Fears that the California power market was manipulated in late 2004 and early 2005 have been dismissed by the Federal Energy Regulatory Commission. On September 26, in a self-described "rare" move, the commission released a previously nonpublic staff investigation into potentially manipulative intertie bidding in the California Independent System Operator's supplemental energy market. FERC went on to state that it agreed with the staff conclusions that the problems were due to CAISO rules that went into effect in October. The problem was corrected by a tariff amendment that the commission approved in April. The California grid operator requested the investigation, alleging that power sellers submitted intertie bids for the purpose of collecting "uplift" payments without delivering any net energy to CAISO. "Uplift" is the difference between CAISO?s market-clearing price and an importer's bid price under the grid operator's tariff adopted last October, FERC's staff explained. CAISO estimated that the bidding resulted in about $18.5 million in "uplift" payments from October 1, 2004, though March 22, 2005. Powerex accounted for 97 percent of the total, the staff report continued. This week CAISO spokesperson Gregg Fishman said the payments were "the unforeseen consequences of changes" CAISO made in its tariffs in October. FERC said one reason it took the "unusual step in making the report public" is that CAISO publicly disclosed its referral of the matter to FERC during a governing board meeting on March 22 (Circuit, April 1, 2005). Thus, the commission's order explained, many market participants were aware of the investigation. FERC also believes disclosure of the staff report presents a useful opportunity to provide general guidance on the application of its market-behavior rules and provides closure on the intertie bidding issue. The staff investigated whether Powerex violated CAISO's Enforcement Protocol, concluding that these rules against market manipulation were not broken. The rules then in effect have been adjusted in CAISO Tariff Amendment 66, which FERC approved on April 7 as an interim solution. "Therefore, staff recommends that this investigation be closed," the FERC staff concluded.