May 15, 2004 in Business

Judge tosses lawsuit against Avista

By The Spokesman-Review
 

A judge has dismissed a lawsuit the Port of Seattle filed against Avista Corp. and other energy companies, saying the Federal Energy Regulatory Commission’s jurisdiction over power markets prevents the court from hearing the case.

The lawsuit, filed last May, used racketeering and antitrust laws to accuse energy marketers of manipulating West Coast markets for financial gain. It accused energy companies of committing wire fraud by transmitting false information regarding energy markets.

The lawsuit sought actual damages of $30.5 million and punitive damages of $61 million.

In his order filed Wednesday in U.S. District Court in Southern California, Judge Robert Whaley held that the Federal Power Act gave FERC jurisdiction over such matters. Also, the court upheld the “filed-rate doctrine,” which says that energy rates approved by governing regulatory agencies are “reasonable and unassailable in judicial proceedings brought by ratepayers.”

Whaley dismissed the Port of Seattle’s lawsuits against Avista, Puget Energy, El Paso Electric, Sempra Energy, Portland General Electric, and PPL Montana.

“If the rate is not just and reasonable … it is up to FERC to address and remedy the situation in accordance with the statutory procedures defined in the Federal Power Act,” Whaley wrote in his order dated April 7. “Thus, the reasonableness of rates and agreements regulated by FERC may not be collaterally attacked in state or federal courts.”

Phil Chabot, the Washington, D.C.-based attorney for the Port of Seattle, said he will meet with his client next week to determine whether to appeal. Chabot said he anticipated this ruling as it is in keeping with Whaley’s actions on similar cases.

“It’s our view that antitrust laws are different than the Federal Power Act,” Chabot said. “We can’t be much more in opposition in our thinking.”

The court dismissed the racketeering charges by saying such claims were prohibited under the filed-rate doctrine, which “forbids the recovery of damages under the Sherman Act where payment of rates were established by regulated tariffs….”

Hugh Imhof, an Avista spokesman, said the company is pleased with the ruling.

“He ruled this is just a matter for FERC to deal with, not him, and in our case, FERC has dealt with us,” Imhof said. “We feel like we were vindicated by the FERC investigation.”

Last month, FERC cleared Avista Corp. of all wrongdoing during the energy crisis of 2000-2001 in which wholesale power prices skyrocketed and numerous energy marketers, including Avista, were accused of market manipulation. FERC found no evidence that anyone at Avista had knowingly engaged in improper trading practices or attempted to manipulate markets.


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