Business & Real Estate

Court orders $200 million in California energy crisis refunds

California’s electrical grid is run from Folsom by the Independent System Operator, seen in 2012. The U.S. 9th Circuit Court of Appeals on Thursday upheld a ruling by the Federal Energy Regulatory Commission that ordered five electricity providers to make refunds totaling $200 million for the state’s energy crisis in 2000 and 2001.
California’s electrical grid is run from Folsom by the Independent System Operator, seen in 2012. The U.S. 9th Circuit Court of Appeals on Thursday upheld a ruling by the Federal Energy Regulatory Commission that ordered five electricity providers to make refunds totaling $200 million for the state’s energy crisis in 2000 and 2001. Sacramento Bee file

More than 15 years after the last rolling blackout, California officials are still collecting refunds from electricity providers for manipulating prices during the state’s energy crisis. This week an appeals court ruling brought the state a step closer toward recouping another $200 million.

The 9th U.S. Circuit Court of Appeals on Thursday upheld a ruling by the Federal Energy Regulatory Commission that ordered five electricity providers to make refunds totaling $200 million. The five companies are Shell Energy North America, MPS Merchant Services, Illinova Corp. and APX Inc.

So far the state has recovered nearly $7.5 billion from various energy companies for alleged price manipulation in 2000 and 2001, when California’s electricity deregulation scheme went haywire. The refunds have generally been distributed to customers of Pacific Gas and Electric Co. and other investor-owned utilities in the form of credits on their bills.

Under the plan, PG&E and other big investor-owned utilities were forced to sell most of their big power plants and then buy their electricity on a newly created spot market. Instead of spawning robust competition, the system led to soaring prices and occasional blackouts. PG&E filed for bankruptcy reorganization.

It was later revealed that traders at Enron Corp. and other companies were manipulating prices through a variety of means. State officials said PG&E and the other utilities were overcharged to the tune of about $9 billion or $10 billion in that two-year stretch; they’ve been filing lawsuits and other claims ever since.

“I am gratified that the court upheld FERC’s determination that large energy companies, such as Shell, manipulated California’s energy markets during the 2000-2001 energy crisis, leading to blackouts and exorbitant prices for the customers of California’s investor-owned utilities,” said Attorney General Kamala Harris, who announced the 9th Circuit’s ruling. “The decision upholds the findings on which FERC has ordered the payment of more than $200 million in damages from sellers that have not settled. My office will continue to pursue compensation from those who gamed the market and profited from the skyrocketing prices that resulted.”

Dale Kasler: 916-321-1066, @dakasler

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