FERC Stands by Creditworthiness Element of CA Mitigation

FERC is refusing to budge on several key points included in a market monitoring and mitigation plan for California's sagging energy markets that was unveiled in April. The Federal Energy Regulatory Commission re-emphasized its belief that it is important for the California Independent System Operator (Cal-ISO) to ensure the presence of a creditworthy buyer for all transactions made with any generator that offers power in compliance with the rules set forth in the mitigation plan.

FERC in April voted out a controversial market monitoring and mitigation plan that seeks to rein in wholesale power prices in California. In an order issued in late May, the Commission attempted to clarify several critical issues prior to the mitigation plan's becoming effective. More recently, FERC issued an order extending its power market mitigation program across the western states 24 hours a day, seven days a week through September 2002.

But the Cal-ISO took issue with FERC's attempt to clarify the mitigation order in a request for rehearing filed in late June. Specifically, the ISO argued, that the creditworthiness clause could undercut the very purpose for which FERC mandated the must-offer requirement.

FERC was not swayed by the arguments put forth by the Cal-ISO. "We continue to believe that the creditworthiness requirement is an important and necessary factor in assuring a properly functioning market in California and until the ISO offers more than mere speculation that this requirement could undercut the must-offer requirement, we will remain steadfast in our support for such a creditworthiness requirement," FERC said in an order issued July 12.

In the same order, the Commission rejected requests for rehearing of its May clarifying order that were made by Duke Energy affiliates and, separately, NRG Power Marketing and NEO California Power LLC.

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