In a key decision, the United States Court of Appeals for the Ninth Circuit upheld in April 2001 the Federal Energy Regulatory Commission’s approach to remedying the dysfunctional California electricity market structures.
The Ninth Circuit supported the Commission’s decision to terminate the California Power Exchange’s (PX) tariff and rate schedules as necessary to facilitate forward contracting by the investor-owned utilities free from “the chilling effect” produced by the California Public Utilities Commission’s continuing reliance on the PX spot markets for determining what prices were prudent to pay for purchasing electricity.
The Court, whose circuit covers much of the western United States, also upheld the Commission’s finding in its major December 15, 2000 order dealing with the California electricity market, that the Cal PX spot markets were not functioning properly and could produce unjust and unreasonable short-term rates under certain conditions.
In the same April 11 decision, the Court addressed a separate petition by the City of San Diego seeking to have the Commission order immediate refunds for the period October 2 through December 31, 2000. The Court agreed that the Commission acted reasonably in giving higher priority to prospective structural remedies over retroactive refund determinations. For a copy of the Courts order, contact FERCs website.
