B.C. vows to continue fight over costly U.S. ruling on power sales to California - Macleans.ca

B.C. vows to continue fight over costly U.S. ruling on power sales to California


VICTORIA – The massive, energy windfall British Columbia pocketed more than a decade ago at the expense of power-starved Californians has sparked an ongoing high-voltage legal case that currently has an arm of Crown-owned BC Hydro potentially owing hundreds of millions of dollars.

A judge with the U.S. Federal Energy Regulatory Commission ruled earlier this month that California could recover up to $1.6 billion from several power companies, including BC Hydro’s electricity trading subsidiary, Powerex, after energy prices spiked up to 900 per cent in 2000 and 2001.

“As the power marketer of BC Hydro, Powerex worked closely with BC Hydro to maximize the value of BC Hydro’s system,” said the 72-page ruling. “This relationship involved selling BC Hydro’s energy in the U.S. when prices were high and buying energy in the U.S. and sending it to Canada when prices were low.”

A Powerex official said the company will appeal the ruling and is preparing for the 12-year-old legal battle to last another five years.

B.C. Energy Minister Rich Coleman said the province will continue to defend its position that it sold power during the California energy crisis at market prices and there was no price-gouging involved.

“We believe we did not operate in any way that was in any way fraudulent or problematic,” said Coleman. “We’ve been fighting this thing for the 10-year period and we’ll continue to go back (to court). The FERC decision is only part of the process. We will continue to go through the courts for many years, I suspect.”

“Of everything I’ve read, Powerex did their business properly and they weren’t involved in any price fixing,” he said.

Opposition New Democrat energy critic John Horgan supported Coleman’s assertion that Powerex was taking advantage of extraordinary market opportunities but not manipulating prices.

“I’m confident that what happened was in the confines of a free market,” he said. “We provided energy. We didn’t game the system.”

The NDP was the B.C. government during the California power sales and hydro profits from the sales padded the province’s revenues and also allowed former premier Ujjal Dosanjh to provide British Columbians with a $100 cheque just before the 2001 provincial election, which the NDP lost.

Powerex is one of more than a dozen power companies named in the FERC decision and was accused of manipulating the energy market by dramatically increasing the price of power.

California launched an ongoing lawsuit alleging the companies fixed the high prices.

FERC spokesman Craig Cano said several energy companies have already technically refunded almost $8 billion to California. Enron was part of that $8 billion, but the company collapsed and several executives were jailed.

“There was, no pun intended, a Wild West sort of mentality in the markets and as a result, these cases are still going on,” Cano said.

The FERC decision does include estimates of how much money Powerex should refund.

The Powerex official did not deny the company made about $1 billion during the California crisis. Powerex is also seeking about $265 million from California in what it claims are unpaid power bills.

Powerex said since 2001 there have been numerous California lawsuits against Powerex and 60 other energy firms.

The most recent FERC decision involves 16 U.S. and Canadian energy sellers, including Powerex.

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B.C. vows to continue fight over costly U.S. ruling on power sales to California

  1. To hear Coleman talk saying BCHydro was in legal and moral/ethical grounds is pure crap. I remember well when the California crisis was happening. And at a time when California didn’t need the power. It was mid winter when the California brownouts were rolling… That is the time California does not have the largest load. It is in the hot summers that California needs power. While this was ongoing I called Powerex (after being re-directed to them from my initial calls to BCHydro.) and spoke with a representative. He replied that they knew there was no real shortage, but that California was willing to pay huge amounts of money for the power they needed. I asked why does BC have extra power to supply California when BC should be in its highest load season? He told me they were running the natural gas generator on the north side of Burrard inlet. When I told him that was only designed for short periods of use during extra load demands, he laughed and said “the prices we are charging we can afford to rebuild it if needed.” I asked why they were charging overvalued prices… he said its because they were playing with other power sellers to get the prices even higher. At that point I thought it might be best to discuss this with his supervisor, as I told him it was highly suspect of wrongdoing or at worst outright illegal. He quickly hung up and my calls went unanswered. So to hear them suggest they had nothing to do with price gouging and or price fixing, it’s a pure and outright lie. It was so long ago I am sure that even if I did remember the names involved at Powerex, they have probably long gone from the company after all these years. I hope California gets its deserved refund. And damn those BCHydro/Powerex thieves.

    • Well, of course and we should all take what you say as gospel truth. right?

      Sorry, not buying it. Wehne the US made the deal to buy power, they knew what they were doing. The price of power fluctuates like any other commodity and they bought high, didn’t pay their bill, then tried to sue their way out of their financial responsibilities. I’d tell them to get stuffed and pay what they owe.

  2. BC Hydro sold electricity to California when the customer was desperate for energy (peak demand outstripping their own supply capacity). BC Hydro bought electricity from California when it was desperate to unload energy (from coal and nuclear that can’t just shut down suddenly during low demand).

    BC Hydro kept the reservoirs full to conserve the energy for when it was needed most. It bought low and it sold high. Call it the hydro advantage.

    What are California and this judge trying to say? That BC shouldn’t have delivered the energy when it was most needed? That California would have preferred even more blackouts?