ELR Citation: 42 ELR 20182
No(s). 09-72775 et al (9th Cir. Aug 27, 2012)

The Ninth Circuit denied petitions challenging FERC orders that retroactively reset the market rates that were charged in the California electricity markets during the state's energy crisis of 2000 and 2001. After California deregulated and restructured its electricity market in the mid-1990s, prices skyrocketed. FERC attempted to ameliorate the problem by ordering refunds from both jurisdictional (public) and nonjurisdictional (non-public) entities for prices paid above what FERC later determined to be the just and reasonable rate. The refunds were challenged, and the court held that FERC lacked authority to order refunds from those entities not under its jurisdiction, namely the non-public utilities. In a set of orders subsequent to that case, FERC stated that it had "revised" or "reset" the market rates for the period for which it had ordered refunds, and that its authority to do so stemmed from §206 of the Federal Power Act. A group of municipal and federal governmental entities, which sold electricity in the affected markets but who are outside of FERC's refund jurisdiction, challenged those orders. The court disagreed with FERC's assertion that it has broad authority under §206 to retroactively reset rates that were charged in the California electricity markets during the time in question. Rather, the Federal Power Act gives FERC the authority to investigate rates and to order refunds only from public utilities. But the specific FERC orders that are challenged here do not exceed the limits on FERC's authority. The FERC orders reset the market prices during the refund period to just and reasonable levels for the purpose of calculating the amount of refund due from entities over which FERC does have authority. The petitions, therefore, were denied.