Texas regulators could fine TXU Corp. $210 million for manipulating the state’s electricity market in the summer of 2005, under a staff proposal issued on Wednesday. The fine is subject to approval by the three commissioners of the Public Utility Commission of Texas. According to the PUC staff recommendation TXU Wholesale, the arm of Dallas-based TXU that generates electricity for sale onto Texas’ power grid, should pay $140 million in fines and $70 million in customer refunds.
The fines and refunds slapped against TXU, which is the Houston-area’s second largest electric retail provider, if merged together would mark the largest single enforcement action state utility regulators have brought against a company. The commission has accused the firm for manipulating prices in the summer of 2005 that triggered wholesale power prices to rise 15.5 percent statewide. However, the company while refusing the allegation has said that it intends to fight them.
The power company in its statement has said, ‘the accusation of any market power abuse is flatly wrong. We look forward to exposing the flaws in the analysis as we contest the staffs position.’ TXU has up to 30 days to respond to the state’s recommendation, after expiring the case will go before the three PUC commissioners. Under the options available TXU could either pay the fine or contest it by seeking a hearing before the State Office of Administrative Hearings or a settlement conference.
The recommendation came the same day when TXU announced that it is planning to implement 6 percent electricity price cuts, offered as part of its proposed takeover by a private equity group. As a matter of fact, there is no system for this refund to trickle down to consumers. TXU’s wholesale unit operates independently from its retail division.
