Reliant Unit Gets Indicted

Shares in energy trader Reliant ( RRI) slipped Thursday afternoon after a federal grand jury indicted a unit of the company and four former officers in a case stemming from the California power crisis of 2000.

The Justice Department said it filed criminal fraud charges against the company's Reliant Energy Services unit, along with four former officers there: Jackie Thomas, a former vice president of Reliant's Power Trading Division; Reggie Howard, a former director of the trading division; Lisa Flowers, a term trader for the trading division; and Kevin Frankeny, Reliant's manager of Western operations.

The government claims Reliant Energy Services and its officers intentionally drove up the price of electricity in California in 2000 by shutting off its power generation to create the false appearance of a shortage. The feds say Reliant Energy reaped millions in illegal profits.

For its part, Reliant said the charges were baseless.

"We believe the actions that are the subject of the indictment were not in violation of laws, tariffs or regulations in effect at the time," the company said. "During the week in question, electricity was plentiful in California, there was no supply shortage, no ISO-declared emergency and no blackouts, and prices were relatively low. There is absolutely no basis to contend that this conduct contributed to the energy shortage that occurred in California later that year. We intend to contest these charges vigorously."

Last year the company settled Federal Energy Regulatory Commission charges over the California crisis without admitting or denying guilt. Reliant agreed to pay $13.8 million to resolve the agency's accusations that it deliberately idled the power plants at the height of the California energy crisis to manipulate the market, Reuters reported.The company also agreed to pay up to $50 million in October to settle FERC charges related to its trading activities in California.

On Thursday, Reliant fell 46 cents to $8.23.

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