Federal Appeals Court Hears $6 Billion Refund Arguments

Attorneys argued a high-stakes case before the U.S. Court of Appeals for the Ninth Circuit in San Diego this week that could decide the fate of $6 billion in refunds the state says the power industry owes Californians. The case involves the lion?s share of the state?s nearly $9 billion refund claim for alleged overcharges during the power crisis of 2000-01. ?They?ve already ruled that the Federal Energy Regulatory Commission abdicated its regulatory duty to California ratepayers,? said Tom Dresslar, a spokesperson for the state attorney general, referring to a court decision last September ( Circuit , Sept. 10, 2004). ?We?re going to fight as long and as hard as we can to obtain full justice for California.? In the September case, Lockyer v. FERC, the Ninth Circuit ruled that the federal commission had authority to order refunds for any unreasonable or unjust charges that occurred in the summer prior to October 2, 2000. However, the court did not order FERC to require refunds, merely directing it to reconsider the issue. In the case argued April 13-14 before the Ninth Circuit, California Public Utilities Commission v. FERC, the state asks the court to require FERC to calculate and order refunds for what may be up to $2.8 billion of overcharges that occurred that summer in the spot market. California maintains that FERC, at a minimum, must substantively address evidence of potential overcharges during that period. By virtue of the court?s exclusive jurisdiction over the refund litigation, the state argues, the judicial panel has the power to order FERC to do so. FERC, however, argues that it has unfettered jurisdiction to decide how to handle the issue and that even the court lacks the authority to review its actions, a contention the Associated Press reported caused the courtroom to erupt into laughter. The state is asking the court to rule on other major issues as well. The court, it says, should require FERC to order refunds to the state Department of Water Resources. California contends that DWR is due refunds totaling $3.5 billion because it paid prices up to 10 times higher than historical norms. The state also wants the court to find that FERC has clear authority to order public power agencies, such as the Los Angeles Department of Water & Power and the Bonneville Power Administration, to refund any unjust and unreasonable charges imposed during the crisis. FERC agrees with the state on this point, maintaining that because it had jurisdiction over the California Independent System Operator and Power Exchange as de facto public utilities, it had authority over all those who sold power into those markets, including public agencies. Finally, the state maintains that the court should order FERC to require refunds for certain transactions it has excluded from its refund proceedings because they did not occur in the CalPX or CAISO markets. The state maintains that those deals heavily influenced the price of power sold within the markets. The timetable for a decision is unknown. CPUC v. FERC (01-71501); Lockyer v. FERC (02-73093)

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Federal Appeals Court Hears $6 Billion Refund Arguments

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