After the California market rate debacle in 2001 FERC issued an order in 2003 declaring all market rates to be illegal, and required certain “market behavior” conditions to be added to all market rate tariffs to discourage market manipulation.
Several utility consumer advocates argued in their 2003 comments that these anti-manipulation conditions were not enough to bring the rates into full compliance with law, including statutory filing requirements. They questioned whether FERC exceeded its powers under the Federal Power Act when it adopted its current market based rate regime for wholesale sales of electricity, principal features of which include price secrecy and elimination of public filing of all rates and contracts before they take effect.
When FERC did not grapple with the advocates’ arguments in its initial order, the advocates sought rehearing, and then when FERC denied rehearing in 2004, they sought judicial review of FERC’s 2004 final order. See Consumer Challenge to FERC “Market-Based Rate” System Proceeds.
After procedural delays, including a request by FERC for voluntarily remand of the matter for further consideration, which was denied, the Court of Appeals for the District of Columbia eventually said in a 2007 decision that the issues raised by the consumer advocates did not need to be addressed by FERC in this case. See FERC Escapes Court Review of Legal Authority for its Electricity Market Rate Regime. Rehearing was requested, see Consumer Advocates Seek Rehearing of D.C. Circuit Court Decision Allowing FERC to Avoid Consideration of Statutory Filing Requirements.
When the Circuit Court denied rehearing, the advocates filed a petition to the Supreme Court for a writ of certiorari. See Electricity Consumer Advocates Seek Supreme Court Review of FERC Market Rate Orders. Responses were filed by FERC and by Morgan Stanley. The consumer advocates filed a reply brief.
On April 14, 2008 the Supreme Court denied certiorari without opinion. This means only that the Court did not want to take the case and the lower court order stands within its territorial jurisdiction; it does not establish a Supreme Court precedent, does not mean that the Supreme Court endorses the outcome or reasoning of the lower court, and does not mean that the Court would not address the issues in another case.
For more information see PULP’s web page on the FERC market behavior case.