News Digest

 

Power Markets

Striking a blow for power producers, who cited the risk of not being paid, the FERC denied authority to the California ISO to waive its minimum credit requirements to allow PG&E and Southern California Edison to continue to schedule transactions within ISO markets with third-party power producers and marketers.

The FERC ruled that PG&E and Edison must continue to meet ISO credit standards, except in the limited case in which PG&E or Edison would self-provide the transaction and create no risk for third parties-that is, the utilities would be using only their own generating facilities and their own proprietary transmission lines (albeit under ISO control) to execute the scheduled transaction.

The FERC said that if it allowed the ISO to lower credit standards for the two largest buyers in the market, it would foster "an inappropriate unilateral shifting of unacceptable financial risks to both large and small third-party suppliers." .

The FERC acted after noting various retaliatory actions by power producers.

On Feb. 6, Mirant Delta and Mirant Potrero (two California power producers owned by Southern company spinoff Mirant) filed a complaint at the FERC attacking the ISO's move to waive credit requirements. Representing Mirant, attorneys James Beh and Jeffrey Jakubiak (Troutman, Sanders) put the matter bluntly: "By removing all semblance of payment security, the California agencies have effectively hijacked Mirant's assets." . And earlier, on Feb. 1, Reliant Energy had written to the California ISO, accusing the ISO of violating its tariff by attempting to release the California utilities from minimum credit requirements, and filed a complaint in federal district court in Washington, D.C. for a declaratory order to relieve it from any duty to comply with ISO dispatch orders. In that letter, Reliant Energy vice president and general counsel Michael Jines said the company was "fully aware of the gravity of the current electricity situation," and thus would honor any federal order forcing it to sell power in California: "Reliant Energy remains willing ... to provide electricity to the ISO to the extent of available capacity ... per a price of $0.02 per kilowatt-hour, provided the ISO, or another party on its behalf ... delivers the natural gas necessary to generate the electricity."

That threat had led the California ISO to file its own complaint, in federal district court (Eastern District of California), charging Reliant Energy with violating the ISO tariff. .-B.W.R..

APX Northeast Contracts. Automated Power Exchange won approval to offer a collection of weekly, daily, and hourly power contracts in the "New York market," that will operate like financial contracts for differences, with payments measured against day-ahead and real-time locational-based marginal prices (LBMP) set by the New York ISO.

Buyers and sellers would be matched by the APX "market engine" in a bid/ask environment to create a binding contract with their own mutually agreed-upon price. They would close the transaction through the ISO, at the ISO's after-the-fact LBMP figure, but would then settle the difference between themselves for the difference between their own price agreement and the ISO price.

APX has asked