Despite being re-ordered by the Federal Energy RegulatoryCommission to comply with a Dec. 15 decision, California’s lameduck wholesale spot power market, the California Power Exchange(Cal-PX), continued Monday to resist recalculating its daily priceauctions since Jan. 1, pointing instead toward a Feb. 7 courthearing in a case it has brought against the FERC imposition of a$150/MWh price cap in the federal DC Court of Appeals.

“How much lower can road kill get,” asked Cal-PX’s Pasadena,CA-based spokesperson, Jesus Arredondo, noting that thestate-chartered nonprofit exchange has basically been put out ofbusiness by a combination of the state’s electricity crisis andFERC’s order that it end its tariffs at the end of April. With theinvestor-owned utilities relieved of their previous mandate to usethe Cal-PX for all its wholesale electricity transactions, thevolume in the Cal-PX market has slowed to a trickle, and like theutilities that it is suing for unpaid bills, the exchange is out ofcash.

The result of the Cal-PX recalculating the transactions sinceJan. 1 would lower the charges to the utilities. How much?Arredondo said he doesn’t know, and it depends on the basis bywhich they use to knock down the past prices. “We would need atechnical conference (with FERC) to get that resolved.”

Initially, Cal-PX filed a new tariff to reflect FERC’s order forthe $150/MWh so-called “breakpoint,” with the state exchangeabandoning its previous single-price auction, but it neverimplemented the new tariff, instead filing for a rehearing.

“We find that the PX is in violation of our order to apply anas-bid price for bids above $150/MWh, and therefore, is causingunjust and unreasonable wholesale rates in California in violationof the Federal Power Act,” FERC said in its latest order.

“We haven’t decided yet if we have to do something in response,given the pending court hearing,” Arredondo said.

The FERC order seems the least of the cash-strapped Cal-PX’sworries this week, having announced a week earlier that it wascutting 15% of its 200-person work force and taking initial stepsto go out of business. Among the various legislative remedies beingdiscussed this week in a continuing special session of the statelegislature is a measure to merge the PX with the state-charteredindependent grid operator (Cal-ISO), but it does not have a billnumber and is just a concept that may or may not make its way intoother pieces of legislation now being debated, Arredondo said.

Otherwise, Cal-PX’s only option seems to be shutting down, andamong the remaining loose ends would be a combination of theuncollected bills from the utilities, which in turn are owed to theexchange’s creditors and whether or not the outstanding powerfutures contracts will be honored as part of the proposed statebonds’ securitization program. One incentive for legislators tocombine the Cal-PX and Cal-ISO would be to follow through on theforward contracts.

“There is not a whole lot we can do,” Arredondo said. “We’re anonprofit public benefits corporation that is revenue neutral. Wehave handcuffs on, and we’re being told to keep swimming.”

For the exchange to expand into other regional energy markets— as it once envisioned — would require state and federalregulatory constraints being removed, said Arredondo, noting thatno one at this point is pursuing this with FERC because it wouldrequire state legislative permission to do so and it is notinterested in doing so.

Indications from FERC are that “they don’t want us around,”Arredondo said, and in the meantime there is no cash coming in tokeep the Cal-PX going.

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.