FERC ruling

San Diego Business Journal, Sept 13, 2004 by Pat Broderick

FERC Ruling: The U.S. 9th Circuit Court of Appeals on Sept. 9 ruled that the Federal Energy Regulatory Commission failed to properly administer the market-based rate system that governed California's wholesale electricity market.

The three-judge panel also ruled that FERC unduly restrained itself in determining remedies for violations of its rules.

"This is a huge victory for California ratepayers, and vindication for state officials who have been struggling for years to wrench justice out of FERC," said Attorney General Bill Lockyer, who represented the state in the case.

"The ruling puts back on the table $2.8 billion in refunds that FERC had denied ratepayers."

The court sent the case back to FERC to reconsider its refund decision. That means that ratepayers could see about $2.8 billion in refunds that FERC had determined were beyond its authority to order, said Lockyer.

"The power to order retroactive refunds when a company's noncompliance has been so egregious that it eviscerates the tariff is inherent in FERC's authority to approve a market-based tariff in the first place," the court ruled.

The court also faulted FERC for a regulatory failure that left Californians vulnerable to market misconduct.

"With FERC abdicating its regulatory responsibility," the court said, "California consumers were subjected to a variety of market machinations."