July 28, 2004

Public Citizen Urges Maryland to Strengthen Licensing Process for Power Providers

Reliant Energy Has Not Fully Disclosed Indictment and Other Investigations Into Energy Manipulation Practices; Subsidiaries Received Three MarylandContracts

WASHINGTON, D.C. – Public Citizen today urged Maryland’s Public Service Commission (PSC) to strengthen its licensing and approval process to better protect consumers from energy companies with questionable ethical practices.  In a letter to the PSC’s chairman, the public interest organization warned that Reliant Energy – whose subsidiary recently won $88.5 million in contracts to provide electricity to Maryland state and local government facilities – may not have fully disclosed the long list of federal and state investigations into affiliates of the company for energy market manipulation.

The PSC regulates public utilities doing business in Maryland, including electric, telephone, water and sewage disposal companies.   On May 21, 2003, the PSC granted a license to Reliant Energy Solutions East, LLC (Reliant East) to sell power in the state.  But less than a year after approving the license, an affiliate of the company that it relies on to provide power, Reliant Energy Services, Inc. (Reliant Services), was indicted for alleged manipulation of electricity markets in the California energy crisis of 2000-2001. 

“We believe the criminal indictment of an affiliate on which the licensee relies to supply Maryland consumers with power should prompt a PSC review of whether to revoke Reliant East’s license to supply electricity,” said Wenonah Hauter, director of Public Citizen’s energy program.  “The current licensing process is inadequate since Reliant may not have fully disclosed the extent of the investigations into the company’s unethical practices.”

Data compiled by Public Citizen indicate that Reliant East may have filed a false license application with the Maryland PSC by failing to disclose a $25 million penalty levied against its affiliate, raising questions about the integrity of Reliant East to be a licensed supplier in Maryland.

Public Citizen recommends three ways in which the PSC could strengthen its licensing process to better protect consumers:

Require all applicants to provide information on any interlocking positions jointly held by officers with the licensee and the licensee’s affiliates (including their common parent company).

• Require the applicant to provide copies of official documents that reflect all fines, suspensions or other reprimands, rather than the current system where the company is allowed to summarize such actions in a minimal way.
• Require a licensee to disclose Electric Quarterly Reports that it and any of its affiliates file with the Federal Energy Regulatory Commission. This would provide key details about how the licensee plans to fulfill obligations to sell power in Maryland.

Public Citizen has sent several letters to various Maryland officials about Reliant Energy’s electricity contracts in the state. To read the letter from Public Citizen to the PSC chairman, please click here. To read more about Reliant Energy, please  click here. 

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