DALLAS, Sept. 29 (UPI) -- Dallas-based TXU Corp. has been fingered by a state utility audit for Enron-style market manipulation, an allegation the company denies.
A report by Potomac Economics Ltd. found a Texas energy company cut off some capacity during high-demand days last year and though it didn't name TXU, it described a company that had 13,000 megawatts of capacity available -- TXU is the only company in Texas with that amount.
TXU has a total capacity of 18,300 megawatts and NRG Energy, the second biggest in the state, has only 10,700 megawatts, The Dallas Morning News reports Thursday.
The report, paid for by the Texas Public Utility Commission, said the move cut supply and increased rates, a trend experts chalk up to deregulated markets and corporate greed.
"It's an economist's perspective of what the market data appear to show, but it doesn't reach any conclusions," said TXU spokesman Chris Schein. TXU has announced plans to build 11 coal plants and possibly four nuclear reactors, all of which are subject to regulator approval.
PUC spokesman Terry Hadley said "the PUC will determine if more investigation is appropriate," which could end up in expensive fines.
The report looked at power generation, capacity and demand in 2005 to see if producers turned off their more efficient plants on high demand days, which would squeeze the market and increase prices.
It found one unnamed company did this, saying only it generated 13,000 megawatts when it could have done more.
Tom "Smitty" Smith, director of Public Citizen of Texas, blames deregulation, which he says allows utilities to manipulate prices.
"If they're setting their prices, they're going to ratchet the prices up in order to cover such events," he said.
Texas deregulated in 2002.
"It's likely that suppliers are currently using strategic bidding techniques and withholding strategies to raise the price," wrote Michigan State University researcher Kenneth Rose, in a report to the Virginia State Corporation Commission.
This is one of the strategies Enron used to bilk billions of dollars from California electric consumers. Enron settled a court case for $1.52 billion last year, although a subsequent bankruptcy filing reduced its payout.
