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<title>June 2002: California Senate Considers Bill To Prohibit Certain Trading
Practices</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" width="375" height="75">
</center><p align="left"><b><u><br>
June 2002</u>
<br>
</b><font size="6">California Senate Considers
Bill To Prohibit <br>
Certain Trading Practices<br>
</font><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>2/11/26)</font></p>
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<p ALIGN="JUSTIFY">The California Senate is now considering a bill to
prohibit certain trading practices as applied to the electric and natural
gas industries to prevent the artificial inflation of prices. If passed as
last amended on May 23, 2002, the bill would prohibit any person "engaged in
the business of generating, selling, distributing, transferring, marketing,
or trading electricity or natural gas" from engaging in, or knowingly
facilitating, any conduct "that results, or is intended to result, in a
significant or sustained increase in the price of electricity or natural
gas, or a significant or sustained decrease in electric or natural gas
system reliability," including without limitation various specific
practices, including the following: </p>
</font><font FACE="Palatino" SIZE="3">
<p ALIGN="JUSTIFY"></p>
</font><font SIZE="3">
<ul>
<li>
<p ALIGN="JUSTIFY">Physically withholding electricity from "any
electricity market";</li>
</font><font FACE="Palatino" SIZE="3">
</ul>
<p ALIGN="JUSTIFY"></p>
</font>
<ul>
<font SIZE="3">
<li>
<p ALIGN="JUSTIFY">Economically withholding electricity "by submitting
bids above the reasonable price for that electricity in a fair and
competitive market";</li>
</font><font FACE="Palatino" SIZE="3">
</ul>
<p ALIGN="JUSTIFY"></p>
</font>
<ul>
<font SIZE="3">
<li>
<p ALIGN="JUSTIFY">"The creating, prolonging, or using of shortages or
outages";</li>
</font><font FACE="Palatino" SIZE="3">
</ul>
<p ALIGN="JUSTIFY"></p>
</font>
<ul>
<font SIZE="3">
<li>
<p ALIGN="JUSTIFY">Scheduling electricity transmission "with the intent or
knowledge that the schedule will create congestion or the false impression
of congestion," or "result in congestion counterflow payment, or
compensation to reduce congestion"; <br>
</li>
</font><font SIZE="3">
<li>
<p ALIGN="JUSTIFY">"[S]elling, distributing, transferring, marketing or
trading" electricity "to any person in any other control area with the
intent or knowledge that a similar amount of electricity will be
repurchased in the original control area for the purpose of avoiding
applicable market rules";</li>
</font><font FACE="Palatino" SIZE="3">
</ul>
<p ALIGN="JUSTIFY"></p>
</font>
<ul>
<font SIZE="3">
<li>
<p ALIGN="justify">Withholding electricity "from any market subject to a
price cap with the intent to sell, distribute, transfer, market, or trade
the electricity to a market not subject to a price cap"; and</li>
</font><font FACE="Palatino" SIZE="3">
</ul>
<p ALIGN="left"></p>
</font>
<ul>
<font SIZE="3">
<li>
<p ALIGN="justify">"Selling, distributing, transferring, marketing or
trading" electricity between subsidiaries of the same company.</li>
</ul>
</font><font FACE="Palatino" SIZE="3">
<p ALIGN="left"></p>
</font><font SIZE="3">
<p ALIGN="justify">The bill defines "person" to include both natural persons
and entities, but otherwise contains no definitions. </p>
</font><font FACE="Palatino" SIZE="3">
<p ALIGN="justify"></p>
</font><font SIZE="3">
<p ALIGN="justify">Violators may be required to disgorge the profits of the
unlawful conduct, i.e. the difference between the actual price charged in
the course of the unlawful conduct and "the reasonable price for that
electricity or natural gas in a fair and competitive market." Violators may
also be required to pay treble damages, costs and attorneys fees. In
addition, the bill authorizes injunctive relief, including the appointment
of a receiver. An action for relief may be brought by the attorney general,
or any natural person or entity in its own interest or in the interest of
its members or of the general public.</p>
</font><font FACE="Palatino" SIZE="3">
<p ALIGN="justify"></p>
</font><font SIZE="3">
<p align="justify">The bill passed the Senate Energy and Utilities Committee
on May 21, 2002 and is now under consideration by the full Senate.</p>
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<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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