Consumer Advocates Seek Rehearing of D.C. Circuit Court Decision Allowing FERC to Avoid Consideration of Statutory Filing Requirements

On June 22, 2007 the Court of Appeals for the District of Columbia denied the petition of consumer advocates (including Public Citizen, PULP, NCLC, and several state utility consumer advocates) for an order requiring FERC to enforce statutory filing and rate review requirements for sellers of electricity with "market-based rate" authorizations from the agency. FERC basically ignored these issues in its administrative proceedings, which were commenced after obvious market manipulation had led to unreasonable market rates. FERC found all the existing market rates to be unjust and unreasonable, and adopted "Market Behavior Rules" intended to reduce market manipulation.

The petitioners contended the actions taken by FERC were insufficient to bring the unlawful market rates into compliance with the statute. Although FERC acknowledged that its "Market Behavior Rules, taken alone, will not be adequate to ensure that the rates, terms and conditions offered by market-based rate sellers will be just and reasonable,” FERC would not consider petitioners' argument that sellers must file their rates publicly in advance as the statute has required for more than 70 years. Prior Supreme Court cases have held that federal regulatory agencies lack any power to deregulate and substitute markets for filed rate regulation, as this is a power that only can be exercised by Congress. See Consumer Groups Question FERC Market Rates.

The court, in an unsigned per curiam decision, said FERC was not required to consider the filing and other issues raised by the consumer advocates after it found all market based rates to be unreasonable. Rather, FERC effectively can choose to "fix" only the provisions it identifies in advance as unreasonable when it commences its investigation, without considering arguments that more reforms are needed to make the the resulting rates lawful. See FERC Escapes Court Review of Legal Authority for its Electricity Market Rate Regime.

On August 6, 2007, the Consumer Advocates filed a petition for rehearing asking the court to reconsider its decision.