CA Power Sellers Cited for Potential Refunds

FERC last week issued an order for the smallest refund amount to the California market to date, alerting three power suppliers that they must justify $587,000 worth of wholesale electricity sold during Stage Three emergencies in the month of March or pay customers back for overcharges.

The refund order, the third one issued since early March, cited Dynegy Power Marketing Inc. as potentially owing refunds of $469,662, Mirant California LLC (and Mirant Delta LLC and Mirant Potrero LLC) for possible refunds of $92,620 and Williams Energy Services Corp. for possible refunds of $25,574.

The latest order follows a March 9 decision in which the Commission put 13 California power sellers on notice that they might owe refunds of about $69 million for electricity sold during Stage III emergencies in the state in January (see NGI, March 12) , and a March 16 order that identified six California power suppliers as potentially owing refunds of $55 million for power sold during February (See NGI, March 19). Dynegy Power, Mirant and Williams Energy were named in both orders.

The most recent refund order said the three suppliers charged more than the "proxy market clearing prices" on power sales during Stage Three emergencies in March, which was estimated at $300/MWh for the month. This was lower than the proxy price established for February ($430/MWh), but higher than the one for January ($273/MWh).

The three suppliers must either justify to FERC the higher prices that they charged to customers in the California market, or notify the Commission of their intent to pay the refunds. The Commission has yet to make any decisions about which suppliers will have to actually pay out refunds.

The March clearing price was based on the average natural gas price for Southern California Gas large-package transactions, which dropped 24% in March to $14.51/MMBtu; average NOx allowance costs from the Southern California Air Quality Management District NOx auction, which also fell in March to $18/lb; an average NOx emissions rate of two lbs/MWh; variable operational and maintenance costs of $2/MWh; and a combustion turbine with a heat rate of 18,073/Btu/kWh.

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