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October-December 2003
| News Release: December 19, 2003 | 
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| Docket Numbers: IN03-10; PA02-2 | |
FERC ACCEPTS SETTLEMENT BETWEEN DUKE AND COMMISSION STAFF
The Federal Energy Regulatory Commission today accepted a settlement
between the Commission’s enforcement staff and Houston-based
units of Duke Energy that resolves outstanding matters relating
to the Western electricity crisis in 2000 and 2001. The $2.5 million
Duke has agreed to pay resolves pending issues stemming from a
FERC staff investigation of the West's energy problems.
The settlement agreement addresses allegations regarding potentially
manipulative bidding practices in the California markets, known
as economic withholding, as well as physical withholding of generation
supplies. It also terminates and resolves any issues before the
Commission involving Duke’s “wash” trading of
natural gas.
A separate settlement between Duke and FERC trial staff, involving
allegations of market gaming practices, was filed today for the
Commission’s approval. That proposed settlement is expected
to result in a payment of $550,000, with the potential for an
additional $1.5 million. It would resolve a show-cause proceeding
involving allegations that Duke engaged in market-gaming practices
the Commission deemed to violate the California Independent System
Operator’s FERC-approved tariff.
The agreements do not resolve any liabilities Duke may incur
in the overall California refund case, which is an ongoing proceeding
before the Commission (EL00-95).
The settlement accepted today with Duke is the second involving
one of California’s large electricity generators. On October
2, 2003, FERC accepted a similar settlement agreement involving
Houston-based Reliant Energy Services, which is expected to net
as much as $50 million, depending on energy market conditions.
FERC Chairman Pat Wood, III said he expected other companies to
follow in the footsteps of Reliant and Duke and settle allegations
of market manipulation in California rather than engage in costly
litigation.
To arrive at today’s settlement agreement, FERC’s
Office of Market Oversight and Investigations (OMOI) investigated
anomalous bidding practices by Duke in 2000 that could have represented
economic withholding. OMOI’s investigative staff found a
de minimis economic impact from such economic withholding.
On August 1, 2003, OMOI provided the Commission with its initial
report on an investigation of alleged physical withholding by
Duke and other generators in California. At the time, OMOI concluded
that Duke had adequately explained its generation outages during
California’s energy crisis in 2000 and 2001. Since then,
OMOI has reviewed additional data filed with the Commission regarding
allegations Duke withheld power. In today’s settlement,
OMOI affirms its initial finding in August and finds no credible
evidence that Duke intentionally withheld generation to influence
prices in California’s power market.
Duke did not admit to the violations in agreeing to today’s
settlement agreements. Settlement funds will be deposited into
a special U.S. Treasury fund set aside for the benefit of California
and other Western-state customers. The Commission will decide
disbursement of those funds in a future proceeding.
R-03-51 (30)
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