Montana Consumer Council v. Federal Energy Regulatory Commission

In 2007, the Federal Energy Regulatory Commission (FERC) (defendant) issued a final order allowing certain sellers of wholesale electricity to sell electricity at market-based rates. Sellers seeking to sell at market-based rates had to be prescreened by FERC to show that they did not have market power in the energy-generation or energy-transmission markets, thus ensuring that they could not unfairly influence the market rate. If a seller passed the screening process, then FERC could authorize the seller to file an initial market-based rate. The seller could then sell at fluctuating market rates without needing to file notice with or obtain permission from FERC as the rates changed. The seller was, however, required to file quarterly reports of all its transactions and submit an updated market-power analysis every three years. If FERC determined, based on the quarterly reports or the updated market-power analysis, that the seller had acquired market power, then its authorization to sell at market rates would be revoked. Montana Consumer Council and other consumer advocacy organizations (plaintiffs) petitioned for review of FERC’s order. They claimed that the market-based-rate policy violated the Federal Power Act (FPA), the act from which FERC’s power derived. The Ninth Circuit considered whether to grant the petition for review.