APX Files Initial Brief With U.S. Court of Appeals Opposing Federal Regulatory Charges on Electricity Trading.

CUPERTINO, Calif.--(BUSINESS WIRE)--June 25, 1999--

Automated Power Exchange Inc. (APX) announced today that it has filed its initial brief with the U.S. Court of Appeals for the District of Columbia Circuit in Automated Power Exchange Inc. v. Federal Energy Regulatory Commission.

The brief (Number 98-1415), filed June 14, presents APX's arguments appealing the orders of the Federal Energy Regulatory Commission (FERC) that APX falls under the commission's jurisdiction and thus must pay an annual regulatory charge of approximately $.03 per megawatt hour of electricity traded. In disputing the annual charge, California Power Exchange (CalPX) is a copetitioner with APX. Because APX and CalPX do not take title to any power, they assert that they are not public utilities and that the annual regulatory charge therefore does not apply.

"A federal regulatory charge would impede the objectives of the deregulation of the U.S. electricity industry, which has been underway since 1996," said Edward Cazalet, Ph.D., APX chief executive officer. "Such a regulatory fee amounts to cascading taxation, in which electricity would be taxed many times between generation and delivery to consumers. Consumers in those states with power exchanges ultimately would bear the additional costs."

The annual regulatory charge would be added several times on a given amount of electricity in markets such as California where vertically integrated utilities have been replaced by power exchanges, system operators, generating companies, and retail aggregators.

The commission's order that APX and other such exchanges pay an annual regulatory charge constitutes the first time the commission has asserted jurisdiction over entities that neither sell nor transmit power in interstate commerce but only facilitate such trades. "We believe that in arbitrarily expanding its jurisdiction the commission has exceeded its congressional mandate," said Cazalet.

Added Cazalet, "Brokers engaged in similar activity remain unregulated and exempt from the annual regulatory charge. Thus, the imposition of such a tax on APX and other power exchanges would give the broker market an unfair advantage, which is contrary to FERC's mission in encouraging the development of power exchanges to help stabilize prices for electric power."

APX filed a petition for review notice with the circuit court in September 1998, following FERC's March 1998 order to APX to pay these charges and reaffirmation of that order in July 1998. The oral argument is scheduled for Dec. 3.

APX operates Internet-based exchanges for the buying and selling of electricity, energy transmission, and related products. The company's markets include Northern and Southern California electricity markets; Ohio, New York, and Washington electricity markets to open in 1999; and a Green Power market for environmentally preferred generation.

The APX automated interface also allows electricity generators and retailers to access many other markets. Founded in 1996, APX is a privately held company based in Cupertino. For more information, visit www.apx.com.