posted on Thursday, July 05, 2007 4:54 PM by Tracy Davis

Court Upholds Market Pricing and Market Behavioral Rules

In a short per curiam opinion issued June 22 in Colorado Office of Consumer Counsel v. FERC, the DC Circuit upheld FERC's provision of a targeted remedy for abuses of market-based rates and ruled that FERC was not required, as certain consumer advocates had argued, to throw out market-based pricing altogether.  In response to findings that sellers operating under market-based tariffs had engaged in "fraudulent or otherwise anticompetitive" behavior, in 2003 FERC adopted Market Behavioral Rules, but rejected arguments by several consumer groups that the only course open to FERC under the Federal Power Act was to jettison market pricing and revert to "fixed" rates for electric energy.  In its decision, the DC Circuit upheld FERC's targeted remedy and held that the agency was not required to "reopen and reevaluate all other aspects of the filed rate."

FERC Chairman Joseph Kelliher trumpeted the decision, along with the Supreme Court's earlier rejection of petitions for certiorari from the Ninth Circuit's decision in Lockyer v. FERC case, as firmly upholding FERC's market-based rate program.  According to Chairman Kelliher, the Colorado Office of Consumer Counsel decision cleared the way for FERC to "conduct effective enforcement" in wholesale power markets.