FERC this week will put some meat on the bones of an electric order it issued late last year proposing to revise all existing market-based rate tariffs and authorizations in order to prohibit anti-competitive behavior or the exercise of market power, FERC Chairman Pat Wood told reporters last Wednesday after appearing at a breakfast meeting sponsored by the Electric Power Supply Association (EPSA). The order has come under criticism from some quarters as being ambiguous and placing an open-ended refund condition on sellers of power.

In the Nov. 20, 2001 order [EL01-118], the Commission also instituted a proceeding to establish a refund effective date should it find that electric power rates are unjust and unreasonable. At the time of the decision, FERC expressed concern about the potential for public utilities with market-based rate authorization to exercise market power or engage in anti-competitive behavior, and affirmed its commitment to ensure that rates are just and reasonable.

“I think we listened to a lot of things and we’ll crispen up the rule,” Wood said. “The biggest complaint was that it was very unclear and amorphous,” he went on to note.

Indeed, the order drew harsh criticism from generators on several fronts. Calpine Energy Services LP, for example, said that the proposal to establish an “open-ended refund condition on public utility sellers of electricity is beyond its statutory authority and accordingly unlawful.”

Wall Street also voiced concerns in the wake of the Commission’s decision. Earlier this year, Goldman Sachs said that investors may perceive the move as a potential open-ended refund obligation for electric industry participants with market-based rate authority, which in turn could cause financiers to shift their money into other non-electric utility sectors.

The Commission wants to give “some real clarity to what we actually mean” as it relates to the Nov. 20 order, Wood said after his appearance before EPSA members. “Everybody wants the details, so we’ll give them the details.”

FERC is set to take up the matter at its next agenda meeting, which is scheduled for this Wednesday.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.