NGI The Weekly Gas Market Report / NGI All News Access

Trading System Dodges FERC Oversight

March 20, 2000
/ Print
| Share More
/ Text Size+

Trading System Dodges FERC Oversight

E-commerce services provider Automated Power Exchange Inc. (APX) said its new electronic power trading platform does not fall under the FERC's jurisdiction because it uses no price-setting mechanisms. The company challenged FERC over its jurisdiction of electronic power trading and said the recent denial of its court petition will have little impact on the Santa Clara, CA-based company.

APX upgraded its trading platform, APX Market 2000, March 6, the day before the court's decision was announced. The new platform does not use the market-pricing algorithm cited by the court but rather a bid-ask approach to clearing APX electricity exchange markets. APX customers decide on all terms of trade and only trade at the price they have chosen. The bid-ask approach also is used by power brokers and has been deemed nonjurisdictional by FERC.

"Congress did not vest FERC with general jurisdiction over all participants in the wholesale electric power industry...," the court said, noting FERC's jurisdiction is limited to situations where traders take title to power or play "a role in setting the price. Our new trading platform, which employs absolutely no price-setting mechanisms, clearly falls outside of these limits," said APX CEO Edward G. Cazalet. "The court's decision creates a clearer path for e-commerce-based power exchanges which heighten the efficiency of the market and help to stabilize prices-in contributing to the goals of deregulation.

The appeal was argued Dec. 3. The APX brief (No. 98-1415), which was filed June 14, appealed FERC's March 1998 orders that APX qualifies as a "public utility" under the Federal Power Act and thus falls under its jurisdiction. Prior to FERC's assertion regarding APX, the commission had not claimed jurisdiction over entities that neither sell nor transmit power in interstate commerce, but only facilitate such trades.

Joe Fisher

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus