FERC Puts 13 CA Power Sellers on Refund Alert
FERC on Friday put 13 California power sellers on notice that they must either make refunds to the tune of about $69 million or provide further justification of the prices they charged for electricity sold in the California Independent System Operator (ISO) and Power Exchange (PX) markets during the month of January.
The companies include Arizona Public Service, Automated Power Exchange, California Power Exchange Corp., Duke Energy Trading & Marketing LLC, Dynegy Power Marketing, Nevada Power Co., Portland General Electric Co., Public Service Company of Colorado, Reliant Energy Services, Sempra Energy Trading, Mirant California LLC (as well as Mirant Delta LLC and Mirtant Potrero LLC), and Williams Energy Services.
In Friday's order, FERC gave the companies until March 23 to inform it as to whether they intend to make the refunds or provide the Commission with information to further justify their prices.
In reviewing generators' weekly transactions reports for January, the Commission said it determined that certain bulk power transactions appeared to be unreasonable, requiring either refunds or further explanation by the sellers of their prices. Power suppliers that bid above the $150/MWh "soft" price cap that FERC established in December are required to file weekly reports with the Commission.
The "refund order demonstrates the Commission's commitment to ensure appropriate and reasonable prices in the wholesale electricity market given the supply and demand imbalance in California," said FERC Chairman Curt Hebert. "My hope is thatÿstarting May 1 the Commission will have a market-monitoring program in place so that we do not have to order after-the-fact refunds." ÿFERC currently is reviewing power transactions that took place in the Cal-ISO and Cal-PX during February.
The potential refunds ordered by the Commission were only a fraction of the amount sought by some. The California Parties (the ISO and the California Electricity Oversight Board) pegged the amount of refunds due for the period between Dec. 8 and Jan. 31 at about $550 million. Of that, they estimated that $248 million in refunds were due for the period between Dec. 8 and Dec. 31, but the Commission said it would address this in a separate order. They further noted that about $170 million in refunds were due from non-public utility sellers in January, but FERC said it didn't have jurisdiction over these suppliers.
In determining the potential refunds for January, FERC said it established a "proxy clearing price" of $273/MWh for the month based on average natural gas prices, average NOx allowance costs and variable operation and maintenance costs. Power suppliers that had transactions above the proxy clearing price during Stage 3 emergencies in California were put on the Commission's list of potential offenders.
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