A federal government investigation has found that a former owner of Astoria’s Ravenswood generators was involved in a price-fixing scheme that resulted in Con Edison customers being overcharged during a period of two years, a spokeswoman for the state Public Service Commission said.
The U.S. Department of Justice fined London energy company National Grid for $12 million, but a Manhattan federal judge has yet to sign off on the amount, the New York Post reported.
National Grid purchased the 2,480-megawatt Ravenswood plant, one of the highest-polluting generators in western Queens, when it merged with KeySpan in 2008. The site on Vernon Boulevard is now operated by energy company TransCanada Corp., which produces power for customers in the United States and Canada.
The Post reported Monday that KeySpan had orchestrated a $157 million price-fixing scheme, which caused Con Ed’s customers to overpay by an average $40 more between May 2006 and February 2008, when that company operated the generators.
KeySpan set up a deal with Morgan Stanley in 2006, under which the global financial services firm would pay the difference to the company if the price for Ravenswood’s power fell below $7.57 per kilowatt month, an electricity unit Con Ed buys by the millions, the Post reported.
Morgan Stanley also made a deal with Astoria Energy, KeySpan’s competitor, under which the firm received the excess if the power company got more than $7.07 per kilowatt month of power, the Post reported.
The financial firm then used excess funds to pay KeySpan when its price fell below $7.57, giving KeySpan access to Astoria Energy’s cash flow in violation of anti-trust laws, the Post reported.
Con Ed needed Ravenswood’s power and was therefore forced to overpay and bill its customers, the Post reported.
The PSC spokeswoman said the agency was currently not commenting on the matter, but Con Ed issued a statement this week.
“Con Edison raised this issue with federal regulators to ensure that energy markets operate fairly and that supply charges be monitored carefully,” the statement read. “Since then safeguards have been established to better protect customers.”
The Department of Justice could not be reached for comment.
City Councilman Peter Vallone Jr. (D-Astoria) said the fine was not enough to correct the situation.
“For years, we have paid the highest rates in the continental U.S. and now we find these rates were partly the result of illegal price fixing,” he said. “This is a step in the right direction, however, millions of overcharged customers deserve a further investigation to ensure that this doesn’t happen again.”
The Ravenswood facility is a gas and oil-fired generator that incorporates steam turbine, combined cycle and combustion turbine technology. The generating station has the capacity to provide about 21 percent of the city’s energy needs.
Reach reporter Nathan Duke by e-mail at firstname.lastname@example.org or by phone at 718-260-4566.
©2010 Community News Group
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