Attorney General Lockyer Asks Court to Reverse FERC and Order Refunds for Unfair Electricity Prices Paid by California During Power Crisis

Tuesday, September 24, 2002
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

(SACRAMENTO) – Attorney General Bill Lockyer today asked the federal court to overturn a Federal Energy Regulatory Commission (FERC) ruling that denies the state billions of dollars in refunds for unjust and unreasonable prices during California's energy crisis.

Filed with the Ninth Circuit Court of Appeals in San Francisco, the appeal contends that FERC erred in its federal regulatory rulings that are protecting generators and marketers from an estimated $1.8 to $2.8 billion in refund claims for sales of power made from May through October 2000, when wholesale power prices first began spiraling out of control in California.

The Attorney General earlier this year in a complaint filed with FERC demonstrated widespread and persistent violations of critically important rate reporting rules by all of the major power generators and traders active in the California market. While finding serious violations of the rules, FERC refused to order any financial relief for California. On September 19, 2002, FERC denied the Attorney General's request for reconsideration of its decision, clearing the way to appeal the decision in court.

"The FERC decisions are both legally flawed and blatantly unfair to California ratepayers," Lockyer said. "FERC agrees there were serious violations of the rule when power companies failed to file their rates, yet refuses to order refunds for California."

The appeal challenges FERC's determination that, even though they failed to file their rates as required by federal law, generators and marketers are nonetheless entitled to certain legal protections which limit their exposure to claims for refunds for past transactions. The appeal also challenges FERC's finding that it would be unfair to order refunds for violations of the rate reporting rules.

"By failing to file their rates, the power generators have forfeited those protections," Lockyer said. "FERC's recent decision on refunds further calls into serious question the ability of FERC to investigate and punish generators and traders who manipulate the system."

During recent revelations of bogus energy trades and other market schemes to manipulate electricity prices in California, FERC told Congress it would detect similar abuses in the future by strictly enforcing rate reporting rules for power companies.

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