UNITED
STATES OF AMERICA
BEFORE
THE
FEDERAL
ENERGY REGULATORY COMMISSION
CAlifornians for Renewable Energy, Inc. ) Docket No. EL01-2-000
(CARE) )
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 )
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)[1]
hereby petitions the Commission to rectify unjust and unreasonable prices
stemming from the wholesale markets for energy and ancillary services operated
by the California Independent System Operator (CAISO) and the California Power
Exchange (CalPX). CARE requests that the Commission find that wholesale markets
in California are not currently workably competitive. 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[2]
activities in restraint of trade 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; all scheduling coordinators acting on behalf of aforementioned
sellers; California Independent System Operator Corporation; and the California
Power Exchange. 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[3],
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; all scheduling
coordinators acting on behalf of aforementioned sellers; California Independent
System Operator Corporation; and the California Power Exchange. 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.
DISCUSSION
CARE contends that 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; all scheduling coordinators acting on behalf of aforementioned sellers; California Independent System Operator Corporation; and the California Power Exchange are currently involved together in a ISO/generator trust to drive up the price of electricity, and justify expedited power plant construction in California to further maximize generator profits. An August 2, 2000 report from Michael Kahn, chairman of California’s Electricity Oversight Board (EOB) to the Governor of California in regards to the events and circumstances surrounding the June 14, 2000 rolling outage in the San Francisco Bay Area, titled California’s Electricity Options and Challenges, identifies that “instability was created by generator decisions to generate energy without notifying the ISO Generators created these deviations in order to be paid a higher price within the ISO Control Area”. This report states,
“On June 14, PG&E was
required to intentionally interrupt nearly 100,000 customers (residential and
small business) for the first time in its history. This remarkable event was not related to insufficient supply in
the ISO control area as a whole.
Rather, it was related to grid instability in the Bay area. The
transmission grid operates at a load level of 230,000 volts, with small deviations. If supply and demand get too far out of
balance, a portion, then the entire system can crash, possibly spreading
throughout the interconnected grid in the West.
The Bay area grid
instability was related to high loads and short supplies in that area, which
could not be relieved given the design of the transmission system. It was exacerbated by the fact that the
evening before, instability was created by generator decisions to generate
energy without notifying the ISO Generators created these deviations in order
to be paid a higher price within the ISO Control Area, and these deviations
caused less than optimal voltage stability on its system.[i]
The ISO became aware of this instability on June 13; the stage was set for the
following day.
On June 14 the Bay Area
suffered unusually hot weather for June, with San Francisco peaking at 103
degrees. Hot weather contributed
directly to a record-setting peak load for June of 43,300 MW, system wide.
PG&E peaked at 23,361 MW[ii],
not counting the customers interrupted. ”
CARE concurs with many of the findings in regards to
this by the (EOB) in its complaint to the Federal Energy Regulatory Commission
(FERC Docket No.EL00-104-000). The EOB complaint against the generators, Cal-ISO,
and Cal-PX states that the EOB,
“Hereby petitions the Commission to rectify unjust and unreasonable prices stemming from the wholesale markets for energy and ancillary services operated by the California Independent System Operator (CAISO) and the California Power Exchange (CalPX). The California Board requests that the Commission find the wholesale markets in California are not currently workably competitive and take such actions as are necessary to ensure that wholesale prices for energy and ancillary services are just and reasonable. “
CARE contends that the
ISO/generator trust contrived the June 14, 2000 rolling outage, to drive up the
price of electricity, and justify expedited power plant construction in
California, and did this in violation of Title VI of the Civil Rights Act of
1964, because of disparate impacts of the outage on low income and minority
populations. The California EOB complaint concurs with this allegation where it
states,
“This Complaint is
based on the conclusion, following preliminary investigation, that respondent
Sellers and Scheduling Coordinators[4], individually and collectively, have market power and
exercise market power commanding prices far above rates that would be
determined by cost-of-service ratemaking or prices voluntarily agreed to by
buyers and sellers in a workably competitive market.”
CARE contends that
California’s current and proposed power plants are clustered in low-income and
minority communities in the San Francisco Bay Area, and low income and minority
housing tends to be located near to transmission systems due to associated
lower property values. CARE contends that these low income and minority
populations where disparately impacted by the June 14, 2000 rolling black outs
in the San Francisco Bay Area. CARE is involved in an investigation of the June
14, 2000 rolling outage in the San Francisco Bay Area. On July 31, 2000 CARE
issued a data request to the Cal ISO, Cal EOB, and Cal PUC. In this data
request CARE alleges the following.
"CARE contends that the absence of a declaration
of a Stage 3 emergency state wide on June 14, 2000 prevented the curtailment of
exports during a system emergency. This action resulted in discriminatory
effects (the loss of power to 96,000 customers on the hottest day of the year)
in violation of Title VI regulations. The disparately impacted environmental
justice populations include, but are not limited to, low-income, minority,
disabled, children, the elderly, and the mentally and/or physically impaired.
Based on the information available CARE contends that by authorizing the
continuation of exports during a system emergency the Cal-ISO demonstrated
intent to discriminate against these populations, and further did this to the
benefit of California based energy generators as the continued exportation of
power by these generators took place at the $750/MW price cap during the system
emergency.
The California EOB violated the Act through their failure to exercise regulatory oversight controls over the Cal-ISO discriminatory actions. The Cal-PUC violated the Act through their failure to exercise regulatory oversight and controls over Pacific Gas and Electric Company, and other involved distributors', and generators' discriminatory practices. Further PUC has failed to provide affected EJ populations assistance in just compensation for these discriminatory effects."
CARE contends that the June 14, 2000 created an eminent threat to public health and safety, that overburdened Northern California emergency services, hospitals, and law enforcement with unanticipated costs of public and private funds. CARE contends that the FERC and Department of Justice need to complete a thorough investigation of the events and circumstances surrounding the June 14, 2000 rolling outage in the San Francisco Bay Area, and the loss of life, injury, hospitalizations, and associated costs for governmental and private emergency services associated with these events and circumstances. In a sample news article from the day after this man made disaster (June 15, 2000) titled Breeze eases killer heat from Rachel Gordon and Marianne Costantinou of the San Francisco Examiner, a few excerpts are provided of the News media’s coverage of the disaster.
“The scorching heat wave that apparently killed two elderly people and caused electrical blackouts around the Bay Area seemed to be coming to an end as the ocean breeze and fog were expected to cool the region considerably Thursday.
The blistering heat also took its toll on ambulance crews, who by Wednesday afternoon saw nearly double the activity than on a usual, fog-cooled day.
Normally, the 911-ambulance dispatch center gets an average of 335 calls in a 24-hour period beginning midnight. On Wednesday, the center logged 675 calls.
"The heat exacerbates existing medical conditions, so more people are calling for emergencies," said Health Department spokeswoman Eileen Shields.
Tremayne said there is a statewide schedule for such rolling brownouts, but he couldn't release the information in fear of compromising public safety.
"If we publish that . . . you're giving the criminal element important information. House alarms will not be operating. Bank (security) cameras and bank alarms will not be operating. It's for safety of the public and our customers," he said. The rotating blackouts cut power not only to buildings, but also to such energy sappers as stop lights.
The Department of Parking and Traffic assigned traffic-control officers to the affected intersections to help keep traffic moving and cars from running into each other.
Muni also was caught off guard when crowds started to leave the game early as they tired of being baked by the heat, forcing transit officials to scramble to get buses and street cars back to the stadium earlier than expected to haul away the sun-drenched fans.
"Who'd have thought we'd have a problem with heat at a ballgame in San Francisco?" Lynch asked.
One fan who hopped on a street car in front of Pac Bell Park after the eighth inning said passengers were told by the driver to get off because there wasn't enough electricity to get the train moving. It started up about two minutes later, and people got back on.”
To date CARE has received written and oral response to
CARE’s data requests by the EOB, and PUC. These two agencies appear to be
exercising due diligence in responding to CARE's data requests. For its part,
the Cal ISO has failed to respond too two such data requests.
At its August 31, 2000 meeting the EOB board rejected
the appointment of members of the Cal ISO governors, based on the ongoing
investigation by the California Attorney General and the Federal Energy
Regulatory Commission (FERC) of ISO involvement in "gaming" with the
generators. On August 31, 2000 the California Electricity Oversight Board (EOB)
acted to "intervene to protect the California consumers, and wholesale
prices" by rejecting the ISO's proposed nominees, as sited in this section
from the transcript of the August 31, 2000 meeting.
"22
CHAIRMAN KAHN: Mr. Willison?
23
The Electricity Oversight Board has been
24
instructed by -- or asked by the governor and we have
25
adopted resolutions which have made it clear that we
CAPITOL REPORTERS
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2340 Harvard Street
SACRAMENTO, CA (916) 923-5
1
believe the FERC ought to intervene and protect the
2
California consumers and wholesale prices. As of
3
now, the Board is not satisfied that either the Power
4
Exchange or the ISO have taken sufficient actions to
5
protect the California Consumers. The Legislature
6
is, as we speak, addressing issues relating to the
7
wholesale market and how they're going to approach
8
the regulatory scheme. Under these circumstances, we
9
believe it inappropriate for us to confirm any
10
nominees for either of the boards. And that's my
11
personal view, and I believe that will be expressed
12
in the resolutions. We thought it only fair to tell
13
you what we're thinking and why we're thinking what's
14
going on. We intend, of course, to reevaluate the
15
situation in light of what the Legislature does today
16
and in light of the input of our legislative members
17
who are not here today.
18
Mr. Willison, do you have a motion?
19
MR. WILLISON: Yes. First of all, I'd just
20
comment that I echo your concerns there. Therefore,
21
the Board -- or I will move that the Board decline to
22
confirm the appointments for agricultural,
23
industrial, commercial and residential end-users and
24
the members for the public interest groups and then
25
decline to appoint members as end-users at large or
CAPITOL REPORTERS
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non-market participants to the California Power
2
Exchange governing Board.
3
CHAIRMAN KAHN: Second.
4
All in favor?
5
Aye.
6
MR. WILLISON: That motion passes two to
7
nothing.
8
Do you have a motion with respect to the ISO
9
members?
10
MR. WILLISON: Basically, the same motion with
11
the ISO members, namely, to decline to confirm the
12
nominees for the categories of agricultural,
13
industrial, commercial and residential end-users and
14
also the public interest groups and decline to
15
appoint members as end-users at large or non-market
16
participants.
17
CHAIRMAN KAHN: Second.
18
All in favor of the resolution?
19
Aye.
20
MR. WILLISON: Aye.
21
CHAIRMAN KAHN: That passes two to nothing.
22
MR. ROBINSON: Mr. Chairman?
23
CHAIRMAN KAHN: Yes.
24
MR. ROBINSON: If I could have some
25
clarification.
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1
CHAIRMAN KAHN: Sure.
2
MR. ROBINSON: Are you deferring action or am
3
I to assume by that that we need to begin another
4
process to fill the vacancies on the board?
5
CHAIRMAN KAHN: Well, we are not deferring
6
action; we're declining.
7
MR. ROBINSON: Thank you.
8
CHAIRMAN KAHN: And so there will be another
9
process required. As to what that process consists
10
of, we would recommend that you confer with the EOB
11
staff after what -- give everybody the Labor Weekend
12
to digest whatever the Legislature does, and then on
13
Tuesday morning, I think, consultation by the Power
14
Exchange and by the ISO with EOB staff would be
15
appropriate.
16
MR. ROBINSON: Thank you, Mr. Chairman.
17
CHAIRMAN KAHN: And the EOB staff will be in
18
touch with the legislative members and with the
19 Administration during that period of time, also.
20
Okay. Mr. Heath?"
In the written information provide to CARE by the PUC, a written response to the PUC subpoena of the ISO, clearly lists the Calpine owned "Geysers" as two of three power plants down for "scheduled maintenance" on June 14, 2000. Clearly the decision to "schedule maintenance" on the hottest day of the year when demand is highest was a planned activity with ISO concurrence that resulted in the June 14, 2000 outages. It also includes Southern Energy owned Pittsburg#6, which was purchased from PG&E as a “Must-Run” generation facility. (See http://www.calfree.com/Exhibit_A_ISOonJune14.pdf )
In a letter to the PUC from the Transmission Agency of
Northern California (see http://www.calfree.com/Exhibit_B_TANConJune14.pdf
) on the June 14, 2000 outages points to the ISO's refusal to support upgrades
to the California Oregon Intertie, as the cause of the loss of 300 MW on that
day, as well as a total loss of 900 MW transfer capability. Further the ISO/generator
trust’s calls for new generation is disputed by the statement,
"In addition, the California Energy Commission (CEC) has been approving various merchant plants, which may further degrade Intertie transfer capability".
Attached to
this letter is an excel spreadsheet showing the import and export capacity (in
MW) on the California-Oregon Intertie. CARE notes that on June 14 between 11AM
and 1PM California was a net exporter of power to Oregon. If the Cal-ISO
fulfilled its statutory responsibilities, and declared a Stage 3 emergency,
exports of 3675 MW to Oregon would have been curtailed. Since Firm exports were
not curtailed, by CARE’s calculations, at 3675 MW/hr x $750/MW gives
$2,756,250/hour being made by California generators on exports out of state on
the hottest day of the year during a system emergency. CARE cannot confirm that
this level of export occurred, because the Cal-ISO is protecting this
information as confidential market information. Neither the EOB nor PUC has
provided any evidence that this information has been made available as a result
of subpoenas they have served on the Cal-ISO. CARE was provided no information
on Nevada California Intertie capacity.
Cal-ISO board president, Jan Smutney Jones, and his co-trustees in California's alleged Electric Grid Power Trust (AKA Independent Energy Producers) provides evidence of an ISO/generator trust (see http://www.calfree.com/Exhibit_C_IndEnergyProdonJune14.pdf ) in the form of a letter to PUC from the "Independent Energy Producers" on the causes of the outage. The letter is signed by a majority of California’s generators and the ISO board president. Jan Smutney Jones. This demonstrates the entities in control of California's power grid, are not the distributors (like PG&E, SCE, & SDG&E), or the consumers, but the generators, or their agents. With the recent EOB rejection of ISO consumer classes from being approved for the ISO board, now the ISO is literally in a situation where the Fox (the generators) is watching the Chicken coop (California's power grid) and we are all the chickens.
Conclusions and Remedies
CARE contends that 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; all scheduling coordinators acting on behalf of aforementioned sellers; California Independent System Operator Corporation; and the California Power Exchange are currently involved together in a ISO/generator trust to drive up the price of electricity, and justify expedited power plant construction in California to further maximize generator profits.
The remedies CARE seeks are:
1. That the Commission make a determination of the just and reasonable levels of wholesale prices for energy and ancillary services that are based on prior year costs of generation with allowances for inflation and increased fuel costs, and
2. That the Commission make a determination of those charges in excess of what is just and reasonable for energy and ancillary services to quantify refundable charges to be returned to distributors and consumers of power, 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, 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; all scheduling coordinators acting on behalf of aforementioned sellers; California Independent System Operator Corporation; and the California Power Exchange, 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, 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; all scheduling coordinators acting on behalf of aforementioned sellers; California Independent System Operator Corporation; and the California Power Exchange. 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; all scheduling coordinators acting on behalf of aforementioned sellers; California Independent System Operator Corporation; and the California Power Exchange 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; all scheduling coordinators acting on behalf of aforementioned sellers; California Independent System Operator Corporation; and the California Power Exchange, that are associated with the events and circumstances surrounding the June 14, 2000 rolling outage in the San Francisco Bay Area.
Michael E. Boyd – President, CARE 9-30-00