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Update: PSEG Confirms FERC Investigating Its Cost-Based Bids
PSEG confirmed in reporting earnings yesterday that PSEG Power has been verbally notified by the FERC Staff that Staff has initiated a preliminary, non-public staff investigation into certain bidding by PSEG Power.
PSEG said that FERC Staff is specifically investigating matters surrounding the, "errors discovered by Power in its cost-based bids for its New Jersey fossil generating units in the PJM energy market," as well as, "additional pricing errors and differences between the quantity of energy that Power offered into the energy market and the amounts for which Power was compensated in the capacity market."
"The investigation could result in the FERC seeking disgorgement of any over-collected amounts, civil penalties and non-financial remedies. Power has implemented and remains in the process of implementing additional measures to mitigate the risk of similar issues occurring in the future. It is not possible at this time to reasonably estimate the ultimate impact or predict any resulting penalties, other costs or the applicability of mitigating factors," PSEG said.
PSEG had first disclosed in May that Power had discovered that it "incorrectly calculated" certain components of its cost-based bids for certain generating units in the PJM energy market, with resulting over-collection of revenues related to its fossil fleet
In August, PSEG told investors that Power had notified the FERC, PJM and the PJM Independent Market Monitor (IMM) in the first quarter that it found certain errors in the cost-based component of its bids for its fossil generation units. In the first quarter, Power recorded a charge to income of $25 million based on the information available at that time. Upon discovery of the errors, PSEG commenced an investigation and has since notified the FERC, PJM and the IMM that additional pricing errors in the cost-based bids were identified and it was further determined that the quantity of energy that Power offered into the energy market for its fossil peaking units differed from the amounts for which Power was compensated in the capacity market for those units. PSEG informed the FERC, PJM and the IMM of these additional issues, and has corrected these errors. In its August statement to investors, PSEG said that it does not have access to PJM's proprietary data to determine if the differences in quantity had any impact, and if so the level of that impact.
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October 31, 2014
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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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