California’s coalition of state government agencies and private-sector utilities late Friday asked the Federal Energy Regulatory Commission to reconsider its March 26 ruling on future wholesale power refunds to consider all of the additional evidence the state coalition provided early in March. The move came three days after FERC granted a rehearing on the narrower issue of the natural gas pricing formula used in the refund case.

The state coalition, which includes the California Public Utilities Commission, state Electricity Oversight Board, attorney general’s office and the two largest investor-owned utilities, contends that FERC did not adequately review and use the volumes of evidence the state provided on 10 compact discs (CDs). The evidence would provide further confirmation that manipulation of the wholesale energy markets in the West did occur in the 2000-2001 period, the state says.

Separately, a coalition of merchant energy companies also filed at FERC for rehearing, calling the federal regulatory panel’s March 26 order “arbitrary and capricious because it is virtually devoid of reasoning or legal analysis” in its use of its refund formula. The generators strongly objected to the use of a different spot prices for natural gas, calling them “an artificial set of prices that bear no relationship to prices of the fuel component of power sold in California during the refund period.”

The California parties argued in their filing that a number of changes need to be made by FERC in light of the additional 100 days of evidence they submitted, including the resetting prices in the May-October 2000 period and abandoning the new natural gas pricing formula. In total, the rehearing request cites 18 errors in the March decision and another four issues needing clarification.

Earlier in the week FERC provided some solace for both sides in the seemingly unending refund debate by granting a partial rehearing on the fuel cost calculation formula used to determine refunds for Oct. 2, 2000 through June 20, 2001. FERC specified that the issue will be part of a technical conference that will be held next month. That forum promises to determine whether California gets anything close to the $9 billion in refunds it claims it is owed.

At issue is whether all relevant factors impacting on natural gas costs, which subsequently affected the wholesale price of electricity in the period in question, have been accounted for in the FERC refund calculations.

“We clarify that the additional fuel cost allowance should be based upon the MWh actually sold into the CAISO and (now-defunct) Cal-PX markets, and the gas used to fuel that generation,” the FERC clarifying order stated.

FERC commissioners said their action on the rehearing should “clarify the method of calculating refunds for purchases made in California’s organized spot markets” during the almost nine-month period that the federal regulators have identified as eligible for refunds.

Given the fact that FERC has already scheduled a technical conference for next month on issues regarding additional fuel cost allowance data, FERC won’t make any determination of the correct data series until after that conference, FERC said in its order that was released late Tuesday with a concurring opinion from Commissioner William Massey. Massey said he was concerned “whether any generator that manipulated the gas market or the gas indices will be permitted to collect the additional fuel cost allowance.”

He noted that FERC’s earlier refund order addressed the effect of gas market manipulation on the allowance calculation, but “that is not the end of the analysis.” He noted that allowing the generators a bigger allowance will reduce the refund amount even though the higher gas prices paid may have been the result of manipulation by the same generators. The issue still needs to be resolved but in other hearings, said Massey, who added that “the manipulation must be remedied.”

FERC also noted in Tuesday’s action that additional discovery or cross-examination is not needed at this time, and the issue will be re-addressed as part of the May technical conference.

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