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Industry News

California Capsule: FERC Orders Some Power Sale Refunds

LCG, March 12, 2001The Federal Energy Regulatory Commission on Friday ordered 13 electricity suppliers to either refund $69 million in overpriced January power sales to California or justify the prices they charged.

It was unclear to whom the refunds would be made, but the $69 million was a lot less than the California Independent System Operator hoped for. Cal-ISO had asked for refunds of $302 million for January and $248 million for December. FERC said it would get to the $248 million later.

Last fall, a $150 per megawatt hour "soft cap" recommended by FERC was adopted by Cal-ISO. Power producers were allowed to exceed that amount but were warned they might have to justify their doing so. The 13 power producers and the amount of their potential refunds are:

Dynegy Power Marketing Inc. ($22.459 million)
Duke Energy Trading and Marketing ($17.885 million)< BR>
Reliant Energy Services Inc. ($12.435 million)
Williams Energy Services Corp. ($8.022 million)
Enron Corp. subsidiary Portland General Electric Co. ($3.189 million)
Mirant Corp. ($2.186 million)
Automated Power Exchange Inc. ($1.607 million)
Sempra Energy Trading Corp. ($480,914)
California Power Exchange Corp. ($378,614)
Avista Energy Inc. ($70,179)
Nevada Power Co. ($12,006)
Arizona Public Service Company ($2,800)
Public Service Co. of Colorado ($980)

In arriving at the amounts overcharged, FERC determined that a price of $273 per megawatt-hour would be justified during January's daily Stage 3 emergencies when blackouts threatened. Suppliers that sold power for more than that will have to notify FERC by March 23 whether they will refund the overcharge or justify their higher prices.

And that isn't all the news from 'way out west.

  • California Treasurer Phil Angelides told state leaders in a letter that the $10 billion they are planning to spend on power could be used up before the end of summer. He hopes to issue the bonds in May or early June and is attempting to arrange bridge financing by the end of this month.
    For the bond issue to succeed under rules imposed by the legislature, the California Department of Water and Power, which is doing the power purchasing, will have to have an assured revenue stream to service the debt. That would require an increase in electric rates beyond the "current rate structure" state politicians talk about. The politicians are mindful that ratepayers are also voters, but may have forgot that they are taxpayers, too.

  • The California Power Exchange, the electricity auction market created by the state's electric deregulation law, on Friday filed for protection from creditors in U.S. Bankruptcy Court, Central District. Cal-PX suspended operations on January 30 after the state stepped in as purchasing agent for power for its cash-strapped investor-owned utilities. The agency said it was filing for Chapter 11 because it is faced with a "multiplicity of litigation."

  • FERC was not entirely occupied with refunds on Friday. The agency's staff, in a report on how to monitor the state's electricity market better, recommended that all planned power plant outages be coordinated and approved by Cal-ISO. "Unplanned outages should be closely monitored by the ISO," the staff report said, "and questionable outages should be reported immediately to the commission."

  • Constellation Power Source, an affiliate of Baltimore Gas & Electric Co., said yesterday it had signed a $3.6 billion 10-year power sales contract with the California Department of Water Resources and will begin providing power in April. The amount of initial deliveries was not disclosed, but the volume of power will be about 800 megawatts full-time once the company's High Desert Power Plant begins commercial operation in July 2003.

  • Edison International Inc., parent holding company for Southern California Edison Co., said on Friday that it had resumed talks with bank lenders who agreed to extend their "forbearance" until March 14 on its credit line default and that of SoCal Ed.

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