California Wants Billions of Dollars, FERC Says “Sorry, but no.”

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On May 24, 2011, FERC issued an Order dismissing a complaint filed by the California Attorney General (representing “the People of the State of California”) seeking refunds for “unjust” short-term bilateral sales made to the California Energy Resources Scheduling Division (CERS) of the California Department of Water Resources during the California Energy Crisis.

The Complaint, filed May 22, 2009, alleged that the named respondents – various power marketers – had exercised “undue market power” in their sales to CERS and committed numerous tariff violations, all with the help of FERC’s market monitoring – a system so “fatally deficient” that it failed to detect this bad behavior for an extended period of time.

The complainants requested that FERC order the sellers named in the suit to pay refunds, plus interest, on the sales made to CERS “at unjust and unreasonable rates from January 18, 2001 to June 20, 2001.” During that time period, the California Attorney General claims that CERS was overcharged approximately $1.9 billion.

But FERC was unsympathetic: “[W]e are compelled to dismiss the Complaint as it seeks an unavailable remedy, advances inadequate legal theories and, to the extent it raises an appropriate legal theory, to wit, Federal Power Act (FPA) section 309, the claims are not sufficiently supported.” For an analysis of this decision, I recommend reading Winston & Strawn’s recent Alert on the topic.

You can see more documents related to this case by searching for Docket Number EL09-56 in FERC’s eLibrary.

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