The California Independent System Operator (CAISO) has called on FERC to reject Duke Energy’s bid to reopen discovery of the energy price manipulation case, saying the energy company is simply trying to “delay, delay, delay the advent of any potential enforcement actions” against itself and other energy suppliers for improper activities in the state during the 2000 and 2001 period.

“Duke’s request for ‘limited discovery’ is, in fact, a thinly veiled attempt to derail the Commission’s efforts to provide full and timely relief for wrongs during the California crisis,” CAISO responded this week [PA02-2-005]. Duke Energy and other suppliers had sufficient opportunity to question CAISO officials during the 100-day discovery period, which ended in early March, and now they are seeking a “second bite at the apple,” it contends.

Duke Energy is seeking to reopen the case because it questions whether FERC can legally issue sanctions against suppliers in California. The company doesn’t believe FERC can take retroactive enforcement action against sellers because it claims the Market Monitoring and Information plans (MMIPs) of the CAISO and now-defunct Cal-PX, on which the agency is basing its authority, were not defined clearly to give market participants “sufficient notice” as to what conduct was allowed or prohibited.

The Charlotte, NC-based energy company has asked for expedited approval to conduct discovery of the CAISO and Cal-PX market monitors on a single issue — “whether the MMIPs afforded market participants the requisite notice to support a retroactive enforcement proceeding.”

While Duke Energy said it is seeking approval of only “limited discovery,” the CAISO claims the company is on a “fishing expedition.” The depositions and data requests “would be only the proverbial camel’s nose,” the grid operator said.

The Commission “should be under no illusion that it can grant Duke’s motion without seriously disrupting any reasonable schedule it might have for resolving the issues stemming from the California crisis of 2000-2001,” the CAISO noted.

The grid operator disagreed with Duke Energy’s view of FERC’s enforcement authority under the MMIPs, particularly the company’s belief that agency action would be retroactive. “There is certainly nothing ‘retroactive’ about any show-cause orders the Commission might issue” against suppliers, the CAISO said, noting that its tariff provisions (which included the MMIPs) “were in effect when the prohibited activities occurred, so the tariffs would be applied prospectively.”

FERC already has issued show-cause orders against Enron-affiliated companies, BP Energy and Reliant Energy Services based on agency staff’s belief that suppliers were sufficiently forewarned of the market monitoring rules in California, and that violations could result in sanctions by the Commission. As a result of the show-cause orders, companies could lose either their ability to sell power at unregulated rates or their blanket gas marketing certificates, and could be required to disgorge any profits gained from improper behavior.

The Cal-PX also filed an objection to Duke Energy’s request for further discovery, saying the company had its chance during the 100-day discovery period. As a compromise, however, it said it would allow the energy company to review documents in the Cal-PX’s document repository.

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