Canadian Regulator Says Duke Overcharged for Power

Reuters
19 Dec 2002

CALGARY, Alberta (Reuters) - Alberta regulators ordered a Duke Energy Corp. unit to refund the province's power grid administrator C$62.6 million ($40.4 million) it said the firm overcharged for short-term electricity supplies last year.

The Energy and Utilities Board ruled Engage Energy Canada LP, a subsidiary of big U.S. power and pipeline company Duke, charged the Transmission Administrator C$125.7 million for demand power to balance the system, when the value of the deal should have been C$66.1 million.

The board ordered Engage to pay back C$59.6 million plus C$3 million in interest by Jan. 15.

Under Alberta's two-year-old deregulated system, Engage has the right to sell electricity from its Rainbow generators in the northwestern part of the province.

The Transmission Administrator did not have a contract with Engage, but it occasionally calls on the Rainbow station to maintain system integrity when it needs more power.

The administrator had argued it should only have paid C$25.7 million in the 2001 transaction.

"The EUB believes this (C$66.1 million) amount reflects what could have been achieved by Engage in a competitive market situation, while recognizing the unique circumstances associated with the Rainbow generators in 2001," it said.

The board first urged Engage and the administrator to come to a settlement themselves, but could not reach a deal, an EUB spokesman said.

The regulator said it expected the grid administrator's tariffs will decrease by the C$62.6 million amount in 2003.

A Duke spokeswoman in Houston said company officials had not seen the decision and could not comment.

The Charlotte, North Carolina-based company said on Thursday it was cutting 275 jobs, or about 21 percent of the staff at its Duke Energy North America unit in a move that was seen as signaling a de-emphasis of its merchant generation and energy trading operations.

($1=$1.55 Canadian)