Wholesalers must refund $69 million to California utilities

Saturday, March 10th 2001, 12:00 am

By: News On 6

SACRAMENTO, Calif. (AP) _ Federal regulators Friday ordered power wholesalers to refund $69 million in excessive charges to California utilities, hundreds of millions less than state officials sought.

The Federal Energy Regulatory Commission found that January electricity prices wholesalers charged the Power Exchange and the California Independent System Operator, which oversees the state grid, exceeded ``just and reasonable'' amounts.

Also Friday, the Davis administration announced it will need another $500 million to buy power on behalf of two cash-starved utilities _ bringing the total the state has authorized to $3.7 billion since early January.

The Power Exchange, the state's electricity trading center and one of the cornerstones of California's failed attempt at utility deregulation, filed for Chapter 11 bankruptcy protection, citing $100 million in debts.

The exchange's business evaporated after wholesalers denied Pacific Gas & Electric and Southern California Edison credit in January and the state began buying power for the utilities' customers.

Of the $69 million in FERC-ordered refunds, $8 million would go to the exchange and the rest to the ISO.

The ISO earlier this month told FERC that suppliers should have to refund roughly $550 million they overcharged in December and January for the last-minute power it buys for utilities to fill gaps in the grid and avoid blackouts.

Grid officials wanted a bigger refund, but consider FERC's order a victory of sorts.

``People should understand that the grant of refunds by FERC is not a common occurrence, indeed it's relatively rare,'' said ISO attorney Charles Robinson said.

FERC said it looked only at January and would address December wholesale prices later.

FERC's order requires refunds from more than a dozen major power suppliers, including Duke Energy, Dynegy, Reliant, Williams, Mirant, and Sempra, which is the parent of the San Diego Gas & Electric Co.

Representatives for Williams and Dynegy said they had not seen the order and couldn't comment.

``We're reviewing it and not only want to review the conclusion, but the basis for those conclusions,'' said Jeremy Dreier, a spokesman for North Carolina-based Duke Energy, which FERC says owes nearly $18 million in refunds.

The prices Duke bid in January included a ``risk premium'' because the company felt it was selling to an uncreditworthy buyer, Dreier said.

``There was a very high risk that we would not be paid,'' he said.

Reliant Energy, ordered by FERC to refund $12.4 million, also challenged the commission's assumptions.

``We believe our pricing was clearly justified and we will be supplying additional supporting data to FERC,'' said Richard Wheatley, a Reliant spokesman.

California has been reeling under soaring wholesale power prices _ driven in part by rising natural gas costs _ and a tight power supply for months. Supplies fell short of demand on Jan. 17 and 18, causing rolling blackouts to be imposed in the northern two-thirds of the state.