On Sept. 14, 2004, a tipster urged electricity administrators to investigate a power generation plant that seemed to be charging extra-high prices during times of stress on the grid.
The inquiry found that a lack of competition allowed the plant to reap outsized profits - an "excess" $20 million just in one two-week period.
The windfall seemed so blatant that Joseph Bowring, market monitor for the Mid-Atlantic grid manager PJM Interconnection, wanted the government to slap controls not only on the plant in question but on every other generator not subject to price caps in times of high demand.
It was a stunning moment - or would have been if anybody knew about it.
At a time when electricity prices were already rising thanks to deregulation, PJM's own watchdog found that unidentified customers were being overcharged for power and wanted to correct it.
But PJM and federal regulators never acted on his concerns.
Disturbing new details about the incident have emerged from a PJM examination into Bowring's claims that grid managers stifled his ability to police profiteering.
Among other things, documents show that he found evidence of excess profits in 2005 and 2006, when Maryland utilities began to pass soaring wholesale-electricity costs to customers.
But don't expect to learn the identity of the company pocketing the $20 million, or expect anybody to do anything about it. Just as they did after Bowring initially raised concerns, PJM and federal regulators are switching off the light just when things look interesting.
Outsized generation profits don't explain everything about high electricity prices.
But they're a factor, and what we're learning casts new doubt on whether deregulation works as well for consumers as it does for power companies.
The summer of 2004 wasn't the hottest on record, but it still offered ample opportunity for generators in PJM's territory to make money. Based in Norristown, Pa., PJM is a nonprofit company that manages the grid in Maryland and a dozen other states.
Unlike every other U.S. grid region, PJM includes several plants whose prices aren't capped on hot days when demand soars and generators with little nearby competition can raise prices almost willy-nilly.
It was one of these plants that fetched Bowring's attention in 2004. By the next summer, documents released last week by PJM show, he was convinced the generator was exploiting grid stress to reap high prices, including once when a transformer failed and power was especially scarce.
By late last year, after more analysis, Bowring told a colleague that "the evidence is pretty overwhelming" that the generator was reaping excess profits.
That wouldn't necessarily be illegal, but it certainly increased prices for end-users. Instead of making electricity themselves, deregulated utilities such as Baltimore Gas and Electric must buy it from independent generators. It seemed an obvious case of monopoly "market power," which Bowring was hired to fight.
"Market mitigation" price controls are routine for every other regional grid in the country, but the Federal Energy Regulatory Commission allowed exemptions for certain PJM plants built in 1996 and later.
PJM refused Bowring's request to ask FERC for price caps. He did make an informal "referral" to FERC in 2005, but nothing came of it. I asked FERC why it didn't respond to the referral, but a spokeswoman said she was unable to learn the answer.
I also asked PJM spokesman Williamson to name the PJM generators exempt from price caps. He couldn't find out yesterday and might not identify them anyway, out of confidentiality concerns, he said.
Deregulation has let electricity plants charge what the market will bear. Environmental rules have prevented construction of almost any new plants, constraining supply. The economy keeps growing, increasing demand and the opportunity to raise prices. The grid manager charged with balancing the needs for profits and reasonable prices seems biased toward the former.
PJM's "investigation" of Bowring's claims of interference has produced hundreds of pages of documents and no changes. Here's the big conclusion: "There can be no minimization of the divide between Dr. Bowring and PJM Management."
Bowring will probably get his own operation instead of reporting to PJM bosses, thanks to litigation by state electricity commissions. But he'll still have to work through FERC, which seems just as tilted toward generation companies as the grid manager.
His complaints about PJM meddling could have started a process to right wrongs and improve confidence in deregulated electricity. Instead, they just show how much trouble we're in.