FERC on Friday put 13 California power sellers on notice thatthey must either make refunds to the tune of about $69 million orprovide further justification of the prices they charged forelectricity sold in the California Independent System Operator(ISO) and Power Exchange (PX) markets during the month of January.
The companies include Arizona Public Service, Automated PowerExchange, California Power Exchange Corp., Duke Energy Trading& Marketing LLC, Dynegy Power Marketing, Nevada Power Co.,Portland General Electric Co., Public Service Company of Colorado,Reliant Energy Services, Sempra Energy Trading, Mirant CaliforniaLLC (as well as Mirant Delta LLC and Mirtant Potrero LLC), andWilliams Energy Services.
In Friday’s order, FERC gave the companies until March 23 toinform it as to whether they intend to make the refunds or providethe Commission with information to further justify their prices.
In reviewing generators’ weekly transactions reports forJanuary, the Commission said it determined that certain bulk powertransactions appeared to be unreasonable, requiring either refundsor further explanation by the sellers of their prices. Powersuppliers that bid above the $150/MWh “soft” price cap that FERCestablished in December are required to file weekly reports withthe Commission.
The “refund order demonstrates the Commission’s commitment toensure appropriate and reasonable prices in the wholesaleelectricity market given the supply and demand imbalance inCalifornia,” said FERC Chairman Curt Hebert. “My hope isthatÃ¿starting May 1 the Commission will have a market-monitoringprogram in place so that we do not have to order after-the-factrefunds.” Ã¿FERC currently is reviewing power transactions that tookplace in the Cal-ISO and Cal-PX during February.
The potential refunds ordered by the Commission were only afraction of the amount sought by some. The California Parties (theISO and the California Electricity Oversight Board) pegged theamount of refunds due for the period between Dec. 8 and Jan. 31 atabout $550 million. Of that, they estimated that $248 million inrefunds were due for the period between Dec. 8 and Dec. 31, but theCommission said it would address this in a separate order. Theyfurther noted that about $170 million in refunds were due fromnon-public utility sellers in January, but FERC said it didn’t havejurisdiction over these suppliers.
In determining the potential refunds for January, FERC said itestablished a “proxy clearing price” of $273/MWh for the monthbased on average natural gas prices, average NOx allowance costsand variable operation and maintenance costs. Power suppliers thathad transactions above the proxy clearing price during Stage 3emergencies in California were put on the Commission’s list ofpotential offenders.
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