Duke Energy Corp. (DUK:US), CMS Energy Corp. (CMS:US) and other companies will get a U.S. Supreme Court hearing on whether they must face antitrust lawsuits claiming they manipulated natural-gas prices during California’s energy crisis.
The justices said today they will hear the energy companies’ arguments that the suits filed by natural gas buyers are pre-empted by federal law.
During the power crisis from 2000 to 2002, prices rose 10-fold, customers endured rolling blackouts, and California’s two largest utilities became insolvent.
Natural gas customers, including Learjet Inc. and Sinclair Oil Corp., sued the energy companies in 2005. The suit said the companies reported false data to trade publications whose price indexes were the basis for many retail sales contracts.
The customers also claimed the companies made sales directly offsetting each other to create a false price for the indexes.
A San Francisco-based federal appeals court said the customers could pursue their claim. The U.S. Natural Gas Act, which gives the Federal Energy Regulatory Commission authority over wholesale rate practices, left room for state-law antitrust suits over retail natural gas prices, the court said.
In appealing to the Supreme Court, the energy companies said because the price indexes also affected wholesale prices governed by FERC, the federal law pre-empted any suits filed under state antitrust law.
U.S. Solicitor General Donald Verrilli, the Obama administration’s top courtroom lawyer, had urged the justices to deny review, although he said the appeals court erred in deciding the purchasers could sue under state law. He said a ruling in the case would have little future effect because the federal law was changed in 2005 to broaden FERC’s authority.
The justices will hear arguments in their 2014-15 term, which starts in October.
The case is Oneok Inc. v. Learjet Inc., 13-271.
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