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It should not apply to me. | dev33 |
Thanks very much. | dev33 |
Jeff | dev33 |
Feds Hint at Power Bill Refunds Firms ordered to justify high rates David Lazarus and Lynda Gledhill, Chronicle Staff Writers Saturday, March 10, 2001 ,2001 San Francisco Chronicle URL: Federal regulators warned power companies yesterday that they may have to refund $69 million to California ratepayers for charging unreasonable prices during recent electricity shortages. | dev33 |
However, the Federal Energy Regulatory Commission left the door wide open for the unnamed 13 generators to avoid refund payments if they could offer "further justification" for why their rates should be considered fair. | dev33 |
Consumer activists were quick to note that the commission's order was significant. | dev33 |
"They have acknowledged for the first time that there has been abuse of the marketplace," said Doug Heller, assistant organizing director for the Foundation for Taxpayer and Consumer Rights in Santa Monica. | dev33 |
"It's an acknowledgment that the power companies have been ripping us off." | dev33 |
However, consumer groups also pointed out that the order -- issued late in the day -- was partly a political ploy intended to make the Bush administration look more sympathetic to California's plight. | dev33 |
The proposed $69 million refund also represents only a fraction of the billions of dollars that utilities have had to pay due to rising electricity rates. | dev33 |
The commission set narrow parameters for power charges in January that may be considered unreasonable. | dev33 |
It is only considering charges above $273 per megawatt hour during the series of Stage 3 energy emergencies that threatened statewide blackouts. | dev33 |
William Massey, the lone commissioner who voted against the order, noted that of 70,300 power transactions in January above $150 per megawatt hour, only about 13,000 fall within the regulatory commission's parameters for potential refunds. | dev33 |
"This order is arbitrary, capricious and unlawful," he said. | dev33 |
"Eighty percent of the transactions have been excluded from refunds." | dev33 |
But commission Chairman Curt Hebert characterized the order as an aggressive effort to safeguard California consumers. | dev33 |
"Today's refund order demonstrates the commission's commitment to ensure appropriate and reasonable prices in the wholesale electricity market given the supply and demand imbalance in California," he said in a statement. | dev33 |
POWER COMPANIES NOT WORRIED Gary Ackerman, executive director of the Western Power Trading Forum, an energy-industry association in Menlo Park, said power companies are not worried about the prospect of having to pay out millions of dollars in refunds. | dev33 |
"The people I've talked to said they can justify the costs for a majority of hours where FERC said there may have been overcharges," he said. | dev33 |
"We will be supplying supporting data to FERC," said Richard Wheatley, a spokesman for Reliant Energy in Houston. | dev33 |
"We commend them for doing this review. We believe this can be resolved and we can all move on." | dev33 |
Jan Smutny-Jones, president of the Independent Energy Producers, a trade group representing out-of-state generators, said the commission's order shows that the system is working. | dev33 |
"In my opinion, what has been identified is talking about potential refunds, " he said. | dev33 |
"The generators will have a chance to justify their rates. I'm not terribly troubled by that." | dev33 |
The California Independent System Operator, which oversees the state's power grid, welcomed the order, although it said $69 million is lower than its own estimates of potential overcharges. | dev33 |
The ISO had asked the commission earlier this month to review $350 million in January power charges that exceeded the regulatory commission's "soft cap" of $150 per megawatt hour. | dev33 |
A soft cap means the price can exceed the prescribed amount as long as a supplier can justify the charge. | dev33 |
REFUND ORDERS ARE RARE "The granting of refunds by FERC is not a common occurrence," said Charles Robinson, the ISO's general counsel. | dev33 |
"We're treading new ground." | dev33 |
Considering the potential ramifications of the order, the commission was oddly furtive in issuing its press release at the very end of the business week. | dev33 |
The commission's press office already was closed by the time of the announcement, and the commissioners had left for the day. | dev33 |
Reached at his home, Massey acknowledged that the commission was all but inviting power companies to bury the commission in paperwork to support their wholesale rates. | dev33 |
"Welcome to the Hebert chairmanship," he said. | dev33 |
Hebert was appointed head of the commission last month by President Bush. | dev33 |
Since then, the regulatory commission and the Bush administration have maintained a largely hands-off approach to California's energy crisis. | dev33 |
"We have said from the beginning that obviously the state of California has to address these problems and these challenges," U.S. Energy Secretary Spencer Abraham said this week. | dev33 |
E-mail David Lazarus at dlazarus@sfchronicle.com and Lynda Gledhill at | dev33 |
Quick question to Joe and/or Christian, John and Mary: I'm assuming that any deal we sign with DWR that falls below the $150/MWH soft cap is free and clear of the order FERC issued on Friday as well as any other refund risk associated with FERC's December order. | dev33 |
Is that correct? | dev33 |
Thanks. | dev33 |
Best, Jeff | dev33 |
Greetings Mark: Here is the latest. | dev33 |
ENA signed a short-term deal (5 -week term, I believe) with DWR that goes through the end of the month, at which time we have the option to extend the deal to a five-year term. | dev33 |
We are discussing other longer-term deals, too. | dev33 |
As Steve points out, we've had serious concerns regarding DWR's creditworthiness. | dev33 |
(DWR, the Dept. of Water Resources, is the state agency that Davis made the purchaser of power when the utilities hit the financial skids a few months ago and the market stopped selling them power.) The problem has been simple and significant---while our brilliant Governor and Legislature gave DWR the authority to buy power on behalf of the cash-strapped utilities, they neglected to t spell out how DWR would recover its costs of buying the power. | dev33 |
Based on comments from us and other suppliers regarding the creditworthiness issue, the California PUC issued an order last week establishing that 1) the PUC would indeed pass DWR's power costs through to ratepayers and 2) the PUC would NOT second-guess (i.e., impose "reasonabless" standards) on any contracts signed by DWR as a condition of passing the costs through to ratepayers. | dev33 |
With the CPUC decision (and other language that ENA's negotiated into the DWR contract), ENA is close to being comfortable signing the 5-year deal, even in the face of the FERC order. | dev33 |
That's predominantly due to the fact that the power price in the 5-year deal would come in well under the $150/MWH threshold that FERC has set up for any sort of "refund review." | dev33 |
But other things could crop up between now and the exercise date that could muck things up. | dev33 |
I'll keep you posted on developments as they transpire. | dev33 |
The big problem (as Steve notes) is that the State is on the verge of (some say hell bent on) taking over the entire electricity industry in California in perpetuity. | dev33 |
Our original proposal focused on getting price volatility and the utilities' financial position back under control. | dev33 |
Our contracting proposals have always been couched in the context of a temporary, stop-gap measure. | dev33 |
That is, the state would do the minimum amount needed via contracts to stabilize prices while simultaneoulsly doing what was necessary to get de-regulation back on track in California. | dev33 |
And once the situation had been righted, the State would as soon as possible exit the industry and let the market step back in. Unfortunately, command-and-control, anti-deregulation policymakers have taken hold of the agenda (with the blessing, seemingly, of the Governor), and are moving the state toward a "takeover" response. | dev33 |
That's what we're actively opposing. | dev33 |
If you have any questions, don't hesitate. | dev33 |
Best, Jeff | dev33 |
FYI. | dev33 |
I have forwarded the info to Ken, and just spoke with him. | dev33 |
Unless there are particular concerns, he will cover today's PR call with IEP. | dev33 |
Otherwise, Sue or I can listen in at 1. | dev33 |
Just let me know. | dev33 |
Best, Jeff | dev33 |
Dylan: Don't kill me. | dev33 |
Is this case due today or next Monday? | dev33 |
Roger. | dev33 |
in all week. | dev33 |
Thanks. | dev33 |
Just wanted to make sure that I wasn't losing my mind...... | dev33 |
See you tonite. | dev33 |
Best, Jeff | dev33 |
Ken: Could you please write a very brief synopsis of what took place on the IEP PR call? | dev33 |
Thanks very much. | dev33 |
Best, Jeff | dev33 |
Just got a call from a fellow named Jame Edgerly at the Enterprise Zone, Inc. He told me that Ken Lay (through Ken's secretary Vanessa) referred me to him. | dev33 |
He is very interested in getting us to help him work with the Legislature to establish an "Enterprise Zone" energy tariff to encourage investment in California's Enterprice Zones. | dev33 |
Before I launch on the effort, just wanted to check in and see if this rings a bell with you. | dev33 |
Thanks. | dev33 |
Best, Jeff | dev33 |
nope. | dev33 |
Greetings Michelle: As we talked about it last week---and now that I'm back in the office, I'm having folks check to make sure that this is 100% accurate: Rates for core subscription customers are forecasted (I believe based on previous month's gas prices). | dev33 |
Bills for core subscription customers are lagged (I believe by 30 days after consumption). | dev33 |
The IOUs face a PBR mechanism that incents them to buy index (though they may have engaged in a modest amount of hedging). | dev33 |
The California PUC issued an order (about 2 months ago) prohibiting noncore customers from switching to core subscription status. | dev33 |
I'm back in the office today, and have folks checking on this. | dev33 |
I need to pin down with certainty 1) the forecast period, and 2) the bill lag period. | dev33 |
Will get back to you as soon as we get the info. | dev33 |
If there's anything, just let me know. | dev33 |
Best, Jeff | dev33 |
Thank you. | dev33 |
For what it's worth, here are my edits overlayed on Jim's, Harry's and whomever else provided comments. | dev33 |
Best, Jeff | dev33 |
Thanks, Scott. | dev33 |
Did it include the "Sierra Pacific language" discussed on the call today? | dev33 |
Best, Jeff P.S. | dev33 |
Must be beautiful in Sacramento today. | dev33 |
Same. | dev33 |
Remember, it will soon be 135 degrees there....... | dev33 |
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