California ex rel. Lockyer v. Federal Energy Regulatory Commission

This case presents the question, inter alia, of whether the Federal Energy Regulatory Commission (“FERC”) properly authorized and administered market-based energy tariffs. The State of California (“California”), through its Attorney General, claims that it did not, and that California energy consumers are entitled to as much as $2.8 billion in refunds. We conclude that FERC’s authorization of market-based tariffs in this case complied with the Federal Power Act, but that FERC abused its administrative discretion by declining to order refunds for violations of its reporting requirements. We therefore grant California’s petition in part and remand this case to FERC for refund proceedings.

I

California’s energy crisis in 1995 prompted the California Public Utilities Commission 1 and the California legislature to restructure the electric energy industry. The resulting legislation, Assembly Bill 1890 (“AB 1890”), was designed to dismantle the investor-owned, government-regulated utility model and create a deregulated market in which price would be established by competition. Act of September 23, 1996, 1996 Cal. Legis. Serv. 854 , codified in Cal. Pub. Util.Code §§ 330-398.5. Under AB…