Ms. Felicia Greer August 19, 2004 Page 3 of 4
Electricity Supplier Application
As noted above, RESE filed its electricity supplier license application on March 6, 2003. In its application, RESE included a detailed response regarding actions against RESE and its affiliates engaged in the sale at retail and wholesale of electricity or natural gas, including suspensions, revocations, limitations, reprimands and fines. Public Citizen, however, alleges that RESE filed a false application by failing to disclose information in response to Question 8 of the application, “Reliability and Environmental Official Actions Against Applicants/Affiliates,” which requires disclosure of “Official Actions that have been taken against the Applicant and any Affiliate (if available to the Applicant) that engages in the sale at retail of electricity, or electric generation supply services, or natural gas for matters relating to environmental or reliability status for the past two years.” Public Citizen specifically alleges that RESE was required to disclose a “$25 million penalty” assessed on RESE’s affiliate by the California Independent System Operator (“CAISO”) pursuant to CAISO Tariff Section 5.6.3. This section of the CAISO tariff, which was cancelled by the FERC effective June 20, 2001, permitted the CAISO to assess penalties against scheduling coordinators during a declared system emergency. Although Public Citizen describes these charges as a single penalty, in fact, they were an accumulation of tariff-based charges for imbalances over a period of seven months and more than 25,000 individual dispatch intervals.
believes the CAISO charges status” within the meaning
“Official Actions” relating
to "environmental were commercial
penalties that, unlike regulatory penalties, were not investigation, deliberation, or a finding of wrongdoing
the subject of any regulatory on the part of RES or any other
participant assessed penalties pursuant to CAISO Tariff Section 5.6.3. They were routine settlement process which was used to calculate net amounts owed for each
part of the 10 minute
dispatch interval. These charges simply provided financial incentives to improve performance during emergency conditions. by allowing the CAISO to deduct from
interval when an individual generator’s metered output fell short of day ahead and schedules combined with CAISO’s dispatch instructions. However, there often were reasons that a generator might be unable to comply with instructions. For example,
hour ahead operational the CAISO
dispatch instructions, despite often physically impossible contingencies. There were administrative proceedings to
best efforts by Reliant dispatching and operating personnel, were to meet due to ramping limitations and unexpected generation no docket numbers, offense dates, case numbers, or similar reference or disclose.
RESE’s application complied with the Commission’s requirements because RESE’s answer to Item 8 on the license application was then and is now correct. RESE carefully and thoroughly completed the application and required disclosure including, out of an abundance of caution, disclosure of various FERC proceedings against RESE’s affiliates not engaged in the sale of electricity at retail and, in one case, a former affiliate of RESE that had been engaged in the sale of gas at retail. RESE’s answers also referenced the more extensive disclosures provided in filings with the Securities and Exchange Commission, which filings were provided to facilitate