FERC Audits Two Market-Based Rate Sellers "“ Reaction to Ninth Circuit Lockyer Decision Concerning Reporting Requirements for Market-Based Rate Sellers?
FERC announced in April that it would begin auditing power sellers with market-pricing authority for compliance with demanding quarterly reporting requirements. The audits plainly come in response to the dubious court decision in Lockyer v. FERC and signal to all market-price sellers the need to heighten their attention to accurate quarterly reporting both in the past and going forward. Last September, the Ninth Circuit US Court of Appeals ruled that wholesale power sales under a market-based tariff, if not individually detailed in quarterly filings with FERC, were "pragmatically" sales with "no filed tariff in place at all," implying that such sales would not enjoy the protections accorded to transactions undertaken pursuant to filed tariffs and could be subject to retroactive refunds stretching back indefinitely. See UPDATE (9/30/04). The court was plainly imposing more stringent requirements than had FERC for most of the market-pricing program, which began in the early 1990s. Not until May 8, 2002, did FERC make it clear in its Order No. 2001 that it expected all short- and long-term sales under authority of a market-based tariff to be individually recounted in quarterly reports, without aggregation.
What the Court did was wrongly caveat its approval of FERC's market-based rate program with a finding that sales made pursuant to the program, if not individually detailed in quarterly published reports, were not sales made under a filed tariff. The Court determined that those sales that were not authorized by a filed tariff would not be eligible for filed rate protection, and thus, could be the subject of refunds. As we observed last September, the potential impact of the Court's erroneous ruling is not necessarily confined to the Attorney General's complaint, which assailed only short-term sales made to the ISO, PX and CERS. See UPDATE (09/30/2004). (Docket Nos. FA05-1-000 and FA05-2-000) [NEW MATTER]