In an appeal filed this week with the Federal Energy Regulatory Commission, state officials said "numerous sellers who manipulated California's electricity markets will improperly reap millions of dollars in additional profits at the expense of ratepayers" if the ruling takes effect.

Attorney General Bill Lockyer's spokesman Tom Dresslar called the ruling "the latest affront to justice from FERC," an agency that California officials believe has treated the state unfairly.

The state is seeking a new hearing from FERC on the issue. Its appeal came as documents released by a U.S. senator and a Washington state public utility accused Enron's traders of reaping $1.14 billion in illegal profits by manipulating prices.

California's latest war with FERC has to do with a little- noticed ruling May 12. FERC said the state Department of Water Resources owes $270 million to sellers such as Enron, Mirant Corp. and Williams Cos., the out-of-state companies that have been accused by California of manipulating the state's beleaguered electricity market in 2000 and 2001.

The May 12 ruling is a complicated matter that stems from the state's desperate efforts to keep the lights on in January 2001.

California's big utilities, stripped of many of their power plants by the state's deregulation plan, were falling into financial ruin because of skyrocketing wholesale electricity prices. They were so destitute, in fact, that the power sellers were refusing to sell to them. The state stepped in, and began buying power on the utilities' behalf at the Department of Water Resources.

According to California energy official Erik Saltmarsh, the refunds ordered by FERC have to do with purchases the water agency made in "real time" -- those sometimes frantic deals made at the last minute when shortages popped up and various players bought and sold electricity back and forth.

At times, sellers had to compensate the state if a shortage developed because they couldn't supply electricity they had committed to deliver, said Saltmarsh, executive director of the state Electricity Oversight Board. Those sellers were billed for the amount the state paid for the power.

When FERC ruled in 2003 that there was rampant market misconduct, it set a threshhold for what electricity should have cost -- and ordered sellers to make refunds for amounts over that threshhold. While that ruling hasn't been finalized, it should yield about $3 billion for California ratepayers.

Then, to the dismay of California officials, FERC went a step further. In its May 12 ruling, FERC said the fairness threshhold also applies to electricity billed to the sellers during those "real time" deals. As a result, FERC said, the sellers paid the state too much -- and the state owes them refunds.

Saltmarsh called the ruling "profane" because he believes FERC is ignoring California's pleas for billions in refunds for electricity purchased by the water agency.

Although FERC has said California is eligible for about $3 billion in refunds, that's a fraction of the nearly $9 billion the state says it is owed.