California ex rel. Harris v. Federal Energy Regulatory Commission

These appeals are the latest in a series of petitions that stem from the energy crisis in California and other western states in 2000 and 2001. The key issue we consider is the applicability of the Mobile-Sierra doctrine, which requires the Federal Energy Regulatory Commission (“FERC”) to “presume that the rate set out in a freely negotiated wholesale-energy contract meets the ‘just and reasonable’ requirement” imposed by law. Morgan Stanley Capital Grp., Inc. v. Pub. Util. Dist. No. 1, 554 U.S. 527, 530 , 128 S.Ct. 2733 , 171 L.Ed.2d 607 (2008).

*496 Background

The circumstances of the California energy crisis are detailed in numerous cases. 1 We recount only the history that is relevant to these petitions.

After the California legislature deregulated the electricity market in the mid-1990s, “wholesale electricity prices skyrocketed.” Port of Seattle v. FERC, 499 F.3d 1016, 1022 (9th Cir.2007). Average rates soared in the California and Pacific Northwest short-term supply markets (also known as “spot markets”). Id. at 1022-23 . The spot markets in this case were somewhat unique in the particular way that rates were set:

Id. at 1023 (citation omitted). These rates…