FERC Cites Three Suppliers for May Refunds

FERC has cited three California power suppliers for selling electricity during Stage Three emergencies in May at prices that exceeded the allowed limit established by the Commission.

The June 15 order named Reliant Energy Services Inc. as the single largest violator last month, potentially owing refunds of $369,520. It was followed by Williams Energy Services Corp., with potential refunds listed at $41,370; and Mirant California LLC (as well as affiliates Mirant Delta LLC and Mirant Potrero LLC), potentially owing refunds of $3,291. The companies will be forced to pay the refunds if they are unable to justify to the Commission the higher prices that they charged for the power.

The order called into question a total of 36 energy transactions between the California Independent System Operator and the three power suppliers [EL00-95-037]. It covered the period up until May 28, when FERC's price mitigation plan went into effect for the California market.

Reliant, Williams and Mirant were singled out for selling electricity for more than $267/MWh, which was the proxy market-clearing price set by FERC for May. The proxy price was based on an average reported midpoint gas price for "Southern California Gas Company large package" transactions of $11.98/MMBtu; average NOx allowance costs from the Southern California Air Quality Management Distriction NOx Auction of $24.32/lb.; an average NOx emissions rate of 2 lbs/MWh; variable operation-management costs of $2/MWh for public utilities; and a combustion turbine with a heat rate of 18,073 Btu/kWh, according to the FERC order.

This marked the fifth refund order for California electric customers that the Commission has issued during the past couple of months.

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