UNITED STATES: Power Companies Get Hearing in Energy Crisis Case

The U.S. Supreme Court will hear arguments from power companies including a Calpine Corp. unit in a case that may affect California's bid to save $1.4 billion on supply contracts signed during the 2000-01 energy crisis.

The justices today agreed to consider whether the Federal Energy Regulatory Commission has the power to cut the price on long-term contracts that customers say were the product of market manipulation. A federal appeals court ordered FERC to reconsider its refusal to adjust the contracts.

The justices will consider appeals by units of Calpine, American Electric Power Co., Allegheny Energy Inc. and Morgan Stanley, which has a power marketing unit. Their case centers on long-term contracts with purchasers in Nevada and Washington, including units of Sierra Pacific Resources and American States Water Co. and the public utility district of Snohomish County, Washington.

The case will affect two similar high court appeals centering on California's energy contracts. The companies pressing those appeals include units of Sempra Energy, Dynegy Inc., Royal Dutch Shell Plc, and Iberdrola SA NRG Energy Inc. The justices took no action on the California cases today, opting to hold them until they resolve the Washington and Nevada disputes.

The dispute is part of a many-faceted, multibillion-dollar fight stemming from the 2000-01 western energy crisis. The appeals say two 1956 Supreme Court rulings preclude FERC from ordering changes in the contracts.

$6 Billion
FERC separately has approved more than $6 billion in settlements of claims that power sellers gouged California during the energy crisis, when power prices rose tenfold, businesses and consumers endured rolling blackouts and the state's two largest utilities became insolvent. The Supreme Court in June rejected an appeal by power companies seeking to limit the refunds they must make to consumers.

California's Public Utilities Commission and the Bush administration were among those urging the Supreme Court not to get involved in the latest case.

The cases the court will review are Morgan Stanley v. Public Utility District No. 1 of Snohomish County Washington, 06-1457, and Calpine Energy Services v. Public Utility District No. 1 of Snohomish County Washington, 06-1462.


Via|Bloomberg|By Greg Stohr
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