FERC Issues Power Ruling
An order issued Wednesday by federal regulators may make it easier for California’s alternative energy generators--considered a crucial component of the battle against blackouts--to bring their electricity to the market this summer.
The Federal Energy Regulatory Commission order, which came a day after Gov. Gray Davis asked the commission to “stay its hand” on matters relating to electricity producers known as “qualifying facilities,” or QFs, granted parts of the emergency relief sought by the cash-strapped facilities.
The commission said the action was “designed to ensure the maximum amount of QF power will be available to the California market this summer.” An industry group predicted this week that the state will face 260 hours of electrical blackouts this summer, a situation federal regulators say their provisions could help alleviate.
But the move was greeted angrily by Davis, who has been holding his own negotiations with the QFs and said the effect of FERC’s order is to expedite the sale of QF power “on the outrageously expensive spot market.
“I want to send a simple message to FERC: Read the Hippocratic oath: First, do no harm,” Davis said.
Nearly 700 alternative energy producers provide California with about one-fourth of the power it uses. But many of those companies have reduced their output or taken their plants offline in recent months as utilities have failed to pay their bills.
The nonpayment and an inability to get their electricity to market have caused California producers of solar, wind and biomass energy and smaller gas-fired generators to cut production by as much as 3,000 megawatts a day. The companies estimate they are owed more than $1.5 billion by Pacific Gas & Electric, which has filed for bankruptcy, and Southern California Edison.
“Clearly, we want to make sure the QFs get paid, but we also don’t want them to be going to the open market to get paid 10, 20 times the contract rate,” said Davis spokesman Steve Maviglio.
The governor’s concern, he said, was that any action by FERC might harm ongoing discussions between his office and the alternative energy generators, who have been meeting for a week to hammer out an agreement to get them back online by summer.
The FERC action ensured that QFs have the right to sell excess power--electricity they generate above their contractual obligations with utilities--to third-party purchasers, such as traders, who could sell it to the highest bidder.
FERC also said that if QFs could persuade a court to release them from contractual obligations to the utilities, they could sell all their power to such third parties.
Davis vowed to ask state Atty. Gen. Bill Lockyer to “intervene in every state court case where a QF attempts to get out of its contractual obligation.”
Federal regulators declined to void long-term contracts between the state’s alternative power generators and utilities, despite the fact that the QFs haven’t been fully paid since November.
Federal regulators also took steps to increase the power supply in Western states in the next few months by removing obstacles to rapid completion of pipeline projects.
In another matter, FERC declined to order refunds for high prices paid for power in California in April. The commission said that because Stage 3 emergencies were not called that month, no potential refunds are called for, citing that was the condition set in an earlier order issued by federal regulators.
Although California officials have said the state has been overcharged $6 billion for electricity since the crisis began, federal officials have instructed generators to refund only about $124 million or explain why the higher prices were justified.
The issue of price-gouging continues to be a point of contention between federal regulators, who have said time and again they do not believe price caps are the answer, and California officials, who say the state needs relief.
