Regulators Launch Probe into Xcel Energy's Link to Blackout
--------------------------------------------------------------------------------
Sep 12, 2003 - Knight Ridder Tribune Business News
Author(s): David Hanners
--------------------------------------------------------------------------------
Sep. 12--Just hours before the nation's worst blackout last month, an official overseeing the Midwest's electric transmission grid expressed concerns that Xcel Energy might try to drive up the price of its electricity by limiting output at its biggest power plant, according to transcripts of telephone conversations released this week.
Minnesota regulators said Thursday they have launched an inquiry into the comments. They want to know whether Xcel reduced production at its Sherco plant in Becker, Minn., for anything other than mechanical reasons.
"We are looking into it," said Marya White, manager of energy planning and advocacy for the Minnesota Department of Commerce.
"We're still in the asking-questions phase."
Xcel declined to comment Thursday; a spokeswoman for the transmission grid firm said no evidence exists that the utility has committed wrongdoing.
Federal energy regulators said they couldn't comment on the matter.
They said they are still investigating the causes of the Aug. 14 blackout, which left 50 million people in eight states and Canada without electricity. Minnesota was not affected.
The blackout is believed to have started within the Midwest Independent Transmission System Operator, or MISO, the company set up by Minneapolis-based Xcel and other utilities to coordinate the Midwest's electric transmission grid.
Earlier this week, the House Committee on Energy and Commerce released 650 pages of transcripts of telephone calls to and from MISO on Aug. 14. In scores of frenetic phone calls, transmission operators tried to contend with fluctuating power levels, dying transmission lines and a collapsing grid.
MISO spokeswoman Mary Lynn Webster said in a written statement Thursday that the company "has no indication now or in the past that Xcel Energy has ever attempted to manipulate the market." She added that the officials quoted in the transcript misspoke when discussing the utility.
As energy regulators discovered following the California power crisis, utility companies can manipulate the price of electricity being sold on the open market by reducing the amount of power they generate. With less supply of electricity, particularly during periods of peak energy use, the price goes up. Then utilities put their power plants back into operation and can get a higher price for their electricity.
The massive power failure is believed to have started in the MISO system in Ohio during the afternoon of Aug. 14. With high temperatures causing heavy energy use throughout the Midwest, there were signs of concern among the transmission operators early in the day. By 10:51 a.m., Rich Cobb, who works in MISO's area operations unit, called Don Hunter, MISO's reliability coordinator, and complained about Xcel.
Cobb said he had just gotten "things squared away" because Xcel had taken one of the three boilers of its Sherco plant, near Becker, offline the day before, "and Xcel, like usual, didn't report it."
Hunter: "Why not? Just the way they are?"
Cobb: "Yes, they're flaky. You know, that's being nice about it."
Cobb then said the plant was supposed to be back at full production by 10 p.m. on Aug. 15. "So," he said, "hottest weekend of the year and they've got it off. Makes a lot of sense."
Hunter: "Yes, really. Well, it will probably just get worse that way."
Cobb: "Yes, that's true."
Hunter: "When they try to manipulate the market here."
Cobb: "Yes. OK, well, I just wanted to let you know."
MISO's Webster said Cobb misspoke in the transcript and that Xcel had in fact notified the grid operator on Aug. 12 that one of Sherco's three units would be taken out of service.
"The unit then experienced a forced outage earlier than Xcel Energy planned, which Midwest ISO's Reliability Coordinator confirmed with Xcel officials," she said. "The unit was taken out of service for tube leaks."
Webster said she could not explain why Cobb thought Xcel hadn't reported the action, or why he said the utility "like usual, didn't report it."
She said outage information "is commercially sensitive and as such it is not made available to the public."
Asked about Cobb's comment that Xcel was "flaky," Webster said MISO would not comment "on any conversations unrelated to operations of the system and contain what seems to be a personal viewpoint."
Janet Gonzalez, head of the Minnesota Public Utilities Commission's energy division, called Hunter's comment about market manipulation "intriguing," and said, "I obviously want to know more about it."
"It depends on what they mean," she said of the conversation between Hunter and Cobb. "If somebody wanted to allege that plants were taken offline for some reason other than needed maintenance, that would be a concern. I'm not saying that suggests that, but that would be a concern."
White said the Commerce Department contacted Xcel and MISO to ask for an explanation about the conversation.
"We're just gathering information," she said. "We don't know what this quote means until we gather this information."
Bryan Lee, a spokesman for the Federal Energy Regulatory Commission, said he couldn't discuss specific cases or utilities, but said the agency's Office of Market Oversight and Investigations is probing whether utilities shut down power plants in California in an attempt to drive up the price of electricity.
"I'm not going to comment on the specific instance," he said when asked about Xcel.
Similarly, U.S. Department of Energy spokeswoman Jean Lopatto said her agency -- which is heading the task force looking into the blackout -- couldn't discuss specifics.
"There's a lot of information coming into the task force, and we're not commenting on specific bits and pieces," she said. "We're not going to get into speculation of every single piece of information that's out there."
Last year, Sherco generated nearly 13 million megawatt-hours of electricity, 36 percent of the energy produced by the power plants owned by Xcel's subsidiary, Northern States Power-Minnesota.
NSP-Minnesota is like many other utility companies in that, aside from providing electricity to its residential and commercial customers, it also sells electricity on the spot market. Last year, the company sold 5.9 million megawatt-hours of electricity that way, earning nearly $132.4 million, according to records the company filed with FERC.
powermarketers.netcontentinc.net |
