Court says FERC Failed in California Energy Crisis

It was supposed to be a deregulation of the California energy markets, but the experiment which began when legislation passed in 1996 failed. Now a three judge panel is considering giving Californians their money back:

A federal appeals court revived California's claim for $2.8 billion in electricity rate refunds Thursday and blistered federal energy regulators for turning a blind eye four years ago while the state endured power outages and soaring prices.

"Despite the promise of truly competitive market-based rates, the California energy market was subjected to artificial manipulation on a massive scale ... with FERC (the Federal Energy Regulatory Commission) abdicating its regulatory responsibility,'' said the Ninth U.S. Circuit Court of Appeals.

The three-judge panel said FERC failed to enforce a key regulation that would have allowed overcharges to be tracked -- a rule requiring energy suppliers to report every sale to a California utility -- "while energy prices skyrocketed and rolling brownouts threatened California's businesses and citizens.''

Most importantly, the court said FERC "abused its discretion in limiting available remedies for regulatory violations.'' The court stopped short of ordering refunds, however, and instead ordered FERC to reconsider the issue now that its refund authority has been established.

The ruling is important not only for those who hope to recoup some of the money for Californians, but also for advocates for true deregulation, who can rightfully say that there has never been such a thing in the Golden State.