American Electric Power Service Corporation, et al. v. Public Utility District No. 1 of Snohomish County, Washington, et al.

Questions presented

SCOTUS records, cert granted 25 Sep 2007

1. The Federal Power Act (“FPA”), 16 U.S.C. §§ 791a et seq., sets forth the standards by which the Federal Energy Regulatory Commission (“FERC”) regulates wholesale energy rates. In United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956), and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), this Court determined that, under the FPA, FERC may undo a valid wholesale energy contract only in the extraordinary circumstance when the contract is contrary to the public interest. In conflict with Mobile and Sierra, and with decisions of the D.C. and First Circuits, the Ninth Circuit in the decision below held that FERC may nullify voluntary wholesale energy contracts—absent the requisite showing of public necessity—if FERC determines in hindsight that the negotiated rate is unreasonable or that, absent the challenged contracts, retail rates for energy would be slightly lower. Thus, this petition presents the following questions:
2. Whether the Ninth Circuit misapplied this Court’s holdings in Mobile and Sierra and created conflicts with the D.C. and First Circuits when it reversed FERC’s decision to uphold valid wholesale energy contracts absent any showing that the public interest required their abrogation.
3. Whether the Ninth Circuit misapplied the Mobile-Sierra doctrine by determining that the Mobile-Sierra public interest criteria apply only to sellers, but not to buyers, under wholesale power contracts, in direct conflict with Mobile, Sierra, and the decisions of other circuits.

Opinion summary

Etalia.ai summary of the majority opinion

The case involved a dispute over long-term energy contracts during the California energy crisis. The Public Utility District No. 1 of Snohomish County, Washington, and other utilities sought to have their contracts with American Electric Power Service Corporation and others invalidated or modified by the Federal Energy Regulatory Commission (FERC). They argued that these contracts were unjust and unreasonable due to market manipulation by Enron and others during the crisis. FERC initially refused to modify the agreements, citing its policy favoring contract stability unless there was evidence of fraud or duress at formation. The Supreme Court upheld this decision, emphasizing deference to FERC's expertise in balancing competing interests within complex regulatory frameworks like electricity markets.