Six CA Suppliers Told to Defend $55M in Sales
FERC told six California power suppliers Friday that they must
justify $55 million worth of wholesale electricity sold during
Stage Three emergencies in the month of February or pay refunds.
The order came exactly one week after the Commission put 13
California power suppliers on notice that they may owe refunds of
up to $69 million for overcharges on bulk power transactions for
Williams Energy Services Corp. was pegged as owing the largest
amount of potential refunds for February ($21.5 million), and was
closely followed by Dynegy Power Marketing Inc. at $20.1 million.
Other suppliers owing potential refunds included: Reliant Energy
Services Inc. ($7.4 million), Duke Energy Trading and Marketing LLC
($2.1 million), Mirant California LLC (as well as Mirant Delta LLC
and Mirant Potrero LLC) at $826,111, and Portland General Electric
Each of the six power suppliers were identified by FERC in a
March 9 order as also owing potential refunds in California for
January. The generators and suppliers have until March 23 to either
justify the higher prices they charged or notify the Commission of
their intent to pay the refunds.
The FERC order said the suppliers charged more than the "proxy
market clearing price" on power sales during Stage Three
emergencies, which was estimated at $430/MWh last month. This
compares to the proxy clearing price of $273/MWh for January.
The February clearing price was based on the average natural gas
price for Southern California Gas large-package transactions, which
rose 53% to $19.11/MMBtu in February; average NOx allowance costs
from the Southern California Air Quality Management District NOx
auction, which jumped 85% to $41.712/lb. last month; an average NOx
emissions rate of 2 lbs./MWh; variable operational and maintenance
costs of $2/MWH; and a combustion turbine with a heat rate of
The Commission still has to address the issue of potential
refunds for December 2000, as well as refunds on bulk power
transactions during March and April. Beginning in May, it plans to
adopt price-mitigation measures for the California Independent
System Operator (Cal-ISO) that would deter overcharges, and thus
make refunds unnecessary.
The Cal-ISO and California Electricity Oversight Board estimate
that $248 million in refunds are owed for December. FERC already
has signaled that it intends to take up the matter in a future
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