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FERC orders partial refunds for July power sales in California


By the OGJ Online Staff

HOUSTON, Oct. 8, 2001 — Federal regulators denied requests by four power producers to sell electricity at prices exceeding a cap in July in California and other western US markets and ordered partial refunds for that month’s sales.

In a separate case, Federal Energy Regulatory Commission administrative law Judge Bruce Birchman has until March 8 to issued a report on whether California is entitled to refunds of nearly $9 billion for wholesale power when prices soared last year.

FERC rejected the power generators demands for payments above the July price level set by the agency and the California Independent System Operator — the so-called proxy market clearing price. FERC said the companies either offered inadequate reasons for charging above-market prices or failed to file their cost justifications with the agency in time.

Affiliates of Dynegy Inc., Houston; Reliant Energy Inc., Houston; Mirant Corp., Atlanta, Ga.; and Williams Cos. Inc., Tulsa, Okla., were ordered to make partial refunds, although FERC didn’t specify the amount in a Friday order.

Under a June 19 order, FERC permitted sellers dissatisfied with the proxy price to justify the higher price with the agency or propose cost-based rates for their entire portfolio. Under the order, all spot market transactions above the proxy market clearing price were subject to refund.

Cost justification documentation for July transactions was due on or before Aug. 7. FERC said Dynegy’s and Mirant’s documents weren’t filed until Aug. 9 and didn’t meet the deadline. “We reject Dynegy’s cost justification both because they are untimely and because neither company supported in detail its actual costs for its transactions,” the agency said in the order.

Reliant also failed to provide adequate support for charges above the proxy market price. “In particular, Reliant did not identify any significant change in the natural gas markets, and Reliant did not document its entire gas portfolio or the allocation among all of its resources during the relevant time,” the commission said.

FERC said Williams didn’t supply actual cost support for its transactions beyond restating general objections to the commission pricing methodology. The commission if others sellers in the West sold power above the proxy price in July and haven’t filed cost justifications for the transactions, the time to justify the prices has lapsed and they are not entitled to received more than the proxy price for the month.