Source: https://caselaw.findlaw.com/us-9th-circuit/1239174.html
Timestamp: 2020-08-04 17:56:47
Document Index: 651997001

Matched Legal Cases: ['§\u2002824', '§\u2002824', '§\u2002825', '§\u2002206', '§\u2002206', '§\u2002824', '§\u2002206', '§\u2002824', '§\u2002206', '§\u2002309', '§\u2002202']

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA, Petitioner, Public Utilities Commission of Nevada; Allegheny Energy Supply Company, Llc, Petitioners-Intervenors, Energy Producer Cogeneration Association of California and Energy Producers and Users Coalition; Avista Corporation; Pinnacle West Capital Corporation; California Electricity Oversight Board; Mirant California; Mirant Delta Llc; Mirant Potrero Llc; Mirant Americas Energy Marketing, Lp; Enron Power Marketing, Inc.; Southern California Edison Company; Northern Calif. Transmission Agency of Northern California (“TANC”); Modesto Irrigation District (MID); M-S-R Public Power Agency; City of Redding; CITY of Palo Alto; City of Santa Clara; Port of Seattle Washington; City of Tacoma, Washington; Public Service Company of Colorado; Pacific Gas and Electric Company; Coral Power, L.L.C.; Exelon Corp.; City & County of San Francisco; Office of Attorney General for the State of Nevada, Bureau of Consumer Protection; Portland General Electric Company; Automated Power Exchange, Inc.; Allegheny Energy Supply Co., Llc; Puget Sound Energy, Puget Sound Energy, Inc.; Dynegy Power Marketing, Inc.; El Segundo Power Llc; Long Beach Generation Llc; Cabrillo Power I Llc; Cabrillo Power II Llc; Pacificorp's; Ppl Energyplus, Llc; Ppl Montana; Ppl Southwest Generation Holdings, Llc; Reliant Energy Power Generation, Inc.; Reliant Energy Services, Inc.; Oerthern; People of the State of California, ex rel. Bill Lockyer; William Energy Marketing & Trading Company; Calpine Corporation; El Paso Merchant Energy L.P.; Sempra Energy Trading Corp.; Avista Energy, Inc.; City of Los Angeles; City of Los Angeles Department of Water and Power; California Electricity Oversight Board; Idacorp Energy L.P.; City of Pasadena, Intervenors, International Pacific Enterprises, Ltd., Intervenor, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. Public Utilities Commission of the State of California, Petitioner,
Ida Corp. Energy, Ida Corp. Energy, L.P., Petitioner-Intervenor, San Diego Gas and Electric Company; Duke Energy North America, Llc, Duke Energy Trading and Marketing, Llc, (Collectively, “Duke Energy”); California Assembly; Southern California Edison Company; Mirant Americas Energy Marketing, Lp, Mirant Ca, Llc, Mirant Delta, Llc, and Mirant Potereo, Llc (Collectively, “Mirant”); Mirant California, Mirant Delta, Llc Iran; Mirant Potrero, Llc; Puget Sound Energy, Puget Sound Energy, Inc.; California Independent System Operator Corporation; Calpine Corporation; Enron Power Marketing, Inc.; Coral Power, L.L.C.; Transmission Agency of Northern California; the M-S-R Public Power Agency; The Modesto Irrigation District; City of Palo Alto; The City of Santa Clara; City of Redding; El Paso Merchant Energy, L.P.; Northern California Power Agency; Child Protective Services; Constellation Energy Commodities Group, Inc.; Williams Energy Marketing & Trading Company; City and County of San Francisco; Public Service Company of New Mexico; California Electricity Oversight Board; People of the State of California; Pacific Gas and Electric Company; Ppl Energy Plus; Ppl Montana; Ppl Southwest Generation Holdings, Llc; Sempra Energy Trading Corp.; Avista Energy, Inc.; City of Los Angeles; City of Los Angeles Department of Water and Power; Marcia Haber Kamine; City of Los Angeles Department of Water and Power; City of Tacoma; Port of Seattle; Pinnacle West Cos.; Public Service Company of Colorado; Portland General Electric Company; Dynegy Power Marketing, Inc., El Segundo Power Llc, Long Beach Generation Llc, Cabrillo Power I Llc, and Cabrillo Power II Llc (Collectively, “Dynegy”); City of San Diego; Portland General Electric Company; California Electricity Oversight Board; Public Utilities Commission of Nevada, Intervenors, v. Federal Energy Regulatory Commission, Respondent. City of San Diego, Petitioner,
California Public Utilities Commission; City of Tacoma; Port of Seattle; Southern California Edison Company; California Electricity Oversight Board; People of State of California, Petitioner-Intervenor, Pinnacle West Capital Corporation; Arizona Public Service Company; Morgan Stanley Capital Group, Inc.; Merrill Lynch Capital Services, Inc.; Public Service Company of Colorado; Long Beach Generation Llc.; Cabrillo Power I Llc; Cabrillo Power II Llc.; City of Los Angeles Department of Water and Power; Transportation Agency of Northern California; The Metropolitan Water District of Sourthern California; The M-S-R Public Power Agency; The Modesto Irrigation District; City of Palo Alto; City of Redding; City of Santa Clara; City and County of San Francisco; Ppl Montana, Llc; Ppl Southwest Generation Holdings, Llc; El Paso Merchant Energy L.P.; Sempra Energy Trading Corp.; Avista Corporation; Avista Energy, Inc.; Ppl Energyplus, Llc; Portland General Electric Company; El Segundo Power Llc; Long Beach Generation Llc; Cabrillo Power I Llc; Cabrillo Power II Llc; Transmission Agency of Northern California; Public Service Company of New Mexico; Energy Plus, Llc, et al; California Electricity Oversight Board; Public Utilities Commission of Nevada, Intervenors, v. Federal Energy Regulatory Commission, Respondent, Northern California Power Agency; Pacific Gas and Electric Company; Idacorp Energy L.P.; Pacificorp; Mirant Americas Energy Marketing, Lp, Mirant California, Llc, Mirant Delta, Llc, and Mirant Potrero, Llc.; Puget Sound Energy; Dynegy Power Marketing, Inc., El Segundo Power Llc, Long Beach Generation Llc, Cabrillo Power I Llc, and Cabrillo Power II Llc (Collectively, “Dynegy”); Coral Power, L.L.C.; Constellation Energy Commodities Group, Inc.; The Salt River Project Agricultural Improvement and Power District; Enron Power Marketing Inc., Respondents-Intervenors.
Pacific Gas and Electric Company, Petitioner, Southern California Edison Company; Port of Seattle Washington; City of Tacoma, Washington; Nevada Power Company; Sierra Pacific Power Company; City of Seattle; Avista Corporation; Coral Power, L.L.C.; Constellation Energy Commodities Group, Inc.; Public Utilities Commission of Nevada; Transalta Energy Marketing (California), Inc., Intervenors, v. Federal Energy Regulatory Commission, Respondent, Metropolitan Water District of Southern California; Northern Calif. Transmission Agency of Northern California (“TANC”); M-S-R Public Power Agency; Modesto Irrigation District (MID); City of Palo Alto; City of Redding, California; City of Santa Clara; Pacificorp, Respondents-Intervenors.
People of the State of California, ex Rel. Bill Lockyer, Petitioner, California Independent System Operator Corporation, Intervenor, v. Federal Energy Regulatory Commission, Respondent.
City of Los Angeles Department of Water and Power, Petitioner, v. Federal Energy Regulatory Opinion Commission, Respondent.
Before SIDNEY R. THOMAS, M. MARGARET McKEOWN, and RICHARD R. CLIFTON, Circuit Judges. Stan Berman, Heller Ehrman White & McAuliffe, Seattle, WA; Kevin J. McKeon, Hawke McKeon Sniscak & Kennard, Harrisburg, PA, for petitioner-intervenor and respondent-intervenor California Parties. Robert A. O'Neil, San Diego City Attorney's Office, San Diego, CA, for petitioner-intervenor City of San Diego. Dennis Lane, Solicitor, Federal Energy Regulatory Commission, Washington, D.C., for respondent Federal Energy Regulatory Commission. Mark W. Pennak, Department of Justice, Civil Division, Washington, D.C., for respondent-intervenor and petitioner-intervenor Bonneville Power Administration. Harvey L. Reiter, Morrison & Hecker, Washington D.C., for respondent-intervenor and petitioners-intervenors Indicated Public Entities. David C. Frederick, Kellogg, Huber, Hansen, Todd, Evans & Figel, Lawrence G. Acker, LeBoeuf, Lamb, Greene & MacRae, Ronald N. Carroll, Foley & Lardner, Washington, D.C., for petitioner-intervenor and respondent-intervenor Competitive Suppliers Group. Charles F. Robinson, Folsom, CA; J. Phillip Jordan, Swidler BerlinShereff Friedman, Washington, D.C., for intervenor California Independent System Operator Corporation. David L. Alexander, Oakland, CA; James M. Costan, McGuire Woods, Washington, D.C., for petitioner Port of Oakland. Randolph Q. McManus, Baker Botts, Washington, D.C., for intervenor Indicated Generators. Natalie L. Hocken, Portland, OR; Stuart F. Pierson, Troutman Sanders, Washington, D.C., for respondent-intervenor PacifiCorp. Kenneth W. Irvin, McDermott Will & Emery, Washington, D.C., for intervenor El Paso Merchant Energy, L.P. Richard L. Roberts, Catherine M. Giovannoni, Joseph E. Stubbs, Melanie J. Teplinsky, of Steptoe & Johnson LLP, Washington, DC; and Stephen E. Pickett, Michael D. Mackness, and Joanna Mooreof Southern California Edison, for Intervenor Southern California Edison.
We grant in relief in part and deny relief in part. In general, we hold that all the transactions at issue in this case that occurred within the California Power Exchange Corporation (“CalPX”) or California Independent System Operator (“Cal-ISO”) markets, or as a result of a CalPX or Cal-ISO transaction, were the proper subject of the refund proceedings instituted by FERC. Therefore, we deny the petitions for review that challenge FERC's inclusion of such transactions; we grant the petitions for review that challenge FERC's exclusion of such transactions.
After divesting the bulk of their generation assets, the investor-owed utilities were required to sell all of their remaining output to CalPX, a nonprofit wholesale clearing-house created by AB 1890. CalPX was to provide a centralized auction market for trading electricity. It was deemed a public utility pursuant to the Federal Power Act, see 16 U.S.C. § 824(e), and thus subject to regulation by FERC, see 16 U.S.C. § 824(b), (d). It operated pursuant to a FERC-approved tariff and FERC wholesale rate schedules. Pacific Gas & Elec. Co., 77 FERC ¶ 61,204 at 61,803-05, (1996), reh'g denied, 81 FERC ¶ 61,122 (1997). The investor-owned utilities were required to purchase all of electrical energy that they required from the CalPX markets and to conduct all of their sales through the CalPX market. Part of the underlying theory was that the investor-owned utilities could not exercise market power in a single transparent market, either as a buyer or a seller, because prices would be posted and all market participants would be paid the same price.
Enron Corporation allegedly gamed the California markets with impunity, using manipulative corporate strategies, such as those nicknamed “FatBoy,” “Get Shorty,” and “Death Star.” Under the “Death Star” strategy, Enron allegedly sought to be paid for moving energy to relieve congestion without actually moving any energy or relieving any congestion. All of the demand was created artificially and fraudulently, creating the appearance of congestion, and then satisfied artificially, without the company providing any energy. “FatBoy” refers to a strategy through which Enron allegedly withheld previously agreed-to deliveries of power to the forward market so that it could sell the energy at a higher price on the spot market. The company would over-schedule its load; supply only enough power to cover the inflated schedule, and thus, leave extra supply in the market, for which Cal-ISO would pay the company. Via the “Get Shorty” strategy, traders were able to fabricate and sell operating reserves to Cal-ISO, receive payment, then cancel the schedules and cover their commitments by purchasing through a cheaper market closer to the time of delivery.
The California Parties allege that Enron was not alone, and criminal charges have been filed against a number of energy traders and executives. For example, the California Parties allege that Powerex Corporation engaged in fraudulent power scheduling to serve false load schedules. The Vice President of Powerex's Western Trading Desk pleaded guilty to wire fraud for submitting false Cal-ISO schedules. According to the California Parties, executives of Reliant Energy Services, Inc. directed traders to engage in manipulative strategies.
Emergency conditions continued following the issuance of the November 1, 2000 Order, requiring Cal-ISO to serve increasingly larger portions of its load through the real time imbalance energy market and depleting Cal-ISO's operating reserves. As a result, Cal-ISO proposed changes to its tariff, which FERC approved in an order dated December 8, 2000. Cal. Indep. Operator Corp., et al., 93 FERC ¶ 61,239 (2000).
One provision of this order lifted the Cal-ISO price caps, with the goal of attracting more supply into the auction markets. On December 15, 2000, FERC issued an order substantially adopting the remedies proposed in the November 1, 2000 Order. San Diego Gas & Elec. Co., et al., 93 FERC ¶ 61,294 (2000) ( “December 15, 2000 Order”). The December 15, 2000 Order attempted to reduce the reliance on spot markets by terminating CalPX's wholesale rate schedules, thereby eliminating the requirement that the investor-owned utilities buy and sell all generation through CalPX. CalPX sought a writ of mandamus from our Court challenging the December 15, 2000 Order's prohibition of the investor-owned utilities' selling power on a voluntary basis in the CalPX market and the termination of the wholesale tariff. The City of San Diego also challenged the December 15, 2000 Order by writ of mandate, arguing that FERC had unreasonably delayed taking action on the purchasers' requests for refunds. We denied those petitions on April 11, 2001. In re Cal. Power Exch. Corp., 245 F.3d 1110 (9th Cir.2001).
In its March 26, 2003 Order, FERC stated that it would not alter any of its previous orders in the Remedy Proceedings concerning the time or transaction limitations in light of the evidence presented to the ALJ. This position was reaffirmed in subsequent FERC orders on October 16, 2003, which also clarified some refund calculation issues. San Diego Gas & Elec. Co., et al., 105 FERC ¶ 61,066 (2003); San Diego Gas & Elec. Co., et al., 105 FERC ¶ 61,065 (2003). Subsequently, FERC issued a number of orders pertaining to calculation of refunds during the Refund Period. San Diego Gas & Elec. Co., et al., 107 FERC ¶ 61,165 (2004); San Diego Gas & Elec. Co., et al., 107 FERC ¶ 61,166 (2004); San Diego Gas & Elec. Co., et al., 108 FERC ¶ 61,311 (2004), and San Diego Gas & Elec. Co., et al., 109 FERC ¶ 61,078 (2004), order on reh'g, 109 FERC ¶ 61,074 (2004).
Before us in the instant case are those portions of the petitions for review that involve the Scope/Transaction issues. We review FERC orders to determine whether they are “arbitrary, capricious, an abuse of discretion, unsupported by substantial evidence, or not in accordance with law.” Cal. Dep't of Water Res. v. FERC, 341 F.3d 906, 910 (9th Cir.2003). FERC's factual findings are conclusive if supported by substantial evidence. 16 U.S.C. § 825 l (b); Bear Lake Watch, Inc. v. FERC, 324 F.3d 1071, 1076 (9th Cir.2003). Substantial evidence “means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Id. (quoting Eichler v. SEC, 757 F.2d 1066, 1069 (9th Cir.1985)). “If the evidence is susceptible of more than one rational interpretation, we must uphold [FERC's] findings.” Id. We review questions of law de novo. Am. Rivers v. FERC, 201 F.3d 1186, 1194 (9th Cir.1999). We review FERC's interpretation of the FPA under the familiar analysis established in Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) and its progeny. Bonneville Power Admin., 422 F.3d at 914.
However, the relief sought in the initial complaint is not dispositive of this issue. The key question is whether the SDG & E complaint afforded sufficient notice to alert market participants that sales and purchases might be subject to refund. The gravamen of the SDG & E complaint was that the rates charges by sellers were unjust and unreasonable. As FERC points out, a complaint challenging the reasonableness of the rates can lead to a refund under § 206, even if a refund remedy is not specifically designated in the initial complaint. FERC is empowered to investigate the reasonableness of a rate either in the context of a third-party complaint or sua sponte. Indeed, as we have noted, the Federal Power Act requires FERC to establish a refund effective date whenever it institutes a § 206 investigation. 16 U.S.C. § 824e(b).
The Competitive Suppliers Group petitions for review of FERC's decision to include OOM sales into the Cal-ISO because (1) FERC made no express finding that the rates charged for OOM sales were unjust and unreasonable and (2) the Remedy Proceedings had been limited since their inception to the Cal-ISO/CalPX single-price auction market. We deny this petition for review.
In its July 25, 2001 Order, FERC adopted the MMCP to calculate just and reasonable rates for Cal-ISO and CalPX. The MMCP was the benchmark for determining the amount of refunds that sellers had to pay-FERC simply looked at their transactions during the refund period then ordered them to pay the difference between the rate and the MMCP.
The Competitive Suppliers Group petitions for review of FERC's decision to apply the MMCP to non-emergency operating hours. It argues that FERC's decision to order mitigation for non-emergency hours was arbitrary and capricious because FERC did not expressly find that rates during non-emergency hours were unjust and unreasonable.
In it July 25, 2001 Order, FERC restricted the refund proceedings to “spot transactions in the organized markets operated by the ISO and PX during the [Refund Period].” July 25, 2001 Order, 96 FERC ¶ 61,120 at 61,499. In its June 19 Order, it defined the spot market at issue as constituting “sales that are 24 hours or less and that are entered into the day of or day prior to delivery.” June 19, 2001 Order, 95 FERC ¶ 61,418 at 62,545. By these two orders, FERC excluded sales made in the Cal-ISO and CalPX spot markets of greater than 24 hours. Although this limitation was made without explanation, it apparently was based on FERC's construction of the original SDG & E complaint. The California Parties petition for review of this limitation.7
One of the fundamental tenets in FERC jurisprudence is the rule against retroactive ratemaking. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 578, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981). This theory underpins the limitations on FERC's remedies under § 206 to the post-complaint period. § 824e(b). Consol. Edison Co. of N. Y., Inc. v. FERC, 347 F.3d 964, 967 (D.C.Cir.2004). If FERC finds a rate unjust and unreasonable pursuant to a § 206 complaint, it must order imposition of a just and reasonable rate; however, the refund is limited to periods subsequent to the “refund effective date” established by FERC, which must be at least sixty days after the filing of the complaint. Id. By this procedure, once a complaint is filed, sellers are on notice that their sales may be subject to refund.
There are fundamental differences between the CalPX/Cal-ISO markets and the bilateral contracts negotiated by CERS. As we have discussed, the CalPX and Cal-ISO markets were centralized, single-price, auction markets, involving multiple participants. In contrast, the CERS transactions were two-party contracts of varying prices, terms and duration that were mutually negotiated-ostensibly at arms-length-outside the CalPX and Cal-ISO markets. Unlike the Cal-ISO OOM and sleeve transactions that we have concluded were properly considered in the Refund Proceedings, the CERS transactions occurred in a market that was not directly influenced by the market manipulations in the Cal-ISO and CalPX spot markets.
The record reflects no direct nexus between the CERS bilateral transactions and the CalPX and Cal-ISO spot markets. Given these differences, and the fact that the entire focus of the SDG & E complaint and FERC's orders creating the Remedy Proceedings were directed at the CalPX and Cal-ISO markets, it is clear that the substantive allegations of the SDG & E complaint did not bear a sufficient nexus to the bilateral CERS transactions to afford parties to the CERS contracts sufficient notice that their sales might be subject to refund.
Specifically, we (1) deny the Competitive Suppliers Group's petition for review challenging FERC's establishment of the effective refund date; (2) grant the California Parties' petition for review of FERC's decision to exclude § 309 relief; (3) deny the Competitive Suppliers Group's petition for review challenging the inclusion of the OOM transactions in the Refund Proceedings; (4) grant the California Parties' petition for review challenging FERC's exclusion of forward market transactions from the Refund Proceedings; (5) grant the California Parties' petition for review challenging FERC's exclusion of the energy exchange transactions from the Refund Proceedings; (6) deny the Public Entities' petition for review challenging FERC's inclusion of sleeve transactions in the Remedy Proceedings; (7) deny the California Parties' petition for review challenging FERC's exclusion of the CERS transactions from the Remedy Proceedings; (8) deny the Port of Oakland's petition for review challenging FERC's exclusion of its bilateral CERS transactions from the Remedy Proceedings; and (9) grant the motion of the California Parties to exclude the Public Entities' § 202(c) and challenges to the categorization of multi-day transactions from this proceeding. Each party shall bear its own costs on appeal.
1. We express our appreciation to Lisa Evans of the Ninth Circuit Court of Appeals Mediation Unit; Cole Benson, Supervisor of the Ninth Circuit Procedural Motions Unit; and our colleague Judge Edward Leavy for their extensive work with the parties in organizing judicial management of the cases. We also express our appreciation to the parties and their attorneys for their cooperation, professionalism, and the quality of their presentations.