Court Ruling on FERC Market Manipulation Case Disappointing, Consumers Are Stuck With Large Rate Increase

Oct. 25, 2016

Court Ruling on FERC Market Manipulation Case Disappointing, Consumers Are Stuck With Large Rate Increase

Statement of Scott Nelson, Public Citizen Attorney

Note: Today, in a decision in Public Citizen v. Federal Energy Regulatory Commission (FERC), the United States Court of Appeals for the District of Columbia Circuit held that it had no jurisdiction to consider Public Citizen’s challenge to a huge increase in New England power rates resulting from a non-competitive “wholesale capacity” auction held in 2014. The court held that because FERC did not approve the rates by majority vote, but allowed them to go into effect because of 2-2 deadlock among the four commissioners serving at the time, there was no reviewable agency action under the Federal Power Act or Administrative Procedure Act. At the same time, the court indicated that the two commissioners who voted to allow the rates to go into effect were likely mistaken in thinking they lacked power to review the reasonableness of the auction results. Thus, the court’s jurisdictional holding has the effect of upholding rates that may well be unlawful. Learn more about the case.

We’re very disappointed with the court’s ruling, particularly since the court recognized that the agency’s failure to act rested on the then-commission chair’s “questionable at best” view that the commission lacked authority to review the lawfulness of the rates.

The court’s holding that the commission has no obligation to review the lawfulness of a challenged rate under section 205 of the Federal Power Act further diminishes the protections the act provides for consumers and leaves in place a large rate increase that reflected an uncompetitive auction.

We are considering what, if anything, remains to be done. The court’s decision recognizes the availability of proceedings under section 206 to challenge rates in this circumstance, but it also acknowledges that that route is “less amenable” to consumer challenges.