Wholesale Electricity Antitrust Cases I & II

FERC standard of a just and reasonable rate, which was tied to how much money defendants were entitled to be making. The matter was taken under submission.

C

Ruling

After oral argument, the trial court issued its order, setting forth its reasoning as follows. First, the court granted the respective requests for judicial notice of rulings and orders issued by FERC. The demurrer was sustained on the basis that all claims were preempted and Younger, supra, 26 Cal.3d 397 , was distinguishable. The court primarily relied on the authority of a Ninth Circuit Court of Appeals decision, Snohomish, supra, 384 F.3d 756 , to conclude that plaintiffs’ claims and prayer for relief would impermissibly require a “fair price” determination, already found to be barred by preemption principles in Grays Harbor, supra, 379 F.3d 641 . The court concluded the field preemption and conflict preemption principles barred each of plaintiffs’ claims.

Further, the trial court rejected plaintiffs’ argument that Otter Tail Power, supra, 410 U.S. 366 , would bar a finding of preemption, “because that case concerned federal antitrust laws and not state antitrust laws as Plaintiffs allege in their Master Complaint.” The court further noted that in light of its finding that preemption bars plaintiffs’ claims, it was not required to reach the issue of the applicability of the filed rate doctrine; nevertheless, those principles would bar these claims (relying on, e.g., Snohomish, supra, 384 F.3d 756 ; Grays Harbor, supra, 379 F.3d 641 ; Dynegy, supra, 375 F.3d 831 ). These rulings were dispositive and the master complaint was dismissed.

Plaintiffs, through liaison counsel, timely filed their notice of appeal.

DISCUSSION

The main thrust of the complaint is that defendants’ conduct, their alleged “manipulation, distortion and corruption” of the wholesale electricity market in California, “forced electricity users to pay electricity prices based not on competitive market forces, but prices which were grossly inflated due to defendants’ conduct,” thereby giving rise to an entitlement to antitrust damages and unfair competition remedies in favor of plaintiffs. To avoid the effect of federal preemption in this heavily regulated area, plaintiffs seek to distinguish between the regulatory authority granted to FERC to order compliance with its policies, such as by ordering refunds to electricity

consumers, and the types of damages and other relief recoverable under the Cartwright Act and/or the UCL.

We first set forth rules regarding federal preemption in this factual and legal context. We then address the filed rate doctrine.

QUESTIONS OF LAW PRESENTED

To address these issues as resolved on demurrer, we apply basic standards of review. “We review the trial court’s sustaining of a demurrer without leave to amend de novo, exercising our independent judgment as to whether a cause of action has been stated as a matter of law. [Citations.] We ‘give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.]’ [Citation.] A judgment based on a dismissal must be affirmed if any of the grounds for demurrer raised by the defendant is well-taken and disposes of the complaint. [Citation.]” (Gallivan v. AT&T Corp. (2004) 124 Cal.App.4th 1377 , 1381 [ 21 Cal.Rptr.3d 898 ].)

“When the issues regarding federal preemption involve undisputed facts, it is a question of law whether a federal statute or regulation preempts a state law claim and, on appeal, we independently review a trial court’s determination on that issue of preemption. [Citations.]” (Smith v. Wells Fargo Bank, N.A. (2005) 135 Cal.App.4th 1463 , 1476 [ 38 Cal.Rptr.3d 653 ] (Smith).)

A preliminary question of law we must address is whether plaintiffs are entitled to claim the benefit of “the general rule disfavoring implied preemption.” (Southern Cal. Edison Co. v. Public Utilities Com. (2004) 121 Cal.App.4th 1303 , 1311-1312 [ 18 Cal.Rptr.3d 435 ] (Southern California Edison).) This is sometimes termed a “presumption against preemption. ‘We apply a presumption against federal preemption unless the state attempts to regulate an area in which there is a history of significant federal regulation.’ [Citation.]” (Grays Harbor, supra, 379 F.3d 641 , 648, fn. 7.) Plaintiffs rely on Smith, supra, 135 Cal.App.4th 1463 , to argue that the Cartwright Act may provide alternative schemes of regulation of wholesale electricity markets, to the extent that such claims are not inconsistent with federal preemption in this area. They hinge this claim upon their perception that antitrust damages arising from defendants’ anticompetitive conduct are different in nature from any penalties or refunds that FERC might order resulting from the same type of conduct. They argue the party claiming federal preemption (defendants) have the burden to show specific state law claims are preempted. (Smith, supra, at p. 1475.)

In response, defendants cite to Southern California Edison, supra, 121 Cal.App.4th 1303 , to say that the “presumption against preemption” is “characteristically applied where the field is one that the states have traditionally occupied and regulated. [Citation.] The presumption ‘is not triggered when the state regulates in an area where there has been a history of significant federal presence. [Citation.]’ [Citation.] Inasmuch as the field of interconnection [wholesale electricity distribution] agreements has a history of significant federal presence, the presumption against preemption is not applicable here.” (Id. at pp. 1311-1312.) We agree with those observations and those of the court in Grays Harbor, supra, 379 F.3d 641 , 648, footnote 7, that “[t]his presumption is almost certainly not applicable here because the federal government has long regulated wholesale electricity rates.”

We therefore seek to examine, free from any such presumption against preemption, the respective merits of the arguments by both plaintiffs and defendants regarding the application of preemption principles here.

n

PREEMPTION PRINCIPLES

As set forth in Smith, supra, 135 Cal.App.4th 1463 , 1476, our task is to examine “the precise language of the federal law or regulation to determine whether a particular state law claim is preempted. [Citations.] ‘As to each state law claim, the central inquiry is whether file legal duty that is the predicate of the [claim] constitutes a requirement or prohibition of the sort that federal law expressly preempts. [Citations.]’ [Citation.]” (Ibid.)

To carry out this analysis of the scope of preemption in the energy/electricity context, we first outline the leading case authority dealing with similar claims arising out of the California energy crisis in the wholesale electricity market, as issued by the Ninth Circuit Court of Appeals. We then compare the nature of the antitrust/UCL damages requested, to the remedial powers allocated by the FPA (16 U.S.C. § 791a) to FERC (formerly the FPC (Federal Power Commission) [see hist. & stat. notes, 16 U.S.C.A. (2000) foll. § 792, p. 78]). We note that although preemption principles are closely intertwined with the “filed rate doctrine,” which is central to FERC’s operations, we may nevertheless discuss them separately. (California ex rel. Lockyer v. F.E.R.C. (9th Cir. 2004) 383 F.3d 1006 , 1011 (Lockyer).) The reason is that the historic filed rate doctrine is undergoing fast-paced evolution in the context of energy deregulation, such as the aftermath of the 1996 California legislation with which we are dealing. (Pub. Util. Code, § 330 et seq.; Dynegy, supra, 375 F.3d 831 , 852-853.) We will address this evolution to the extent necessary in part III, post.

Finally, with this background set forth, we will analyze plaintiffs’ arguments that certain alternative federal and state authority shows that antitrust relief in the state courts is not inconsistent with the grant of federal authority to regulate the wholesale electricity market. (E.g., Younger, supra, 26 Cal.3d 397 ; Otter Tail Power, supra, 410 U.S. 366 .)

A

Recent Ninth Circuit Authority

In Grays Harbor, supra, 379 F.3d 641 , 644, the Ninth Circuit Court of Appeals built upon earlier authority (Dynegy, supra, 375 F.3d 831 ), to address “contract-related claims against energy wholesalers by a public utility which contends it was forced to pay exorbitant prices for electricity.” (Grays Harbor, supra, at p. 644.) The court upheld a district court dismissal of such contract claims on preemption grounds. It first set forth basic preemption principles: “As an initial matter, it is clear that the Federal Power Act (the ‘FPA’) grants FERC ‘ “exclusive authority to regulate the transmission and sale at wholesale of electric energy in interstate commerce.” ’ [Citations.] Through the FPA, ‘ “Congress meant to draw a bright line easily ascertained, between state and federal jurisdiction. . . . This was done in the Power Act by making [FERC] jurisdiction plenary and extending it to all wholesale sales in interstate commerce except those which Congress has made explicitly subject to regulation by the States.” ’ [Citation.] This power includes the exclusive authority to determine the reasonableness of wholesale rates. [Citations.]” (Grays Harbor, supra, 379 F.3d 641 , 646-647.)

In Dynegy, supra, 375 F.3d 831 , 839, the court explained the operation of the ISO tariffs filed with FERC, and said that “the ISO tariff binds the companies to important obligations and duties that are relevant and necessary to the state law claim.” (Ibid.) For example, “the ISO must file schedules showing its rates and charges, and the practices and regulations affecting such charges. [Citation.] The filing enables FERC to determine whether the ISO rules and regulations pertaining to those charges are reasonable, as required by the FPA. [Citation.] Once filed with a federal agency, such tariffs are the ‘equivalent of a federal regulation.’ [Citations.] . . . Besides specifying the generators’ responsibilities, the tariff also details penalties and remedies for non-compliance.” (Ibid.)

Even though the unsuccessful plaintiff in Grays Harbor was claiming contract damages (nominally state law causes of action), the court of appeals read its complaint as seeming, impermissibly, “to require the district court, at some point, to determine the fair price of the electricity that was delivered under the contract. This determination is clearly within FERC’s jurisdiction

for determining the reasonableness of wholesale rates. [Citations.] At the very least, the requested relief intrudes on an ‘identifiable portion’ of a field that the federal government has occupied and addresses a matter that is ‘in any way regulated by the federal government.’ [Citation.]” (Grays Harbor, supra, 379 F.3d at p. 648.)

The court of appeals also rejected the plaintiff’s claim that “market-based rates are not within FERC’s exclusive jurisdiction over wholesale rates.” (Grays Harbor, supra, 379 F.3d 641 , 649.) The federal court acknowledged that FERC had changed its policies from requiring filed rates to allowing market-based rates. However, traditional preemption principles continue to apply because, “by asking the court to set a fair price, Grays Harbor is invoking a state rule (specifically, contract law) that would interfere with the method by which the federal statute was designed to reach its goals (specifically, FERC regulation of wholesale electricity rates). To permit Grays Harbor to receive in its court action what is essentially a refund would create a conflict with FERC’s authority over wholesale rates. And such a result would make state law stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress under the FPA.” (Id. at p. 650, fn. omitted.) The court ruled the contract claims would interfere with FERC’s exclusive jurisdiction to set wholesale rates and were barred by field preemption, conflict preemption, and the filed rate doctrine. (Id. at pp. 648, 650, 651.)

In the next case, Snohomish, supra, 384 F.3d 756 , the court extended the reasoning in Grays Harbor, supra, 379 F.3d 641 , from the contract field to the antitrust field. The federal court found that preemption rules applied to preclude a California state law antitrust court action that was essentially challenging market-based rates. The court explained its reasoning: “The fundamental question in this case is whether, under the market-based system of setting wholesale electricity rates, FERC is doing enough regulation to justify federal preemption of state laws. The answer to this question is controlled by two recent decisions of this court: Dynegy, [supra,] 375 F.3d 831 , and Grays Harbor, [supra,] 379 F.3d 641 . Under the system at issue here, FERC has waived many of the requirements that applied under the cost-based system. For example, the actual prices are no longer filed with FERC 60 days before they can be charged and the utilities do not provide FERC with detailed schedules of their costs. Instead, the price of wholesale electricity is determined in the markets operated by the PX and the ISO. [f] FERC continued to oversee wholesale electricity rates, however, by reviewing and approving a variety of documents filed by the defendants, the PX, and the ISO.” (Snohomish, supra, 384 F.3d 756 , 760, italics added.)

The federal court of appeals then gave several examples of how FERC was continuing to exercise its regulatory power to a sufficient degree to justify continued federal preemption. These included considering applications for approval of market-based tariffs upon a showing that the seller lacked or had mitigated its market power; requiring power sellers to file quarterly reports, which contained certain required information including the minimum and maximum rate charged and the total amount of power delivered during the quarter; and reviewing “detailed tariffs filed by the PX and the ISO, which described in detail how the markets operated by each entity would function.” (Snohomish, supra, 384 F.3d 756 , 761.)

Next, the court in Snohomish, supra, 384 F.3d 756 , described how FERC had taken action to order wholesalers to disgorge profits that resulted from the anticompetitive practices involved in that particular case. From all of these factors, the federal court decided that preemption-related doctrines would continue to apply when market-based rates are involved, as laid out in Grays Harbor, supra, 379 F.3d 641 . (Snohomish, supra, 384 F.3d at pp. 760-761.) Even though Grays Harbor was a contract case, the same reasoning applied to the claims by Snohomish, alleging violations of state antitrust and unfair competition law. The court concluded that both types of claims sought to have the district court “determine the rates that ‘would have been achieved in a competitive market.’ This is the same determination as the ‘fair price’ determination that we held was barred by preemption principles in Grays Harbor. We therefore hold that Snohomish’s claims are barred by the filed rate doctrine, by field preemption, and by conflict preemption.” (Snohomish, supra, at p. 761.) The plaintiff’s proper course of action was to apply to FERC to redress its claims that the prices in the wholesale electricity markets were not just and reasonable or that the defendants sold electricity in violation of the filed tariffs. Snohomish’s state antitrust claims were dismissed for lack of jurisdiction. (Id. at p. 762.)

B

Nature of Remedies: FERC Regulatory Scheme/Antitrust Damages

Notwithstanding the above authority, plaintiffs contend that they may continue to pursue their claims for relief, damages pursued under the Cartwright Act and the UCL (alleging unlawful or unfair conduct), as alternative theories of recovery. However, in their reply brief, plaintiffs appear to admit that injunctive relief is not available, although their position is unclear. In any case, in Snohomish, supra, 384 F.3d 756 , the court noted

such injunctive relief has been held to be barred in this context by preemption principles, as well as the filed rate doctrine. (Id. at pp. 761-762; Dynegy, supra, 375 F.3d at pp. 849-853.) Ninth Circuit cases have held that injunctive relief under the UCL in this context of energy regulation is preempted, because it would “ ‘encroach[] upon the substantive provisions of the tariff, an area reserved exclusively to FERC, both to enforce and to seek remedy.’ ” (Snohomish, supra, at p. 762; see Dynegy, supra, at pp. 836, 852.)

We therefore focus upon plaintiffs’ remaining claims for antitrust damages for the defendants’ anticompetitive conduct. “[T]he central purpose of the antitrust laws, state and federal, is to preserve competition. It is competition—not the collusive fixing of prices at levels either low or high—that these statutes recognize as vital to the public interest.” (Knevelbaard Dairies v. Kraft Foods, Inc. (9th Cir. 2000) 232 F.3d 979 , 988 (Knevelbaard).)

Plaintiffs’ arguments require a comparison of antitrust relief to the remedies available from FERC under the FPA. One of the elements of standing to seek antitrust damages for anticompetitive conduct is a sufficient showing of injury with respect to: “ ‘(1) the nature of the plaintiff’s alleged injury; that is, whether it was the type the antitrust laws were intended to forestall; (2) the directness of the injury; (3) the speculative measure of the harm; (4) the risk of duplicative recovery; and (5) the complexity in apportioning damages.’ ” (Knevelbaard, supra, 232 F.3d 979 , 987.) A court must “ ‘evaluate the plaintiff’s harm, the alleged wrongdoing by the defendants, and the relationship between them.’ [Citation.]” (Ibid.; see Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709 , 723 [ 187 Cal.Rptr. 797 ] [antitrust standing is required under the Cartwright Act].)

It is well accepted that damages awards in antitrust cases may not be based upon “sheer guesswork or speculation.” (Suburban Mobile Homes, Inc. v. AMFAC Communities, Inc. (1980) 101 Cal.App.3d 532 , 545 [ 161 Cal.Rptr. 811 ].) Rather, a plaintiff seeking such damages must establish to a reasonable probability that there was some causal connection between defendant’s wrongful act and the damages alleged, such as lost profits. (Ibid.) “Once that has been accomplished, the jury will be permitted to act upon probable and inferential proof and to ‘make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly.’ [Citation.]” (Ibid.)

Plaintiffs say they can prove an entitlement to antitrust damages in state court, on the basis that the injuries they sustained as consumers from the

anticompetitive acts of defendants are mainly unrelated to FERC’s normal duties of regulating rates and tariffs for the delivery of electricity on a wholesale basis. Plaintiffs believe they can show all the elements of “antitrust injury,” i.e., “ ‘(1) unlawful conduct, (2) causing an injury to the plaintiff, (3) that flows from that which makes the conduct unlawful, and (4) that is of the type the antitrust laws were intended to prevent.’ ” (Knevelbaard, supra, 232 F.3d 979 , 987.) Plaintiffs believe that the injury they allege is distinct from the high energy prices allegedly caused by defendants’ actions in creating collusive supply, demand, and price manipulation. They say their claims “are based on duties and obligations that arise entirely independently of any ‘tariff’ relevant to this case.” However, they admit that if FERC were to award any refunds, these would have to be offset against any court award of antitrust or UCL damages, and vice versa.

Defendants rely on the FPA statutory scheme as preempting the field, according to the basic principles explained in Lockyer, supra, 383 F.3d 1006 , 1011, as follows: “The Federal Power Act governs the transmission and wholesale sales of electrical energy in interstate commerce. [Citation.] Pursuant to its authority under the FPA, FERC has exclusive jurisdiction over interstate wholesale power rates. [Citations.] The FPA requires that all rates for the transmission and sale of wholesale electricity be filed with FERC and published for public review. [Citation.] FERC is obligated to ensure that wholesale power rates are ‘just and reasonable,’ [citation], and applied in a non-discriminatory manner, [citations]. Indeed, FERC’s authority to determine whether wholesale rates are ‘just and reasonable’ is exclusive. [Citation.]” (Lockyer, supra, at p. 1011.) As explained in Dynegy, the wholesale producers’ filings will enable FERC “to determine whether the ISO rules and regulations pertaining to those charges are reasonable, as required by the FPA. [Citation.] Once filed with a federal agency, such tariffs are the ‘equivalent of a federal regulation.’ [Citations.]” (Dynegy, supra, 375 F.3d at p. 839.)

Defendants accordingly argue that the FPA preempts this field and requires that any such relief be requested from FERC, such as refunds to purchasers. They point to 16 United States Code section 824d(a) et seq., providing that FERC is charged with regulating and disclosing “just and reasonable rates” as follows: “All rates and charges made, demanded, or received by any public utility for or in connection with the transmission or sale of electric energy subject to the jurisdiction of the Commission, and all rules and regulations affecting or pertaining to such rates or charges shall be just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful.” (16 U.S.C. § 824d(a).) Likewise, in 16 United States Code section 824d(c), FERC is authorized to

require public utilities to file and disclose “schedules showing all rates and charges for any transmission or sale subject to the jurisdiction of the Commission, and the classifications, practices, and regulations affecting such rates and charges, together with all contracts which in any manner affect or relate to such rates, charges, classifications, and services.”

FERC also has the power under 16 United States Code section 824e(a) to prohibit “[u]njust or preferential rates, etc.” and to order remedies as follows: “Whenever the Commission, after a hearing held upon its own motion or upon complaint, shall find that any rate, charge, or classification, demanded, observed, charged, or collected by any public utility for any transmission or sale subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or contract affected such rate, charge, or classification is unjust, unreasonable, unduly discriminatory or preferential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by order.” In 16 United States Code section 824e(b), the commission is entitled to prescribe the effective dates of refunds that it orders. We believe the broad scope of these statutes must invoke the rule that antitrust damages will not be proper where there is a risk of duplicative recovery. The nature of plaintiffs’ alleged injury (equivalent to an entitlement to refunds) is apparently inseparable from the type of injury the antitrust laws were intended to forestall. (Knevelbaard, supra, 232 F.3d 979 , 987.)

Plaintiffs, however, offer several reasons why these applications of preemption theory were wrongly decided or distinguishable from their claims, as we next discuss.

C

Alternative Approaches Relied on by Plaintiffs to Preclude a Preemption Finding

Plaintiffs rely on California law (Younger, supra, 26 Cal.3d 397 ; Spielholz, supra, 86 Cal.App.4th 1366 ) to argue no federal preemption principles apply here. They also cite to Otter Tail Power, as representing the concept that activities coming under the jurisdiction of a regulatory agency “nevertheless may be subject to scrutiny under the antitrust laws.” (Otter Tail Power, supra, 410 U.S. 366 , 372.) Plaintiffs seemingly argue for a “back to basics” approach to preemption, based on this older case law focusing on congressional intent. Further, they point to language in the Lockyer opinion (Lockyer, supra, 383 F.3d 1006 ) as showing that the federal courts here recognized that FERC is not doing a good enough job, such that alternative remedies should

now be allowed through this state antitrust action. We discuss these theories in turn.

In Younger, supra, 26 Cal.3d 397 , the court explained that an agency such as the FPC (now FERC) must take antitrust considerations into account when it determines “ ‘public interest’ ” and “ ‘public convenience and necessity,’ ” but the agency “has ‘no power to insulate utilities under its regulation from the operation of the antitrust acts, or to determine when an antitrust violation has taken place. Otter Tail Power[, supra,) 410 U.S. 366 , 93 S.Ct. 1022 , 35 L.Ed.2d 359 . . . .’ [Citations.]” (Younger, supra, at pp. 407-408.) The Supreme Court decided that a parallel piece of legislation, the Natural Gas Act ( 15 U.S.C. § 717 et seq.), did not preclude the state Attorney General from investigating possible violations of California antitrust law. It reasoned that the act did not expressly prohibit investigation or other activity regarding state antitrust laws, and that such practices could be consistent with the federal counterparts. (Younger, supra, 26 Cal.3d at p. 408.) The Supreme Court therefore found no federal preemption of the state Attorney General’s investigation of alleged conduct such as “ ‘price fixing, monopolization, divisions of markets, and restraint of trade,’ ” and said “[hypothetical conflict between federal law and enforcement of California antitrust provisions within the scope of the investigation, even if assumed, is not ground for preemption since it may never arise in fact. [Citations.]” (Ibid.) Instead, state investigations into possible violations of California statutes that were in harmony with federal antitrust laws were deemed to be permissible and not preempted. (Id. at p. 409.)

Plaintiffs argue the authority of Younger, supra, 26 Cal.3d 397 , 409, is not restricted to authorizing state antitrust investigation procedures, but should also extend to authorizing state antitrust enforcement actions, such as this complaint. We disagree, because more than a “[hypothetical conflict between federal law and enforcement of California antitrust provisions” (id. at p. 408) is present here, in light of the extensive nature of the FERC regulatory scheme over the wholesale electricity market. In the FPA, we are presented with “ ‘ “a bright line easily ascertained, between state and federal jurisdiction. . . . This was done in the Power Act by making [FERC] jurisdiction plenary and extending it to all wholesale sales in interstate commerce except those which Congress has made explicitly subject to regulation by the States.” ’ [Citations.] This power includes the exclusive authority to determine the reasonableness of wholesale rates. [Citations.]” (Grays Harbor, supra, 379 F.3d 641 , 646-647.) Plaintiffs cannot explain why the trial court would not have to second-guess FERC rate determinations in fixing antitrust damages to punish defendants for the alleged anticompetitive conduct, because such conduct would directly affect the reasonableness of the rates charged.

In the UCL context, in Spielholz, supra, 86 Cal.App.4th 1366 , those plaintiffs were allowed to proceed with false advertising allegations that a telecommunications carrier had falsely advertised a “seamless calling area” existed, where in reality, there were gaps where wireless telephone users were unable to connect calls. The Court of Appeal found no federal preemption of such claims, because the main allegations dealt with false advertising, such that any effect on rates was merely incidental. Here, however, as stated by the trial court, “This can be contrasted to the instant case, involving the FPA, where Plaintiffs’ allegations concern conduct directly related to rates charged and ultimately paid.” We agree with the trial court’s analyses of the California case law claims, because plaintiffs have been unable to show why the alleged anticompetitive conduct by defendants inflicted any different kind of injury on them, that is separate from the rates charged and ultimately paid. This is not a case in which incidental damages are claimed to arise from conduct that is not covered by the federal legislation, such as false advertising.

In its ruling, the trial court also rejected the argument that Otter Tail Power would bar a finding of preemption, since that case concerned federal antitrust laws and not state antitrust laws. There, the Supreme Court relied on legislative history to find nothing in the FPA that would “insulate electric power companies from the operation of the antitrust laws.” (Otter Tail Power, supra, 410 U.S. 366 , 374-375.) Rather, to the extent that voluntary business relationships are utilized to control the interstate distribution of power (as opposed to governmental regulation), “courts must be hesitant to conclude that Congress intended to override the fundamental national policies embodied in the antitrust laws.” (Ibid.) The court in Otter Tail Power held there is no basis to conclude that the limited power granted to the FPC/FERC to regulate certain aspects of electrical supply (e.g., ordering interconnections of power lines) “was intended to be a substitute for, or to immunize Otter Tail from, antitrust regulation for refusing to deal with municipal corporations.” (Ibid.) This authority is distinguishable because these plaintiffs are attempting to claim injury by invoking the same subject matter covered by the government regulatory authority, but recharacterizing it as antitrust injury, all the while seeking to recover damages for overcharged payments and allegedly excessive rates. This is a distinction without a difference.

Plaintiffs next argue that the authority of MCI Telecommunications Corp. v. American Telephone & Telegraph Co. (1994) 512 U.S. 218 [ 129 L.Ed.2d 182 , 114 S.Ct. 2223 ] and Maislin Industries, U. S. v. Primary Steel (1990) 497 U.S. 116 [ 111 L.Ed.2d 94 , 110 S.Ct. 2759 ] should indicate that the kind of market-based tariffs that are in use here are not properly regulated solely by the FPA and FERC. In Lockyer, supra, 383 F.3d 1006 , 1013, the court of appeals summarized and distinguished those same holdings in a closely analogous factual context (regulatory challenges by the state to the actions of

the federal agency). The court explained the nature of these different market-based regulatory schemes as follows: “In MCI, the Supreme Court held that the FCC could not eliminate rate-filing requirements for any class of carrier, even when necessary to promote competitive markets. In Maislin, the Court held that the ICC could not allow common carriers to charge unfiled, privately negotiated rates lower than the filed rates, even when the carriers were in highly competitive markets. [Citation.] As the Court stated in Maislin, the existence of a competitive market ‘cannot provide the ICC authority to alter well-established statutory filed rate requirements.’ [Citation.]” (Lockyer, supra, 383 F.3d at p. 1013.) The court of appeals then distinguished the FERC regulatory scheme from those schemes, in the course of rejecting an argument that the FERC procedures were fatally defective: “The agencies in MCI and Maislin relied on market forces alone in approving market-based tariffs. In contrast, FERC’s system consists of a finding that the applicant lacks market power (or has taken sufficient steps to mitigate market power), coupled with strict reporting requirements to ensure that the rate is ‘just and reasonable’ and that markets are not subject to manipulation. Here, FERC required the wholesale seller to file a market analysis every four months, and quarterly reports summarizing its transactions during the preceding three months. These transaction summaries include both long and short-term contracts, purportedly with reports of some sales for intervals as small as ten minutes. FERC has affirmed in its presentation before us that it is not contending that approval of a market-based tariff based on market forces alone would comply with the FPA or the filed rate doctrine. Rather, the crucial difference between MCI/Maislin and the present circumstances is the dual requirement of an ex ante finding of the absence of market power and sufficient post-approval reporting requirements. Given this, FERC argues that its market-based tariff does not run afoul of MCI or Maislin, and we agree.” (Ibid., italics added.)

Plaintiffs have provided no reason to depart from the above analysis, and disregard the fact that the FPA includes certain safeguards to oversee the reasonableness of rates for the wholesale electricity market. It does not make any difference that in Lockyer, supra, 383 F.3d 1006 , 1013, the court of appeals reached those conclusions but nevertheless went on to criticize the regulatory efforts of FERC as “abdicating its regulatory responsibility.” (Id. at pp. 1014—1015.) At that time, the court of appeals accepted the argument that “even if market-based tariffs are lawful in concept, FERC failed to administer the tariffs in accordance with their terms and abused its discretion in limiting available remedies for regulatory violations.” (Id. at p. 1014.) Specifically, in Lockyer, the court found fault with FERC’s past policies as follows. First, it had implemented market-based tariffs so as to virtually deregulate the wholesale electricity industry and remove it from statutorily required oversight, but without providing appropriate safeguards, such as “enforceable

Also in Grays Harbor, the court addressed contemporary concerns that application of “the filed rate doctrine to market-based rates that have not been filed with FERC would be an unwise and unprecedented expansion of the doctrine.” (Grays Harbor, supra, 379 F.3d 641 , 651.) The court found no such barrier to the use of this doctrine, for the following reasons: “[T]he market-based rate regime established by FERC continues FERC’s oversight of the rates charged. FERC only permits power sales at market-based rates after scrutinizing whether ‘the seller and its affiliates do not have, or have adequately mitigated, market power in generation and transmission and cannot erect other barriers to entry.’ [Citation.] According to FERC, these conditions assure that the market-based rates charged comply with the FPA’s requirement that rates be just and reasonable. [Citations.] This oversight is ongoing . ... [][]... Further, FERC contends that such procedures effectively constitute review of rates prior to their implementation. [Citation.]” (Ibid.) FERC also has a remedies provision regarding refunds in 16 United States Code section 824e(a) and (b).

Based on those factors, the court of appeals stated that “while market-based rates may not have historically been the type of rate envisioned by the filed rate doctrine, we conclude that they do not fall outside of the purview of the doctrine.” (Grays Harbor, supra, 379 F.3d 641 , 651.) Although this analysis of the evolution of this regulatory method is very general in nature, it is nevertheless persuasive and we have been given no reason to depart from it here. Instead, the allegations of the master complaint amount to requests for penalties for alleged anticompetitive conduct by defendants, and these potentially would interfere with FERC supervision of market-based rates and any enforcement activities allowed under FERC procedures. We are reluctant to engage in policy analysis to the extent that plaintiffs request in this fast-changing and highly regulated area.

Moreover, in light of these conclusions, we need not address in detail plaintiffs’ limitations argument, that FERC was without jurisdiction as to conduct occurring prior to October 2, 2000, due to its own rulings about its assertion of jurisdiction as depending on the timing of events giving rise to claims filed. We find the filed rate doctrine to be instructive in this context and conclude that it reinforces our conclusions regarding preemption. (Dynegy, supra, 375 F.3d at pp. 852-853; Entergy La., Inc. v. Louisiana Pub. Serv. Comm’n (2003) 539 U.S. 39 , 47 [ 156 L.Ed.2d 34 , 123 S.Ct. 2050 ] [filed rate doctrine may apply to state regulators through federal preemption under the supremacy clause].) The trial court correctly sustained the demurrer without leave to amend on this ground as well.

DISPOSITION

The judgment of dismissal is affirmed. Plaintiffs are to pay the ordinary costs on appeal.

McConnell, P. J., and Irion, J., concurred.