Shell Energy among the “pirates”
hit with $1.6 billion judgment for gouging
A federal administrative law judge issued a preliminary decision on Feb. 15 against several big energy wholesalers for their role in gouging California customers during the energy crisis of 2000-2001.
Among the wholesalers who will be forced to pay refunds, if the decision is upheld by the entire Federal Energy Regulatory Commission, is Shell Energy North America. Shell Energy is currently poised to become the supplier of electricity to San Francisco if city supervisors approve a pending measure called CleanPowerSF. The city’s power is currently supplied by Pacific Gas & Electric.
The average San Franciscan would pay an extra $23.67 a month or $283.92 a year for electricity if Shell Energy becomes the city’s supplier, according to the website Stop the Shell Shock, which has created a calculator to help residents figure out how much their rates would rise.
The ruling comes after a decade of legal wrangling that was originally set off by Enron Corporation’s manipulative trading practices that led directly to a full-scale energy crisis in 2000-2001, including price increases and blackouts in California affecting millions of customers. PG&E, caught between the spiraling prices it had to pay for energy and the fixed rates it could charge retail customers, was forced into bankruptcy by the crisis.
“It took a lot of tenacity to achieve this victory before FERC, on behalf of California consumers,” Michael Peevey, president of the state’s Public Utilities Commission, said Feb. 19 in a statement.
If the five-member FERC adopts the judge’s decision, California consumers may eventually be paid almost $1 billion in refunds and an additional $600 million in interest, according to the statement from the state energy regulator.
The energy crisis bled billions from the big investor-owned utilities – Pacific Gas and Electric Co., Southern California Edison and San Diego Gas & Electric – and led to substantial rate hikes for customers. Refunds would be paid through offsets on consumers’ monthly bills.
Californians have already received more than $3 billion in refunds for economic damage done during the energy crisis. Another claim is pending with FERC for $1 billion worth of alleged overcharges as the crisis peaked in early 2001.
The latest decision covers the first six months of the crisis, starting in May 2000, when prices first began to explode. The judge, Philip Baten, found that more than a dozen power wholesalers, including Shell Energy, engaged in manipulative bidding practices to ratchet up pricing.
“This money was stolen from ratepayers in California by a bunch of sellers who conducted business like pirates,” said PUC Commissioner Mike Florio in a prepared statement.