In an upset of an administrative law judge (ALJ) ruling, the Federal Energy Regulatory Commission has opened the door for California regulators, the state attorney general and other parties to try to obtain from energy suppliers certain documents that were submitted to the agency as part of its ongoing probe of natural gas and electricity prices in California and other western markets.

Responding to a mid-December bid for a review of the ALJ ruling, the Commission said it will permit the California parties to “seek through data requests served on the sellers certain documents provided to the Commission” during its year-long probe of western markets [PA02-2]. FERC kept intact its earlier ruling from November, which prohibited parties from deposing or seeking directly from the agency or staff information related to the investigation.

California regulators, state Attorney General Bill Lockyer, the California Electricity Oversight Board and the state’s public utilities are trying to gain access to the documents and related information to prove their claims of supplier overcharges during the 2000-2001 power crisis. They took issue with a ruling by ALJ H. Peter Young in November that the investigation documents were only discoverable under the Freedom of Information Act (FOIA).

But in its Jan. 10 order, FERC said Young was in error when he ruled that the California parties must obtain the sought-after documents under the FOIA. The Commission “does not wish to encourage FOIA requests of information obtained through enforcement investigations and generally will not grant such requests except to the extent required under FOIA,” the order said.

Specifically, FERC said it will allow the California parties to ask suppliers to provide their responses to a March 5, 2002 FERC information request on jurisdictional and non-jurisdictional wholesale energy sales in western markets; FERC’s data request on supplier trading strategies in the California power market; the agency’s request on “wash trades;” and the Commission’s request about natural gas sales in the West and Texas.

A supplier’s refusal to comply with a California request based on “claims as to privilege, confidentiality, and/or non-discoverability on any other grounds should be addressed by [Young],” according to the agency order.

FERC further said the California parties “can conduct their own depositions” to obtain information that suppliers may have provided to FERC staff in depositions. It noted, however, that discovery of depositions conducted jointly by FERC, the Commodity Futures Trading Commission and/or the Department of Justice was off-limits to California regulators and other parties.

The Commission said that opening up these depositions to public scrutiny could jeopardize the integrity of ongoing civil and criminal investigations that are being conducted by various federal agencies.

Lastly, it denied the California parties access to “any other documents” turned over by suppliers to FERC staff as part of its investigation. The “premature disclosure” of this information would have a “chilling effect” on the willingness of companies to cooperate with future Commission inquiries, and “would discourage parties from providing additional assistance to the Commission in its investigations,” the order said.

The state is expected to try to use the information to support its claim for at least $9 billion in refunds stemming from the alleged manipulation of the western wholesale energy markets in 2000-2001.

FERC still is trying to determine the amount of refunds owed to California. Last month, an agency administrative law judge tentatively recommended $1.8 billion in refunds for the state, an amount that is overshadowed by the $3 billion the state owes in unpaid power bills to major suppliers during the crisis period.

As part of the investigation, FERC in November allowed 100 extra days for all parties to submit new evidence on whether California’s wholesale market was manipulated. That period runs through Feb. 28.

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