Content-Transfer-Encoding: quoted-printable
Date: Wed, 01 Nov 2000 10:36:07 -0600
From: "Tracey Bradley" <tbradley@bracepatt.com>
To: "Jeffrey Watkiss" <dwatkiss@bracepatt.com>, "Paul Fox" 
<pfox@bracepatt.com>, "Ronald Carroll" <rcarroll@bracepatt.com>
Subject: DJ - CalPX Responds To FERC, Denies It Worsened Power Prices
Mime-Version: 1.0
Content-Type: text/plain; charset=ISO-8859-1
Content-Disposition: inline

CalPX's take on FERC's ability to end mandatory buy requirement.


DJ CalPX Responds To FERC, Denies It Worsened Power Prices
Copyright , 2000 Dow Jones & Company, Inc.



NEW YORK (Dow Jones)--The chief executive officer of the California Power 
Exchange responded Tuesday to details in a federal energy regulatory report 
that suggests the two-year-old exchange's mandatory buy requirement was 
partly to blame for this past summer's soaring wholesale electricity prices.

The details of the landmark probe prepared by the Federal Energy Regulatory 
Commission is scheduled to be released Wednesday morning, but some 
commissioners told Dow Jones Newswires the report will suggest that the 
state's mandatory buy rule should be abolished and utilities should be 
permitted to purchase their power through other power exchanges.

"We believe that the representation of the CalPX contributing to soaring 
wholesale prices is incorrect and misleading," said CalPX CEO George Sladoje.

"Over the summer months, certain wholesale market participants chose to not 
take full advantage of the price and cost mitigating products offered through 
the CalPX...if a participant chose to purchase all or most of their energy on 
the spot market, they often paid much more than other participants who chose 
to buy in the forwards market," Sladoje added.

It is widely known in the wholesale electricity market that Sempra Energy 
(SRE) unit San Diego Gas & Electric Co. purchased most of their power in the 
spot market, which the utility passed on to its customers at a much higher 
price.

SDG&E also complained to federal regulators that the CalPX hourly and 
day-ahead market clearing prices are too high.

When California moved to electricity deregulation four years ago, a statewide 
power exchange was created requiring Edison International (EIX) unit Southern 
California Edison, PG&E Corp. (PCG) unit Pacific Gas & Electric Co. and San 
Diego Gas & Electric Co. to purchase all of their power through the exchange 
until 2002, the expected transition date to a completely deregulated market.

But the FERC report proposes that utilities be permitted to purchase power 
from other exchanges in an effort to generate increased competition, 
commissioners said.

The CalPX purchases power one day in advance for California's three 
investor-owned utilities. Suppliers bid in power indicating their price. For 
each hour of the next day, the price of the last megawatt taken to meet 
demand sets the market price.

In various reports issued since 1996, FERC has commended the state's Power 
Exchange for running a successful market that helped mitigate concerns about 
market power abuses.

If the FERC report suggests that California end the mandatory buy 
requirement, it will be up to state lawmakers to see to draft Legislation to 
change the market rules, according to the CalPX.

-By Jason Leopold, Dow Jones Newswires; 323-658-3874; 
mailto:jason.leopold@dowjones.com

(END) Dow Jones Newswires 31-10-00