good news from ferc no action needed by either of you . you can ignore this if you like . the issue is really complicated and i ' ve tried to summarize it . i ' m not sure how closely the two of you have been tracking activities at ferc . we had an interim victory late last week on the chargeback issue .
as edison and pacific gas were defaulting on px and iso payments in january and february , the px attempted to invoke the charge back section of its tariff . this had several strange outcomes . first , the px attempted to recover the short payments by edison for december activity by charging px market participants based on a three month rolling average of gross sales . if the px owed a supplier money , they simply short - payed by the prorata amount . if the market participant owed the px money , the px added it to the participants bill . this created a series of short pays and chargebacks . if a market participant who received a chargeback bill didn ' t pay ( e . g . , pg & e for sce ' s december px activity ) , the px would then allocate that amount ( via short pays and chargebacks ) to other participants . this iterative process would continue until credit - worthy participants shouldered the burden . the px attempted to us an equally bizarre method to allocate defaults by the utilities on their iso rt energy bill ( the px is the schedule coordinator for the utilities and handles payments to the iso for rt energy on behalf of the utilities ) . rather than shortpaying suppliers to the iso for defaults by the utilities on rt energy charges , the px attempted to collect this money from its participants in order to pay the iso - - that is sellers into the px day ahead market were supposed to pay sce ' s and pg & e ' s rt iso bill . this was done via a chargeback . this led to our " last man standing " theory , whereby the px would iteritively chargebacks until a few credit - worthy entities were stuck with pg & e and sce ' s defaults in both the px and iso markets .
ferc granted market participants some relief on friday . they directed the px to ( 1 ) rescind all chargebacks and ( 2 ) refrain from taking any future chargebacks . they found " the chargeback provision in the px tariff was not designed to address default of this magnitude and , thus , its application in these circumstances is unjust and unreasonable . " this is not the last word on this matter . there are a variety of state court cases that impact this , and , of course the bankruptcy judge will weigh in as well . however , this is a solid victory for us as ferc has sided with us rather than the px with respect to interpreting the px tariff for defaults .
good news from ferc
no action needed by either of you . you can ignore this if you like . the issue is really complicated and i ' ve tried to summarize it . i ' m not sure how closely the two of you have been tracking activities at ferc . we had an interim victory late last week on the chargeback issue .
as edison and pacific gas were defaulting on px and iso payments in january and february , the px attempted to invoke the charge back section of its tariff . this had several strange outcomes . first , the px attempted to recover the short payments by edison for december activity by charging px market participants based on a three month rolling average of gross sales . if the px owed a supplier money , they simply short - payed by the prorata amount . if the market participant owed the px money , the px added it to the participants bill . this created a series of short pays and chargebacks . if a market participant who received a chargeback bill didn ' t pay ( e . g . , pg & e for sce ' s december px activity ) , the px would then allocate that amount ( via short pays and chargebacks ) to other participants . this iterative process would continue until credit - worthy participants shouldered the burden . the px attempted to us an equally bizarre method to allocate defaults by the utilities on their iso rt energy bill ( the px is the schedule coordinator for the utilities and handles payments to the iso for rt energy on behalf of the utilities ) . rather than shortpaying suppliers to the iso for defaults by the utilities on rt energy charges , the px attempted to collect this money from its participants in order to pay the iso - - that is sellers into the px day ahead market were supposed to pay sce ' s and pg & e ' s rt iso bill . this was done via a chargeback . this led to our " last man standing " theory , whereby the px would iteritively chargebacks until a few credit - worthy entities were stuck with pg & e and sce ' s defaults in both the px and iso markets .
ferc granted market participants some relief on friday . they directed the px to ( 1 ) rescind all chargebacks and ( 2 ) refrain from taking any future chargebacks . they found " the chargeback provision in the px tariff was not designed to address default of this magnitude and , thus , its application in these circumstances is unjust and unreasonable . " this is not the last word on this matter . there are a variety of state court cases that impact this , and , of course the bankruptcy judge will weigh in as well . however , this is a solid victory for us as ferc has sided with us rather than the px with respect to interpreting the px tariff for defaults .