UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY
COMMISSION
CAlifornians for Renewable Energy, Inc. ) Docket No. EL01-2-000
(CARE) ) Request for Rehearing
Complainant
)
v. )
Independent
Energy Producers, Inc. and )
All
Sellers of Energy and Ancillary
Services )
Into
the Energy and Ancillary )
Services
Markets Operated by the )
California
Independent System )
Operator
Corporation and the )
California
Power Exchange; )
)
All
Scheduling Coordinators Acting )
On
behalf of the Above Sellers; )
)
California
Independent System )
Operator
Corporation; and )
)
California
Power Exchange Corporation )
)
Respondents
)
CAlifornians for Renewable Energy, Inc. (CARE) Request for Rehearing
Pursuant to Rule 713 of the Commission’s Rules of Practice and Procedure CARE hereby requests rehearing of the Commission’s December 15, 2000 order in these proceedings EL00-95 et al (“December 15 Order”). As you probably already know, CARE is a California private, not for profit public-benefit 501(c)(3) corporation relying exclusively on public funding. At the present time, CARE simply does not have the resources to obtain legal counsel to fully, fairly, knowledgeably and meaningfully participate in your statutorily mandated administrative process. Therefore, CARE respectfully requests that your agency provide us with all available assistance to facilitate our public participation, including but not limited to an explanation of the administrative steps we must take in order to preserve and protect all our legal rights, particularly the right to have the issues we raise heard by a court of law in a legal proceeding to enforce our statutory and constitutional rights. In addition, and with all due respect, our understanding is that it is you as the administrative agency, and not CARE or other members of the public, that are responsible to conduct a full and fair investigation of matters as to which you have been put on notice by the submission of objectively-based, reasonably credible information, such as the information we have been providing you. It is our further understanding that the information we provide you with need not rise to the technical legal level of "substantial evidence" in order to trigger your duty to investigate. If our understanding is incorrect in any manner, please so advise us and explain in reasonable detail why. If our understanding is correct, please consider this our formal request for you to proceed in carrying out your duty to conduct an adequate investigation in accordance with the information CARE and other members of the public have provided or may provide in the future.
CARE provided exhibit A[1] below as an example of substantial evidence of collusion between California’s generators of power and the California Independent System Operator (Cal-ISO) board president in the events and circumstances surrounding the June 14, 2000 rolling blackouts. CARE also provides in exhibit B[2] further evidence of collusion between the Cal-ISO and one of the generators who tested their market power on June 14, 2000 (Calpine) by withholding power by taking two generation plants down for maintenance in order to justify prices that were not just and reasonable, and to justify
expedited development of their proposed 600 MW Metcalf Energy Center in San Jose California. CARE contends that Calpine Corp. and Southern Energy took their three plants down on June 14, 2000 for maintenance to with hold power during a period of peak demand to contrive an outage to create a shortage and test their market power. CARE alleges the apparent exercise of market power by these generators in cooperation with the Cal-ISO was done to increase the cost of power and justify the approval of their pending new generation projects under consideration by the CEC. CARE provides graphical evidence of the sharp jump in the price of power in the day-ahead markets during the contrived outage (see figure 1). CARE further alleges that these two generators acted with impunity for their actions irrespective of the loss of life and associated run-up in price of power that resulted.
In Staff’s December 1, 2000 report to the FERC it states,
“The Commission could direct a further investigation of generators with abnormally high unplanned outage rates or bidders into the PX to examine whether individual market participants may have engaged in withholding or price manipulation. It may be appropriate for the Commission to take a more active role in investigating and dealing with individual instances of market power abuse. For example, one way to physically withhold capacity from the market is to contrive a forced outage. Of course, generation equipment will break down from time to time even in a competitive market; so unexpected, forced outages will naturally occur in any market. However, when a generator experiences an outage, capacity in the market is reduced, and that tends to raise the market price. So a generator might be able to exercise market power and raise the market price by contriving a forced outage, and thus, physically withholding capacity. It may be difficult to determine whether a forced outage is legitimate or contrived. However, when a generator's forced outage rate is abnormally high, especially during periods of tight capacity, it may be useful to investigate the outage in more detail to determine whether it has been contrived as an exercise of market power. If the outage is determined to be contrived, penalties could be imposed in order to deter similar future behavior.
In the time available for this investigation it was not possible to determine whether individual market participants abused their market power. An option available to the Commission is to direct staff to conduct a further investigation into individual conduct during the past summer.”
CARE hereby requests the FERC authorize such an investigation by staff, along with the Department of Justice, for such individual market participant’s behavior, with emphasis on those surrounding the June 14, 2000 outage.
CARE concurred with a majority of the FERC’s order of December 15, 2000. The
exceptions to this are listed in the remedies that CARE continues to seek.
Unfortunately the FERC may have acted too slowly in implementing market reform,
as the other generators of power in the state have followed suit, by with
holding generation capacity to a record 15,000 MW as of January 11, 2001,
returning energy prices to those of June 14, 2000. In December when FERC lifted
the $250 hard price cap (see figure 2) the price of power jumped to $1,300/MWh
because 11,000 MW of power was being with held with impunity by generators at
this time. CARE contends that FERC’s failure to determine the just and
reasonable price of power and impose refunds enabled generators of power to
contrive a now long-term shortage of supply. To date California faces a repeat
of the events and circumstance of the June 14, 2000 outages, but on a statewide
and continuing basis, as the Investor Owned Utilities (PG&E, and SCE) face
bankruptcy. CARE calls on FERC to take immediate action to create certainty in
the market through the enforcement of its statutory responsibility to protect
consumers from unjust pricing, while protecting reliable delivery of
power.
COMPLAINT
Pursuant to Section 206 of the Federal Power Act, 16
U.S.C. § 824e, and Rule 206 of the Commission’s Rules of Practice and
Procedure, 18 C.F.R. § 385.206, CAlifornians for Renewable Energy, Inc. (CARE)[3]
hereby petitions the Commission to rectify conditions that led to the rolling
blackouts of June 14, 2000 by investigating the behavior of generators in the
San Francisco Bay Area on June 13, 2000 which may have contributed to system
instability, by ordering the California Independent System Operator (CAISO) to
fulfill its reliability function by immediately correcting the transmission
bottlenecks that made it difficult to import power to the Bay Area when several
plants were off-line for maintenance, by correcting the dysfunctional bidding
behavior in the wholesale power markets which led distributors to under
schedule block-forward/day-ahead
purchases and generators to withhold power from that market CARE hereby
petitions the Commission make findings that the events and circumstances
surrounding the June 14, 2000 rolling outage in the San Francisco Bay Area
warrant investigation by the United States Department of Justice of trust[4]
activities in restraint of trade by Independent Energy Producers Inc.,
sellers of energy and ancillary services into energy and ancillary services
markets operated by the California Independent System Operator and the
California Power Exchange; California Independent System Operator Corporation;
the California Power Exchange; and the major investor-owned distribution
utilities (San Diego Gas & Electric, Southern California Edison, and
Pacific Gas & Electric). CARE hereby petitions the Commission make findings
that the events and circumstances surrounding the June 14, 2000 rolling outage
in the San Francisco Bay Area warrant investigation by the United States
Department of Justice of alleged civil rights violations[5],
by Independent Energy Producers Inc., all sellers of energy and
ancillary services into energy and ancillary services markets operated by the
California Independent System Operator and the California Power Exchange;
California Independent System Operator Corporation; the California Power
Exchange and the major investor-owned distribution utilities (San Diego Gas
& Electric, Southern California Edison, and Pacific Gas & Electric).
CARE petitions that said investigation include the identification of injury,
loss of life, disability, or hospitalization associated with the June 14, 2000
rolling outage. CARE requests that this complaint be consolidated with
Commission Dockets EL00-95-000, EL00-98-000, and EL00-104-000. CARE has not
used any of the Commission’s alternative dispute resolutions services (ADR)
described in Rule 206(b)(9) and believes that the nature of the complaint is
such that ADR will not be useful.
The remedies CARE continues to seek are:
1. That the Commission take action to correct the dysfunctional market, and
2. That the Commission make a determination regarding the market behavior of all participants, buyers as well as sellers, particularly regarding the prudence of the distribution utilities’ hedging strategies, and
3. That the Commission make findings that the events and circumstances surrounding the June 14, 2000 rolling outage in the San Francisco Bay Area warrant investigation by the United States Department of Justice of trust activities in restraint of trade by Independent Energy Producers, Inc., all sellers of energy and ancillary services into energy and ancillary services markets operated by the California Independent System Operator and the California Power Exchange; California Independent System Operator Corporation; and the California Power Exchange, and the major investor-owned distribution utilities (San Diego Gas & Electric, Southern California Edison, and Pacific Gas & Electric), and
4. That the Commission make findings that the events and circumstances surrounding the June 14, 2000 rolling outage in the San Francisco Bay Area warrant investigation by the United States Department of Justice of alleged civil rights violations, by Independent Energy Producers, Inc., sellers of energy and ancillary services into energy and ancillary services markets operated by the California Independent System Operator and the California Power Exchange; California Independent System Operator Corporation; the California Power Exchange; and the major investor-owned distribution utilities (San Diego Gas & Electric, Southern California Edison, and Pacific Gas & Electric). CARE petitions that said investigation include the identification of injury, loss of life, disability, or hospitalization associated with the June 14, 2000 rolling outage, and
5. That the Commission seek prosecution to the fullest extent of the law, criminal prosecutions for trust activities in restraint of trade, and alleged civil rights violations, by Independent Energy Producers, all sellers of energy and ancillary services into energy and ancillary services markets operated by the California Independent System Operator and the California Power Exchange; California Independent System Operator Corporation; the California Power Exchange; and the major investor-owned distribution utilities (San Diego Gas & Electric, Southern California Edison, and Pacific Gas & Electric) that are associated with the events and circumstances surrounding the June 14, 2000 rolling outage in the San Francisco Bay Area, and
6. That the Commission seek just compensation for those persons or entities damaged by trust activities in restraint of trade, and alleged civil rights violations, by Independent Energy Producers, all sellers of energy and ancillary services into energy and ancillary services markets operated by the California Independent System Operator and the California Power Exchange; California Independent System Operator Corporation; and the California Power Exchange; and the major investor-owned distribution utilities (San Diego Gas & Electric, Southern California Edison, and Pacific Gas & Electric) that are associated with the events and circumstances surrounding the June 14, 2000 rolling outage in the San Francisco Bay Area, and
7. That the Commission direct the California Independent System Operator Corporation, and California Public Utilities Commission, to fulfill its primary responsibility for system reliability by constructing adequate transmission in the San Francisco Bay Area on a priority basis, and
8. That the Commission provide the consumers of power, and the owners of electric transmission facilities, of the affected area with an appropriate escrow account mechanism to be used to withhold a portions of their utility bills, used in payment to Generators of power, in an escrow account until such time as administrative and judicial remedies are exhausted, or transmission facilities are determined by appropriate state and federal authorities to be adequate and reliable during periods of peak demand. At such time as Generators of power establish that administrative and judicial remedies are exhausted, or transmission facilities are determined by appropriate state and federal authorities to be adequate and reliable, Owners of electric transmission facilities shall refund Generators of power's deposit with interest accrued at rates set pursuant to 18 CFR Section 154.501(d).
Michael E. Boyd – President, CARE 01-14-01
Exhibit A
Exhibit B
