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Hedging bets on electricity

Zen and the art of making utility customers pay for trading losses

January 09, 2008|By JAY HANCOCK

So you, the electricity customer, lose when Tower loses. And you lose when Tower wins.

Spread across the grid, the $80 million Power Edge default would come to pennies per BGE customer if the utility decided to pass along the cost. But it's part of a troubling pattern that has driven kilowatt prices higher than what can be explained by more-expensive oil, natural gas and other generation fuel.

Allegations of Enron-style manipulation by power-generation companies continue to crop up in wholesale markets across the country. PJM's own market monitor has found evidence of "excess" profits by generators, which FERC has disregarded. And the whole thing is opaque. We don't know what positions Tower may have taken in other trading vehicles still in business.

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Gorton, who already has an enemy in the Recording Industry Association of America because of the file sharing enabled by LimeWire, has earned new hostility with this stunt. But save some blame for the Washington bureaucrats, deep in their own Zen trance of denial.

jay.hancock@baltsun.com

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