FERC last week ordered settlement talks in response to complaints filed by the city of Burbank, CA, and Kroger Co., a national grocery chain, against power suppliers seeking to modify forward bilateral contracts for power supplies that were entered into during the California energy crisis of 2000-2001.

Kroger last summer asked FERC to either reform or terminate a series of power delivery arrangements executed between Dynegy Power Marketing Inc. and AES NewEnergy Inc. on the grounds that the deals have left the grocery chain facing “grossly inflated prices” for power.

At issue are the prices included in four wholesale, forward bilateral contracts between Dynegy and AES NewEnergy, the costs of which are directly passed through to Kroger. The contracts were entered into between March and May 2001 and contemplated deliveries of energy between April 2001 and December 2006.

Also last summer, in a separate complaint, Burbank took aim at rates included in five long-term, forward bilateral contracts the city entered into with Calpine Energy Services L.P., Duke Energy Trading and Marketing LLC and El Paso Merchant Energy L.P. These contracts were also entered into between March and May 2001 and contemplated deliveries of power between January 2002 and December 2004.

Burbank asked the Commission to order the suppliers to refund all amounts “unlawfully collected” under the contracts, plus interest. At the same time, the city wants the contracts to be reformed so that the prices included in them are “just and reasonable.”

FERC on Monday set the complaints for hearing, but is holding that hearing in abeyance pending the outcome of settlement judge procedures. The Commission directed its chief judge to appoint a settlement judge in the proceeding within 15 days of the date of its order.

The settlement judge in turn will report to FERC’s chief judge and the full Commission within 60 days of the date of the decision concerning the status of settlement talks. “Based on this report, the chief judge shall provide the parties with additional time to continue their settlement discussions or provide for commencement of a hearing by assigning the case to a presiding judge.”

FERC Commissioner Nora Brownell, in a concurring statement attached to the order, noted that these cases share a number of issues of law and fact with cases that include Nevada Power. “Within a few short weeks, the Commission will be issuing decisions in the Nevada Power cases that will likely resolve some of these common issues and focus the factual inquiry related to others,” wrote Brownell.

“Therefore, I believe that by holding these cases in abeyance pending the issuance of those decisions, the parties will be spared the time and expense of duplicative, unnecessary litigation while still receiving a full opportunity to address at hearing the truly case-specific, factual issues that remain.”

A FERC administrative law judge (ALJ) in December urged the full Commission to dismiss a series of complaints brought by power companies in Nevada, California and Washington state seeking to reform above-market electric contracts that they entered into with generators during the height of the western energy crisis in 2000 and 2001.

The complainants — Nevada Power, Sierra Pacific Power, Southern California Water Co. and the Snohomish public utility district in Washington — failed to show that the contract rates in question adversely affected the public interest as required under the Mobile-Sierra doctrine, which ALJ Carmen Cintron said was the “applicable standard for use in this case.”

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