WASHINGTON – The Supreme Court said today it will rule on two cases involving electricity contracts that Snohomish PUD and a Nevada power company seek to invalidate because they were signed at the height of the 2000-2001 Western energy crisis.
At issue is the standard used by the Federal Energy Regulatory Commission in a 2003 decision that upheld the contracts, which were signed with subsidiaries of American Electric Power Co. Inc. and Morgan Stanley, among others. Morgan Stanley Capital Group is engaged in energy trading.
The price of electricity skyrocketed during the energy crisis, due in part to market manipulation by energy traders at companies such as Enron Corp.
Snohomish County and Nevada Power Co., a subsidiary of Sierra Pacific Resources, argued in court filings that the crisis pushed electricity prices in the long-term contracts to unjust and unreasonable levels. FERC has the authority to regulate electricity rates to ensure they are just and reasonable.
But once a contract is signed, FERC determined that it could only invalidate it if doing so is necessary to protect the public interest. FERC determined that Snohomish and Nevada Power hadn’t met that standard.
The 9th Circuit Court of Appeals, however, in December 2006 disagreed with FERC and ordered it to reconsider the agencies’ request. The county and power company then appealed to the Supreme Court.
The justices consolidated the two cases and will consider them jointly. Oral arguments haven’t yet been scheduled. The cases are: Morgan Stanley Capital Group v. Snohomish County, 06-1457; Calpine Energy Services v. Snohomish County, 06-1462. Oral arguments haven’t yet been scheduled.
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