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Neon Tommy - Annenberg digital news

Remember The California Energy Crisis? Blame Canada

Colin Hale |
August 17, 2013 | 6:09 p.m. PDT

Executive Producer

Transmission lines near San Francisco/via Flickr Creative Commons
Transmission lines near San Francisco/via Flickr Creative Commons
If you lived in California between 2000 and 2001, you certainly remember the "energy crisis" that gripped the Golden State.

For over two years, the nearly predictable lack of affordable electricity (or electricity at all) forced huge rate hikes, caused rolling blackouts during summer months, and played a major role in the recall of Governor Gray Davis and the election of The Governator, Arnold Schwarzenegger.

Ask anyone here during that time, especially Davis, and they'll tell you: California has never quite been the same.

Over a decade later, however, the State of California struck back against what many have called a "shakedown" of California's utilities and ratepayers.

California reached a $750 million settlement on Friday with Canadian power company Powerex Inc. According to California Attorney General Kamala Harris, Powerex "gamed the California energy market by purchasing and exporting to Canada huge quantities of electricity and then selling it back to California at exorbitant prices."

Powerex, which is a subsidiary of province-owned British Columbia Hydrolectric, denied any wrongdoing or legal liability as part of the settlement. The settlement still needs to be finalized and approved by the U.S. Federal Energy Regulatory Commission.

In response, the British Columbia Minister for Energy and Mines, Bill Bennett, said the settlement was "tough but necessary" to protect provincial taxpayers against a potential $3.2 billion legal liability if California's lawsuit went to trial.

The president of California's Public Utilities Commission (PUC), Michael Peevey, told the Los Angeles Times that "the large settlement should send a message to other power companies being sued by California that they should cut similar deals. As part of the settlement, California utility companies will receive $273 million, while an outstanding charge of $477 million, "owed" to Powerex for power sold to California during the crisis, will be nullified.

According to Reuters, the settlement with Powerex means that customers of PG&E Corp, Southern California Edison, and San Diego Gas & Electric will receive refunds and offsets on their current electric bills.

PUC said it has now received $4 billion in refunds and settlements from electricity sellers involved in the crisis. The U.S. Federal Energy Regulatory Commission currently has legal actions against 60 electricity trading companies involved in the energy crisis.

Enron Corporation, the former Houston-based energy company whose collapse garnered worldwide attention and scrutiny, was also accused of gaming the electricity market for massive profits at the expense of California and its ratepayers. Enron's former stockholders were not part of this current settlement.

The agreement with Powerex, which is currently facing a CAD $101 million net-loss for the year due to lawsuits and infrastructure cost overruns, is the largest energy crisis settlement to date.

Reach Executive Producer Colin Hale here. Follow him on Twitter.


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Tired of getting Fleeced (not verified) on August 17, 2013 7:25 PM

So the current PG&E customers will receive a small discount on current bills, what about us that got raped with $450-600 monthly bills???? The settlement was a calculated business expense, fleece billions, settlement years later at a fraction of the damage, and be allowed to not omit fault.... B.S.

Anonymous (not verified) on August 17, 2013 7:15 PM

I remember when they announced that California would be deregulating the electric industry.
They said there were be lots of competition and prices would come down because of competition.
It turned out to be the exact opposite. deregulation led to power companies entering the california market and gaming the system to amass huge profits.
Smells just like banking DEREGULATION that led to phoney liar loans and eventually to the housing crisis

Anonymous (not verified) on August 17, 2013 7:10 PM

The entities that sold Cali the juice obviously did not think they would get sued. Next time they will sell it for a lower price to someone that they are sure will not sue them. California will need to keep raising their offer until they find someone willing to gamble on it. Someone like Enron.

Anonymous (not verified) on August 17, 2013 6:45 PM

i though this was related to the emron scandal

Anonymous (not verified) on August 17, 2013 6:32 PM

With all their beady little eyes
And flapping heads so full of lies

OniR$aptor (not verified) on August 17, 2013 6:27 PM

$750 million? is that all. Pocket change in comparison. Enron soaked California for $40 Billion (thats with a "B") or more. And they largely got away with it.