February 10, 2003—The Federal Energy Regulatory Commission has approved a staff settlement calling for Reliant Energy to pay $13.8 million for limiting the amount of power it offered to the California Power Exchange (CalPX) for delivery on June 21 and 22, 2000.
The payment will go directly to CalPX customers for those two days.
Reliant employees reduced the amount of power offered to the CalPX on a dayahead basis below the amount that would normally have been offered. Statements made by some of Reliant’s traders indicate that the reason for reducing bids was an attempt to increase prices.
The settlement with Reliant stems from a staff investigation ordered by the Commission in February 2002 of short-term prices for electric energy or natural gas in the West in 2000 and 2001. The Reliant payment reflects the maximum possible difference in CalPX clearing prices between the actual prices on those days and the prices that would have prevailed if Reliant had offered the average amount of megawatts bid during the weekdays of the prior two weeks.
As part of the settlement, Reliant agrees to abide by a must-offer obligation to submit bids for all uncommitted, available capacity from its plants in California, a requirement that will be implemented through a condition in Reliant’s market-based rate tariffs.
Reliant must also retain an independent engineering company for 24 months to determine that any outages at its California generating plants are legitimate, with the audits sent directly to the Commission.
