Message-ID: <4044546.1075844231494.JavaMail.evans@thyme> Date: Fri, 6 Apr 2001 10:22:00 -0700 (PDT) From: jgallagher@epsa.org To: bhawkin@enron.com, bmerola@enron.com, christi.l.nicolay@enron.com, donna.fulton@enron.com, janelle.scheuer@enron.com, jeff_brown@enron.com, jhartso@enron.com, jsteffe@enron.com, rshapiro@enron.com, sarah.novosel@enron.com, tom.hoatson@enron.com Subject: FERC Orders Issued April 6th Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: "Jackie Gallagher" X-To: , , , , , , , , , , X-cc: X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\Discussion threads X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf MEMORANDUM TO: Regulatory Affairs Committee Power Marketers Working Group FROM: Joe Hartsoe, Regulatory Affairs Committee Chair Bob Reilley, Power Marketers Working Group Chair Julie Simon, Vice President of Policy Mark Bennett, Senior Manager of Policy Erin Perrigo, Manager of Policy DATE: April 6, 2001 RE: FERC Orders Issued April 6th (1) CalPX Chargebacks; (2)CalPX Rate Recalculations; and (3) Kern River Certificate We want to inform you of three significant orders FERC issued today, two relating to the California Power Exchange (CalPX), and the third concerning a pipeline project from Wyoming to California. (1) Pacific Gas & Electric Company v. California Power Exchange Corporation, et al. (Docket Nos. EL01-29/33/36/37/43-000) "Order on Complaints Concerning Use of Chargebacks and Liquidation of Collateral" In this order, the Commission addressed five complaints against the CalPx concerning its response to alleged defaults by Pacific Gas & Electric (PG&E) and Southern California Edison Company (SoCal Edison). Among other things, the Commission determined that "the chargeback provision in the PX tariff was not designed to address default of this magnitude and, thus, its application in these circumstances is unjust and unreasonable." Accordingly, the Commission directed the CalPX to rescind all prior chargeback actions and refrain from any future chargeback actions relating to PG&E and SoCal Edison's liabilities, subject to further Commission action in accordance with the order. Regarding the ultimate question of how the PX should account for the nonpayments by SoCal Edison and PG&E, the Commission deferred further action pending the outcome of SoCal Edison's State Court Complaint, as well as the Government Claims Board Complaint. Finally, with respect to the PX's bankruptcy proceeding, the Commission concluded that section 362(b)(4) of the Bankruptcy Code allowed it to lawfully exercise its regulatory power under sections 205 and 206 of the Federal Power Act, so long as it did not threaten the bankruptcy court's control over the property of the bankruptcy estate. (2) San Diego Gas & Electric Company v. Sellers of Energy and Ancillary Services (Docket Nos. EL00-95-015/016 and Docket Nos. EL00-98-014/015) "Order Dismissing Rehearing, Accepting Compliance Filing, and Directing the Recalculation of Lower Wholesale Rates" In this order, the Commission dismissed the CalPX's request for rehearing of the Commission's January 29, 2001 order, which found that the CalPX had violated the Commission's December 15, 2000 order and the Federal Power Act. The December 15 order required the CalPX to pay suppliers in the CalPX markets their as-bid price above the $150/MWh breakpoint. Additionally, the Commission accepted the PX's compliance filing and provided guidance to the PX on an acceptable methodology so that the PX may implement the $150/MWh breakpoint for its January 1, 2001 invoices. Additionally, as in the chargeback case, the Commission determined that its action in the instant case was exempt from the automatic stay provision of the Bankruptcy Code. (3) Kern River Gas Transmission Company (Docket No. CP01-106-000) "Order Issuing Certificate" Pursuant to section 7(c) of the Natural Gas Act, the Commission denied the protests that had been filed and issued a certificate of public convenience and necessity to Kern River authorizing it to construct and operate its California Action Project, subject to resolution of the proceeding pending in Docket No. CP01-61-000. However, the Commission rejected Kern River's proposal to utilize a return on equity for this project of 15.25 percent. Instead, the Commission directed Kern River to file a revised incremental rate to reflect a return on equity of 13.25 percent at least 30 days prior to commencing service. Finally, the Commission conditioned the certificate on Kern River's compliance with the environmental conditions set forth in Appendix C to the order. These orders can be found on the Bulk Power section of FERC's website, at www.ferc.fed.us/electric/bulkpower.htm. If you have any questions, comments or would like additional information relating to these orders, please contact either Julie Simon (jsimon@epsa.org) or Mark Bennett (mbennett@epsa.org) at (202) 628-8200.