Friday, June 27, 2008

SCOTUS Takes a Pass on Energy Contracts

U.S. Supreme Court Justice Antonin Scalia had a busy day yesterday... not only did he author the Court's landmark opinion overtnring the Washington, D.C. gun ban, he also wrote the decision to duck issue of re-opening long-term power contracts entered into during the 2001 Electricity Crisis. The case was sent back to the Federal Energy Regulatory Commission, with instructions to determine if the public interest was harmed by energy supply contracts signed in 2001.

According to the San Diego Union Tribune:

"In writing for the court, Scalia rejected arguments that FERC should have considered whether the supply contracts were “just and reasonable.” FERC declined in 2002 to intervene in the dispute and upheld dozens of contracts signed in California and elsewhere.

The 9th U.S. Circuit Court of Appeals disagreed and instructed FERC to reform the contracts. Scalia rejected that ruling, which said the contracts fell outside a “zone of reasonableness.”

The Supreme Court's 5-2 ruling instead told FERC to do a more thorough job of considering if the power suppliers were manipulating energy markets and to look at the long-term effect of the contracts on consumers. "

Sempra is reported to be "pleased" with the decision.