City of Redding v. FERC

Under § 206 of the Federal Power Act, the Federal Energy Regulatory Commission does not have broad retroactive ratesetting authority over non-jurisdictional sellers. FERC’s refund authority under the provision is limited to being prospective only, and it extends only to those entities under its jurisdiction.

In an attempt to alleviate California’s soaring energy prices in the mid 1990s, the Federal Energy Regulatory Commission (FERC) ordered refunds from both public and non-public entities for prices paid above what FERC later determined to be the “just and reasonable” rate. In 2005, the Ninth Circuit found FERC lacked authority to order refunds from non-public utilities because they were not under FERC’s jurisdiction. In orders subsequent to this ruling, FERC stated that it had “revised” or “reset” the market rates for the period when it had ordered refunds pursuant to authority from § 206 of the Federal Power Act (FPA), 16 U.S.C. § 824e. Petitioners, municipal and federal governmental entities that sold electricity in the affected markets but are outside FERC’s refund jurisdiction, appeal these orders. Petitioners are both “aggrieved” parties under the FPA and retained a sufficient stake in the outcome, thus providing standing to bring their petition. To determine whether the petition was barred as a collateral attack on a prior order, the Court had to determine whether the Order the petition was based was a “modification” of a prior order, which is reviewable on appeal, or merely a “clarification.” Because the July 2001 Order in question lacked clarity and later orders were not entirely consistent, the Court determined FERC’s shifting position was not mere clarification, and the petition was not barred. By looking at Congress’s intent as well as the language and overall structure of the statute, the Court concluded FERC does not have broad power under § 206 to retroactively reset rates for all market participants. FERC’s refund authority is limited to being prospective only, and it extends only to public utilities. The Court concluded that the specific FERC Orders being challenged do not exceed the limits on FERC’s authority. PETITIONS FOR REVIEW DENIED.