Ecotality Sues California Regulators over Dynegy Price Gouging Deal and Alleged EV Charging Station Monopoly

AutoInformed.com

From the new green vehicle testament: The government or rather taxpayers giveth, and the government taketh away.

Ecotality (NASDAQ:ECTY) today filed suit with in the First District Court of Appeal in California in an attempt to stop the implementation of an agreement between the California Public Utilities Commission and New Jersey-based company NRG Energy.

In March, Governor Jerry Brown announced a controversial agreement between the PUC and NRG Energy as part of a legal settlement that goes back to California’s 2001 energy crisis. NRG is the successor entity to Dynegy Power Marketing, the firm blamed by PUC for $940 million in price gouging, widespread blackouts and ultimately the bankruptcy of PSEG.

Ecotality alleges that the agreement meant to settle NRG’s role in overcharging California energy ratepayers, instead rewards NRG by requiring only that the company spend $102.5 million on its own charging station business. NRG acquired bankrupt  Dynegy’s California assets and debts in 2006.

Some EV supporters say that because of the deal, NRG will be the main provider of charging stations throughout the state. Ecotality also claims that PUC intervened in the private marketplace by endorsing one of multiple competitors, which is illegal.

The agreement requires only a $20 million payment to the PUC –  roughly 2% of the overcharges –  and that NRG invest $102.5 million in establishing 1,200 electric vehicle charging stations throughout the state.

“This so-called ‘punishment’ is like a restaurant failing a health inspection then being given an exclusive franchise to open and operate every restaurant in the city, subsidized by public funds,” said Ecotality CEO Jonathan Read.

Ecotality is also the beneficiary of taxpayer largesse. Ecotality revenues in the first quarter of 2012 – its first profitable one –  increased 215% to a record $13.7 million, as compared to $4.3 million in the same year-ago quarter. The increase in revenue was largely generic ativan attributed to the continued expansion of a network infrastructure for the EV Project and by a Blink® network licensing agreement. The EV Project is a public-private deal subsidized by the Department of Energy that seeks to develop, implement and study techniques for optimizing the deployment of a commercially viable EV charging infrastructure.

The EV project will ultimately provide chargers for 8,300 EVs and is funded by the U.S. Department of Energy with $114.8 million of taxpayer-supplied money under the so-called American Recovery and Reinvestment Act. The grants are matched by private investment, bringing the total value of the project to approximately $230 million. The U.S. government is providing buyers of EVs a $7,500 tax credit per car to boost sales of what thus far remain expensive, limited appeal vehicles.

NRG’s electric vehicle charging arm, eVgo, is based in Houston and  operates 11 electric vehicle charging stations in Houston and one in Dallas.

Roush Manufacturing in Livonia, Michigan earlier this year began making Blink Level 2 charging stations for electric vehicles for the  San Francisco based Ecotality

“This is an illegal giveaway, negotiated without public input, that will not only impede the development of the electric vehicle market in California and ultimately cost consumers more — but it also denies California rate-payers any refunds from the nearly $1 billion in overcharging that occurred during the energy crisis,” said Read.

Ecotality also alleges that the agreement was privately negotiated, without public review or input. That breaks from PUC precedent. The Commission has in the past delayed lower-dollar, less far-reaching settlement agreements in order to conduct public review and receive public input, including from competitors.

“The Agreement presents a substantial risk of creating a subsidized predatory scheme and conveyed first mover advantage,” said anti-trust expert and director of the Berkeley Research Group C. Paul Wazzan.

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