Duke to Accept Less in CA if Guarantees are Made
Duke Energy reported last Monday it would be willing to accept less money for the power it sold in California during January and February, as long as assurances are made by the California Independent System Operator (Cal-ISO) and the California Power Exchange (Cal-PX) that it will be paid. Duke said if guarantees are made, it will waive the credit premiums on its bids (which amount to nearly $20 million) and accept the Federal Energy Regulatory Commission's (FERC) clearing price for transactions during those months.
Currently, Duke said it has received a very small percentage of the monies owed by the Cal-ISO and the Cal-PX, proving that the credit premiums attached to its power bids were warranted.
Duke's filing with FERC late last week came in response to accusations from the Commission that some companies had taken advantage of the tumultuous situation in California by overcharging power customers during Stage Three emergencies. Earlier thismonth, FERC issued an order requiring electricity suppliers in California to refund or offset prices that exceed the FERC-determined market clearing price, or submit information supporting their bid prices. During January and February, Duke attached a commercially based credit premium to its bids to cover the risk of non-payment that existed at the time.
"We cannot lose sight of the fact that most energy suppliers have yet to be paid for a substantial amount of the energy consumed in California in January and February," said Jim Donnell, CEO of Duke Energy North America.
"The prices bid by Duke Energy reflect the continued uncertainty over whether we will be paid," said Donnell. "Such risk premiums are standard business practice. We could be willing to forego collection of the credit premiums for these months, provided we were paid the FERC clearing price. If we are not assured payment, the credit premiums are obviously appropriate, and we would reserve our right to collect the entire amount of the bids that are subject to the FERC order."
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