It’s too bad voters can’t recall impotent or uncaring energy
regulators the way they can governors and other elected
politicians.
It’s too bad voters can’t recall impotent or uncaring energy regulators the way they can governors and other elected politicians.

For no one deserves to be thrown out of office more than most members of today’s Federal Energy Regulatory Commission (FERC) and the California Public Utilities Commission (PUC).

These calm spectators simply look on as extreme corporate malfeasance occurs on their watch: All but one of the companies that ripped off California consumers to the tune of tens of billions of dollars two years ago are still around, figuring out new ways to charge consumers more and more while providing them with less.

If regulators make them pay any price at all, it is invariably tiny by the standards of these multi-billion dollar energy giants.

The latest to get a friendly pat on the wrist, rather than the bloody nose it deserves, is BP Energy, a subsidiary of the giant London-based British Petroleum, owner of most Alaska oil wells and thousands of Arco and BP gas stations across America.

BP Energy the other day fessed up to FERC that it manipulated electricity prices in the Southwest (read: California) through bogus trades – the same activity to which the infamous Enron Corp. attached colorful names like Deathstar while it was driving prices up and causing blackouts here.

Transcripts of telephone conversations showed a BP trader and another with Houston-based Reliant Resources rigged at least two phony trades in early 2000 to boost prices early in the energy crunch. Those, of course, were only the crooked acts that were documented. Both companies now say the behavior violated company rules, but in a recently-settled lawsuit California Atty. Gen. Bill Lockyer claimed Reliant and others did it often during 2001 and 2002.

In general, companies whose employees were tape-recorded doing illegal fake trades during the electricity shortage later admitted they made many more deals that were not recorded. There’s no reason to believe BP was different.

But it will pay only $3 million in penalties. This pittance from a corporation whose current market value is well over $120 billion will go to low-income energy assistance programs here and in Arizona. This money will be spread so thin it will lack any meaning.

This, of course, comes while FERC and California authorities still argue over whether consumers in this state were cheated out of $9 billion, or “only” $4 billion. There’s no argument about the theft, just over how much was stolen.

Meanwhile, the state PUC has decided to continue one of the worst components of the disastrous 1996 electricity deregulation law: Large customers (read: factories, oil refineries and the like) will be allowed to choose between buying power at a discount from anyone they pick or getting their supplies from regulated utilities like Southern California Edison, Pacific Gas & Electric or San Diego Gas & Electric.

That’s bad for residential consumers and small businesses who don’t have a similar option, but must pay more when big users stop paying for regulated energy. That’s because regulated power is priced to include repayments to the utilities for maintaining power lines and to pay for power supplied under state contracts. Those costs don’t vary, and when fewer consumers share them, the price each pays must rise.

“Small customers will pay more than their fair share of the overpriced power purchased by the state (at the height of the crisis) when the large consumers were part of the overall load,” said Nettie Hoge, executive director of The Utility Reform Network, a consumer advocate group. She estimated the PUC decision will cost residential consumers about $300 million per year.

“Every time the PUC has a choice between big business and small consumers, it chooses big business,” Hoge complained.

But PUC commissioners serve five-year terms with no provision for recall. And FERC commissioners also serve fixed terms, with no recall allowed.

No one on either agency has ever been thrown out because of decisions that overtly favor either a particular business or business in general.

Which means consumers are essentially without protection today, preyed on not just by unscrupulous electricity generators, but also by regulators whose sworn duty, ironically, is to see that they are not cheated.

Elias is an author and columnist. His email address is td*****@ao*.com

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