Power providers cry foul over fees 
State is accused of improper billing 
Electricity suppliers long accused of manipulating California's energy market are turning the tables on the state, saying its independent grid manager is forcing them to make up the cost of bad energy deals signed by Gov. Gray Davis' administration. 
The power traders accuse the Independent System Operator -- which is legally required to act as an impartial market manager -- of improperly helping state power buyers spread out the cost of high-priced electricity contracts. 
Energy firms as well as municipal utility systems have complained about mysterious charges on their accounts with the grid agency, said Jan Smutney- Jones of the Independent Energy Producers Association, which represents such industry giants as Enron, Dynegy, Williams and Reliant. 
The charges showed up around the time the state Department of Water Resources was forced to start selling excess electricity it had purchased at an average of $69 per megawatt hour for as little as $1 per megawatt hour. 
"The ISO seems to be following specific instructions the Department of Water Resources is giving them," Smutney-Jones said. 
An industry source said NRG Energy Inc. and other suppliers were preparing a formal complaint to the Federal Energy Regulatory Commission, which could order the state to issue refunds to generators if it finds they have been improperly charged. 
The commission has ordered an unprecedented operational audit of the grid management agency. 
State officials bought power under long-term contracts when it appeared California could suffer serious power shortages over the summer. Instead, the state had more than enough power, and electricity available on the spot market suddenly cost half as much as the energy California had bought. 
Gary Ackerman of the Western Power Trading Forum, an industry group, said the grid operator was using a combination of power scheduling and billing practices to "bury" some of the cost of power purchased by the state in the accounts of other generators. 
"The state is the biggest buyer and seller of electricity, and they control the governing board of the ISO," Ackerman said. 
The governor's spokesman, Steve Maviglio, called the power firms' accusations "absolutely false" and said the generators were trying to whip up sentiment in Washington to interfere with the state's affairs. 
"The generators know they'll get a much better deal at FERC headquarters in Washington than they will in Sacramento," Maviglio said. "It shouldn't be a surprise that they make these accusations here to get federal involvement." 
Oscar Hidalgo, a spokesman for the Department of Water Resources, said generators could hardly cast themselves as victims in California's energy crisis. 
"I don't feel sorry for them one bit," Hidalgo said. "They had one heck of a year." 
Gregg Fishman, spokesman for the ISO said the agency was preparing a response to the accusations. 
Energy trade organizations said they suspected the ISO of using several mechanisms to charge suppliers for state contract costs. 
The extra expense is sometimes tacked on to suppliers' bills for ISO operating costs, which all electricity sellers in California share, Ackerman said. 
Some firms say they have tried to buy cheap spot market electricity for resale, only to find later that the grid manager has charged them for more expensive state power. Others say the grid operator orders them to activate stand-by power units on too-short notice. When they can't comply, they say, the ISO brings high-priced state power on line and bills them for the extra cost. 
The accusations are part of a struggle for control of California's grid. In January, Davis disbanded the ISO's 26-member governing board, which was chaired by Smutney-Jones, after some critics said it was too cozy with industry. Davis appointed his own five-member board. 
In February, then-FERC Chairman Curt Hebert said the new board had become "a political arm of the governor." The commission is trying to get California to turn over its grid to a multistate transmission organization. 
Davis has warned Washington to "keep its hands off" the ISO.