This is troublesome
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Date: Thu, 10 May 2001 09:34:05 -0500
From: "Tracey Bradley" <tbradley@bracepatt.com>
To: "Justin Long" <jlong@bracepatt.com>, "Paul Fox" <pfox@bracepatt.com>
Cc: "Andrea Settanni" <asettanni@bracepatt.com>, "Deanna King" 
<dking@bracepatt.com>, "Dan Watkiss" <dwatkiss@bracepatt.com>, "Ronald 
Carroll" <rcarroll@bracepatt.com>
Subject: FERC Eyes Making More Calif Pwr Sales Subject To Refund
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According to this article, FERC officials have indicated that FERC might 
modify its 3 proxy price/refund orders to include sales made during Stage 1 
and Stage 2 emergencies.


FERC Eyes Making More Calif Pwr Sales Subject To Refund

Updated: Wednesday, May 9, 2001 05:56 PM ET
By Bryan Lee
OF DOW JONES NEWSWIRES


WASHINGTON (Dow Jones)--The U.S. Federal Energy Regulatory Commission is 
considering orders that would broaden the scope of California power sales - 
subject to potential refund for overcharges, according to knowledgeable FERC 
officials.

FERC has issued three refund orders to date, totaling nearly $125 million for 
the first three months of this year.

In calculating the potential refunds, the commission limited its 
consideration to power sales made during Stage 3 power-grid emergencies 
declared by the California Independent System Operator.

Stage 3 alerts are the last step before the state's grid operator orders 
rolling blackouts because demand has outstripped the system's ability to 
deliver power.

The orders established proxy market-clearing prices for Stage 3 emergencies - 
and ordered power providers to justify the higher costs or provide refunds to 
the California ISO.

The orders were highly controversial, stirring criticism from California 
officials and others who complained that the orders were too narrow and 
failed to require refunds for unjust and unreasonable power costs during all 
hours.

The California ISO has placed its overcharges at $6.2 billion for electricity 
purchased during a 10-month period from May 2000 through February of this 
year. The calculation wasn't limited to just grid-emergency hours.

By limiting refund liability to just Stage 3 emergencies, FERC sought $69 
million in refunds for January, $55 million in February, and $587,000 for 
March.

FERC Commissioner William Massey has decried the refund orders as "paltry" 
and "arbitrary" and called for the commission to order refunds for power 
sales during all hours, not just Stage 3 grid emergencies.

The broader refund orders under consideration by the commission won't go far 
enough to satisfy Massey, California officials and other critics, however.

In acting on requests for rehearing of the three refund orders, the 
commission is looking to also make sales during Stage 1 and Stage 2 
emergencies subject to potential refund, according to FERC officials.

The commission on rehearing will adjust the refund orders to reflect the 
California power price mitigation plan FERC approved late last month.

Under the order, the ISO going forward will establish cost-based 
market-clearing prices for Stage 1, 2 and 3 emergencies. Power providers 
would have to justify power sales above the proxy market-clearing price - or 
make refunds to the ISO.

In light of the price mitigation order's consideration of all three stages of 
power-grid emergencies declared by the ISO, "It doesn't make any sense to 
have those stage 3 refund orders sticking out like a sore thumb," said a FERC 
official, who confirmed the commission's intent to adjust the refund orders 
on rehearing.

By Bryan Lee, Dow Jones Newswires, 202-862-6647, bryan.lee@dowjones.com