Ninth Circuit Backs Consumers Against FERC

Sure it’s been supplanted by more current outrages. But back in the days before 9/11, Iraq, Katrina and Kid Nation, the California energy crisis — and the Federal Energy Regulatory Commission’s handling of it — caused widespread umbrage. Today, the Ninth Circuit provided some vindication for those of you whose vitriol remains fresh: A unanimous three-judge panel agreed that in 2003, FERC should have considered evidence that Enron had manipulated power prices in the Pacific Northwest before denying a refund request.

The decision (.pdf) by Judge Sidney Thomas — and joined by Judges Richard Clifton and M. Margaret McKeown — stems from a long and convoluted case (the opinion itself lists 27 different law firms and government agencies that submitted briefs on the matter) that began when a group of Northwest utilities took umbrage with the 2000 power spike.

A FERC administrative law judge dismissed the case in 2001 on the grounds that remedies aimed at the California market would cover the rest of the West. Several plaintiffs fought to keep it open, especially after the FERC released Enron documents in 2002 indicating that prices were artificially inflated. The FERC let the evidence in, though it eventually decided not to award further refunds. “FERC did not, however, respond to or take into account the new evidence of Enron’s market manipulation submitted with FERC’s approval,” Thomas wrote.

That decision, Thomas said, was arbitrary and capricious. “In determining whether refunds were warranted, FERC should have considered new evidence of intentional market manipulation submitted by the parties with FERC’s approval,” Thomas wrote, before stating that the Ninth Circuit panel was not considering the merits of the claim.

That, he wrote, is FERC’s job, and the commission now has a directive to consider the Enron evidence before deciding whether to award rebates — and also to include California in any potential group that could get a refund, since the state bought power from markets affected by the Enron conduct.

—  Justin Scheck