APX Will Fight FERC Order Imposing Charges on Electricity; FERC Taxes Electricity Many Times on Its Way from Generators to Consumers.

CUPERTINO, Calif.--(BUSINESS WIRE)--July 20, 1998--Last week, the Federal Energy Regulatory Commission ("FERC") affirmed its decision to have Automated Power Exchange ("APX"), the California Power Exchange ("PX"), and other exchanges pay a FERC Annual Regulatory Charge of approximately three cents per megawatt-hour. The FERC also affirmed its jurisdiction over APX.

APX offers low cost, electricity markets, where buyers and sellers trade hourly electric energy up to one week before delivery of the energy for the hour. Participants make voluntary offers to buy or sell electricity at prices they will accept. APX opened its California markets on March 30, just ahead of the state-mandated California PX.

"FERC's order is a giant step backward, both for the FERC and for proponents of a competitive power industry", noted Dr. Edward Cazalet, CEO of APX. "The FERC claims that its recent Orders 888 and 889 are designed to promote competition. Last week's order demonstrates the FERC's lack of a clear vision for introducing competition to the power industry and a strong preference for imposing burdensome new regulations and taxes.

"Perhaps the most glaring contradiction in the FERC order is the way in which the FERC treated brokers, who now operate by telephone and electronic bulletin boards, and new exchange markets like APX and the PX. Brokers, who today match buyers and sellers by telephone or computer, are completely unregulated, and are exempt from the FERC's Annual Regulatory Charge.

"Brokers are exempt from regulation, the FERC claims, because they do not take title to power, do not control electric utility facilities and do not set prices. Yet, the FERC claims that because the APX and the PX employ a computer algorithm, they set the market price for electricity and therefore, unlike brokers, they should be regulated and taxed. The FERC is trying to make an impossible distinction between APX and brokers. APX does not take title to power and does not control utility facilities. In addition, buyers and sellers control the prices in the APX, not APX. APX does what a broker does only more efficiently, more openly, and with continuous price discovery.

"This tax on APX and other power transactions discourages price discovery and favors secrecy in setting prices. The FERC Annual Regulatory Charge, which is currently around three cents per megawatt-hour, applies at several steps in the transactional chain. This tax could be charged 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 FERC should eliminate pancaking of its charges on electricity transactions, and thereby set an example for the industry to eliminate pancaking of its transmission rates.

"FERC Commissioner Curtis Herbert suggests that the FERC order clears the way for APX to challenge the FERC's decision in federal court. We are evaluating a range of options, including a court appeal and legislation that would change the way the FERC collects its charges. We call on energy wholesalers and their advocates to join us in this effort."

APX operates the APX Electricity Markets, providing forward markets to buy and sell power up to 168 hours in advance of delivery, operating 24 hours a day, seven days a week. In addition to northern and southern California electricity markets, APX provides a Green Power Market for buyers and sellers of environmentally preferred generation. Automated Power Exchange is a privately owned firm based in Silicon Valley. For more information about APX, visit the company's website at www.energy-exchange.com.

    CONTACT: Automated Power Exchange
              Jack Ellis, 408/517-2100