Sellers of spot electricity that exceeds the price cap for the Western Interconnection will have more time to justify the higher prices to FERC the commission ruled Thursday (EL10-56).

FERC approved a motion by Macquarie Energy and Mercuria Energy America to extend the deadline for cost-justification filings to 30 days after the end of the month in which an “excess sale” occurred.

Sellers currently have seven days to make the submission.

The commission established a price cap in the WECC area outside CAISO in July 2002 after the Western energy crisis of 2000/01, when widespread manipulation in the California market sent the wider region’s wholesale prices skyrocketing. The $250/MWh price cap set in 2002 was, with FERC approval, increased to $1,000/MWh in 2010 after CAISO raised its cap to that level.

When it set the price cap in 2002, FERC clarified that it was in fact a soft cap, saying that “prices can be above the cap but will be subject to justification and refund.” It also established the seven-day cost justification deadline.

In their identical requests to extend the filing deadline, Macquarie and Mercuria said the complexity of gathering information to submit a justification warranted more time.

After making an excess sale, the companies said they must identify the scope of trades above the soft cap and ensure the trades have been finalized from a contractual perspective. Then they need to “gather information about the market fundamentals and other factors driving prices,” as well as data related to production costs, opportunity costs and other indices supporting their arguments.

The sellers then have to identify other costs and risks and prepare the submission, including pleadings and declarations.

“Both parties argue that it is very challenging to complete these tasks in seven days, and they contend that 30 days from the end of the month of a trade is a more reasonable deadline,” FERC noted in its order.

The two parties also contended that changing the deadline would lessen the burden on FERC by reducing the instances when the commission must deal with repeated motions for extension and answers to those motions, as well as avoiding the need for sellers to make an initial filing to meet the seven-day deadline, followed by supplements to reflect changes.

Tenaska, Tri-State Generation and Transmission, Brookfield Renewable Energy and Trading and EDF Trading all filed comments in support of the plan. Tenaska said it appreciated FERC’s willingness to allow “one-off” extensions to the deadlines but said it was still challenging to assemble the needed data within seven days.

Tri-State said the commission’s recent approvals of extensions demonstrated the need for longer deadlines.

“We agree that allowing parties more time to gather the required information for a filing will likely lead to more complete filings, increase the likelihood that market participants will receive settlement data for relevant transactions that are billed on a monthly cycle, and will help ensure that market participants are considering all sales in a given month and are not making rolling submissions for each trade date,” FERC said in approving the motion.

“Finally, we expect that an extension will not only minimize the need for supplemental filings and amendments, but also reduce the number of requests for individual extensions,” it said.