Latest suit against B.C. Hydro called political

Peter Kennedy
Globe and Mail
20-May-2005

VANCOUVER

U.S. energy officials say California's latest lawsuit against British Columbia Hydro and Power Authority may be politically motivated and could hamper the state's ability to meet demand this summer.

They were referring to a $1-billion (U.S.) lawsuit filed this week in which California Attorney-General Bill Lockyer accuses B.C. Hydro's Powerex export arm of acting in concert with others to manipulate electricity prices during the state's energy crisis five years ago.

"These actions include, but are not limited to, the purchase of electricity by Powerex in California and, with the help of Public Service Co. of New Mexico and the Colorado River Commission, its withdrawal from, and subsequent reimportation into the California market," the suit alleges.

A statement of claim filed in the Superior Court of California indicates that the state is aiming to recover $1-billion in damages for injuries caused by the alleged violation of the state's antitrust law.

The latest in a string of lawsuits filed by California against B.C. Hydro, it comes nearly two years after the U.S. Federal Energy Regulatory Commission (FERC) said it could find no evidence that Powerex manipulated the California electricity market during the 2000 and 2001 energy crisis.

B.C. Hydro spokeswoman Elisha Moreno said the suit is "a bombshell" because it alludes to the same transactions that were reviewed and cleared by FERC in October, 2003. "The Attorney-General's office is dragging up the past when we thought it was behind us."

U.S. energy sector officials seemed to agree.

FERC spokesman Bryan Lee said he did not want to comment on the specific allegations in the suit, but added that Mr. Lockyer has not had a very successful track record with suits of this kind.

"Typically, they have been dismissed because under the U.S. Constitution, the Federal Power Act prevails over state law in matters of state commerce, such as electricity sales across state lines," he said.

Gary Ackerman, an executive director of the Western Power Trading Forum, which speaks for 40 wholesale electricity buyers and sellers in the United States, put it more bluntly.

"It is clear to me that this is politically motivated," he said in an interview. He said Mr. Lockyer may be trying to garner support from voters opposed to deregulation of the California's electricity industry ahead of state governor elections next year. "I challenge anyone to come up with a better explanation."

A spokesman for Mr. Lockyer, Tom Dresslar, said yesterday that California's only motive is to hold companies accountable for their misconduct. "Powerex ripped us off, pure and simple, and we are trying to get our money back."

B.C. Hydro's Ms. Moreno said the Crown utility has 10 days to respond to the allegations in the suit. "We are going to be more selective about who we do business with in California," she added.