The case of California v. Federal Energy Regulatory Commission (FERC) in 1989 revolved around the issue of whether FERC had the authority to order refunds for rates that were charged by a public utility and later found to be unjust or unreasonable. The Supreme Court held that FERC did indeed have such authority under Section 206(b) of the Federal Power Act, which allows it to set aside any rate determined as unjust or unreasonable and establish a new one instead. Furthermore, if this new rate is lower than what was previously charged, then FERC can also mandate refunds for customers who paid more under the old rate during a period known as "the refund effective period". This decision affirmed FERC's power to protect consumers from unfair pricing practices by utilities.

The dissenting opinion in the case of California v. Federal Energy Regulatory Commission argued that the majority's decision to uphold FERC's authority over wholesale energy rates, even those stemming from contracts between a federal agency and a state utility, was an overreach of federal power. The dissenters believed this interpretation went beyond what Congress intended when it enacted the Federal Power Act (FPA). They contended that such contracts should be exempted from FERC jurisdiction because they are not "sales for resale" as defined by the FPA. Furthermore, they expressed concerns about potential negative impacts on states' abilities to manage their own resources and negotiate beneficial agreements with federal agencies without fear of later interference or modification by FERC.