The California Public Utilities Commission’s (CPUC) claim that Williams Energy Marketing and Trading has market power in the California and western wholesale power markets and is flagrantly abusing it is unfounded, the marketer contends. Consequently, the CPUC’s request to suspend Williams Energy’s market-based rate authority should be rejected by FERC.

An updated market analysis, which Williams Energy submitted on March 12, “shows no changes in facts during the past three years that would give Williams…dominance in any relevant market” in the West and jeopardize its authority to charge market-based rates, the marketer told the Commission.

Moreover, given that the CPUC hasn’t brought a Section 206 complaint against Williams Energy, it has failed to provide any basis for the Commission to respond to its request, Williams Energy said. “A triennial market update does not provide any basis by which FERC can suspend an effective rate schedule.”

The CPUC argues that “any doubt” about whether Williams Energy has market power and is exercising it was removed when the Commission issued a show-cause order against the company in mid-March (See NGI, March 19). It ordered Williams Energy and AES Southland Inc. to show cause why they should not be found in violation of the Federal Power Act (FPA) for allegedly engaging in actions that drove up power prices in the California bulk market and potentially compromised the reliability of the transmission network.

In the event that Williams Energy and AES can’t successfully refute the charges, the Commission could order the two companies to return profits of more than $10.8 million, and it could condition their future market-based rate authority. They have until this month to show cause why they should not be held in violation of the FPA.

Since May 1998, Williams Energy has had the exclusive rights to market and dispatch the power output of the generation facilities of subsidiaries of AES Corporation in southern California.

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