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.