FERC Denies Sempra Generation Sale of Capacity to SDG&E

FERC has denied a request from Sempra Generation to make capacity sales to its affiliate San Diego Gas & Electric Company pursuant to a competitive solicitation, as FERC found that the solicitation does not satisfy the Commission's concerns regarding the potential for affiliate abuse (ER11-3464).

The decision is notable as there had been no protests to Sempra Generation's application.

Sempra Generation was seeking to sell system-wide Resource Adequacy (RA) capacity at market-based rates to SDG&E for the months of August and September 2011.

FERC found that SDG&E's solicitation did not meet its transparency requirement because SDG&E allowed Sempra Generation to submit a late bid, while not providing other bidders an opportunity to refresh pricing.

FERC also ruled that the competitive solicitation was not consistent with the Commission's evaluation guideline because the evaluation criteria were not publicized beforehand.

The Commission additionally noted that an independent evaluator was not present to design and administer the solicitation process. The Independent Evaluator was brought in after the auction closed, upon learning that Sempra Generation intended to submit a late bid into the RFO. "The Independent Evaluator did not monitor the bid evaluation process and reviewed the bids only after SDG&E finalized a list of selected bids. Therefore, based on the record in this proceeding, the Commission finds that the competitive solicitation is not consistent with the Commission's Oversight guideline," FERC held.