FERC staff last week moved to clear various power-related entities of charges that they tried to manipulate California’s electricity markets in 2000-2001. Under separate settlements, FERC staff proposed tossing out gaming allegations against Portland General Electric (PGE), American Electric Power (AEP), San Diego Gas & Electric Co. (SDG&E) and Aquila Merchant Services Inc.

FERC in June formally initiated show cause enforcement proceedings against an estimated 60 energy marketers, as well as municipal and investor-owned utilities, for allegedly gaming the California Independent System Operator (CAISO) and Power Exchange (PX) more than two years ago. Violators would be required to return any profits stemming from the questionable activities. The suppliers cited in the order were directed to respond to the show cause actions by Sept. 2.

FERC trial staff and PGE last Wednesday filed a settlement agreement with a Commission administrative law judge (ALJ) that resolves all gaming allegations previously made against the utility in the show cause order.

Pursuant to the show cause order, CAISO in July submitted transaction data that identified potential transactions that may have constituted gaming and/or anomalous behavior on the part of each listed company. “Staff has reviewed the transaction information relative to the allegations of potential gaming practices against Portland [General Electric],” the settlement agreement stated. The settlement was filed with FERC ALJ Carmen Cintron.

Also, FERC staff has examined PGE’s response, under which the utility explained that each identified transaction did not fit the Commission’s definition of a gaming practice, was below the threshold for prosecution or was otherwise a legitimate business deal.

In the interest of settlement and without admitting any liability, PGE has offered to pay a settlement amount representing all the revenues associated with two of the transactions in question and FERC staff has accepted the utility’s offer. The specific monetary amount of the payment was not detailed in the filing.

In a similar filing, AEP and FERC staff last week filed a settlement agreement with Cintron aimed at resolving allegations that AEP attempted to manipulate California’s electricity markets in 2000-2001. Under the deal, the utility has agreed to pay $45,240, a figure that is equal to the total revenues received by AEP from the alleged gaming practices known as “cutting non-firm” or non-firm export.

Also, FERC trial staff and SDG&E last Friday filed a proposed settlement agreement with Cintron. FERC staff and the utility said that in order to bring this proceeding to “swift and certain closure,” SDG&E has agreed to pay $27,972 to “fully and finally resolve all issues and claims” related to the company in the proceeding. SDG&E admits “no wrong,” the agreement noted.

Aquila Inc. on Friday said that its wholly-owned subsidiary, Aquila Merchant Services, has entered into an agreement with FERC trial staff to settle charges that the company allegedly was involved in the manipulation of western power markets during the region’s 2000-2001 energy crisis.

Aquila said that the $75,975.42 settlement is designed to avoid litigation costs to prove that Aquila Merchant Services’ energy trading practices were proper and in full compliance with the FERC regulations and standards. The settlement amount is based on the total revenue associated with the transactions in question.

Aquila “strongly believes” that the allegations against Aquila Merchant Services “do not have any merit” and that Aquila Merchant Services’ trading activities did not violate any tariff, regulation or statute or adversely affect market prices.

Meanwhile, in separate filings also made last week, FERC staff moved to dismiss gaming charges previously levied against the Salt River Agricultural Improvement and Power District and the city of Anaheim, CA.

With respect to Salt River, the show cause order determined that Salt River appeared to have engaged in the gaming practice known as “false import” or “ricochet.” But based upon its investigation of Salt River and documentation submitted by the entity, FERC staff has determined that Salt River did not engage in that trading strategy.

Staff said that the evidence shows that from May 1, 2000 through Oct. 2, 2000, Salt River made a “relatively small number” of out-of-market sales to CAISO. “However, the evidence shows that none of these sales involved a third party and none of the sales were made at a price in excess of the price cap in the ISO real-time market.”

Turning to Anaheim, FERC staff noted that the show cause order determined that the city appeared to have participated in so-called “paper trading” and the congestion-related practice of scheduling service on out-of-service lines. Staff “finds no basis to substantiate the allegations that Anaheim engaged in either paper trading or scheduling service on out-of-service lines.”

FERC staff has also recently moved to dismiss gaming allegations made in the show cause order against Tucson Electric Power Co., Public Service Co. of New Mexico, Cargill Power Markets, Sierra Pacific Power and the city of Riverside, CA.

In related news, bankrupt Mirant Corp. last week asked FERC to give it additional time to file a response to the show cause decision. Mirant said that it has reached a settlement in principle in the proceeding with FERC staff, but does not expect that settlement language will be fully drafted prior to the Sept. 2 deadline.

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