fw : portland general electric : order rejecting tariff amendments ferc rejected the request by pge to modify the code of conduct so that they could buy on enrononline . basically , ferc did not believe that buying thru enrononline was a guarantee that consumers in oregon would not be harmed .
ferc found that there is , for
example , no assurance that the posted prices on enrononline
represent prevailing market prices .
applicants contend that , since pge can transact with epmi
via enrononline only at the posted price , there can be no
affiliate abuse . we are not certain , however , that the posted
price necessarily represents the market price . while , on the
surface , enron online may bear some resemblance to an index or an
auction , the posted prices for any product may not be the result
of a competitive market of multiple buyers and sellers ; in fact ,
for sales the posted prices represent what epmi is willing to
sell at , and for purchases the posted prices represent what epmi
is willing to buy at .
ferc left open the idea that pge could re - file to fix the affiliate abuse .
as soon as we hear anything else , i ' ll let you know .
jim
- - - - - original message - - - - -
from : shapiro , richard
sent : friday , july 20 , 2001 4 : 14 pm
to : steffes , james d .
subject : fw : portland general electric : order rejecting tariff amendments
- - - - - original message - - - - -
from : novosel , sarah
sent : friday , july 20 , 2001 10 : 42 am
to : robertson , linda ; shapiro , richard ; steffes , james d .
subject : portland general electric : order rejecting tariff amendments
- - - - - forwarded by sarah novosel / corp / enron on 07 / 20 / 2001 11 : 39 am - - - - -
" emily harris " 07 / 20 / 2001 11 : 14 am to : , , , , , , , cc : " andrea settanni " subject : portland general electric : order rejecting tariff amendments
96 ferc 61 , 093
united states of america
federal energy regulatory commission
before commissioners : curt h * bert , jr . , chairman ;
william l . massey , linda breathitt ,
pat wood , iii and nora mead brownell .
portland general electric company docket no . erol - 2097 - 000
enron power marketing , inc . docket no . erol - 2103 - 000
order rejecting tariff amendments without prejudice
( issued july 20 , 2001 )
in this order we reject , without prejudice , proposed
amendments of enron power marketing , inc . ( epmi ) and portland
general electric ( pge ) to their respective market - based rate
tariffs that would allow them to make inter - affiliate sales using
the enrononline trading platform .
i . background
on may 22 , 2001 , in separate filings , affiliates pge in
docket no . erol - 2097 - 000 and epmi in docket no . erol - 2103 - 000
( collectively applicants ) filed to amend their respective market -
based rate schedules to allow for inter - affiliate sales through
the enrononline trading platform , and to prohibit communication
among affiliates regarding the contents of prices posted on
enrononline or the times that pge will be making trades on
1
enrononline . this amendment does not supplant the existing
provisions of pge ' s and epmi ' s currently effective tariffs which
allow for inter - affiliate sales subject to conditions that the
commission generally imposes on inter - affiliate sales where there
are captive customers , e . g . , allowing a public utility to sell to
its affiliated power marketer only at a rate that is no lower
than the rate it charges non - affiliates , requiring simultaneous
offers to non - affiliates , or requiring use of a relevant ,
established index . rather , pge and epmi propose to amend their
respective tariffs to add a provision by which they will make
1
the enrononline system is administered by enron networks ,
an enron corp . subsidiary . enrononline is a free , internet -
based , transaction system which allows epmi ' s customers to view
real time prices from epmi ' s traders and transact instantly
online . enrononline is not an epmi application , but rather
enrononline is a trading platform used as a tool by epmi in
buying from and selling power to third parties .
docket nos . erol - 2097 - 000 - 2 -
and erol - 2103 - 000
inter - affiliate sales via enrononline , with restrictions
different than those in place but that , they state , will still
prevent affiliate abuse . applicants state that the commission ' s
requirements have become outdated due to recent developments in
electronic commerce and , in particular , the commission ' s
requirement that " pge post on its website notice of a potential
purchase or sale with epmi prior to pge entering into the
transaction with epmi prohibits pge from using enrononline , since
enrononline offers only instantaneous transactions that do not
provide for a waiting period before consummating the
2
transaction . " according to applicants , this deprives pge of the
ability to buy or sell power " from perhaps the largest marketer
3
in its region , to the detriment of pge and its ratepayers . "
ii . notice of filing and interventions / protests
notices of the filings were published in the federal
register , 66 fed . reg . 29 , 939 ( 2001 ) ( docket no . erol - 2097 - 000 ) ,
and 66 fed . reg . 30 , 180 ( 2001 ) ( docket no . erol - 2103 - 000 ) , with
motions to intervene and protests for both due on or before
june 12 , 2001 . none was filed .
iii . discussion
the commission allows power marketers and their public
utility affiliates to sell to one another at market - based rates
when it can be assured that there is no possibility of affiliate
abuse . as the commission has explained , affiliate abuse can
occur when a traditional public utility with captive customers
sells power at below - market prices to , or purchases power at
above - market prices from , an affiliate without captive customers
( such as a power marketer affiliate ) . one way in which the
commission has sought to prevent this type of cross - subsidization
by captive customers is to require the pricing of inter - affiliate
4
sales at an established , relevant market price or index .
another way , when there is no assurance that the affiliates are
transacting at the prevailing market price , is to adopt various
conditions previously established by the commission to prevent
5
affiliate abuse .
2
epmi application at 3 ; pge application at 4 .
3
epmi application at 3 ; pge application at 4 .
4
see , e . g . , dpl energy , inc . 90 ferc 61 , 200 ( 2000 ) ;
accord , first energy trading services , inc . , 88 ferc 61 , 067 at
61 , 156 ( 1999 ) .
5
e . g . , gpu advanced resources , inc . , 81 ferc 61 , 335 at
( continued . . . )
docket nos . erol - 2097 - 000 - 3 -
and erol - 2103 - 000
here , applicants request that the commission permit them to
use enrononline to make inter - affiliate sales , subject to the
following restrictions that they contend provide sufficient
protection against affiliate abuse . pge , when buying from epmi
using enrononline , will be required to " take the transaction
price as posted that is generally applicable at a particular
6
location without attempting to negotiate any adjustment . " in
7
addition , pge will be prohibited from submitting limit orders or
engaging in any other type of transaction in which the identity
of the counter - party is revealed to epmi prior to the transaction
being finalized . applicants also propose to amend their
respective codes of conduct to preclude any communication
regarding prices posted on enrononline .
applicants contend such restrictions ensure no affiliate
abuse occurs since pge will only be able to transact with epmi at
5
( . . . continued )
62 , 539 ( 1997 ) ( gpu ) ; detroit edison company , 80 ferc 61 , 348 at
62 , 197 - 98 ( 1997 ) ( detroit edison ) . in gpu , the commission
allowed sales from a power marketer to its affiliated traditional
public utility at a rate that was no higher than the lowest rate
the public utility paid non - affiliates under certain standard
supplier agreements . accord , first energy trading that the utility simultaneously offer through its
electronic bulletin board to sell to non - affiliates at the same
rate offered to its affiliate ; and that all prices charged to the
affiliate be simultaneously posted on its electronic bulletin
board . accord , jersey central power commonwealth edison co . , 85 ferc
61 , 288 at 62 , 176 - 77 ( 1998 ) .
6
epmi application at 4 ; pge application at 5 .
7
in the case of a limit order on enrononline , epmi would
know the identity of the customer requesting a price higher or
lower than that currently available . applications at 3 . while
applicants do not define " limit order , " the common understanding
is that , unlike a market order , which instructs a broker to
transact immediately at whatever price is currently available in
the marketplace , a limit order instructs a broker to fill the
order only if certain conditions are met . generally , a limit
order may be either a day order , in which case it expires when
the market closes if unfilled , or good - until - canceled , in which
case the limit order lasts until executed or canceled .
docket nos . erol - 2097 - 000 - 4 -
and erol - 2103 - 000
the posted price ( a price that is offered to all market
participants ) and there will be no transactions in which epmi
knows that pge is the counter - party before the transaction is
finalized . thus , applicants contend that not only will pge be
unable to negotiate special terms with epmi through enrononline ,
but epmi will have no discretion to take actions which favor pge .
applicants further offer that procedures are performed by
computer and are not left to the discretion of any affiliate of
pge . in addition , because the enrononline price is posted
electronically and is available to all market participants ,
applicants state that pge ' s customers have the opportunity to
transact with epmi on enrononline on the same terms and
conditions that are available to pge .
applicants have failed to demonstrate that their proposed
restrictions provide the same protections afforded under the
commission ' s affiliate abuse requirements and conditions ( e . g . ,
protection against pge buying too high or selling too low in its
8
transactions with its affiliate epmi ) . the thrust of
applicants ' argument is that the commission ' s affiliate abuse
concerns are satisfied by using enrononline , a public medium , for
selling power between affiliates . we disagree . while perhaps
faster and easier to use than phone calls , faxes , or letters , an
internet - based platform is just another medium for trade , and
speed and ease of use do not dictate that the commission ' s
affiliate abuse concerns have been satisfied . there is , for
example , no assurance that the posted prices on enrononline
9
represent prevailing market prices .
applicants contend that , since pge can transact with epmi
via enrononline only at the posted price , there can be no
affiliate abuse . we are not certain , however , that the posted
price necessarily represents the market price . while , on the
surface , enron online may bear some resemblance to an index or an
auction , the posted prices for any product may not be the result
of a competitive market of multiple buyers and sellers ; in fact ,
for sales the posted prices represent what epmi is willing to
sell at , and for purchases the posted prices represent what epmi
10
is willing to buy at . for other transactions through media
other than enrononline , including other exchanges , epmi might be
8
see supra notes 4 - 5 and accompanying text ( citing cases
that discuss commission ' s underlying concerns with affiliate
power sales ) .
9
see supra note 4 and accompanying text .
10
all transaction on enrononline involve epmi as a
participant . for sales , epmi is the seller . for purchases , epmi
is the buyer .
docket nos . erol - 2097 - 000 - 5 -
and erol - 2103 - 000
11
willing to sell at lower prices and buy at higher prices .
moreover , applicants provide no information about how product
prices posted by epmi are determined , or whether there would be
any restrictions on what products pge could trade via
enrononline , or even whether there are other similar , but non -
affiliated , internet - based venues where pge can electronically
trade those products to attain similar benefits .
having failed to convince us that these affiliates will be
transacting at a prevailing market price via enrononline , we now
turn to whether the applicants have met other conditions
established by the commission to prevent affiliate abuse .
regarding transactions in which epmi may be purchasing from pge
through enrononline , there is nothing in the applicants ' proposed
restrictions that would require pge to
simultaneously offer to sell to non - affiliates at the same rate
offered to the affiliate . the commission requires that , with
respect to any power offered to its affiliate , pge make the same
offer to unaffiliated entities at the same time through its
electronic bulletin board . but it is unclear whether pge can or
will make the same offer to non - affiliates .
applicants also offer as a protection that pge is prohibited
from submitting limit orders , which would prevent epmi from
knowing that pge is the counter - party to a transaction . again ,
this would not prevent epmi from selling power to pge at above -
market prices .
the commission is not assured by the applicants ' proposal
that transactions between pge and epmi conducted via enrononline
will occur in a manner that is consistent with the commission ' s
expectations regarding transparent and reasonable prices for
inter - affiliate power sales transactions . there is , for example ,
no provision in the proposed amendments regarding how
unaffiliated customers , or other interested parties , would
monitor inter - affiliate transactions .
for the above reasons , we will reject the proposed
amendments , without prejudice to applicants revising their
proposal to address the commission ' s concerns and incorporating
appropriate restrictions to protect against affiliate abuse .
11
likewise , pge might be willing to buy at lower prices and
sell at higher prices .
docket nos . erol - 2097 - 000 - 6 -
and erol - 2103 - 000
the commission orders :
applicants ' proposed tariff amendments are hereby rejected ,
without prejudice , as discussed in the body of this order .
by the commission .
( s e a l )
david p . boergers ,
secretary .
- 2097 _ txt . txt
fw : portland general electric : order rejecting tariff amendments
ferc rejected the request by pge to modify the code of conduct so that they could buy on enrononline . basically , ferc did not believe that buying thru enrononline was a guarantee that consumers in oregon would not be harmed .
ferc found that there is , for
example , no assurance that the posted prices on enrononline
represent prevailing market prices .
applicants contend that , since pge can transact with epmi
via enrononline only at the posted price , there can be no
affiliate abuse . we are not certain , however , that the posted
price necessarily represents the market price . while , on the
surface , enron online may bear some resemblance to an index or an
auction , the posted prices for any product may not be the result
of a competitive market of multiple buyers and sellers ; in fact ,
for sales the posted prices represent what epmi is willing to
sell at , and for purchases the posted prices represent what epmi
is willing to buy at .
ferc left open the idea that pge could re - file to fix the affiliate abuse .
as soon as we hear anything else , i ' ll let you know .
jim
- - - - - original message - - - - -
from : shapiro , richard
sent : friday , july 20 , 2001 4 : 14 pm
to : steffes , james d .
subject : fw : portland general electric : order rejecting tariff amendments
- - - - - original message - - - - -
from : novosel , sarah
sent : friday , july 20 , 2001 10 : 42 am
to : robertson , linda ; shapiro , richard ; steffes , james d .
subject : portland general electric : order rejecting tariff amendments
- - - - - forwarded by sarah novosel / corp / enron on 07 / 20 / 2001 11 : 39 am - - - - -
" emily harris " 07 / 20 / 2001 11 : 14 am to : , , , , , , , cc : " andrea settanni " subject : portland general electric : order rejecting tariff amendments
96 ferc 61 , 093
united states of america
federal energy regulatory commission
before commissioners : curt h * bert , jr . , chairman ;
william l . massey , linda breathitt ,
pat wood , iii and nora mead brownell .
portland general electric company docket no . erol - 2097 - 000
enron power marketing , inc . docket no . erol - 2103 - 000
order rejecting tariff amendments without prejudice
( issued july 20 , 2001 )
in this order we reject , without prejudice , proposed
amendments of enron power marketing , inc . ( epmi ) and portland
general electric ( pge ) to their respective market - based rate
tariffs that would allow them to make inter - affiliate sales using
the enrononline trading platform .
i . background
on may 22 , 2001 , in separate filings , affiliates pge in
docket no . erol - 2097 - 000 and epmi in docket no . erol - 2103 - 000
( collectively applicants ) filed to amend their respective market -
based rate schedules to allow for inter - affiliate sales through
the enrononline trading platform , and to prohibit communication
among affiliates regarding the contents of prices posted on
enrononline or the times that pge will be making trades on
1
enrononline . this amendment does not supplant the existing
provisions of pge ' s and epmi ' s currently effective tariffs which
allow for inter - affiliate sales subject to conditions that the
commission generally imposes on inter - affiliate sales where there
are captive customers , e . g . , allowing a public utility to sell to
its affiliated power marketer only at a rate that is no lower
than the rate it charges non - affiliates , requiring simultaneous
offers to non - affiliates , or requiring use of a relevant ,
established index . rather , pge and epmi propose to amend their
respective tariffs to add a provision by which they will make
1
the enrononline system is administered by enron networks ,
an enron corp . subsidiary . enrononline is a free , internet -
based , transaction system which allows epmi ' s customers to view
real time prices from epmi ' s traders and transact instantly
online . enrononline is not an epmi application , but rather
enrononline is a trading platform used as a tool by epmi in
buying from and selling power to third parties .
docket nos . erol - 2097 - 000 - 2 -
and erol - 2103 - 000
inter - affiliate sales via enrononline , with restrictions
different than those in place but that , they state , will still
prevent affiliate abuse . applicants state that the commission ' s
requirements have become outdated due to recent developments in
electronic commerce and , in particular , the commission ' s
requirement that " pge post on its website notice of a potential
purchase or sale with epmi prior to pge entering into the
transaction with epmi prohibits pge from using enrononline , since
enrononline offers only instantaneous transactions that do not
provide for a waiting period before consummating the
2
transaction . " according to applicants , this deprives pge of the
ability to buy or sell power " from perhaps the largest marketer
3
in its region , to the detriment of pge and its ratepayers . "
ii . notice of filing and interventions / protests
notices of the filings were published in the federal
register , 66 fed . reg . 29 , 939 ( 2001 ) ( docket no . erol - 2097 - 000 ) ,
and 66 fed . reg . 30 , 180 ( 2001 ) ( docket no . erol - 2103 - 000 ) , with
motions to intervene and protests for both due on or before
june 12 , 2001 . none was filed .
iii . discussion
the commission allows power marketers and their public
utility affiliates to sell to one another at market - based rates
when it can be assured that there is no possibility of affiliate
abuse . as the commission has explained , affiliate abuse can
occur when a traditional public utility with captive customers
sells power at below - market prices to , or purchases power at
above - market prices from , an affiliate without captive customers
( such as a power marketer affiliate ) . one way in which the
commission has sought to prevent this type of cross - subsidization
by captive customers is to require the pricing of inter - affiliate
4
sales at an established , relevant market price or index .
another way , when there is no assurance that the affiliates are
transacting at the prevailing market price , is to adopt various
conditions previously established by the commission to prevent
5
affiliate abuse .
2
epmi application at 3 ; pge application at 4 .
3
epmi application at 3 ; pge application at 4 .
4
see , e . g . , dpl energy , inc . 90 ferc 61 , 200 ( 2000 ) ;
accord , first energy trading services , inc . , 88 ferc 61 , 067 at
61 , 156 ( 1999 ) .
5
e . g . , gpu advanced resources , inc . , 81 ferc 61 , 335 at
( continued . . . )
docket nos . erol - 2097 - 000 - 3 -
and erol - 2103 - 000
here , applicants request that the commission permit them to
use enrononline to make inter - affiliate sales , subject to the
following restrictions that they contend provide sufficient
protection against affiliate abuse . pge , when buying from epmi
using enrononline , will be required to " take the transaction
price as posted that is generally applicable at a particular
6
location without attempting to negotiate any adjustment . " in
7
addition , pge will be prohibited from submitting limit orders or
engaging in any other type of transaction in which the identity
of the counter - party is revealed to epmi prior to the transaction
being finalized . applicants also propose to amend their
respective codes of conduct to preclude any communication
regarding prices posted on enrononline .
applicants contend such restrictions ensure no affiliate
abuse occurs since pge will only be able to transact with epmi at
5
( . . . continued )
62 , 539 ( 1997 ) ( gpu ) ; detroit edison company , 80 ferc 61 , 348 at
62 , 197 - 98 ( 1997 ) ( detroit edison ) . in gpu , the commission
allowed sales from a power marketer to its affiliated traditional
public utility at a rate that was no higher than the lowest rate
the public utility paid non - affiliates under certain standard
supplier agreements . accord , first energy trading that the utility simultaneously offer through its
electronic bulletin board to sell to non - affiliates at the same
rate offered to its affiliate ; and that all prices charged to the
affiliate be simultaneously posted on its electronic bulletin
board . accord , jersey central power commonwealth edison co . , 85 ferc
61 , 288 at 62 , 176 - 77 ( 1998 ) .
6
epmi application at 4 ; pge application at 5 .
7
in the case of a limit order on enrononline , epmi would
know the identity of the customer requesting a price higher or
lower than that currently available . applications at 3 . while
applicants do not define " limit order , " the common understanding
is that , unlike a market order , which instructs a broker to
transact immediately at whatever price is currently available in
the marketplace , a limit order instructs a broker to fill the
order only if certain conditions are met . generally , a limit
order may be either a day order , in which case it expires when
the market closes if unfilled , or good - until - canceled , in which
case the limit order lasts until executed or canceled .
docket nos . erol - 2097 - 000 - 4 -
and erol - 2103 - 000
the posted price ( a price that is offered to all market
participants ) and there will be no transactions in which epmi
knows that pge is the counter - party before the transaction is
finalized . thus , applicants contend that not only will pge be
unable to negotiate special terms with epmi through enrononline ,
but epmi will have no discretion to take actions which favor pge .
applicants further offer that procedures are performed by
computer and are not left to the discretion of any affiliate of
pge . in addition , because the enrononline price is posted
electronically and is available to all market participants ,
applicants state that pge ' s customers have the opportunity to
transact with epmi on enrononline on the same terms and
conditions that are available to pge .
applicants have failed to demonstrate that their proposed
restrictions provide the same protections afforded under the
commission ' s affiliate abuse requirements and conditions ( e . g . ,
protection against pge buying too high or selling too low in its
8
transactions with its affiliate epmi ) . the thrust of
applicants ' argument is that the commission ' s affiliate abuse
concerns are satisfied by using enrononline , a public medium , for
selling power between affiliates . we disagree . while perhaps
faster and easier to use than phone calls , faxes , or letters , an
internet - based platform is just another medium for trade , and
speed and ease of use do not dictate that the commission ' s
affiliate abuse concerns have been satisfied . there is , for
example , no assurance that the posted prices on enrononline
9
represent prevailing market prices .
applicants contend that , since pge can transact with epmi
via enrononline only at the posted price , there can be no
affiliate abuse . we are not certain , however , that the posted
price necessarily represents the market price . while , on the
surface , enron online may bear some resemblance to an index or an
auction , the posted prices for any product may not be the result
of a competitive market of multiple buyers and sellers ; in fact ,
for sales the posted prices represent what epmi is willing to
sell at , and for purchases the posted prices represent what epmi
10
is willing to buy at . for other transactions through media
other than enrononline , including other exchanges , epmi might be
8
see supra notes 4 - 5 and accompanying text ( citing cases
that discuss commission ' s underlying concerns with affiliate
power sales ) .
9
see supra note 4 and accompanying text .
10
all transaction on enrononline involve epmi as a
participant . for sales , epmi is the seller . for purchases , epmi
is the buyer .
docket nos . erol - 2097 - 000 - 5 -
and erol - 2103 - 000
11
willing to sell at lower prices and buy at higher prices .
moreover , applicants provide no information about how product
prices posted by epmi are determined , or whether there would be
any restrictions on what products pge could trade via
enrononline , or even whether there are other similar , but non -
affiliated , internet - based venues where pge can electronically
trade those products to attain similar benefits .
having failed to convince us that these affiliates will be
transacting at a prevailing market price via enrononline , we now
turn to whether the applicants have met other conditions
established by the commission to prevent affiliate abuse .
regarding transactions in which epmi may be purchasing from pge
through enrononline , there is nothing in the applicants ' proposed
restrictions that would require pge to
simultaneously offer to sell to non - affiliates at the same rate
offered to the affiliate . the commission requires that , with
respect to any power offered to its affiliate , pge make the same
offer to unaffiliated entities at the same time through its
electronic bulletin board . but it is unclear whether pge can or
will make the same offer to non - affiliates .
applicants also offer as a protection that pge is prohibited
from submitting limit orders , which would prevent epmi from
knowing that pge is the counter - party to a transaction . again ,
this would not prevent epmi from selling power to pge at above -
market prices .
the commission is not assured by the applicants ' proposal
that transactions between pge and epmi conducted via enrononline
will occur in a manner that is consistent with the commission ' s
expectations regarding transparent and reasonable prices for
inter - affiliate power sales transactions . there is , for example ,
no provision in the proposed amendments regarding how
unaffiliated customers , or other interested parties , would
monitor inter - affiliate transactions .
for the above reasons , we will reject the proposed
amendments , without prejudice to applicants revising their
proposal to address the commission ' s concerns and incorporating
appropriate restrictions to protect against affiliate abuse .
11
likewise , pge might be willing to buy at lower prices and
sell at higher prices .
docket nos . erol - 2097 - 000 - 6 -
and erol - 2103 - 000
the commission orders :
applicants ' proposed tariff amendments are hereby rejected ,
without prejudice , as discussed in the body of this order .
by the commission .
( s e a l )
david p . boergers ,
secretary .
- 2097 _ txt . txt