The study was conducted by the California Independent System Operator, which oversees the state's massive power grid. Anjali Sheffrin, Cal-ISO's director of market analysis, says some of the money should be refunded to commercial and residential power users, and the rest should be returned to the state's cash-strapped utilities.

According to the report, independent power generators, which sell power to utilities such as Southern California Edison and Pacific Gas & Electric for distribution, manipulated prices in two ways. First, the study says, the generators effectively withheld supplies by demanding excessive prices even though they could have made some money by selling more electricity.

Other times, the ISO says, the generators had power-generation available but did not offer to sell it. Either way, the study concludes, the net effect was to push prices higher.