Market Manipulation?

beer purchase in Nashville, Tenn.
Lucien Geldrich, left, checks a customer's ID as he rings up a purchase at the Frugal MacDoogal Beer Warehouse in Nashville, Tenn., Wednesday, May 9, 2006. A bill, which is expected to undergo a final vote in the Tennessee House on Thursday, would require everyone, no matter what their age, to show proof of legal age in order to buy beer. But in a twist that reflects the state's convoluted alcohol laws, people buying wine or hard liquor won't face the same ID requirement because it only applies to beer sales, prompting questions about how much the measure will cut underage drinking. (AP Photo/Mark Humphrey)
AP Photo/Mark Humphrey

After deregulation, Duke Energy bought four California power plants. The company appears to hold the record for the highest price ever charged for electricity — almost $3,900 a megawatt.

Before the energy crisis the average price was only $30, reports CBS News Correspondent Vince Gonzales.

In an exclusive interview, former workers from Duke's South Bay Power Plant tell CBS News how they think Duke may have pushed up prices.

"Their exact quote was they're making more money than they ever thought possible," recalled Glenn Johnson.

Johnson, who was a mechanic at the South Bay plant for more than 20 years, supports what state investigators say happened across California — units were shut down unnecessarily in order to shrink the supply of electricity.

"I felt I was directed at pieces of equipment that didn't need to be taken down at that particular period of time," said Johnson.

Johnson also claims Duke ordered maintenance shutdowns even though he didn't have the needed parts.

"Looking back at it, it would tell me they wanted the load limited," said Johnson. Asked if that meant less power would be coming out of the plant and higher prices, Johnson replied, "Correct."

Ed Edwards knows why they had to wait for spare parts. A supervisor ordered him to get rid of them.

"I explained to him, 'Man, that's good stuff. These are parts we can use.' And so I took a forklift and I disposed of some 23 palettes of good inventory," said Edwards.

And after 22 years at the plant, he couldn't understand Duke's decision to constantly run the most expensive turbine that produced the least power.

Asked why that would be done, Edwards responded, "I can't tell you. My opinion would be it had something to do with economics."

Click here for a closer look at energy in the U.S.

Jimmey Olkjer is no economist, but he was an assistant control room operator at the plant.

"Why do you think they ran it so much? It cost more to run so you can charge more for each megawatt," said Olkjer.

Control room logs obtained by CBS News show Duke Energy Trading and Marketing (DETM) ordered power levels to quickly rise and fall — something Olkjer says never occurred before deregulation at Duke.

Asked what the logs indicated, Olkjer said, "Well, that means to me they were manipulating the market."

"We are proud of our maintenance procedures at the plant. The production levels speak for themselves," said Duke spokesman Tom Williams. "Our production levels are way up. The plant's working hard."

Williams says the expensive turbine met demand and environmental requirements. And as for the logs, Duke says every change in power level was ordered by the state.

"The ISO often instructs us to move the plant up and down to manage the daily system load," he said.
The ISO, California's Independent System Operator, which has already accused Duke of withholding power 80 percent of the time last year, is checking its own logs and may have some answers Friday, when the plant workers are scheduled to testify before a state committee on price-fixing.

The men say they were let go in April when Duke restructured the plant's workforce.

"This needs to be exposed. When I look at my bill every month, having the knowledge of what's going on behind the scenes, I think it's a crime that everybody's paying the amount of money that they are," said Edwards.

"There is a thing about making a fair profit and there is nothing fair about this," said Johnson.

©MMI, Viacom Internet Services Inc., All Rights Reserved