FERC told six California power suppliers Friday that they mustjustify $55 million worth of wholesale electricity sold duringStage Three emergencies in the month of February or pay refunds.

The order came exactly one week after the Commission put 13California power suppliers on notice that they may owe refunds ofup to $69 million for overcharges on bulk power transactions forJanuary.

Williams Energy Services Corp. was pegged as owing the largestamount of potential refunds for February ($21.5 million), and wasclosely followed by Dynegy Power Marketing Inc. at $20.1 million.Other suppliers owing potential refunds included: Reliant EnergyServices Inc. ($7.4 million), Duke Energy Trading and Marketing LLC($2.1 million), Mirant California LLC (as well as Mirant Delta LLCand Mirant Potrero LLC) at $826,111, and Portland General ElectricCo. ($73,600).

Each of the six power suppliers were identified by FERC in aMarch 9 order as also owing potential refunds in California forJanuary. The generators and suppliers have until March 23 to eitherjustify the higher prices they charged or notify the Commission oftheir intent to pay the refunds.

The FERC order said the suppliers charged more than the “proxymarket clearing price” on power sales during Stage Threeemergencies, which was estimated at $430/MWh last month. Thiscompares to the proxy clearing price of $273/MWh for January.

The February clearing price was based on the average natural gasprice for Southern California Gas large-package transactions, whichrose 53% to $19.11/MMBtu in February; average NOx allowance costsfrom the Southern California Air Quality Management District NOxauction, which jumped 85% to $41.712/lb. last month; an average NOxemissions rate of 2 lbs./MWh; variable operational and maintenancecosts of $2/MWH; and a combustion turbine with a heat rate of18,073/Btu/kWh.

The Commission still has to address the issue of potentialrefunds for December 2000, as well as refunds on bulk powertransactions during March and April. Beginning in May, it plans toadopt price-mitigation measures for the California IndependentSystem Operator (Cal-ISO) that would deter overcharges, and thusmake refunds unnecessary.

The Cal-ISO and California Electricity Oversight Board estimatethat $248 million in refunds are owed for December. FERC alreadyhas signaled that it intends to take up the matter in a futureorder.

Susan Parker

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