Off Peak

October 1, 2001

Pennies From Heaven

 

Make that 2.3 cents-the miserly refund that California says it might owe for power that it sold to the Pacific Northwest.

Every time it rains ... it still leaves those hydro reservoirs just a little bit short.

In August, the California Department of Water Resources (DWR) filed evidence at the Federal Energy Regulatory Commission claiming nearly $1.5 billion in refunds on some 6.8 million megawatts of power it purchased between Jan. 17 and June 20 from suppliers in the Pacific Northwest. The figures imply that California overpaid by about $215.50 per megawatt-hour.

By contrast, the DWR says it sold some 1.35 MWh to Pacific Northwest buyers over the same period. But on those sales, DWR admits it owes refunds of only $31,241, or about 2.3 cents per MWh.

Question: Please state your name and business address.

Witness: My name is William Green. ... I am the manager of billing and settlements for the California Energy Resources Scheduling Division (CERS) of the California Department of Water Resources.

Question: Did CERS keep records of its bilateral energy purchases and exchanges?

Witness: Yes. ... We are able to identify the source of the power, by delivery point, that we purchased in bilateral transactions, and therefore confirm that it originated in the Pacific Northwest.

Question: What price have you used as the basis for calculating refunds?

Witness: I have compared the actual price CERS paid to the unadjusted MMCP [mitigated market-clearing price] as calculated by the ISO [Independent System Operator in [FERC] and submitted on Aug. 9, 2001.

Question: Why did you use the ISO's unadjusted MMCP?

Witness: [W]e believe that a cost-based price would be most appropriate as a refund benchmark [and] the ISO's MMCP is the formula currently advanced by FERC as the basis to calculate prices for a West-wide market mitigation.

Question: Using this methodology, what refunds are owed for purchases made by CERS in the Pacific Northwest [over the relevant period]?

Witness: The total refunds due are $1,466,098.96, and fall into various categories. ...

Question: During the time period in question, was CERS also a seller of wholesale power in the Pacific Northwest?

Witness: Yes. ...

Question: Using the formula that CERS has used to calculate refunds due it, would CERS owe refunds to purchasers for the sale it made?

Witness: Applying the unadjusted MMCP that we use as the basis for refunds ... CERS would owe $31,241 to other purchasers. ... Exhibit CAL-4 is my summary calculation. ...

Question: Does this conclude your direct testimony in this case?

Witness: Yes, it does.

 

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