The Star-Ledger

Winning Energy Suppliers Cited In California Price-Gouging

The Star-Ledger — Thursday, March 6, 2003

Star-Ledger Staff

Two of the winners in New Jersey's recent $5.2 billion energy auction are among 70 energy traders accused of artificially driving up electricity prices during California's energy crisis two years ago.

Sempra Energy Trading Corp. and Reliant Energy Services Inc. were among the 15 winning bidders in last month's auction, which locked in prices utility customers will pay for electricity beginning this August.

They also are among traders cited in documents California officials submitted to the federal government last week in its price-gouging case. California is seeking at least $9 billion in refunds from the companies involved.

The allegations trouble New Jersey Citizen Action, the state's largest consumer organization.

"No one wants to see what happened in California occur here in New Jersey," said Staci Berger, program advocate for the group, and who thinks the state Board of Public Utilities ought to probe the issue. "Even though the prices are locked in, when wholesale prices increase, there always seems to be some loophole for suppliers to seek a rate increase."

State officials said a full financial review was conducted of both companies as part of the auction process and they were satisfied with the results.

Jennifer Andrews, a spokeswoman for Sempra, said the California filings appear to be more "saber-rattling" on the part of politicians who want to re-negotiate long-term energy contracts on their own terms.

Richard Wheatley, a spokesman for Reliant, defended the company's record as a reliable energy provider.

"California's energy market was flawed and allowed problems to crop up," Wheatley said. "We don't have those problems in other areas of the country."

Municipalities get help banding together

After years of frustration, municipal officials are gearing up for a chance to save residents money on their electric bills.

With Gov. James E. McGreevey signing legislation making it easier for towns to form energy-buying pools on behalf of their residents, the New Jersey State League of Municipalities is planning to hold a conference April 23 in Holmdel to tell local officials how to secure lower rates for homeowners and businesses.

With price caps on utility bills due to be lifted Aug. 1, the communities do not have a lot of time to spare, said William Dressel, a lobbyist for the municipalities group.

The law automatically would include residents in the energy-buying pool, unless they tell officials they do not want to participate. The automatic opt-in eliminates one of the big impediments to forming pools in the past – a requirement that each homeowner voluntarily and specifically join the pool.

"This offers individual energy consumers the opportunity to combine their buying power, so that they can negotiate lower rates and better service from the energy industry," Dressel said.

Hotline to Congress

Public Service Enterprise Group is trying to mobilize its quarter-million shareholders to lobby Congress on behalf of President Bush's plan to end income tax on dividends.

In what company officials say is the first such campaign in PSEG's history, the Newark-based owner of Public Service Electric & Gas has set up a portion of its Web site to allow shareholders to e-mail their representatives on the issue.

The repeal of the tax would put more money in the pockets of investors, the company says, and help stimulate the economy. Last year, PSEG paid more than $536 million in dividends to shareholders.

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