Cal-PX to Resist FERC Order, Pointing to Feb. 7 Court Date
In response to a FERC directive, the California Power Exchange
(Cal-PX) board last week decided to shut down day-ahead and day-of
wholesale electricity markets Jan. 31, bringing toÿa close one part
of the state's initial 1996 electric industry restructuring law
that created the state-chartered, nonprofit public benefits
corporation to provide a wholesale spot market through which
California's three major investor-owned utilities were required to
buy and sell all of their wholesale power. They are no longer
required to do so.
"Regrettably, Cal-PX must take this extraordinary action in
response to FERC's order that directs us to immediately comply with
the terms of its Dec. 15 order and implement a $150/MWh
breakpoint," said Cal-PX CEO George Sladoje, who noted that this
week there is an oral argument (Feb.7) set for the power exchange's
emergency motion and petition with the U.S. Ninth Circuit Court of
Appeals, requesting a stay and rehearing of the original FERC Dec.
The Cal-PX will not close down entirely as yet. It will continue
to perform all scheduling and settlement services for its current
participants. "Forward contracts will be scheduled via approved
alternative delivery mechanisms, assuring both buyers and sellers
will not be inconvenienced or exposed to adverse economic impact as
a result of the suspension of the day-ahead market," the exchange
said in announcing the market closings.
Cal-PX continued to resist recalculating its daily price
auctions up until their closing last week, pointing instead for
this week's federal court hearing in a case it has brought against
the FERC imposition of a $150/MWh price cap in the federal DC Court
"How much lower can road kill get," said Cal-PX's Pasadena,
CA-based spokesperson, Jesus Arredondo, noting that the
state-chartered nonprofit exchange has basically been put out of
business by a combination of the state's electricity crisis and
FERC's order that it end its tariffs at the end of April. With the
investor-owned utilities relieved of their previous mandate to use
the Cal-PX for all its wholesale electricity transactions, the
volume in the Cal-PX market has slowed to a trickle, and like the
utilities that it is suing for unpaid bills the exchange is out of
Initially, Cal-PX filed a new tariff to reflect FERC's order for
the $150/MWh so-called "breakpoint," with the state exchange
abandoning its previous single-price auction, but it never
implemented the new tariff, filing for a rehearing.
"We find that the PX is in violation of our order to apply an
as-bid price for bids above $150/MWh, and therefore, is causing
unjust and unreasonable wholesale rates in California in violation
of the Federal Power Act," FERC said in its latest order.
The FERC order seems the least of the cash-strapped Cal-PX's
worries this week, having announced a week earlier that it was
cutting 15% of its 200-person work force and taking initial steps
to go out of business. Among the various legislative remedies being
discussed this month in a continuing special session of the state
legislature is a measure to merge the PX with the state-chartered
independent grid operator (Cal-ISO), but it does not have a bill
number and is just a concept that may or may not make its way into
other pieces of legislation now being debated, Arredondo said.
Otherwise, Cal-PX's only option seems to be shutting down, and
among the remaining loose ends would be a combination of the
uncollected bills from the utilities, which in turn are owed to the
exchange's creditors and whether or not the outstanding power
futures contracts will be honored as part of the proposed state
bonds' securitization program. One incentive for legislators to
combine the Cal-PX and Cal-ISO would be to follow through on the
"There is not a whole lot we can do," Arredondo said. "We're a
nonprofit public benefits corporation that is revenue neutral. We
have handcuffs on, and we're being told to keep swimming."
For the exchange to expand into other regional energy markets
--- as it once envisioned --- would require state and federal
regulatory constraints being removed, said Arredondo, noting that
no one at this point is pursuing this with FERC because it would
require state legislative permission to do so and it is not
interested in doing so.
Indications from FERC are that "they don't want us around,"
Arredondo said, and in the meantime there is no cash coming in to
keep the Cal-PX going.