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Sunday, Jul 21, 2024

Energy Demands increase for takeover of power plant

Calls to revoke the lease Duke Energy North America has on a power plant in Chula Vista have been increasing, despite Duke’s insistent denials of wrongdoing.

Rep. Bob Filner, D-San Diego, called on the San Diego Unified Port District to revoke its lease with Charlotte, N.C.-based Duke Energy. The lease is scheduled to end in June 2009.

Port District spokeswoman Diana Lucero earlier said the port was conducting a “comprehensive review” of the lease. The review was sparked in part by allegations from former employees that Duke had rigged the market to push up electricity prices.

In testimony made public June 21, Duke was accused of cutting power production during times of energy shortfalls in January, frequently running the least-efficient turbine at the Chula Vista plant and tossing out new spare parts in order to increase the amount of downtime for generators, Lucero said.

Port commissioners ordered a review of the lease, a process that could take several weeks. Lucero had no timeline on when the port would make its decision, nor any specific information on what the decision would be, she said.

Filner, however, wants action now.

“Duke has made a billion dollars off that plant in a year,” he said. “I don’t care what their reasons are. They have violated federal law in charging unjust and unreasonable rates. They’ve broken the law; they’ve broken the lease. And we ought to take the lease back.”

Only this would restore fiscal sanity to the ongoing energy crisis, he said.

‘Insult To Injury’

“We have scores of companies out of business. We have businesses closing up or not coming here,” he said. “The insult to the injury they have caused by robbing us so clearly is they’ve been doing it out of a plant we own.”

If the port were to reclaim the power plant and operate it in the public interest, Filner believes it could generate electricity at a nickel a kilowatt hour, he said.

Filner said he plans to attend the next meeting of the port’s review committee to state his case.

“(I will tell them) it’s time to act. We’ve been suffering now for a year. We have evidence of misuse. Let’s take some bold action on behalf of the public , break the lease, let them sue you if they have to,” he said.

Pat Mullen, spokesman for Duke, strongly denied the allegations of misuse. He pointed to confidential papers Duke released July 2 , papers which he said refuted the claims the power company was deliberately withholding electricity.

Cal-ISO Orders

One of those papers was a memo from the California Independent System Operator, confirming orders to reduce power during times of shortage came from the Cal-ISO. The logs show times of production cutbacks along with the notation “DETM” (Duke Energy Trading and Marketing), which correspond with times the Cal-ISO ordered DETM to reduce its power.

“The dispatch orders from Duke Energy Trading were consistent with the ISO dispatch orders,” the memo stated. “It appears that the Duke South Bay units 1 and 2 logs are accurate and the units did follow the ISO’s dispatch orders.”

At the time power was ramping up and ramping down, the system was under the control of the Cal-ISO, not Duke, he said.

The ISO could conceivably order a generator to reduce its power during a time of shortages, Mullen said. At times, bottlenecks in the transmission grid can make it impossible to move the power from Southern California, where there might be a surplus of energy, to Northern California, where there might not be enough, he explained.

Gregg Fishman, a spokesman for Cal-ISO, could not confirm any specific instance when powering up or powering down the Chula Vista plant was done in accordance with Cal-ISO orders. However, he said, it’s fairly common practice.

Fishman likened the process to driving a car on the freeway. To deal with traffic flow, the driver will constantly tap on the accelerator, then ease up several times during the trip, he said.

Fishman agreed with Mullen the ISO was also likely to order a plant to power down due to a bottleneck on the transmission grid.

However, Fishman said Cal-ISO could also order the Chula Vista plant to stop production during a time of shortage if Duke was charging too much.

“It is also conceivable that if given a less expensive option, the ISO would ask a plant that is operating at a very high price to ramp down, and ask the less-expensive offering to ramp up to meet that demand,” Fishman said.

At one point at the beginning of 2001, Duke charged as much as $3,880 per megawatt hour, an amount that cost only $325 a year earlier. This may have contributed to orders to shut down, Fishman said, although he could not confirm that.

Mullen denied Cal-ISO had powered down the facilities because Duke’s price of electricity was too high. He noted Cal-ISO’s memo makes no reference to high prices as a reason for shutting down.

The reason the cost of electricity went as high as $3,880 in the first place was Duke was trying to protect itself from non-creditworthy utility buyers. If these utilities declared bankruptcy , as Pacific Gas & Electric Co. did April 6 , Duke could only expect to collect pennies on the dollar, he said.

Duke Refunds Money

On July 2, Duke agreed to forgive $20 million it was owed by the state for electricity purchases.

That figure is slightly more than the $17.8 million the Federal Energy Regulatory Commission ordered the generator to refund to the state for what it called overcharges.

Duke agreed to the terms in March, saying it would make the refund once the company got paid for the electricity it sold to non-creditworthy utilities. Mullen said Duke followed through on its promise even though it has yet to be paid by those utilities.

Filner doesn’t accept Duke’s explanations. He acknowledged Cal-ISO admitted ordering Duke to ramp down the generators, but insisted it did so only because Duke was charging too much money for power.

Also, Duke released very few of the documents in its possession, he said.

“The Cal-ISO was talking about only three days,” he said. “I want to know, what about the other 362 days?”

Nor is this the only mystery, Filner said.

“What about the charges (employees) were told to throw away spare parts, so they couldn’t repair things quickly?” he said. “(What about) charges the plant was responding directly to phone calls from the trading department of the company? There’s been no answer to the broader charges.”

Filner pointed to a June 29 report from the General Accounting Office, the investigative arm of Congress, which faulted a FERC investigation into market manipulation by the energy industry. The FERC report found no evidence power companies were withholding prices to influence the cost of power, but the GAO said FERC failed to conduct a thorough probe.

“The GAO confirmed what I’ve been saying since last June,” he said. “We had evidence provided from people inside these plants that power was withheld; there was laundering of electrons because of certain price caps in California.”


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