please the court bill only representing public utility district number one for grays harbor county washington this case involves a contract formation dispute between grays harbor and i don't hope power company first i'd like to give a brief description of the preempted under the federal power act and the filed rate doctrine and third i like to address the remedy that grays harbor is seeking in this case and why that also is not preempted grays harbor is a small public utility district serving approximately thirty five thousand retail customers in the central washington post it is a municipal utility district that purchases power to serve its customers it does not speculate in the market enforcement of idaho power companies tariff market based tariffs in the absence of an in forcible agreement that says the actual dollar amount of that tariff this is a question of tariff application and enforcement not of i think it's supplement everything or they raise the parade of horribles that will occur if in fact you're you know you would be able to have a viable lawsuit but all around the country people be filing cases in front of judges who don't know don't know nearly as much about energy as the people that are making these regulations that are determining their rights and so we'll have you know judges all over the country decide that the right should  don't know anything about energy let me address that and that is simply not the case and the reason that's not the case is that we're not asking grays harbor is not asking this court to do something or create any precedence that they don't already exist around the country we are asking for a equitable claims of reception of the contract under unconscionable of the rest mutual or unilateral in the states these claims have existed prior to the two thousand and two thousand and one power crisis during the two thousand two thousand and one power crisis and afterwards grays harbor brought its claim in october of two thousand and two or has a whole system to do that and they have people that are experts in that do that and their whole claim is that that's what congress intended and they don't want other people that don't know nearly as much about it doing that well i mean that's why agencies get deference and that's why congress pre that reason well i think there are a number of issues that you're addressing that first ferk itself the first of the courts on issues of common law contract formation it does under the arkansas that we lose in a gas three part standard when you have you have both places have jurisdiction when it's not for you have to then you got to remember the district court in this case ruled that it did not have jurisdiction to hear the claim it didn't rule that it wasn't the right place that you could it could have had jurisdiction but that you should have brought the claim first in fact if you look at first jurisdiction because of the timing and because of when i did grays harbor was able to learn of the in the stake that it made in entering into want to determination that you're owed money and  doctor there are there are two possible remedies here and i mean you wouldn't bring a lawsuit if you don't want money you're right and i think i won one of the cases but let me explain how this works it because there are two questions that we're asking the court the court in the supplemental briefing rates it's not a dollar amount it's not the two hundred forty nine dollars that was in the contract between the parties if there wasn't that the market rate the time it was the rate that was negotiated between the parties and it is the the mistake he did the mistake the grays harbor made was in the winter of two thousand and two thousand and one it looks forward to the next winter march of two thousand and one for delivery over the next winter because it's saw a power shortage telephony was experiencing blackouts grays harbor has a legal obligation and a moral obligation to meet it it can't if it drops alone in the middle of winter that's people on the coast without heat it has to purchase power it made the decision when it did to purchase the amount of power that it did because of its mistaken belief that the shortages were real and as were and as we learned in after the enron bankruptcy in the middle of two of two thousand and two those shortages weren't real though shortages were artificial and as we just learned a month ago when the department of justice released scores of tapes from from enron that it was it was at my question at two forty nine  the market rate but it was not a legitimate market rate is it really well when you have a market based rate tariff what sets the dollar amount for that market base rate is the price that the parties a legitimate market three yeah if that's in and forcible contract then yes that's the market based rate if that's not enforceable current let me ask you this i mean you're claiming th contractors was illegal because of dysfunction elation in the marketplace so why not just come in and ask for similar case and thing instead of that that was the market based rate at the time nobody approved market rate no first is not made that determination first the the docket first is a docket that was started by one of the other companies up here that  it was an evaluation of whether refunds were due under first unjust and reasonable standard which is different than the standard we're asking the court to apply here and what further ruled was that because some players are jurisdictional idaho power company is jurisdictional for can order a refund from them but grace harbor is not jurisdictional or public utility they cannot order grace harvard to pay a refund what further determined was that we're not making any ruling if the market was was unjust or a reasonable we're not making any ruling like that what we're saying is we can't give a class wide remedy for everybody and we are not going to exercise our discretion to give a piecemeal remedy that's what ferg determine and that is on appeal and grays harbor is participating in that appeal grays harbor has some specific issues that are unique to itself and whether or not you could ever get around the neon and just in t reasonable rates from for but that isn't an issue i can address you want to get money out of this litigation right yes we get out how's that going to be done on the court determining rights what a coup well you don't stand the court can interpret and enforce a rate a dollar amount rate furka said we're not a collection agency we're not the people that go out and enforce you owe us money which is what the court is going to do is enforce the market based tariff at the time the power was being delivered because that if you look at the quantum arrow in a way that the obligation of how the power was being delivered at the forty five dollars per megawatt hour and there was a delivery without a contract then all a court would do is the sign forty five dollars number megawatts that's how much you owe for the power that was delivered to consume without a contract what the court is going to do in this case is nothing different except it's going to apply a formula instead of a straight dollar amount it's going to buy a market based formula courts do that all the time under the uniform commercial code into real estate transactions that we're not supposed to get involved in  the fifth circuit and gulf states ruled out way the first circuit in town of norwood ruled out way in or a enron supplemental authority that with it was put forward the bankruptcy court specifically looked at the substance of the fraud and  and the district of the fifth circuit said yes you're right under limited circumstances the court can review whether or not you have an enforceable agreement and and once tariff may be protected by the filed rate doctrine but whether a tariff applies to norwood in this case depends on the extent of norwood's contractual obligations and the contractual obligations the court does have jurisdiction to hear now one of these cases and i can remember  hinted at what appeared to be a transfer of a case after a finding that that contract wasn't forcible under some circumstances back to for to make a determination on what the rate would have been i'd probably not quoting it correctly but i do recall reading that and i know it's that exactly certain of the process that would be involved in a case like that first place he'd have to look at the market rate to determine this wasn't really an honest to god market rate because the true market rate would have been x and this was why so you could get the declaratory relief you got to go through that exercise that that is that is one part of it and i can see where that could be a question or french and there are other issues that you could look at one again as i point out is when grays harbor entered into this contract and why  entered into the contract when it did was because of a mistake and that doesn't go to the rate that it that it paid for it that goes to the timing and the amount of power it purchased if it if it the shortage was not artificial if it wasn't mistaken about the power shortage it would have looked at two hundred forty nine dollars and said that's ridiculous i'm not going to pay that i can wait but when it's looking at blackouts in california which are pretty fraudulently caused but unknown to you has to step back and say this contract involved here was a futures contract it often called the hedging contract and the very purpose of that contract was to remove the risk for the for the buyer the power would not be available and to lock in a price that is the very purpose of that contract and any hedging contractors a winner is a loser and but in this case the buyer got exactly what a bargain for the seller was not a generator of electricity but rather  marketer a wholesaler of power it bought that power from the very same market that the buyer was looking at at the time the contract was entered into so there really are a very similarly situated in the sense of their position vis a vis in the market the ultimate question in this case is whether or not the rate payers of the plaintiff or the rate payers and or shareholders of the defendants will suffer the financial financial consequences of what the buyer now be believed to be an improvident decision to place that has a contract and or put differently and perhaps slightly more argumentatively whether the grace farmer transaction alone will be the only want to be reformed among the five hundred thousand transactions reviewed by fur in northwest markets i say only slightly more argumentative because i want to emphasize the broader issues involved in this case and that  determinations concerning the unjustness an unreasonable missed of rates in the california spot market however in separate proceedings in which grace harbor was a party by by means of intervention and that's the that's the pacific northwest proceeding often called the puget sound proceeding they determine that no rate relief and changes in any of the contracts would be were justified agreeing that in a context of that proceeding grace farber intervened took discovery filed briefs made the very same contract formation arguments it made in its lawsuit and they were specifically rejected by for and under the collateral attack doctrine the city tacoma case which we was mentioned in our letter yesterday yesterday the day before and other well established cases the only way you can attack a determination of perc is to take it up on appeal and this case really represents an attempt to cleverly attack those findings the circumstances there is not a single claim in this complaint or in this or even described an appeal by way or the supplemental briefing which has not been considered by further and rejected by  prior to the consumption unwinding those transactions based on any kind of theory whether big contract aggregation or for or some defect information would cause incredible problems that finding a firkin this year in the puget sound case for the collateral tact are going to apply of course if it we'd not have actually appealed it would still be barred because the exclusive means for challenging that determination would have describe if you look at those factors that they align their uniformity is one of them the importance of the issue of whether has repercussions generally on the markets yes first first he can determine formation and in this case did as a back on to the to the regular rate payers but the the question about the effect of the california crisis on western markets is an issue that's already been taken up by for and you have the difference between the spot market where there were  many places was allegedly occurring and the long term bilateral market in the northwest which is a tightly different kind of a market the spot markets in california were centralized market subject to what's called a single price auction and they were there first found in the way the market was structured the markets were subject to gaming potentially started to gain a manipulation however the folks found that that did not extend to the pacific northwest markets for the court even reach those issues because the collateral attack doctor would reply even if those determinations by for were not yet final but i mention them because they need when you look at conflict prevention principles you need this court would need to look at what fu done in these areas the congress is exclusively committed to the authority of for and you will find that all the relief they ask is not only inconsistent generally with the decisions made by for but is inconsistent with the decisions they made on the very to tackle with respect to the file you made by grace farber the first is they have mischaracterized what is the filed rate the filing rate is not the market based tariff a market based t gives the seller the right to sell at market based rates and it involves a pre determination vie for that though that the prices resulting from the sales will be just as reasonable so that that is a fundamental part but the mischaracterized what the fall rate yes second they're asking the court to in effect take over the responsibility a fur inconsistent with a market based tariff because they're asking the clerk to determine what adjusted reasonable rate is in place of the file great on file with fir that is runs counter to the entire thrust of the file make okrent and now when they're asking a judge or jury this case a jury to determine that rate you look at their complaint they're asking the the relief they're asking for focuses on the market conditions at the time of delivery not the time of contracting and first of course is focusing in the market based  tariff on the conditions that exist in the market at the time of contracting they're trying to treat this as if this were a breech case and it would be a u c c case where you get you get damages based upon the contract at the time the market prices in a contract market rate and we find it's reasonable or something well why does that work it's a little complicated to oversimplify it first makes a determination of the time they grant the market based rate authority and issue an order that all rates and that becomes the file rate approved by for further fixers a problem is a case in the case of enron there was a problem they revoked the market based rate of thore ok so there is a place in the for determination where these words are transform so you know there are so many levels on which this court could not act in derogation of what has happened at first i mean first of all you'd have to surmount the problem with the market based rid of the r t and basically undo what first did in granting the generally as to relief in the northwest power markets which first decline to order in both nevada power and in the puget sound proceedings third you have to in effect over well first the terminations made with respect to gra decline to order contract formation and think about principles of conflict preemption on another level which is the jurisprudence set for chaos with respect to relief from contractor abrogating contracts is quite say they price something called the mobile c r standard which is not depend on the bargaining position between the parties at all but rather it implies a focus is on the public interest generally and the considerations of what would happen if we start going around aggregating or modifying prices in wholesale power contracts i mean if parties can have confidence in a you know in a contract they're signing what's going to happen to the wholesale if the courts are going to come back later and say oh the price at the time of delivery was different from the price you signed in the hedge contract that would defeat the very purpose of the hedge contract and people will and buyers would not be able to handle risk ahead of time by signing contracts that assure supply and at a fixed price that's exactly what grays harbor wanted to do and the only reason they'd have buyer's remorse at this point in time is because ford didn't take action after they signed the contract in june nineteenth and sort of you nineteenth extending price caps to the entire west and so the prices do come down on the spot markets in the west and at the time of delivery the prices were actually lower than the contract price but at the time the us this question at the time the contract was formed the record before further shows that the contract price was actually lower than the market prices were at the time they got a deal they actually got a good deal and that's why they signed the contract with with  numerous numerous buyers numerous sellers over one hundred different sellers active in the bilateral northwest market at the time and that the prices reflected conditions such as shortness of supply and so that was a reason for the vol and various other factors of the weather there was a drought in the pacific northwest which we do see availability of hydroelectric supply and so on i have about a minute left i want to talk just a few a few seconds about amendment performed a long time ago all the power was delivered you can't undo the contract i mean electrons have are fungible intellect in a sense in a physics sense but they're not fungible in the sense of the market because the price of power varies considerably depending on the time of day the time of year the transmission constraints between the buyer in the seller there's no way you can unwind this transaction in the sense of clarity and void and having even a quarter of jury or anyone determine a new market price the the minimum of that market price was determined based upon the conditions that existed in the market on that specific day the power was delivered it was consume but the only issue here is price and what he called declaratory relief price which is they call in the supplemental briefing that is the belief they want they want to make a jury to determine a new price for this contract and disregard the filed  which is in the filings that for pursuant to the market based rate authority and that's just something a court cannot do that is that is the responsibility of firk thank you thank you very briefly i like to respond to two points first the question that grace harbors asking this court to answer the first the first question in this record is whether or not there was a forcible contract because if there was not there was not an enforceable contract if there was no one forcible contract then what the then the issue of what the dollar amount that was due in owing under the transaction is an open question and maybe that question to be answered by a court in equity and at that time our company can put on its evidence which it is done in this case numerous pages and pages of additional evidence outside the complaint to show they paid two hundred forty dollars of power then the market price for that power is two hundred forty nine dollars  the market price they have the ability to profit i was crazy harvey should have the ability to to do its discovery to determine whether or not that in fact should be the point of what was the price or if the market price that the market price of pluggable to the power was actually delivered the something different the second i'd like to address what first was considering and what in the decision it may not show actually sure where the council was reading from but specifically i mean further determined that it could not provide a class wide remedy and never made a determination that