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The Mobile-Sierra Doctrine, Part Deux

A new twist on an old doctrine.

Fortnightly Magazine - March 2007

may be seriously affected.

The final condition articulated in PUD is a mere catch-all. If hindsight suggests that contract formation was flawed due to market irregularities, the Mobile-Sierra presumption does not apply and the inquiry is guided solely by the unjust and unreasonable standard of Section 206 of the FPA. The court suggests that if wholesale prices are any higher than they would have been absent the market irregularities, then they are ipso facto unjust and unreasonable, warranting contract abrogation retroactive to the date of execution. How this result comports with the filed-rate doctrine and the rule against retroactive rulemaking is yet to be seen. 23

At the very least, the commission is now relieved of its internal dispute as to the meaning and application of the “public-interest” standard to its own conduct since that concept appears to be either dead or on its way back to the Supreme Court.

 

Endnotes:

1. Richmond Power & Light v. FPC, 481 F.2d 490, 493 (D.C. Cir. 1973).

2. Pub. Util. Dist. No. 1 of Snohomish County, Washington v. FERC, No. 03-72511, et al., 2006 U.S. App. LEXIS 31297 (9th Cir. Dec. 19, 2006) (PUD); Pub. Utils. Comm’n of the State of California v. FERC, No. 03-74207, 2006 U.S. App. LEXIS 31140 (9th Cir. Dec. 19, 2006)(“CPUC”). This article focuses on the PUD decision, as the new standard was developed therein.

3. United Gas Pipe Line Co. v. Mobile Gas Serv. Corp., 350 U.S. 332 (1956) (Mobile).

4. 15 U.S.C. § 717c.

5. Mobile, 350 U.S. at 338.

6. FPC v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (Sierra).

7. 16 U.S.C. § 824e.

8. Sierra, 350 U.S. at 355.

9. Id.

10. Id.

11. Papago Tribal Util. Auth. v. FERC, 723 F.2d 950, 954 (D.C. Cir. 1983).

12. For a discussion of these decisions, see Stephen L. Teichler & Ilia Levitine, Long-term Power Purchase Agreements in a Restructured Electricity Industry, 40 Wake Forest L. Rev. 677, 697-701 (2005).

13. PUD, 2006 U.S. App. LEXIS 31297, at *16.

14. Id. at *58.

15. Id. at *18.

16. See, e.g., Pennzoil Co. v. FERC, 645 F.2d 360 (5th Cir. 1981).

17. California ex rel. Lockyer v. Dynegy Inc., 375 F.3d 831 (9th Cir. 2004).

18. PUD, 2006 U.S. App. LEXIS 31297, at *75.

19. Id. at *89.

20. Id. at *91.

21. Id. at *104 (quoting FPC v. Texaco Inc., 417 U.S. 380, 399 (1974)).

22. FPC v. Hope Natural Gas Co., 320 U.S. 591 (1944).

23. The filed-rate doctrine forbids a regulated entity to charge rates for its services other than those properly filed with the appropriate federal regulatory authority. See Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571 (1981). The related rule against retroactive ratemaking prohibits the commission from adjusting current rates to make up for a utility's over- or under-collection in prior periods.

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