Energy Enforcement Update

Today at the FERC open meeting, FERC Staff and others briefed the Commissioners on Aliso Canyon.  Concerns about reliability and manipulation figured prominently.

On hearing about the issues and proposed solutions, Commissioner LaFleur remarked:  “It’s been my experience that history has shown when there is turmoil and disruptions in quickly developed solutions can create opportunity for market manipulation, price gouging, bad actors and so forth.  I know that Larry [Parkinson, Director of the FERC Office of Enforcement] and his team will be closely looking.

FERC’s review started with the Summer 2016 Market and Reliability Assessment presented by FERC’s Office of Electric Reliability and Office of Enforcement.  On Aliso Canyon, Staff stated:  “We may see increased transmission congestion, localized price spikes and greater than normal uplift as California ISO’s market mechanisms reflect these operational difficulties in its pricing outcomes.  Because of these concerns, staff will be closely monitoring this situation and maintaining contact with the other parties during this period.

FERC also heard presentations from a number of parties on the restricted operation of the Aliso Canyon storage facility and its impact on electric supply in Southern California.  The presentations can be found at:  CA Energy Commission | Southern California Gas | CAISO | Southern California Edison | LADWP | Peak.

California Energy Commission Chairman Robert Weisenmiller stated:  “I appreciate [FERC] staff comments on closely monitoring the markets and looking to manipulation.  We both see in the forwards particularly around that area some elevation of prices both for gas and power.”  Chairman Weisenmiller asked for FERC’s help to “closely monitor markets for any signs of manipulation” and take “prompt corrective actions if there is market manipulation.”

Bret Lane, COO of SoCalGas, noted the potential direr issues, including that electric generation is “first off the line” in the event of gas curtailments.

This was one of the longer presentations since Chairman Bay’s ascension.  FERC clearly understood circumstances with Aliso Canyon present an elevated concern.  The presentations emphasized impairment of this resource poses a risk to local electric reliability and will likely result in elevated energy prices, which will only heighten FERC’s scrutiny, both this summer and into winter.

Please let us know if you have any questions.

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