FERC Orders Refunds by 4 Power Firms
Federal energy regulators have ordered four energy generating companies to refund unspecified amounts of money because their prices in July exceeded federal price limits.
The Federal Energy Regulatory Commission order directs Dynegy Corp., Mirant Corp., Williams Cos. and Reliant Energy to give the refunds. Though FERC did not specify how much money each company should be prepared to give back, the operators of the California electricity grid estimate that in all, they were overcharged $260,000 by power sellers in July.
Under federal rules, generating companies have to provide regulators proof that prices charged above a wholesale price ceiling--now at $92 per megawatt-hour--are justified. Companies can also forgo explaining why their electricity cost more than the price ceiling and simply accept the federally set price for their power sales.
FERC set the ceiling in a June 19 decision that is credited with helping dampen prices in what had been an exorbitant Western wholesale electricity market. At times, prices in that market had exceeded $1,000 per megawatt-hour. (A megawatt-hour is enough electricity to supply roughly 750 homes for an hour).
The FERC order, issued late Friday, concluded that the justifications submitted by the four companies for electricity sold in July were either not filed on time or were unsubstantiated. FERC found that Reliant Energy, for example, did not offer sufficient detail about the price of the natural gas that the company purchases to run its Southern California power plants.
Reliant spokesman Richard Wheatley said the company will give FERC more information.
“I think it’s just a matter of ironing out what details FERC is going to need,” he said.
Of the four companies, only Williams released the amount of money it is being asked to refund.
Paula Hall-Collins, spokeswoman for the Tulsa-based company, said that $30,000 worth of electricity sales are subject to the FERC rebate order for both June and July.
Williams will ask for a rehearing on the issue, she said, because the company opposes the method federal regulators use to calculate the price ceiling. “Most of our power is sold in long-term contracts,” she said. “We don’t deal that much in the spot market.”
Dynegy spokesman Steve Stengel said his company also would ask FERC to reconsider its order.
“Our information was late, and that’s why it was rejected,” he said. “We have the opportunity to file for rehearing, and we plan to do that.”
FERC’s June 19 order was its most drastic and comprehensive attempt at taming wholesale electricity prices that leaped upward in May 2000 and stayed high until crashing last summer. The order came closest to appeasing the California politicians who had for months beseeched FERC to cap prices.
Under the order, the price ceiling is set at the amount it cost to run the most inefficient, expensive power plant selling electricity to California grid operators the last time the state’s power reserves reached a critically low level.
Some sellers were allowed to charge more, but only if they could justify the higher price based on what it cost to generate the electricity.
“We’re happy that FERC is monitoring the situation and responding reasonably quickly,” said Charles Robinson, general counsel for the California Independent System Operator, the agency that manages 75% of California’s transmission system.
