Powerex, a wholly owned subsidiary of B.C. Hydro in Canada, expressed outrage last week over California Attorney General Lockyer's latest lawsuit seeking US$850 million in refunds from Powerex for power deliveries that kept California's lights on during the 2000/2001 power crisis.
“It is frankly the height of bad faith for California to seek to welch on its contracts and demand money back, when it still owes Powerex more than $280 million for the power that was delivered during 2000/2001,” said Doug Little, vice president, Powerex. “We responded to the entreaties of the California government in their time of need, and this suit proves that no good deed goes unpunished.”
Powerex was a major supplier to California during its power crisis. Even though Powerex was a net importer to B.C. and had no surplus available, Powerex was able to purchase and deliver large quantities of electricity by drawing on the capability of the B.C. Hydro system. These supplies were delivered on short notice and kept California's transmission grid in balance. The U.S. Federal Energy Regulatory Commission has thoroughly examined Powerex's conduct regarding sales to California, and has consistently rejected California's claims of market manipulation and other misconduct.
As FERC's staff concluded in October 2003 after a thorough investigation: "Evidence provided by Powerex shows that, despite the drought conditions that prevailed in British Columbia and the Pacific Northwest in 2000-2001, Powerex was able to draw on the capacity and capability of BC Hydro's predominately hydroelectric system to be a major supplier of energy, particularly real-time imbalance energy and ancillary services to California. . . This evidence demonstrates Powerex's reliability as a supplier and its contribution toward keeping the lights on in California during the crisis."
The FERC staff determined that Powerex was "a valuable and reliable supplier" to California, and found no evidence whatever to support California's claims of market manipulation or price gouging, according to the Powerex release.
“We believe that California grossly mismanaged its energy affairs prior to and during the crisis, which was largely self-inflicted,” continued Little. “They failed to construct adequate generation, did not have adequate transmission in place and passed some of the worst energy statutes ever enacted. Now they seek to make Powerex a scapegoat to divert political attention away from their own ineptitude.”
Powerex is in the process of reviewing California's lawsuit and intends to respond vigorously to its allegations.