Opinion ID: 786773
Heading Depth: 2
Heading Rank: 3

Heading: Exclusion of CAISO's Account Balance

Text: 26 PG&E also argues that even if every other aspect of the allocation is legitimate, the exclusion of sales to CalPX through CAISO markets improperly increases the burden on PG&E. CAISO has the largest outstanding balance of any customer, but FERC decided to exempt that balance from the equation because CAISO was a scheduling coordinator for other entities, like PG&E. According to FERC, because the costs would be passed on to CAISO's customers, like PG&E, including CAISO's balance would be double counting. 27 PG&E claims that this explanation does not square with FERC's allocation methodology. Because FERC considers absolute outstanding account balances in allocating costs, a buyer and a seller could be assessed a charge on an account for the same megawatt sold. Thus, double-counting exists under the regime, but not if the seller was CAISO. 28 FERC responds that while sellers' and buyers' outstanding balances are equally assessed, the same balance is not double counted. Because any amount assessed to CAISO would also be assessed to its customers, the result would be double counting the same account, not counting two different accounts from the same transaction. Finally, FERC cites the fact that CAISO is a not-for-profit entity with no stake in the Refund Proceedings - any refunds will flow through CAISO directly to its customers. In sum, FERC contends that because CAISO is a flow-through entity, the cost allocation is properly assessed on its customers, not on it. 29 Again, FERC's arguments are unconvincing. FERC's double-counting argument makes no sense in light of its justification for its cost-allocation scheme. If, as FERC argues, the absolute value of a party's balance correlates with the magnitude of its stake in CalPX's wind-up activities, then CAISO's stake should be proportional to its balance. The fact that the money owed by CalPX to CAISO is the same money owed to CalPX by participants, such as PG&E, has no bearing on CAISO's stake as a CalPX creditor in the calculation of refunds. As to FERC's assertion that CAISO has no stake in CalPX's wind-up activities because any money refunded to CAISO would simply pass through to CAISO's customers, CAISO's outstanding account balance would be just as reflective of its customers' stake in the outcome as PG&E's outstanding balance is reflective of its stake. Knowing that, and taking FERC's position that CAISO is a flow-through entity, FERC has not explained why CAISO should not be induced to pass along the costs of CalPX's wind-up activities to its customers. To the extent that using outstanding account balances would be appropriate, FERC has erred in excluding CAISO's balance. 30 As to CAISO's non-profit status, we can find no reason why that status limits what it has at stake in the proceeding. Any number of entities operating in energy markets may be classified as non-profit, and FERC has offered no convincing reason why they should be treated differently in this case.