Two FERC administrative law judges (ALJ) on Thursday said that the full Commission should sign off on a settlement agreement reached last year between FERC trial staff and Sempra Energy Trading Corp. resolving allegations that the power company tried to game California’s electricity market in 2000-2001.

FERC staff in October 2003 agreed to a settlement with Sempra Energy Trading, the wholesale energy trading unit of Sempra Energy, as a full, final and complete resolution of FERC’s gaming and partnership investigation of Sempra Energy Trading in connection with a review of western energy markets between January 2000 and June 2001.

FERC on June 25, 2003 issued an order in which it found that a number of identified entities appeared to have participated in activities that constituted gaming and/or anomalous market behavior in violation of the California Independent System Operator (CAISO) and California Power Exchange (PX) tariffs during the relevant period — Jan. 1, 2000 through June 20, 2001.

The gaming order asserted that Sempra Energy Trading may have engaged in the following gaming practices: false import, cutting non-firm, circular scheduling, scheduling counterflows on out-of-service lines and paper trading.

On the same day, FERC issued an order alleging that various power entities may have participated in gaming practices through the use of partnerships, alliances or other arrangements in violation of the CAISO and PX tariffs during the same time period. This order determined that Sempra Energy Trading may have worked in concert with Coral Power LLC, Eugene Water & Electric Board and/or Public Service Company of New Mexico (PSNM) to conduct activities that might be deemed gaming practices.

Under the settlement agreement, Sempra Energy Trading will pay $7.2 million. This amount is said to be the total that Sempra Energy Trading received from the alleged gaming practices, whether individually or as part of a partnership. Payment of the settlement amount does not constitute an admission of the merit of the allegations made in the gaming and partnership orders or that the power supplier violated any governing tariff, regulation or statute or adversely affected the price formation process.

In certifying the settlement agreement to the full Commission on Thursday, FERC ALJs Carmen Cintron and Isaac Benkin said that “the public interest will be served by the approval of the agreement.”

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