(9th Circuit) Court: Feds must order refunds to California energy ratepayers (~$2.8 billion)

Federal regulators must order retroactive refunds to California residents for electricity overcharges they paid during the energy crisis, a U.S. appeals court ruled today in a decision that could force power companies to return about $2.8 billion.

The Ninth Circuit U.S. Court of Appeals said the Federal Energy Regulatory Commission ``abused its administrative discretion by declining to order refunds'' because the agency ``improperly concluded that retroactive refunds were not legally available.''

The court, however, declined to order refunds itself and said that should be determined by the federal regulators.

It wasn't immediately known whether the energy companies at the heart of the energy crisis would appeal the ruling to the U.S. Supreme Court, said Jan Smutny-Jones, a spokesman for the Independent Energy Producers Association, a power industry trade group.

California Gov. Arnold Schwarzenegger and Attorney General Bill Lockyer hailed the ruling as a victory in the state's three-year fight for electricity refunds.

``I think the Ninth Circuit Court's decision is a fantastic one,'' said Schwarzenegger, a Republican who was elected in a recall in part because of Democrat Gov. Gray Davis' handling of the energy crisis.

``Californians deserve refunds to fairly compensate them for the excessively high prices they paid during the energy crisis. The court's action today gives clear direction to FERC that they should issue significant refunds to California ratepayers who were overcharged. I will continue to fight for Californians and work to lower energy costs for all consumers.''

The 9th Circuit Court decision can be found at the following Click here for Court Opinion

We conclude that FERC’s authorization of market-based tariffs inthis case complied with the Federal Power Act, but that FERC abused its administrative discretion by declining to order refunds for violations of its reporting requirements. We therefore grant California’s petition in part and remand this case to FERC for refund proceedings......

However, despite the integral nature of the reporting requirements to an effective market-based tariff, and despite the patent failure of many of the affected companies to provide even minimal reporting, FERC’s position here is that violation of tariff reporting requirements is merely a technical “compliance issue,” and it is therefore without authority to order refunds retroactively based on reporting failures. FERC misapprehends its legal authority in this context. In fact, FERC possesses broad remedial authority to address anti-competitive behavior

So while we agree with FERC that market-based tariffs are not per se invalid under the FPA, it is clearly incorrect to conclude that the reporting requirements are anything less than essential to a valid administration of the market-based system at issue in this case. As we have noted, FERC itself has recognized that it possesses the authority to impose retroactive refunds...

For these reasons, we agree with California that FERC improperly concluded that retroactive refunds were not legally available. Although California urges us to order refunds, we decline to do so. It is more appropriate for FERC to reconsider its remedial options in the first instance. We therefore grant the petition and remand to FERC for further proceedings consistent with this opinion.

OK so FERC will reconsider and determine that the various power marketers each owe the entire state of California one cent!

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