US court sends California refund claims back to FERC

Washington (Platts)--9Sep2004

The US Court of Appeals for the Ninth Circuit said the US Federal Energy
Regulatory Commission "improperly concluded" that it could not order
retroactive refunds for sales made during the 2000-2001 Western energy crisis.
In an order Thursday, the court said that it cannot order the refunds as
California requested, finding that "it is more appropriate for FERC to
reconsider its remedial options" to order refunds "in the first instance." 

The decision stems from FERC's June 2001 determination that it could only
grant refunds for sales made in the state between October 2000 and June 2001.
The commission said it was restricted by law and could not consider refunds
beyond that time frame.

California took the case to court in June 2002, claiming that the commission
did not consider proof that wholesale suppliers violated FERC's tariff and
market-behavior rules, and claimed the agency did not consider evidence that
the suppliers were not reporting their own violations of these rules. The
state is seeking about $2.8 bil in this case in refunds. 

FERC and wholesale suppliers said the court action was a "collateral attack"
on the agency's market-based rate authority. But the court, in stern language,
said FERC was "abdicating its regulatory responsibility" by allowing wholesale
suppliers to manipulate California consumers. FERC "misapprehends its legal
authority" that it cannot order refunds retroactively, the court said.

This story was first published in Platts real-time news and market reporting
service Platts Electricity Alert (http://electricityalert.platts.com ).

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