporting" it outside ISO's control area, then "importing" it back into ISO's area and selling it at inflated prices as OOM transactions.
posted by Hugh Harris-Evans at 9:54 AM
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