E-commerce services provider Automated Power Exchange Inc. (APX)said its new electronic power trading platform does not fall underthe FERC’s jurisdiction because it uses no price-settingmechanisms. The company challenged the FERC over its jurisdictionof power trading and said the recent denial of its petition willhave little impact on the Santa Clara, CA-based company.

APX upgraded its trading platform, APX Market 2000, March 6, theday before the court’s decision was announced. The new platformdoes not use the market-pricing algorithm cited by the court butrather a bid-ask approach to clearing APX electricity exchangemarkets. APX customers decide on all terms of trade and only tradeat the price they have chosen. The bid-ask approach also is used bypower brokers and has been deemed nonjurisdictional by FERC.

“Congress did not vest FERC with general jurisdiction over allparticipants in the wholesale electric power industry …,” thecourt said, noting FERC’s jurisdiction is limited to situationswhere traders take title to power or play “a role in setting theprice.”

“Our new trading platform, which employs absolutely noprice-setting mechanisms, clearly falls outside of these limits,”said APX CEO Edward G. Cazalet. “The court’s decision creates aclearer path for e-commerce-based power exchanges which heightenthe efficiency of the market and help to stabilize prices-incontributing to the goals of deregulation.

“Due to the rapid pace of e-commerce technology, the court’sdecision not to accept our petition for review of FERC’s assertionof jurisdiction has little immediate impact on our business. Thedecision was based largely on market-pricing technology that we nolonger use.”

The appeal was argued Dec. 3. The APX brief (No. 98-1415), whichwas filed June 14, appealed FERC’s March 1998 orders that APXqualifies as a “public utility” under the Federal Power Act andthus falls under its jurisdiction. Prior to FERC’s assertionregarding APX, the commission had not claimed jurisdiction overentities that neither sell nor transmit power in interstatecommerce, but only facilitate such trades.

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