Power Price Gouging Secrets

California Highway Patrol Officer Christopher Throgmorton stands next to a 1956 Ford Thunderbird on June 19, 2007, in Moorpark, Calif.. The car, reported stolen in Palo Alto, Calif. 31 years ago, was returned by a resident who recently purchased the car on eBay and later learned it had been stolen. AP / Redmond, Ventura County Star

Under siege from angry consumers, power companies deny they shut down plants to push up California energy prices. Federal regulators continue to maintain they have "no persuasive evidence" that kind of price gouging occurred.

"If we find it, they're going to dread the day they ever thought about doing it," Federal Energy Regulatory Commission Chairman Curt Hebert Jr., said on May 1.

But they did find it, reports CBS News Correspondent Vince Gonzales -- in a secret FERC investigation of two companies for keeping plants out of service to raise prices. In one instance, Williams Energy admits telling operators at a plant owned by AES, "Williams could provide a financial incentive...to extend the outage."

According to Sen. Diane Feinstein, D-Calif., "This withholding of power netted Williams $11 million."

Follow The Paper Trail
  • Click here to read FERC's Show Cause Order for AES and Williams Energy with Williams Energy admitting telling operators at this plant owned by AES, "Williams could provide a financial incentive...to extend the outage."

  • Click here to read the Order Approving Stipulation And Consent Agreement with Williams agreeing to pay back $8 million.

  • Click here to read the California State Senate document finding Enron in contempt after refusing to turn over documents subpoenaed by a California senate committee on price fixing.

  • Click here to read the General Accounting Office letter asking Cheney to turn over the names of industry insiders who helped draft the new energy policy he is out selling.
  • Williams agreed to pay back $8 million. And while neither company would talk on camera, under a FERC settlement, they admitted to no "violation or wrongdoing." The public may never know the truth because FERC sealed the evidence — documents and audio tapes of company employees arranging to keep plants shut down.

    The government refused requests to release any of the documents and has yet to decide about the tapes — which sources tell CBS News are "politically explosive, smoking gun evidence."

    "California was concerned about power blackouts. But in fact what we've seen is a blackout over the information necessary for Californians to know whether in fact they've been gouged or not," said Michael Shames of the Utility Consumers' Action Network.

    Industry critics say the demand for secrecy is a side effect of deregulation as private companies enter what was once a public arena.

    "One can only ask what do you have to hide," asked Calif. State Senator Steve Peace.

    Texas-giant Enron and Reliant Energy were found in contempt after refusing to turn over documents subpoenaed by a California senate committee on price fixing. Enron then sued the committee, claiming it doesn't have the right to conduct an investigation.

    "You just went to war with the State of California. You just declared war on the people of this state," said Peace.

    California was forced to reveal some energy secrets of its own after a court ordered the release — long-term contracts showing how much the state agreed to pay for power.

    "It doesn't make sense that now we have to do major court battles and issue subpoenas and find companies in contempt just to get this basic pricing information," said Shames.

    Vice President Dick Cheney is also under attack for keeping secrets. The former energy executive refuses to give government investigators the names of industry insiders who helped draft the new energy policy he is out selling.

    Even the conservative group Judicial Watch, better known for suing the Clintons, is suing Cheney.

    "We want to know how that position was drafted and if they're meeting behind closed doors with well-heeled lobbyists the people need to know that," Said Judicial Watch's Tom Fitton.

    But there's a growing divide between what the public wants to know and what industry and even the government are willing to reveal.



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    • CBSNews.com staff CBSNews.com staff

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