California Asks Court to Order Power Refunds

California asked the 9th U.S. Circuit Court of Appeals on Wednesday to order more than $6 billion in refunds for alleged electricity overcharges during the state’s 2000-01 energy crisis.

“Equity and just and reasonable principles demand we get paid,” said Stan Berman, who argued California’s case before a three-judge panel.

California has asked the court to step in because the state contends that federal energy regulators failed to protect consumers as power prices skyrocketed and blackouts raked the regions served by Edison International’s Southern California Edison Co., PG&E; Corp.’s Pacific Gas & Electric Co. and Sempra Energy’s San Diego Gas & Electric Co.

Berman said the Federal Energy Regulatory Commission, instead of seeking market-wide relief, was running a “shell game” with scores of proceedings against power marketers that deny California a shot at a full refund.

FERC has indicated it might require energy companies, including several subsidiaries of Enron Corp., to pay $3.3 billion for manipulating power prices in California’s market. Berman said California consumers and businesses paid $8 billion to $10 billion for overpriced power in a manipulated market.

In court, FERC argued that Congress vested it with absolute discretion to seek whatever remedy it saw fit -- a power that not even the appellate court could touch.

“You do not have authority to review how we settle a case or how we dealt with past conduct,” attorney Dennis Lane told the court.

That didn’t sit well with Judge M. Margaret McKeown, who asked: What if FERC decided to use its authority only against companies whose names began with S?

“The law is that’s not reviewable,” Lane responded.

Then, McKeown asked, should we pack up our notebooks and go home?

“In our view, that’s right,” the attorney said, drawing laughs from the audience.

David Frederick, who represented power sellers, said Congress and the Supreme Court said utilities had the right to keep profits from a manipulated market in order to provide investors with certainty.

The panel heard about three hours of arguments from California, FERC and power buyers and sellers during a special session in the University of San Diego’s Joan B. Kroc Institute for Peace and Justice.

In the eyes of an attorney for the city of San Diego, it was an entirely fitting venue.

“For a long time, these citizens have been seeking justice for what happened in the summer of 2000,” attorney Robert A. O’Neil told the court.

San Diego Gas & Electric was the first utility to fully deregulate in May 2000, and businesses and residents soon saw prices triple or quadruple.

FERC’s refund order covers only the period after Oct. 2, 2000 -- the date that regulators say power companies were put on notice that they might have to pay refunds. California is seeking $2.8 billion in refunds from the summer of that year.

In addition, the lawsuit seeks to compel FERC to refund $3.5 billion to the state Department of Water Resources. The department was forced to step in in 2001 to buy short-term contracts on behalf of cash-strapped utilities.