The state of California has asked for a $3 billion penalty refund from gas pipeline operator El Paso Pipeline, following a ruling that the company withheld capacity during the power crisis of 2001 in order to boost prices. The September ruling, by FERC chief judge Curtis Wagner, found that El Paso had illegally cut supply over 121 days during which electricity prices were raised. It must still be approved by the FERC itself and the penalty requested by California has also still to be agreed.
Wagner’s ruling contradicts a 2001 examination by FERC that found no illegal capacity reductions, and blamed gas supply inadequacies on the distribution system. The revision comes as a result of an hour-by-hour study of power plant production and outages, the bidding behaviour of electricity generators, and electricity transmission during the crisis.
The report considered the behaviour of five large independent generators in California, namely Duke, Dynegy, Reliant, Mirant and AES. It found that if they had run all their available capacity the blackouts would have been avoided, which has added weight to California’s attempts to win $20 billion in refunds for power bought at thousands of dollars per MWh. The five dispute the report, saying, for example, that some capacity listed as unavailable was in fact under the control of the California ISO.
