FERC has agreed to allow UBS AG to sell energy, capacity and ancillary services at market-based rates, a decision that follows on the heels of UBS Warburg Energy, a U.S.-based unit of UBS, last month purchasing the North American natural gas and power trading business of Enron Corp.

However, the Commission warned UBS that if it does not provide information in a timely fashion to Commission staff investigating whether short-term prices in electric or natural gas markets out West were manipulated, the federal agency would revoke UBS’ market-based rate authorization.

UBS recently started energy trading operations and completed a partial reincarnation of EnronOnline — now called UBSWenergy.com (see Daily GPI, Feb. 12).

UBS on Feb. 6 filed an application at the Commission seeking the authority to sell energy, capacity and ancillary services at market-based rates. UBS said that authorization to compete in the bulk power markets will benefit Enron’s creditors, prospective employees and the public at large.

The Federal Energy Regulatory Commission on Feb. 13 issued an order initiating a fact-finding investigation into possible manipulation of short-term prices for natural gas and electricity in West Coast markets. The agency’s action was sparked by the Enron financial debacle, FERC Chairman Pat Wood said at the time the order was unveiled (see Daily GPI, Feb. 14).

Pursuant to that order, an associate director in FERC’s Office of Markets, Tariffs and Rates on Feb. 15 submitted a data request to Enron seeking, among other things, all contracts for sales of electric energy on which Enron defaulted or that have been canceled or terminated early.

FERC on March 7 conditionally accepted for filing the proposed market-based rate schedule filed by UBS. The Commission conditioned its authorization on UBS providing all information requested by FERC staff in its fact-finding investigation of western energy prices. The Commission pointed out that this includes FERC staff having access to any former Enron employees UBS has hired.

“Failure to provide this information in a timely manner will result in revocation of UBS’ market-based rate authorization,” the Commission said. “We also reserve the right to further condition UBS’ market-based rate authorization in the future should we so require as a result of the staff investigation.”

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