US appeals court affirms FERC jurisdiction over electricity rates

Washington (Platts)--10Sep2004

The US Court of Appeals for the Ninth Circuit Friday upheld a district court
ruling that found a Washington municipal utility's lawsuits charging various
wholesale power suppliers with violating California antitrust and consumer
protection laws are preempted by federal law. In its ruling, the court
rejected an appeal by the Snohomish, Washington, Public Utility District,
which sued suppliers for manipulating the wholesale power market to
artificially increase prices during the 2000-2001 energy crisis. 

The ruling affirmed the district court decision that held the muni's claims
were "preempted by federal law, which authorizes the Federal Energy Regulatory
Commission to set wholesale electricity rates." In its appeal, Snohomish that
the lower court ruling should be overturned because FERC's market-based rate
policy amounts to "an abdication of rate making."

The appeals court disagreed, however, saying "FERC has exclusive jurisdiction
over interstate sales of wholesale electricity, and continues to engage in
such regulatory activity." FERC, the court added, "approved tariffs that
governed the California wholesale electricity markets. Therefore, if the
prices in those markets were not just and reasonable, or if the defendants
sold electricity in violation of the filed tariffs, Snohomish's only option is
to seek a remedy before FERC."

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