With order lifted, marketers cool to California sales

Freed from a US Energy Department mandate that required them to sell power to California, some out-of-state marketers say they are bowing out for now. 'When the DOE order was in effect, we sold surplus power when we had it available,' says Dan McCarthy, director of corporate communications for PP&L Inc., parent of PPL Montana LLC. 'We continue to have credit concerns and would need additional credit assurances before we would sell into the market.'


By the OGJ Online Staff

HOUSTON, Feb. 7�Freed from a US Energy Department mandate that required them to sell power to California, some out-of-state marketers say they are bowing out for now.

"When the DOE order was in effect, we sold surplus power when we had it available," says Dan McCarthy, director of corporate communications for PP&L Inc., parent of PPL Montana LLC. "We continue to have credit concerns and would need additional credit assurances before we would sell into the market."

Likewise, Bob Hagan, a spokesman for Public Service Co. of New Mexico, said the company discontinued trades with the California Power Exchange and the California Independent System Operator about 2 weeks ago.

"Given the directive has expired, we would not trade with the ISO, unless we have some assurance of being paid," he said.

The US Energy Department order first issued by the Clinton Administration in December expired Tuesday at midnight. President Bush said the order should not be extended because it harmed generators in other states.

The order was issued after some generators threatened to halt sales due to concern about the ability of Pacific Gas & Electric Co. and Southern California Edison Co. to pay their wholesale power bills.

The utilities are operating under a retail rate freeze and cannot pass on the full amount of their purchased power. They are challenging a state decision that has kept them from raising rates enough to recover their undercollections.

While it is difficult to judge the impact of the expiring order on the market, Kellan Fluckiger, chief operating officer of the ISO, estimated during a January briefing the state was getting about 600 Mw as a result of the federal mandate.

Some out-of-state marketers have shifted sales to the state. A spokesman for Portland General Electric Co. said the Portland, Ore.-based energy company has an interest in selling surplus power to the California Department of Water Resources.

Under legislation adopted last week, the agency received $500 million in general funds to buy power for California and negotiate long-term contracts.

"But we have to need to find a way to do it without having to worry about credit concerns," the spokesman said. "We are working with them as circumstances allow."

Sierra Pacific Power Co. and Nevada Power Co., both units of Sierra Pacific Resources, have cut short-term deals with the Water Resources Department, said a spokesman, but the Nevada utilities are no longer selling to the ISO.

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