Feds Must Review Power Price Deal, Ninth Rules

     (CN) – An energy company’s proposals to settle refund demands for pricey electricity sales in the Pacific Northwest deserve federal review, the Ninth Circuit ruled.
     Settlement proceedings before the Federal Energy Regulatory Commission began after the Ninth Circuit in 2007 remanded claims from wholesale electricity buyers that bought energy in the short-term supply market in the Pacific Northwest at unusually high prices in 2000 and 2001.
     One proposed settlement would resolve claims by Tacoma, Wash., against Idaho Power Co. and its subsidiary, Idacorp Inc., and reserve Seattle’s similar claims for later disposition.
     The settlement would also release claims between Idacorp and all other parties, thus ending the firm’s participation in the energy proceedings once the Seattle claim is resolved.
     Three respondents in the proceeding – Powerex Corp., of Vancouver, B.C.; PPL EnergyPlus LLC, a subsidiary of the newly formed, Allentown, Pa.-based Talen Energy; and PPL Montana LLC – filed comments contesting part of the proposed Tacoma settlement.
     The firms said the provisions releasing all other parties’ claims against Idacorp interfered with the preservation of potential “ripple claims” against “a succession of sellers in a chain of purchases that are triggered if the last wholesale purchaser in the chain is entitled to a refund.”
     The settlement judge nonetheless certified the settlement as uncontested.
     In 2012, the commission rejected the release of all other third-party claims against Idacorp, explaining that the agency had precluded marketwide remedies in the proceedings.
     Idacorp accordingly modified the settlement, and the commission denied rehearing.
     The firm then petitioned for review, and meanwhile submitted a second proposed settlement, under which Powerex would withdraw its objections to the original proposed settlement and agree not to pursue any claims against Idacorp.
     This settlement would also exempt the PPL entities from the release provisions that they had disputed in the proposed Tacoma settlement.
     Though no objections were filed to the Powerex settlement, the commission rejected its release provisions last year and ordered a modification similar to what it set for the first proposal.
     Idacorp’s revisions mollified the commission, which denied rehearing on June 17.
     The firm then petitioned for review, and the Ninth Circuit granted both petitions Friday.
     “These petitions call to mind the classic lyric: ‘You can check out any time you like, but you can never leave,'” Judge M. Margaret McKeown wrote for the three-judge panel, quoting the Eagles’ song, “Hotel California.”
     The panel is “perplexed why FERC treated the proposed Tacoma settlement as uncontested,” McKeown wrote. “A litany of references in the record underscore that it was contested.”
     “Even affording FERC substantial latitude in interpreting and applying its own regulations, FERC’s recognition of disputed issues coupled with its lack of explanation for proceeding how it did makes it impossible for us to assess FERC’s reasons for departing from its own rules and precedent,” the judge added.
     Noting that the commission “departed from its rules and precedent without explanation when it treated the first proposed settlement as uncontested,” the San Francisco-based panel ordered the commission to issue its decision within 60 days.
     “Because the settlements and petitions are inextricably intertwined, we grant both petitions and remand for further proceedings,” McKeown wrote.
     Idaho Power is “encouraged by the court’s decision to remand this case to FERC for reconsideration,” spokeswoman Stephanie McCurdy said.
     Commission spokeswoman Mary O’Driscoll said the FERC has a policy not to comment on court decisions.

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