Term: 2007
Docket: 06-1457
Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 Of Snohomish County, Washington, Et Al.
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06-1457 MORGAN STANLEY CAPITAL GROUP V. PUBLIC UTILITY DIST. 1 DECISION BELOW: 471 F3d 1053 CONSOLIDATED WITH 06-1462 FOR ONE HOUR ORAL ARGUMENT. THE MOTION OF GOLDEN STATE WATER COMPANY FOR DISQUALIFICATION OF COUNSEL IN NO. 06-1457 IS DENIED. EXPEDITED BRIEFING SCHEDULE CHIEF JUSTICE ROBERTS AND JUSTICE BREYER TOOK NO PART CERT. GRANTED 9/25/2007 QUESTION PRESENTED: Whether the Ninth Circuit erred by failing to abide by this Court’s decisions 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), which preclude the Federal Energy Regulatory Commission from retroactively undoing valid, bilaterally negotiated, arms-length wholesale energy contracts that have, at most, minimal impact on retail rates. LOWER COURT CASE NUMBER: 03-72511, 03-74757, 04-70712, 03-74617, 03- 74208
In the case of Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington et al., the U.S Supreme Court ruled in favor of Morgan Stanley Capital Group Inc., a natural gas supplier, over allegations that they had manipulated prices during an energy crisis in California between 2000 and 2002. The public utilities claimed that contracts signed with Morgan Stanley at this time were unjust and unreasonable due to price manipulation by the company which led to inflated rates for consumers. However, the court held that these long-term contracts could not be revised under Section 206 of Federal Power Act unless it was proven beyond reasonable doubt that there was excessive pricing or other illegal activities involved when signing them.
In the dissenting opinion for Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington et al., Justice Ginsburg disagreed with the majority's decision to uphold contracts that were influenced by market manipulation during California’s energy crisis in 2000-2001. She argued that Federal Energy Regulatory Commission (FERC) should have authority to remedy unjust and unreasonable rates resulting from such manipulation, even if they are set by contract terms agreed upon by both parties involved. The majority's ruling, she contended, undermined FERC’s statutory duty under the Federal Power Act to ensure just and reasonable electricity rates for consumers and protected manipulative traders at consumers' expense.
