Puget Decision Opens Door For Massive Energy Crisis Refunds

Update 1

Friday, August 24, 2007
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

SAN FRANCISCO - The 9th Circuit Court of Appeals today issued a key decision that requires the Federal Energy Regulatory Commission (FERC) to reconsider its refusal to grant energy crisis refunds—which could potentially return $1.3 billion to California ratepayers. The Attorney General had asked the court to reverse FERC’s refusal to grant refunds after ratepayers suffered massive price-gouging on short-term energy purchased in the Pacific Northwest during the energy crisis of 2001.

In arguments before the 9th Circuit, the Attorney General argued that FERC abused its discretion when it excluded the state’s purchases from refund eligibility. The Court agreed with California’s position and remanded the case back to FERC for reconsideration in light of the Court’s decision.

Commenting on today’s decision, Attorney General Edmund G. Brown Jr. said: “Today’s decision is a major victory for California ratepayers. I encourage FERC to promptly refund the more than one billion that was stolen from the people of California.”

FERC had asserted that California was not entitled to refunds in the Pacific Northwest because the power was consumed in California, not in the Pacific Northwest. Today, the Court found FERC’s reasoning was specious and arbitrary. The Court remanded the case back to FERC, instructing the commission to consider the evidence of market manipulation that it had previously ignored.

As a result of today’s decision, California can now potentially claim $1.3 billion in refunds from non-governmental energy sellers, the largest potential refund-payers being Powerex, Sempra, TransAlta Energy, Coral Power and Trans-Canada.

The case is Port of Seattle, Washington, et al. v. Federal Energy Regulatory Commission, no. 03-74139, also known as the Pacific Northwest (PNW) or Puget case.

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