Power marketers and other suppliers to the California market got a major boost last week when FERC ordered the state’s independent system operator (Cal-ISO) to assure payment for all third-party energy sales made to the state transmission coordinator.

The Commission ordered the Cal-ISO to abide by its Feb. 14 ruling, which prohibited the ISO from relaxing its creditworthiness standards for third-party electricity sales to the state’s troubled investor-owned utilities Pacific Gas and Electric and Southern California Edison [ER01-889-002].

California generators — Dynegy Power Marketing Inc., Reliant Energy Power Generation, Duke Energy North America, Duke Energy Trading and Marketing LLC, Mirant Corp., Williams Energy Marketing and Trading Co. and others — asked the Commission to step in and enforce its earlier edict, claiming that they were racking up millions in unpaid bills from the two utilities and the Cal-ISO due to the ISO’s failure to comply with the earlier order.

Several of the generators had been under a court order to supply power to the Cal-ISO for the last couple of months. The order was rescinded last week.

In court, the Cal-ISO had argued that the Feb. 14 order did not apply to all third-party power transactions. Specifically, it claimed it excluded all real-time purchases, and power supplied in response to emergency dispatch orders issued by the Cal-ISO.

But the Commission said the Cal-ISO had twisted the meaning of its order. “The ISO has misinterpreted our order,” it noted flatly. The Feb. 14 order “did not exempt any transactions from the requirement to have in place a creditworthy buyer. Instead, our order provided third-party suppliers assurances of a creditworthy buyer for all energy delivered to the loads through the ISO.”

The Cal-ISO’s interpretation promotes the “continuation of over-reliance on the real-time market by increasing use of emergency dispatch instruction to serve load,” which FERC said was contrary to its goal of expanding the amount of load that is supplied through forward contracts.

The Cal-ISO has estimated that the real-time market currently supplies about 15% of the state’s load. “This is by far higher than our stated goal of limiting the amount of load supplied in the real-time market to no more than 5%,” the FERC order said.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.