LOS ANGELES, March 26 (UPI) -- Energy companies that were found to have fleeced the state of California during the 2000-2001 electricity crisis will likely be ordered to refund more than $3 billion to the state, an amount the governor Wednesday called a nice start yet unacceptable considering the state was seeking nearly three times that amount.
Gov. Gray Davis Wednesday vowed late in the day to continue pressing for the full documented $9 billion in refunds through a re-hearing by the Federal Energy Regulatory Commission and, if necessary, a trip to federal court with their evidence in tow.
FERC Wednesday issued a long-awaited report on the California power crunch that concluded a number of energy-marketing firms had improperly "gamed" the electricity and natural gas spot markets in order to push prices for electricity high into the stratosphere.
"It's totally insufficient," Davis insisted in a late-afternoon conference call. "We were victimized by far more than even the $9 billion figure."
"It was gratifying to hear FERC say we were right all along," Davis added, "but that -- and a dollar -- will get you a cup of coffee."
The FERC commissioners have yet to decide on a final figure that energy marketers must pony up. Wednesday's report said an administrative judge had calculated the refunds owed at $1.8 billion, however the pile of unpaid bills will increase the amount owed to a ballpark figure of around $3.3 billion, according to FERC staff.
"This commission is acting to ensure that customers pay just and reasonable prices," FERC Chairman Pat Woods said in a statement. "Today's actions represent important progress toward a just resolution of these matters for both customers and the industry. It is time to bring this crisis to a close."
The California electricity crisis is still ringing in the ears of Davis, who won a hard-fought second term in office last fall amid scathing Republican criticism of his handling of the crisis that sent the state treasury tumbling toward bankruptcy and its residents crying foul.
The buttoned-down governor's actions during the crunch were not pretty, although he was able to minimize the much-publicized rolling blackouts in the state and meet his primary objective of "keeping the lights on."
The situation, however, left Pacific Gas & Electric, the state's largest utility, in bankruptcy and the other two investor-owned power companies with shattered credit, unable to purchase electricity from wholesalers.
In response, Davis ordered the state to buy wholesale power to be re-sold to the utilities.
Pleas for federal intervention were rebuffed during the closing days of the Clinton administration and the first year of the Bush presidency. During that period, California mainly received lectures from Washington about the state's environmental regulations and assurances that new power plants would eventually be built by private investors.
Power suppliers that had portrayed themselves as merely playing by the flawed rules California had implemented when it deregulated its electricity market in the 1990s. Some of the companies said Wednesday they were happy to see the FERC ruling after a yearlong investigation and were ready to put the controversy behind them.
"We are confident that a further detailed review of the outstanding issues will confirm that Williams operated in accordance with market rules and ethical business practices," said Steve Malcolm, chairman of Williams, a Tulsa energy marketing company. "It's time to resolve these issues once and for all -- prudently and in the public's interest -- and move on."
Yet Davis insisted the wholesale power market had ganged up on the Golden State by withholding generation, churning the market with a blizzard of unneeded trades and pushing up the spot-market price of natural gas, which is the primary fuel for power generation in California.
"I'm sure that eventually the generators will say we are being hyperbolic, but the documentation is there," averred Jeff Brown of the California Public Utilities Commission. "They'll make your hair stand on end."
Brown maintained that the rampaging bull market had cost the state at least $40 billion compared to the "normal" tab of around $20 billion, and Rep. Anna Eshoo, D-Calif., accused FERC of ignoring the scope of the alleged swindle.
"The commission has chosen to stand with the energy market manipulators instead of California consumers," she declared in a statement. "What the FERC essentially did today was rubber stamp 'APPROVED' on one of the biggest frauds to occur in our nation's history."
Davis said FERC's decision could result in power generators being ordered to pay the state back in cash or in the form of lower-priced electricity or to renegotiate $20 billion in long-term power supply contracts that the state argues were based on artificially inflated natural gas prices in the first place.
California, he promised, would seek to be "made whole" either by appealing to FERC for a new hearing on the matter or by going to the Ninth Circuit Court of Appeals.
"I can use every legal means at my disposal," Davis promised. "That $3.3 billion just doesn't get the job done."