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 January.

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 Co. ($73,600).

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 18,073/Btu/kWh.

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 order.

Susan Parker

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