SAN DIEGO – San Diego Gas & Electric Co. ratepayers are expected to share benefits from a $750 million settlement from a Canadian government power company that reportedly drove up electricity prices in California for than a decade, it was reported today.
Powerex, the electricity trading subsidiary of BC Hydro, will pay $273 million in cash and offer California electric utilities a credit worth $477 million to settle claims of allegations that it help inflate the California power market during the state’s electricity market crisis of 2000 and 2001.
BC Hydro is a “crown corporation” owned by the province of British Columbia, and the settlement with California will cost ratepayers and possibly taxpayers there, the Vancouver Sun newspaper reported today.
Powerex CEO Teresa Conway denied California allegations that the prices were inflated, asserted to the Vancouver Sun that Powerex had not done anything wrong, and said the matter was always a trade dispute.
“It was determined that the market was broken and that sellers into that market, all 60 sellers, would have to pay market wide refunds,” Conway told the newspaper. “We have chosen legal and financial certainty over the continuing of a protracted and costly dispute.”
The settlement-is subject to the U.S. Federal Energy Regulatory Commission’s approval, and was made with California utility companies, the California Attorney General and other parties to resolve the claims, the newspaper reported. To date, 47 sellers have made separate settlements with parties in California.
In a statement released Friday, California Attorney General Kamala Harris said that the settlement brings long-awaited compensation to California ratepayers for Powerex’s conduct. Harris alleged that Powerex engaged in market gaming by purchasing and exporting to Canada huge quantities of electricity California needed, and selling it back to California at exorbitant prices.
“Californians suffered through huge rate hikes and blackouts during the energy crisis,” she said, in the statement. “This settlement brings long-awaited compensation to California ratepayers for Powerex’s conduct.”
The money will go to the state’s general fund as well as customers of SDG&E, Southern California Edison and PG&E in central and northern California.
Municipal utilities such as the L.A. DWP were not overcharged in the original deal.