Associated Press
SPOKANE — Avista Corp.’s ability to trade energy is threatened by federal regulators who contend the Spokane company was involved in questionable energy trading practices in the West.
The Federal Energy Regulatory Commission issued an order Tuesday giving Avista and three other energy trading companies 10 days to show why their power trading authority should not be revoked.
The commission contends the companies failed to cooperate with an investigation into alleged manipulation of Western electricity and natural gas markets that sent electricity prices soaring in late 2000 and early 2001.
The regulatory agency contends Avista may have been involved with Enron Power Marketing Inc. in trading practices known as "ricochet," or "megawatt laundering."
Avista officials said Wednesday they are reviewing trades being questioned by FERC, noting the company earned less than $2,500 from the transactions during the three-month period.
Shares in Avista closed Wednesday at $12.26, down $1.89 or 13.4 percent on the New York Stock Exchange.
The FERC order does not apply to Avista Energy, the energy trading and marketing subsidiary of Avista Corp.
"We have not knowingly withheld any information about Avista Utilities’ activities related to FERC’s request," Gary Ely, chairman, chief executive officer and president of Avista Corp., said in a news release Wednesday. "We will continue to do everything possible to cooperate with FERC in this process to provide a complete and accurate response."
The trades in question were conducted on 18 trading days during a three-month period between April and June 2000. The total number of megawatts traded was limited to less than one-tenth of 1 percent of Avista Utilities’ trading activity during the period, the company said.
The company noted that its original response was based on internal reviews of electronic and paper records, and interviews with traders.
Avista spokesman Hugh Imhof said the company is reviewing "literally thousands of hours of audiotapes of transactions" that it was not able to forward to FERC prior to the May 22 deadline.
"We certainly had no intention to manipulate any markets," Imhof said, noting the trades occurred when rates were still less than $35 per megawatt hour, well before California power rates skyrocketed to $300 per mwh or more.
Avista was the middleman in trades between Enron and its subsidiary, Portland General Electric Co., FERC said in its order.
Enron bought power from the California Independent System Operator and sold it to Avista, which sold it to PGE.
PGE then resold the power to Avista, which resold it to Enron, which then sold it in California, usually to the Los Angeles Department of Water and Power.
The tactic enabled Enron to work around caps imposed on the price of electricity traded within California by routing the power through the Northwest companies, and selling it at uncapped market prices, FERC contends.
Officials allege ricochet, along with other market practices, allowed Enron and other large energy trading companies to illegally drive up wholesale West Coast electricity prices as much as tenfold in 2000 and 2001. It cost consumers billions of dollars.
Copyright ©2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.