FERC Must Consider Refunds Prior to 2000

The Ninth Circuit of Appeals ruled that the Federal Energy Regulatory Commission improperly denied California refunds of up to $2.8 billion. The court sent the matter back to FERC to decide the amount due to state ratepayers. The California Attorney General successfully challenged federal regulators' claim that the agency lacked the authority to order refunds prior to October 2000. At the same time, the court upheld FERC's market-based tariffs. "Californians deserve refunds to fairly compensate them for the excessively high prices they paid during the energy crisis," stated Governor Arnold Schwarzenegger. The court held September 9 that federal regulators have "broad remedial authority" under the Federal Power Act to demand refunds when requisite reporting requirements are violated, causing anti-competitive behavior. "Despite the promise of truly competitive market-based rates, the California energy market was subjected to artificial manipulation on a massive scale," wrote Judge Sidney Thomas. Generators were required to file reports every four months on power sales?short- and long-term?with quarterly reports summarizing transactions over the preceding three months. The court ruled that the reporting rules, not followed during the period at issue, were "an integral part of market-based tariffs." It added that "one of the animating ideas behind" the Federal Power Act and the filed rate doctrine is "the prevention of price discrimination and the imposition of unjust and unreasonable rates by requiring all customers receive the same published rate." "This might be a lot of huff and puff for little or nor money changing hands," warned Gary Ackerman, Western Power Trading Forum executive director. The amount of actual refunds is speculative, he said, noting the decision adds at least another year to the entire regulatory process, given likely appeals. "On the other hand, we were affirmed in our belief that market based rates are legitimate," he said. The court declined to order refunds, holding that this issue is in FERC's hands. (No. 02-73093)

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FERC Must Consider Refunds Prior to 2000

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