California PX takes FERC to court

Jan. 12, 2001—The California Power Exchange (PX), in a fight for its very existence, petitioned a U.S. Court of Appeals for a stay of a Federal Energy Regulatory Commission (FERC) order which it claims threatens the exchange�s livelihood.

Oral arguments on the emergency petition before the U.S. Ninth Circuit Court of Appeals are scheduled Feb. 7.

The Dec. 15 FERC order eliminates a requirement that California�s three investor-owned utilities must buy and sell power on the California PX and also prohibits utilities from selling power from their own plants into any of the exchange’s markets.

The FERC order is intended to encourage the utilities to use more long-term bilateral contracts lessening their dependence on the volatile spot market. All power bought and sold by utilities was previously bid into the PX day ahead market and forwards market.

The PX is a nonprofit corporation created by the state legislature to provide a competitive auction for energy after the electric industry was deregulated. But the PX argues in a brief filed Thursday it is suffering �irreparable harm.”

In curtailing the markets the PX operates, “FERC substantially curtailed CalPx�s ability to recover its costs and ultimately to stay in business,� the power exchange states in the brief. FERC essentially �dissolved the PX,� it argues.

The PX acknowledges FERC has the right to set “new just and reasonable rates” in California, but FERC “neglects to explain why it refused to set such just and reasonable rates for CALPx but instead simply terminated its rate schedules.”

The Dec. 15 order also brought forward energy trading to a halt on the PX and creates uncertainty about the validity of existing contracts, the PX alleges. It argues FERC’s action is at odds with the agency’s intention to encourage long-term and forward contracting, according to the PX�s filing.