FERC issued a set of orders Thursday that indicate that the myriad disputes around the Western energy crisis of 2000/01 might finally be winding down two decades after California’s nascent wholesale energy market was paralyzed by widespread market manipulation.

The most significant of the orders dealt with a complaint by California’s attorney general, the state’s Public Utilities Commission, Pacific Gas and Electric (NYSE:PCG) and Southern California Edison (NYSE:EIX) (the California Parties) seeking refunds from a group of companies that sold ancillary services into the state during the crisis (EL-02-71).

Thursday’s order covered Hafslund Energy Trading and TransCanada Energy Trading, the two remaining respondents that had not reached a settlement in the proceeding.

In their complaint, the California Parties alleged that violations of FERC’s market-based rate quarterly reporting requirements allowed the companies to conceal market power or acts of manipulation that allowed them to charge unreasonable rates.

FERC’s initial decision in 2017, which found that the reporting violations concealed no such actions or intent, was remanded to the commission by the U.S. Ninth Circuit Court of Appeals, which ruled that FERC had erred by limiting the scope of its investigation to only market-share considerations.

“To fully consider whether a reported rate was just and reasonable, the agency must consider claims and evidence beyond the hub-and-spoke” market power screen, the appeals court found. The ruling also granted FERC latitude to determine whether the sellers may have unjustly benefitted from the manipulation even if they didn’t perpetrate it.

In Thursday’s order, FERC affirmed its initial decision, finding that the “California Parties have not established a basis for ordering refunds based on quarterly reporting violations.”

The commission reaffirmed an earlier finding that both companies had violated FERC’s reporting rules: Hafslund failed to include required transaction-specific prices or volumes, or dates of service in its reports, while TransCanada reported transactions on an aggregated — rather than transaction-specific — basis.

But the commission said it was “unpersuaded” by the California Parties’ contention that compliant quarterly reporting during the period in question also included a requirement to report hourly transactions.

“We acknowledge the importance of compliant quarterly reporting, but find that California Parties have failed to draw a connection between the purpose and importance of this reporting and any purported requirement to report all transactions on an hourly basis,” the commission wrote. “Moreover, given the commission’s consistent emphasis on the need for transaction-specific reporting, we find that nothing in the Initial Decision’s findings on this issue diminishes the importance of compliant quarterly reporting and the essential role it plays in the commission’s market-based rate program.”

FERC also found that, the potential existence of an hourly reporting requirement notwithstanding, its initial decision “correctly relied upon numerous other grounds” that compliant quarterly reports would not have provided the needed information to detect “telltale patterns of manipulation” or signs of market power.

The commission also rejected the California Parties’ argument that its findings would have been different even if hourly data had been included in a compliant set of reports.

“Although the initial decision did find that hourly data would have been necessary to detect the signs of manipulative trading schemes, the Initial Decision also emphasized that California Parties relied on numerous other sources of information, such as data responses, email communications, transcripts of trader tapes, and bid information, that would not have been included in compliant quarterly reports,” FERC wrote. “Thus, we find that the initial decision correctly concluded that noncompliant quarterly reports did not inhibit the commission’s identification of manipulative trading strategies in this case.”

Offset Claims

In another order stemming from the energy crisis, the commission dismissed as moot the California Parties’ request to rehear an order related to cost offsets provided to generators that had been required to refund a portion of their crisis-era sales into to the now-defunct California Power Exchange (CalPX) due to market mitigation (EL00-95-301). The offsets permitted the generators to claw back costs they’d incurred above the final mitigated market clearing price (MMCP).

In a previous decision, FERC accepted offset claims from Shell and Hafslund, prompting the California Parties to file a petition for review by the Ninth Circuit. The court then granted the commission a voluntary remand to reconsider the offsets granted to the two companies. The commission subsequently issued an order to establish an evidentiary hearing to examine whether the cost offset claims submitted by the companies included costs associated with the transactions “that constituted certain types of transactions that violated the then-current CAISO and CalPX tariffs.”

The California Parties subsequently entered into a settlement agreement with Shell that resolved the dispute over cost offsets, but they continued to pursue the matter over Hafslund, saying the commission erred in failing to set for hearing all the offset-related issues briefed before the Ninth Circuit.

FERC dismissed the complaint, noting that an administrative law judge in 2018 determined that “undisputed” expert testimony showed that Hafslund had no basis for a cost offset, meaning its refund liabilities were not affected by the company’s cost offset claim.

Winding Down CalPX

In a third order, the commission accepted for filing the California Parties’ settlement overlay compliance filing, which reconciled refund calculations made by CAISO and CalPX with the dollar amounts already paid under settlement agreements among the California Parties and more than 60 market participants (EL00-95-291).

The order approved “the proposed steps for accomplishing market clearing and the wind-down of CalPX,” including implementing a final clearing process; instituting a process for the retention and ultimate destruction of CalPX’s books and record, addressing its lease obligations and closure fee expenses, and paying expenses to close its bankruptcy case; and implementing a “hold harmless” provision releasing CAISO and CalPX from any liability around the final market clearing.

Moot

The commission also dismissed as moot Sacramento Municipal Utility District’s (SMUD) request for rehearing of an order that addressed compliance filings submitted by sellers who committed tariff violations during the crisis. The commission noted that SMUD and the California Parties have since settled their dispute (EL00-95-310).

FERC also said issues raised by the Salt River Project in its request for rehearing had been addressed by the commission in a prior order.