I am told that due to the lack of settlement the Judge will recommend a 
refund based on a proxy MCP wherein there will be a daily or hourly heat rate 
multiplied by a DAILY gas price + O&M.  Emission costs would be justfied on a 
generator-specific basis.

The refund would only look at transactions 2 Oct. 00 - 19 June 01.  Note that 
refund orders have already come out so presumably this recommendation would  
lead to a modification of  those existing orders. 

The modifications proposed to the June 19 order affect the refund caculation 
only; this does not change anything to the current mitigation rules.

To reiterate: the judges recommendation is just that and FERC has not yet 
ruled fromally.

More news to come.

Alan Comnes

US FERC-Ordered Calif Power Talks End Without Agreement

07/09/2001 
Dow Jones Energy Service 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 

WASHINGTON -(Dow Jones)- Federally mediated negotiations between the state of 
California and power providers ended Monday without an agreement settling the 
state's demand for refunds for alleged overcharges. 

Throughout the fast track 15-day settlement conference California remained 
steadfast in its demand for $8.9 billion in refunds. But power providers 
offered a total of $716.1 million, according to the federal mediator 
overseeing the talks.

U.S. Federal Energy Regulatory Commission Chief Administrative Law Judge 
Curtis Wagner said at the close of talks Monday that he will recommend that 
the commission use its June 19 price-mitigation order to retroactively 
determine refunds due dating back to Oct. 2, 2000. Such an approach is 
expected to result in a total refund far less than the nearly $9 billion 
sought by the state. 

The FERC ordered settlement conference "set the balls rolling," Wagner said. 
"In 15 days you can't work miracles," he said of the unresolved negotiations. 

Wagner said he would recommend that FERC order a fast-track hearing of 60 
days or less to address the disputed issues unresolved by the talks. He also 
said he would recommend alterations in the June 19 orders pricing methodology 
to address "problems" involving power plant heat rates, natural gas pricing 
and the cost of emissions permits. 

Of the total $716 million in refund offers cited by Wagner, the so-called Big 
5 Power Generators in California had offered $510 million. The remainder 
included $125 million offered by BC Hydro's Powerex, $49.6 million by a group 
of 15 power marketers, $16.5 million by six California municipal utilities 
and $25 million offered by "load serving entities" outside California. 

"Many of the offers of settlement could with time result in an agreement," 
Wagner said. 

Wagner also noted that California came "close to settlement" with Calpine 
Corp. (CPN) during the negotiations. Calpine Vice President Joe Roman told 
reporters that the agreement with California was "close to gelling."



 

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