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FERC Orders Retail Supplier To Issue Refunds

January 30, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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As part of an order granting Ambit Northeast, LLC market-based rate authority, FERC directed Ambit Northeast to make refunds for the period of time during which market-based rates were collected without Commission authorization, i.e., May 2012 to December 21, 2018, for Ambit's sale of excess power back into the wholesale markets as part of balancing Ambit's retail load obligations

FERC stated in its order that, "Ambit states that it commenced procuring wholesale power in May 2012 in the ISO-NE market and in January 2013 in the MISO market. Ambit states that as part of obtaining power supplies to serve its retail-level customers, Ambit purchased electricity at wholesale and resold excess power back to the ISO-NE and MISO markets. Ambit states that in September 2018, in connection with internal due diligence, Ambit was informed that such transactions may be subject to the Commission’s requirements. Ambit requests that the Commission waive any penalties or charges associated with its late filing."

In its application for MBR authority with FERC, Ambit had stated, "Applicant commenced procuring wholesale power in May 2012 in ISO-NE and January 2013 in MISO. As part of obtaining power supplies to serve its retail-level customers, Applicant purchased electricity at wholesale, and, to the extent necessary, resold excess power back to the ISO-NE and MISO markets. Around the time such activities commenced, on the advice of in-house personnel, Applicant was informed that such 'balancing' transactions were not subject to FERC jurisdiction. In September 2018, in connection with internal due diligence by a minority shareholder of Applicant’s parent company, Ambit Holdings, LLC, such shareholder informed Applicant that such balancing transactions may be subject to FERC’s prior authorization (tariff) requirements. Upon learning this information, Applicant moved with haste to consult with the undersigned, Applicant’s new outside regulatory counsel. The undersigned advised Applicant of its opinion that such balancing transactions (the wholesale sales back to the grid) over approximately the past three years were FERC-jurisdictional, and required FERC prior authorization. Applicant and the undersigned have proceeded in a very expedited manner in preparing the instant tariff filing, and request waiver of any penalties or charges associated with the late filing."

FERC stated in its order that, "Ambit commenced procuring wholesale power in May 2012 and resold excess power without Commission authorization. Section 205 of the FPA explicitly requires that proposed rates be filed with the Commission at least 60 days in advance of their proposed effective date."

FERC stated in its order that, "The Commission has noted that, if a utility files a market-based rate tariff less than 60 days prior to the proposed effective date of new service, the Commission will require the utility to refund to its customers the time-value of the gross revenues collected, calculated pursuant to 18 C.F.R. § 35.19a of the Commission’s regulations, for the entire period that the rate was collected without Commission authorization. In addition to returning the time value of the revenues collected for the period the rate was charged without Commission authorization, when dealing with market-based rates that are not timely filed, the Commission also has stated that: '[T]he utility will be required to refund all revenues resulting from the difference, if any, between the market-based rate and the cost-justified rate. . . . [T]he late-filing utility will receive the equivalent of a cost-based rate, less the time value remedy applicable to the unauthorized filing of cost-based rates, until the date of Commission authorization.'"

FERC stated in its order that, "We note that whether or not an individual customer actually suffered any harm is irrelevant to our inquiry here. The injury being remedied by refunds for late filing is not merely redress for that customer but particularly 'the Commission’s ability to enforce FPA section 205’s requirement that there be prior notice and that the rates charged be just and reasonable at the time they are being charged.'"

Ambit was directed to make refunds, with interest, within 30 days of the date of FERC's January 29 order. Additionally, Ambit was directed to submit a refund report within 15 days thereafter, regarding the basis for and calculations of the refunds paid

"Ambit is hereby ordered to make refunds, with interest, within 30 days of the date of this order, as discussed in the body of this order. Such refunds shall include the period that market-based rates were collected without Commission authorization, i.e., May 2012 to December 21, 2018," FERC ordered

FERC granted Ambit Northeast, LLC the authority to make wholesale sales of electric energy, capacity, and ancillary services at market-based rates, effective December 22, 2018.

Docket No. ER19-158

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