The U.S. Supreme Court ruled that a Ninth Circuit Court decision on energy crisis rebates was flawed June 26. However, the High Court did not shut the door entirely to rebates, agreeing with the Ninth Circuit Court that there is a \u201cjust and reasonable\u201d standard for wholesale electric rates even under contracts. The case now goes back to the Ninth Circuit. \u201cTo be sure, Federal Energy Regulatory Commission has ample authority to set aside a contract where there is unfair dealing at the contract formation stage,\u201d noted the Supreme Court. \u201cBut the mere fact that the market is imperfect, or even chaotic, is no reason to undermine the stabilizing force of contracts\u201d as an alternative to tariff-based regulation, it added. Thus, the decision may hamper attempts at reducing the costs of bilateral contracts. \u201cBuyer\u2019s remorse set in\u201d after the 2000-01 energy crisis contracts were negotiated at high prices, noted the court. Buyers asked federal regulators to modify those contracts to reflect \u201cjust and reasonable\u201d rates. At the time, California estimated it could end up in $1.4 billion in refunds. The case turned on what\u2019s called the Mobile-Sierra precedent. That case presumes that a legal contract for rates is \u201cjust and reasonable.\u201d However, that presumption became rebuttable under the Ninth Circuit\u2019s January 2007 decision when rates are high. The decision notes that if \u201ca challenged contract imposes any significant cost on ultimate customers because of a wholesale rate too high to be within a zone of reasonableness, that contract affects the public interest.\u201d The High Court decision, written by Justice Antonin Scalia, was split 5 to 2. The two dissenters were Justices John Paul Stevens and David Souter. Chief Justice John Roberts and Justice Stephen Breyer did not vote. A concurrence in part was made by Justice Ruth Bader Ginsberg. The case is Morgan Stanley Capital v. Public Utility District, Snohomish County.