                                              Volume 1 of 2

                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

PUBLIC UTILITIES COMMISSION OF          
THE STATE OF CALIFORNIA,
                          Petitioner,
PUBLIC UTILITIES COMMISSION OF
NEVADA; ALLEGHENY ENERGY
SUPPLY COMPANY, LLC,
            Petitioners-Intervenors,
ENERGY PRODUCER COGENERATION
ASSOCIATION OF CALIFORNIA AND
ENERGY PRODUCERS AND USERS
COALITION; AVISTA CORPORATION;               No. 01-71051
PINNACLE WEST CAPITAL
CORPORATION; CALIFORNIA                      FERC No.
ELECTRICITY OVERSIGHT BOARD;                FERC-EL00-000
MIRANT CALIFORNIA; MIRANT DELTA
LLC; MIRANT POTRERO LLC;
MIRANT AMERICAS ENERGY
MARKETING, LP; ENRON POWER
MARKETING, INC.; SOUTHERN
CALIFORNIA EDISON COMPANY;
NORTHERN CALIF. TRANSMISSION
AGENCY OF NORTHERN CALIFORNIA
(“TANC”); MODESTO IRRIGATION
DISTRICT (MID); M-S-R PUBLIC
POWER AGENCY; CITY OF REDDING;
                                        



                             8753
8754                  PUC v. FERC


CITY OF PALO ALTO; CITY OF          
SANTA CLARA; PORT OF SEATTLE
WASHINGTON; CITY OF TACOMA,
WASHINGTON; PUBLIC SERVICE
COMPANY OF COLORADO; PACIFIC
GAS AND ELECTRIC COMPANY;
CORAL POWER, L.L.C.; EXELON
CORP.; CITY & COUNTY OF SAN
FRANCISCO; OFFICE OF ATTORNEY
GENERAL FOR THE STATE OF
NEVADA, BUREAU OF CONSUMER
PROTECTION; PORTLAND GENERAL
ELECTRIC COMPANY; AUTOMATED
POWER EXCHANGE, INC.; ALLEGHENY
ENERGY SUPPLY CO., LLC; PUGET
SOUND ENERGY, Puget Sound
Energy, Inc.; DYNEGY POWER
MARKETING, INC.; EL SEGUNDO         
POWER LLC; LONG BEACH
GENERATION LLC; CABRILLO POWER
I LLC; CABRILLO POWER II LLC;
PACIFICORP’S; PPL ENERGYPLUS,
LLC; PPL MONTANA; PPL
SOUTHWEST GENERATION HOLDINGS,
LLC; RELIANT ENERGY POWER
GENERATION, INC.; RELIANT ENERGY
SERVICES, INC.; OERTHERN;
PEOPLE OF THE STATE OF
CALIFORNIA, ex rel. Bill Lockyer;
WILLIAM ENERGY MARKETING &
TRADING COMPANY; CALPINE
CORPORATION; EL PASO MERCHANT
ENERGY L.P.; SEMPRA ENERGY
TRADING CORP.; AVISTA ENERGY,
INC.; CITY OF LOS ANGELES;
                                    
                         PUC v. FERC                   8755


CITY OF LOS ANGELES                     
DEPARTMENT OF WATER AND
POWER; CALIFORNIA ELECTRICITY
OVERSIGHT BOARD; IDACORP ENERGY
L.P.; CITY OF PASADENA,
                      Intervenors,
               and
INTERNATIONAL PACIFIC ENTERPRISES,      
LTD.,
                        Intervenor,
                v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                      Respondent.
                                        

PUBLIC UTILITIES COMMISSION OF          
THE STATE OF CALIFORNIA,
                          Petitioner,
IDA CORP. ENERGY, IDA Corp.
Energy, L.P.,                               No. 01-71321
              Petitioner-Intervenor,        FERC No.
SAN DIEGO GAS AND ELECTRIC                  EL 00-95-000
COMPANY; DUKE ENERGY NORTH
AMERICA, LLC, DUKE ENERGY
TRADING AND MARKETING, LLC,
(COLLECTIVELY, “DUKE ENERGY”);
                                        
8756                  PUC v. FERC


CALIFORNIA ASSEMBLY; SOUTHERN       
CALIFORNIA EDISON COMPANY;
MIRANT AMERICAS ENERGY
MARKETING, LP, MIRANT CA, LLC,
MIRANT DELTA, LLC, AND MIRANT
POTEREO, LLC (COLLECTIVELY,
“MIRANT”; MIRANT CALIFORNIA,
MIRANT DELTA, LLC IRAN; MIRANT
POTRERO, LLC; PUGET SOUND
ENERGY, Puget Sound Energy, Inc.;
CALIFORNIA INDEPENDENT SYSTEM
OPERATOR CORPORATION; CALPINE
CORPORATION; ENRON POWER
MARKETING, INC.; CORAL POWER,
L.L.C.; TRANSMISSION AGENCY OF
NORTHERN CALIFORNIA; THE M-S-R      
PUBLIC POWER AGENCY; THE
MODESTO IRRIGATION DISTRICT;
CITY OF PALO ALTO; THE CITY OF
SANTA CLARA; CITY OF REDDING;
EL PASO MERCHANT ENERGY, L.P.;
NORTHERN CALIFORNIA POWER
AGENCY; CHILD PROTECTIVE
SERVICES; CONSTELLATION ENERGY
COMMODITIES GROUP, INC.;
WILLIAMS ENERGY MARKETING &
TRADING COMPANY; CITY AND
COUNTY OF SAN FRANCISCO; PUBLIC
SERVICE COMPANY OF NEW MEXICO;
CALIFORNIA ELECTRICITY OVERSIGHT
BOARD;
                                    
                     PUC v. FERC       8757


PEOPLE OF THE STATE OF             
CALIFORNIA; PACIFIC GAS AND
ELECTRIC COMPANY; PPL ENERGY
PLUS; PPL MONTANA; PPL
SOUTHWEST GENERATION HOLDINGS,
LLC; SEMPRA ENERGY TRADING
CORP.; AVISTA ENERGY, INC.;
CITY OF LOS ANGELES; CITY OF LOS
ANGELES DEPARTMENT OF
WATER AND POWER; MARCIA HABER
KAMINE; CITY OF LOS ANGELES
DEPARTMENT OF WATER AND
POWER; CITY OF TACOMA; PORT OF
SEATTLE; PINNACLE WEST COS.;       
PUBLIC SERVICE COMPANY OF
COLORADO; PORTLAND GENERAL
ELECTRIC COMPANY; DYNEGY POWER
MARKETING, INC., EL SEGUNDO
POWER LLC, LONG BEACH
GENERATION LLC, CABRILLO POWER
I LLC, AND CABRILLO POWER II
LLC (COLLECTIVELY, “DYNEGY”);
CITY OF SAN DIEGO; PORTLAND
GENERAL ELECTRIC COMPANY;
CALIFORNIA ELECTRICITY OVERSIGHT
BOARD;
                                   
8758                     PUC v. FERC


PUBLIC UTILITIES COMMISSION OF         
NEVADA,
                      Intervenors,
                 v.                    
FEDERAL ENERGY REGULATORY
COMMISSION,
                      Respondent.
                                       

CITY   OF   SAN DIEGO,                 
                         Petitioner,
CALIFORNIA PUBLIC UTILITIES
COMMISSION; CITY OF TACOMA;
PORT OF SEATTLE; SOUTHERN
CALIFORNIA EDISON COMPANY;
CALIFORNIA ELECTRICITY OVERSIGHT
                                       
BOARD; PEOPLE OF STATE OF                  No. 01-71544
CALIFORNIA,                                 FERC No.
              Petitioner-Intervenor,
PINNACLE WEST CAPITAL
CORPORATION; ARIZONA PUBLIC
SERVICE COMPANY; MORGAN
STANLEY CAPITAL GROUP, INC.;
MERRILL LYNCH CAPITAL SERVICES,
INC.; PUBLIC SERVICE COMPANY OF
                                       
                      PUC v. FERC       8759


COLORADO; LONG BEACH                
GENERATION LLC.; CABRILLO
POWER I LLC; CABRILLO POWER II
LLC.; CITY OF LOS ANGELES
DEPARTMENT OF WATER AND
POWER; TRANSPORTATION
AGENCY OF NORTHERN CALIFORNIA;
THE METROPOLITAN WATER
DISTRICT OF SOURTHERN
CALIFORNIA; THE M-S-R PUBLIC
POWER AGENCY; THE MODESTO
IRRIGATION DISTRICT; CITY OF PALO
ALTO; CITY OF REDDING; CITY OF
SANTA CLARA; CITY AND
COUNTY OF SAN FRANCISCO; PPL
MONTANA, LLC; PPL SOUTHWEST         
GENERATION HOLDINGS, LLC; EL
PASO MERCHANT ENERGY L.P.;
SEMPRA ENERGY TRADING CORP.;
AVISTA CORPORATION; AVISTA
ENERGY, INC.; PPL ENERGYPLUS,
LLC; PORTLAND GENERAL ELECTRIC
COMPANY; EL SEGUNDO POWER
LLC; LONG BEACH GENERATION
LLC; CABRILLO POWER I LLC;
CABRILLO POWER II LLC;
TRANSMISSION AGENCY OF
NORTHERN CALIFORNIA; PUBLIC
SERVICE COMPANY OF NEW MEXICO;
ENERGY PLUS, LLC, ET AL;
                                    
8760                  PUC v. FERC


CALIFORNIA ELECTRICITY OVERSIGHT     
BOARD; PUBLIC UTILITIES
COMMISSION OF NEVADA,
                      Intervenors,
               v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                      Respondent,
NORTHERN CALIFORNIA POWER
AGENCY; PACIFIC GAS AND ELECTRIC
COMPANY; IDACORP ENERGY L.P.;
PACIFICORP; MIRANT AMERICAS
ENERGY MARKETING, LP, MIRANT
CALIFORNIA, LLC, MIRANT DELTA,       
LLC, AND MIRANT POTRERO, LLC.;
PUGET SOUND ENERGY; DYNEGY
POWER MARKETING, INC., EL
SEGUNDO POWER LLC, LONG BEACH
GENERATION LLC, CABRILLO POWER
I LLC, AND CABRILLO POWER II
LLC (COLLECTIVELY, “DYNEGY”);
CORAL POWER, L.L.C.;
CONSTELLATION ENERGY
COMMODITIES GROUP, INC.; THE
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT;
ENRON POWER MARKETING INC.,
          Respondents-Intervenors.
                                     
                         PUC v. FERC                  8761



POWEREX CORPORATION,                    
                          Petitioner,
M-S-R PUBLIC POWER AGENCY;
MODESTO IRRIGATION DISTRICT
(MID); CITY OF PALO ALTO;
CITY OF REDDING; CITY OF SANTA
CLARA; METROPOLITAN WATER
DISTRICT OF SOUTHERN CALIFORNIA,
            Petitioners-Intervenors,        No. 02-70254
AVISTA CORPORATION; CORAL
POWER, L.L.C.; CONSTELLATION
                                            FERC Nos.
                                            EL-0095-0004
ENERGY COMMODITIES GROUP, INC.,             EL00-95-001
                        Intervenors,
                 v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                        Respondent,
PACIFICORP,
            Respondent-Intervenor.
                                        
8762                      PUC v. FERC



PACIFIC GAS   AND   ELECTRIC             
COMPANY,
                           Petitioner,
SOUTHERN CALIFORNIA EDISON
COMPANY; PORT OF SEATTLE
WASHINGTON; CITY OF TACOMA,
WASHINGTON; NEVADA POWER
COMPANY; SIERRA PACIFIC POWER
COMPANY; CITY OF SEATTLE; AVISTA
CORPORATION; CORAL POWER,
L.L.C.; CONSTELLATION ENERGY                 No. 02-70266
COMMODITIES GROUP, INC.; PUBLIC
                                              FERC Nos.
UTILITIES COMMISSION OF NEVADA;
                                             EL00-95-000
TRANSALTA ENERGY MARKETING
                                             EL00-95-000
(CALIFORNIA), INC.,
                       Intervenors,         ER01-607-000
                                             EL00-95-017
                 v.                          EL00-95-012
FEDERAL ENERGY REGULATORY                    EL00-95-031
COMMISSION,                                  EL00-95-004
                       Respondent,           EL00-95-001
METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA; NORTHERN
CALIF. TRANSMISSION AGENCY OF
NORTHERN CALIFORNIA (“TANC”);
M-S-R PUBLIC POWER AGENCY;
MODESTO IRRIGATION DISTRICT
(MID); CITY OF PALO ALTO;
CITY OF REDDING, CALIFORNIA;
CITY OF SANTA CLARA; PACIFICORP,
           Respondents-Intervenors.
                                         
                        PUC v. FERC                   8763



CALIFORNIA ELECTRICITY OVERSIGHT       
BOARD,
                         Petitioner,
PORT OF SEATTLE; CITY OF TACOMA;
PEOPLE OF THE STATE OF
CALIFORNIA; CITY OF PASADENA;               No. 02-70275
CITY OF SAN DIEGO; CA STATE
ASSEMBLY,
                                            FERC No.
                                           FERC-EL95-000
           Petitioners-Intervenors,
                v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                       Respondent.
                                       
8764                     PUC v. FERC



CITY   OF   SAN DIEGO,                 
                         Petitioner,
CORAL POWER, L.L.C.;
CONSTELLATION ENERGY
COMMODITIES GROUP, INC.,
                      Intervenors,
               and
SOUTHERN CALIFORNIA EDISON                  No. 02-70282
COMPANY; PORT OF SEATTLE;                   FERC No.
CITY OF TACOMA,                            FERC-00-95-000
                      Intervenors,
                v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                      Respondent,
PACIFICORP,
            Respondent-Intervenor.
                                       
                       PUC v. FERC                    8765



CITY OF OAKLAND, CALIFORNIA           
ACTING BY AND THROUGH ITS
BOARD OF PORT COMMISSIONERS,
                        Petitioner,
CORAL POWER, L.L.C.;
CONSTELLATION ENERGY
COMMODITIES GROUP, INC.,                   No. 02-70285
                      Intervenors,         FERC No.
                v.                        FERC-00-95-000
FEDERAL ENERGY REGULATORY
COMMISSION,
                      Respondent,
PACIFICORP,
            Respondent-Intervenor.
                                      

SAN DIEGO GAS & ELECTRIC              
COMPANY,
                       Petitioner,
CALIFORNIA ATTORNEY GENERAL,
                      Intervenor,
CORAL POWER, L.L.C.;                       No. 02-70301
CONSTELLATION ENERGY                       FERC No.
COMMODITIES GROUP, INC.,                     02-1058
                     Intervenors,
               v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                     Respondent.
                                      
8766                   PUC v. FERC



SOUTHERN CALIFORNIA EDISON            
COMPANY,
                        Petitioner,
PORTLAND GENERAL ELECTRIC
COMPANY; DYNEGY POWER
MARKETING INC.; EL SEGUNDO
POWER; LONG BEACH GENERATION
LLC; CABRILLO POWER; CABRILLO
POWER II LLC; MORGAN STANLEY
CAPITAL GROUP, INC.; AVISTA
ENERGY; PUGET SOUND INVESTMENT
GROUP; THE CITY OF LOS ANGELES
DEPARTMENT OF WATER AND
POWER; SEMPRA ENERGY;
CALIFORNIA POWER AGENCY;
                                          No. 02-72113
                                      
MODESTO IRRIGATION DISTRICT
(MID); METROPOLITAN WATER                  FERC No.
DISTRICT OF SOUTHERN CALIFORNIA;           EL-95-000
EL PASO MERCHANT ENERGY L.P.;
POWEREX CORPORATION; CORAL
POWER, L.L.C.; MIRANT AMERICAS
ENERGY MARKETING, LP; MIRANT
CALIFORNIA, LLC; MIRANT DELTA,
LLC IRAN; MIRANT POTRERO, LLC;
TRANSCANADA ENERGY LTD.;
CITY OF TACOMA, Washington;
PORT OF SEATTLE, Washington,
                      Intervenors,
                v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                      Respondent.
                                      
                          PUC v. FERC                  8767



PACIFIC GAS   AND   ELECTRIC          
COMPANY,
                        Petitioner,
DYNEGY POWER MARKETING INC.;
EL SEGUNDO POWER; LONG BEACH
GENERATION LLC; ENRON POWER
MARKETING, INC.; PUBLIC UTILITY
DISTRICT NO. 1 OF SNOHOMISH
COUNTY, WASHINGTON; ENRON
ENERGY SERVICES, INC.; CALIFORNIA
ELECTRICITY OVERSIGHT BOARD;
PEOPLE OF CALIFORNIA; CALIFORNIA
PUBLIC UTILITIES COMMISSION;
CALIFORNIA INDEPENDENT SYSTEM
OPERATOR CORPORATION; M-S-R                 No. 03-73887
PUBLIC POWER AGENCY; MODESTO
IRRIGATION DISTRICT (MID);
                                            FERC No.
                                          Federal Power Act
CITY OF SANTA CLARA; CITY OF
REDDING; CORAL POWER;
CONSTELLATION ENERGY
COMMODITIES GROUP, INC.;
POWEREX CORP; THE SALT RIVER
PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT;
SACRAMENTO MUNICIPAL UTILITY
DISTRICT; SOUTHERN CALIFORNIA
EDISON COMPANY; TUCSON ELECTRIC
POWER COMPANY; PORTLAND
GENERAL ELECTRIC COMPANY;
PINNACLE WEST CAPITAL
CORPORATION; ARIZONA PUBLIC
SERVICE COMPANY; PACIFICORP;
                                      
8768                  PUC v. FERC


PUBLIC SERVICE COMPANY OF NEW       
MEXICO; NORTHERN CALIFORNIA
POWER AGENCY; TRACTEBEL ENERGY
MARKETING INC.; BP ENERGY
COMPANY; AVISTA ENERGY; PUGET
SOUND ENERGY; CITY OF LOS
ANGELES DEPARTMENT OF
WATER AND POWER; AVISTA
CORPORATION; SEMPRA ENERGY; EL
PASO MERCHANT ENERGY L.P.;
IDACORP ENERGY; BP ENERGY CO.;
                                    
WILLIAMS POWER COMPANY, INC;
PORT OF SEATTLE; TRANSCANADA
ENERGY LTD.; EXELON CORP,
                     Intervenors,
                v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                     Respondent.
                                    

SACRAMENTO MUNICIPAL UTILITY        
DISTRICT,
                     Petitioner,          No. 03-74252
              v.                          FERC No.
FEDERAL ENERGY REGULATORY               Federal Power Act
COMMISSION,
                    Respondent.
                                    
                        PUC v. FERC                   8769



STATE WATER CONTRACTORS; THE           
METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA,
                        Petitioners,
TRANSCANADA ENERGY; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; POWEREX CORP.;
PACIFICORP; TUCSON ELECTRIC
POWER COMPANY; PINNACLE WEST
CAPITAL CORPORATION; PACIFIC
GAS AND ELECTRIC COMPANY;
CALIFORNIA POWER AGENCY;
PEOPLE OF THE STATE OF
CALIFORNIA; CALIFORNIA PUBLIC
                                           No. 03-74527
                                       
UTILITIES COMMISSION; POWEREX
CORP.; SOUTHERN CALIFORNIA                  FERC No.
EDISON COMPANY; CALIFORNIA                 EL00-95-081
ELECTRICITY OVERSIGHT BOARD;
WILLIAMS POWER COMPANY, INC.;
M-S-R PUBLIC POWER AGENCY;
MODESTO IRRIGATION DISTRICT
(MID); CITY OF SANTA CLARA;
CITY OF REDDING; CONSTELLATION
ENERGY COMMODITIES GROUP, INC.;
CITY OF VERNON,
                       Intervenors,
                v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                       Respondent.
                                       
8770                    PUC v. FERC



MODESTO IRRIGATION DISTRICT            
(MID),
                       Petitioner,           No. 03-74531
               v.                            FERC No.
FEDERAL ENERGY REGULATORY                    EL00-95-081
COMMISSION,
                     Respondent.
                                       

PEOPLE OF THE STATE OF                 
CALIFORNIAEX REL. BILL LOCKYER,
                         Petitioner,
CALIFORNIA INDEPENDENT SYSTEM
                                       
OPERATOR CORPORATION,                        No. 03-74594
                        Intervenor,           FERC No.
              v.
FEDERAL ENERGY REGULATORY
COMMISSION,
                    Respondent.
                                       

CITY OF LOS ANGELES                    
DEPARTMENT OF WATER     AND POWER,
                                             No. 04-73501
                         Petitioner,
              v.                             FERC No.
                                           Federal Power Act
FEDERAL ENERGY REGULATORY
                                               OPINION
COMMISSION,
                    Respondent.
                                       
                   PUC v. FERC                   8771
     On Petition for Review of an Order of the
      Federal Energy Regulatory Commission

                Argued and Submitted
    April 13, 2005—Panel Location Unrecognized

               Filed August 2, 2006

Before: Sidney R. Thomas, M. Margaret McKeown, and
           Richard R. Clifton, Circuit Judges.

             Opinion by Judge Thomas
8776                    PUC v. FERC
                         COUNSEL

Stan Berman, Heller Ehrman White & McAuliffe, Seattle,
Washington; Kevin J. McKeon, Hawke McKeon Sniscak &
Kennard, Harrisburg, Pennsylvania, for petitioner-intervenor
and respondent-intervenor California Parties.

Robert A. O’Neil, San Diego City Attorney’s Office, San
Diego, California, for petitioner-intervenor City of San Diego.

Dennis Lane, Solicitor, Federal Energy Regulatory Commis-
sion, Washington, D.C., for respondent Federal Energy Regu-
latory Commission.

Mark W. Pennak, Department of Justice, Civil Division,
Washington, D.C., for respondent-intervenor and petitioner-
intervenor Bonneville Power Administration.

Harvey L. Reiter, Morrison & Hecker, Washington D.C., for
respondent-intervenor and petitioners-intervenors Indicated
Public Entities.

David C. Frederick, Kellogg, Huber, Hansen, Todd, Evans &
Figel, Washington, D.C.; Lawrence G. Acker, LeBoeuf,
Lamb, Greene & MacRae, Washington, D.C.; Ronald N. Car-
roll, Foley & Lardner, Washington, D.C., for petitioner-
intervenor and respondent-intervenor Competitive Suppliers
Group.

Charles F. Robinson, Folsom, California; J. Phillip Jordan,
Swidler Berlin Shereff Friedman, Washington, D.C., for inter-
venor California Independent System Operator Corporation.

David L. Alexander, Oakland, California; James M. Costan,
McGuire Woods, Washington, D.C., for petitioner Port of
Oakland.

Randolph Q. McManus, Baker Botts, Washington, D.C., for
intervenor Indicated Generators.
                             PUC v. FERC                            8777
Natalie L. Hocken, Portland, Oregon; Stuart F. Pierson,
Troutman Sanders, Washington, D.C., for respondent-
intervenor PacifiCorp.

Kenneth W. Irvin, McDermott Will & Emery, Washington,
D.C., for intervenor El Paso Merchant Energy, L.P.


                              OPINION

THOMAS, Circuit Judge:

   This case comes to us on petitions for review of a series of
orders issued by the Federal Energy Regulatory Commission
(“FERC”) relating to the energy crisis that occurred in Cali-
fornia in 2000 and 2001. Nearly 200 petitions for review of
the various FERC orders have been filed in our Court. We
consolidated these petitions for administrative management.1

   On November 24, 2004, we issued a consolidated order in
this case separating certain issues for decision in two consoli-
dated proceedings, the first of which we termed the “Jurisdic-
tional Cases”; the second we termed the “Scope/Transactions
Cases.” In the Jurisdictional Cases, we considered whether
FERC’s refund authority extended to certain governmental
entities. We heard oral arguments on Jurisdictional Cases on
April 12, 2005, and issued an opinion concerning the Jurisdic-
tional Cases on September 6, 2005. Bonneville Power Admin.
v. FERC, 422 F.3d 908 (9th Cir. 2005).
  1
    We express our appreciation to Lisa Evans of the Ninth Circuit Court
of Appeals Mediation Unit; Cole Benson, Supervisor of the Ninth Circuit
Procedural Motions Unit; and our colleague Judge Edward Leavy for their
extensive work with the parties in organizing judicial management of the
cases. We also express our appreciation to the parties and their attorneys
for their cooperation, professionalism, and the quality of their presenta-
tions.
8778                     PUC v. FERC
   The Scope/Transaction Cases before us here involve
numerous questions pertaining to the proper scope of FERC’s
refund orders, including the appropriate temporal reach and
the type of transactions properly subject to the refund orders.
We heard oral arguments on the Scope/Transaction Cases on
April 13, 2005. This opinion covers the issues presented in the
Scope/Transaction Cases.

   We grant in relief in part and deny relief in part. In general,
we hold that all the transactions at issue in this case that
occurred within the California Power Exchange Corporation
(“CalPX”) or California Independent System Operator (“Cal-
ISO”) markets, or as a result of a CalPX or Cal-ISO transac-
tion, were the proper subject of the refund proceedings insti-
tuted by FERC. Therefore, we deny the petitions for review
that challenge FERC’s inclusion of such transactions; we
grant the petitions for review that challenge FERC’s exclusion
of such transactions.

   We deny the petitions for review that seek to expand
FERC’s refund proceedings into the bilateral markets beyond
the CalPX and Cal-ISO markets. In particular, we hold that
FERC properly excluded from the refund proceedings bilat-
eral transactions between the California Energy Resources
Scheduling (“CERS”) Division of the California Department
of Water Resources and other entities that occurred outside
the CalPX and Cal-ISO markets.

   We hold that FERC properly established October 2, 2000
as the refund effective date for the § 206 proceedings, rather
than October 29, 2000, as argued by some parties. However,
we hold that FERC erred in excluding § 309 relief for tariff
violations that occurred prior to October 2, 2000. We reserve
consideration of all other issues raised in the various petitions
for review for the next phase of our appellate proceedings.

  The net effect of our decision is to preserve the scope of the
existing FERC refund proceedings, but to expand those
                              PUC v. FERC                              8779
refund proceedings to include: (1) tariff violations that
occurred prior to October 2, 2000, (2) transactions in the
CalPX and Cal-ISO markets that occurred outside the 24-hour
period specified by FERC, and (3) energy exchange transac-
tions in the CalPX and Cal-ISO markets.

                                     I

                         Parties and Claims

   With that brief summary of the issues, we turn to the spe-
cific claims of the parties. The State of California and several
intervenors (collectively, “the California Parties”)2 seek
review of a number of FERC’s decisions, namely: (1) FERC’s
denial of relief for sales of electricity made at unjust rates
prior to October 2, 2000, the refund effective date set by
FERC; (2) FERC’s denial of relief for energy sales in which
CERS was the purchaser; (3) FERC’s refusal to order relief
for energy exchange transactions; and (4) FERC’s refusal to
order relief for certain forward market transactions.

   A group of energy suppliers and generators called the Com-
petitive Suppliers Group3 also petitions for review of several
of FERC’s decisions, namely: (1) FERC’s decision to set the
refund effective date at October 2, 2000, rather than October
  2
     The California Parties consist of the People of the State of California,
ex rel. Bill Lockyer, Attorney General; the Public Utilities Commission of
the State of California; the California Electricity Oversight Board; Pacific
Gas and Electric Company, and Southern California Edison Company.
   3
     This group consists of Powerex Corp.; Avista Energy, Inc.; Constella-
tion Energy Commodities Group, Inc.; Coral Power, L.L.C.; Exelon Cor-
poration on behalf of Exelon Generation Company, LLC; PECO Energy
Company; Commonwealth Edison Company; IDACORP Energy LP; Port-
land General Electric Company; PPL EnergyPlus, LLC; PPL Montana,
LLC; Public Service Company of New Mexico; Puget Sound Energy, Inc.;
Sempra Energy Trading Corp.; TransAlta Energy Marketing (CA), Inc.;
TransAlta Energy Marketing (US), Inc.; and Tucson Electric Power Com-
pany.
8780                         PUC v. FERC
29, 2000; (2) FERC’s order of refunds for transactions that
took place during non-emergency hours, and (3) FERC’s
inclusion of certain out-of-market transactions in its refund
proceedings.

  The Port of Oakland, along with other petitioners and inter-
venors, petitions for review of FERC’s decision to exclude
certain bilateral transactions from its refund order.

   Also before us in this case are the Public Entities’4 and the
Bonneville Power Administration’s petitions for review of
FERC’s determination that it had authority to order relief for
certain transactions known as “sleeve” and “multi-day” trans-
actions, as well as transactions occurring under § 202(c) of
the Federal Power Act. The California Parties have moved to
strike, and El Paso Merchant Energy Company has moved to
defer, consideration of the arguments until the next phase of
our consideration of the FERC orders.

                                    II

                        Factual Background

   During the mid-1990’s, FERC began examining whether
the wholesale electric power industry should have been
restructured and deregulated to separate generation, transmis-
sion, and distribution functions. Generation involves the pro-
duction of power through a variety of means. Transmission
generally refers to the conveyance of high voltage electric
power from the points of generation to substations for conver-
sion to delivery voltages. Distribution refers to the delivery of
  4
    This group consists of municipal entities, including the Modesto Irriga-
tion District, the City of Los Angeles Department of Water and Power, the
Sacramento Municipal Utility District, the City of Redding, and the State
Water Contractors/The Metropolitan Water District of Southern California
(which represents 27 of the 29 California public entities that provide sub-
stantial funding for the California Department of Water Resources’ opera-
tion of the State Water Project).
                         PUC v. FERC                       8781
the converted low voltage energy from substations to individ-
ual consumers. The theory behind separating these functions,
known as “unbundling,” was that wholesale power competi-
tion would be promoted, and consumers would benefit, if
public utilities were required to provide nondiscriminatory,
open access, transmission. See Promoting Wholesale Compe-
tition Through Open Access Non-Discriminatory Transmis-
sion Services by Public Utilities, 60 Fed. Reg. 17,662
(proposed April 7, 1995) (codified at 18 C.F.R. § 35.0 et
seq.). This examination culminated in the issuance of FERC
Order No. 888 in 1996. Order No. 888, Promoting Wholesale
Competition Through Nondiscriminatory Transmission Ser-
vices by Public Utilities, 61 Fed. Reg. 21,540, 21,541 (May
10, 1996) (“FERC Order No. 888”), on reh’g, 62 Fed. Reg.
12,274 (Mar. 14, 1997), on reh’g, 62 Fed. Reg. 64,688 (Dec.
9, 1997), on reh’g, 82 F.E.R.C. ¶ 61,046 (Jan. 20, 1998), aff’d
Transmission Access Policy Study Group v. FERC, 225 F.3d
667 (D.C. Cir. 2000) (per curiam), aff’d sub nom. New York
v. FERC, 535 U.S. 1 (2002). Among other provisions, FERC
Order No. 888 included a series of regulations that provided
for the creation of competitive markets for wholesale electric
power, including the creation of independent regional trans-
mission companies that would allow the development of a
competitive electric transmission market.

   Prior to these events, the California electricity market was
composed of investor-owned utilities, whose generation,
transmission, and distribution of electricity were vertically
integrated and regulated by the California Public Utilities
Commission (“CPUC”), the state agency charged with regu-
lating retail electricity rates. Cal. Pub. Util. Code § 451. The
CPUC set retail electrical rates charged by the investor-owned
utilities providing service in exclusive service territories.
There are three major investor-owned utilities in California:
Pacific Gas and Electric Company (“PG&E”), Southern Cali-
fornia Edison Company (“Edison”), and San Diego Gas and
Electric Company (“SDG&E”).
8782                           PUC v. FERC
   In response to FERC Order No. 888 and energy problems
in 1995, the CPUC and the California legislature commenced
initiatives to restructure the California electric energy indus-
try. The aim was to convert California’s investor-owned, reg-
ulated utilities, to a deregulated market, in which the price of
electricity would be established by competition, and consum-
ers could select their electrical power supplier. The theory
was that competition would lead to better service and a price
reduction for consumers.

   Toward this end, the California legislature enacted Assem-
bly Bill 1890 (“AB 1890”). Act of September 23, 1996, 1996
Cal. Legis. Serv. 854 (codified at Cal. Pub. Util. Code §§ 330-
398.5). The deregulation was to proceed in several phases,
beginning with the deregulation of the wholesale electricity
market. After a transition period during which the investor-
owned utilities were to recover their “stranded costs” through
fixed prices for electricity, the retail market was to be
deregulated.5

   Under AB 1890, the major investor-owned, vertically inte-
grated utilities were required to divest a substantial portion of
their power generation plants, including fossil fuel generation
plants (but excluding hydroelectric facilities and nuclear
power plants), to unregulated, non-utility producers. This
divestiture was accomplished by a process of market valua-
   5
     The California legislature recognized that the transition to a
deregulated market would leave the investor-owned utilities with some
unrecoverable “stranded costs.” “Stranded costs” are those costs, generally
associated with facility construction, that cannot be recovered because
either the charged rate is insufficient to cover the costs or the utility cannot
sell enough power. In the case of sales made pursuant to the divestiture
requirements, recoverable stranded costs meant the difference between the
sales price and the book value of the assets. During the transition to a
deregulated market, the investor-owned utilities were to recover certain
stranded costs through individual cost-recovery plans, which provided that
rates would be frozen for a period of time to allow the investor-owned
utilities to generate sufficient profits to recover their stranded costs.
                         PUC v. FERC                        8783
tion, based on a discount of projected future revenue streams.
See Order Instituting Rulemaking on Commission’s Proposed
Policies Governing Restructuring California’s Electric Ser-
vice Industry and Reforming Regulation, 64 CPUC 2d. 1,
1995 WL 792086 (Dec. 20, 1995) (“CPUC Decision 95-12-
063”). Between 1998 and 1999, 22 electrical generation plants
were sold.

   After divesting the bulk of their generation assets, the
investor-owed utilities were required to sell all of their
remaining output to CalPX, a nonprofit wholesale clearing-
house created by AB 1890. CalPX was to provide a central-
ized auction market for trading electricity. It was deemed a
public utility pursuant to the Federal Power Act, see 16
U.S.C. § 824(e), and thus subject to regulation by FERC, see
16 U.S.C. § 824(b), (d). It operated pursuant to a FERC-
approved tariff and FERC wholesale rate schedules. Pacific
Gas & Elec. Co., 77 FERC ¶ 61,204 at 61,803-05, (1996),
reh’g denied, 81 FERC ¶ 61,122 (1997). The investor-owned
utilities were required to purchase all of electrical energy that
they required from the CalPX markets and to conduct all of
their sales through the CalPX market. Part of the underlying
theory was that the investor-owned utilities could not exercise
market power in a single transparent market, either as a buyer
or a seller, because prices would be posted and all market par-
ticipants would be paid the same price.

   CalPX commenced operations in 1998. Initially, it operated
only a single price auction for its “spot markets,” defined as
“sales that are 24 hours or less and that are entered into the
day of or day prior to delivery.” San Diego Gas & Elec. Co.,
et al., 95 FERC ¶ 61,418 at 62,545 (“June 19, 2001 Order”).
The price in the CalPX spot market was determined by evalu-
ating bids submitted by market participants. As we described
the procedure in Public Utility Dist. No. 1 of Snohomish
County v. Dynegy Power Marketing, Inc. (“Dynegy”), 384
F.3d 756, 759 (9th Cir. 2004):
8784                    PUC v. FERC
    A seller could submit a series of bids that consisted
    of price-quantity pairs representing offers to sell
    (e.g. 5 units at $50 each, but 10 units if the price is
    $100 each). Similarly, a buyer could submit a series
    of bids that consisted of price-quantity pairs repre-
    senting offers to buy. The PX would then establish
    aggregate supply and demand curves and set the
    “market clearing price” at the intersection of the two
    curves.

Once the market clearing price had been established, “every
exchange would take place at the market clearing price, even
though some buyers had been willing to pay more and some
sellers had been willing to sell for less.” Id.

   The CalPX spot market, or “core market” as it is sometimes
called, consisted of: (1) “day-ahead” trading, in which the
market clearing price was derived from the sellers’ and buy-
ers’ price and quantity determinations for the next day’s
energy transactions and (2) “day of” or “hour-ahead” trading,
in which CalPX would determine on an hourly basis, a single
market clearing price which all suppliers would be paid. Pur-
chases made in the CalPX spot market were deemed by
CPUC to be “prudent per se.” See CPUC Decision 95-12-063,
1995 WL 792086 at *26-*27.

   In practice, the CalPX spot market generated considerable
price uncertainty. Therefore, CalPX started a division, termed
CalPX Trading Services (“CTS”), to operate a block forward
market by matching supply and demand bids for long term
electricity markets. In 1999, CalPX allowed the investor-
owned utilities to purchase only a limited percentage of their
combined load in the CTS forward market. They were
required to purchase the balance of their load in the CalPX
spot market.

  AB 1890 created another nonprofit entity, the Independent
System Operator (“Cal-ISO”), also subject to FERC jurisdic-
                        PUC v. FERC                      8785
tion, which was to be responsible for managing California’s
electricity transmission grid and balancing electrical supply
and demand. Although the investor-owned utilities continued
to own the transmission facilities, Cal-ISO exercised opera-
tional control over the grid. The Cal-ISO grid included the
transmission systems of PG&E, Edison, SDG&E, and the cit-
ies of Vernon, Anaheim, Banning, and Riverside, California.
To maintain the grid, Cal-ISO was authorized to procure both
energy needed to balance the grid (“imbalance energy”) and
operating reserves (sometimes referred to as “ancillary ser-
vices”). The imbalance energy market is the so-called “real
time” market, in which bids to supply energy were to be made
no later than 45 minutes prior to the operating hour. Cal-ISO
would rank the supply bids and purchase the required energy
at the market-clearing price. Cal-ISO would then bill CalPX
for electricity it required. CalPX would, in turn, bill the
investor-owned utilities, who were forced to pay whatever
price that Cal-ISO paid its suppliers, even though that price
might have exceeded what the utilities could have charged
their consumers as a consequence of the retail price freeze.

   Because Cal-ISO was responsible for ensuring that all elec-
tricity demand was met, Cal-ISO was required to buy energy
outside the CalPX market to make up the energy shortfall if
sellers in the CalPX market were unable or unwilling to pro-
vide enough supply to meet California’s demand during a par-
ticular period. Cal-ISO acquired operating reserves,
constituting capacity that could be converted to energy and
delivered to the grid in response to unexpected events, such
as power outages, from ancillary services suppliers who
would agree to reserve capacity during the specified period.
The ancillary suppliers would agree to supply the required
electricity during the specified period on demand from Cal-
ISO, and were to be paid regardless of whether their capacity
was used. All of these operations were to be governed by a
tariff and protocols filed with FERC.

   As we now know, something happened on the way to the
trading forum, and the best laid regulatory plans went astray.
8786                     PUC v. FERC
The plan to establish a competitive market, while keeping the
exercise of monopoly and monopsony power in check, failed
to account for energy economics and the sophistication of
modern energy trading. As became clear in hindsight, even
those who controlled a relatively small percentage of the mar-
ket had sufficient market power to skew markets artificially.
In short, the old assumptions, based on antitrust theory, that
market power could not be exercised by those who possessed
less than 20% of the market share proved inaccurate in Cali-
fornia’s energy market.

   With the new structure, over 80% of the transactions were
being made in the spot markets — the converse of most other
electricity markets, in which more than 80% of transactions
are made through long term forward contracts, lending stabil-
ity to the markets. Sellers quickly learned that the California
spot markets could be manipulated by withholding power
from the market to create scarcity and then demanding
extremely high prices when scarcity was probable. The
energy market is highly dependent upon weather; heat waves
or cold snaps inevitably produce demand. Thus, it was
quickly apparent to sellers that there was little risk and great
profit in withholding capacity when high demand was antici-
pated based on weather forecasts. In addition, traders soon
developed other purely artificial means of market manipula-
tion, such as shutting down power plants when electric
demand was high in order to destabilize the electric grid, and
to increase prices. In order to maximize profit, traders
engaged in anomalous bidding practices, including “hockey-
stick bidding,” in which an extremely high price is demanded
for a small portion of the market, and “round trip trades,” in
which an entity artificially creates the appearance of increased
revenue and demand through continuous sales and purchases.

  Enron Corporation allegedly gamed the California markets
with impunity, using manipulative corporate strategies, such
as those nicknamed “FatBoy,” “Get Shorty,” and “Death
Star.” Under the “Death Star” strategy, Enron allegedly
                        PUC v. FERC                       8787
sought to be paid for moving energy to relieve congestion
without actually moving any energy or relieving any conges-
tion. All of the demand was created artificially and fraudu-
lently, creating the appearance of congestion, and then
satisfied artificially, without the company providing any
energy. “FatBoy” refers to a strategy through which Enron
allegedly withheld previously agreed-to deliveries of power to
the forward market so that it could sell the energy at a higher
price on the spot market. The company would over-schedule
its load; supply only enough power to cover the inflated
schedule, and thus, leave extra supply in the market, for
which Cal-ISO would pay the company. Via the “Get Shorty”
strategy, traders were able to fabricate and sell operating
reserves to Cal-ISO, receive payment, then cancel the sched-
ules and cover their commitments by purchasing through a
cheaper market closer to the time of delivery.

   The California Parties allege that Enron was not alone, and
criminal charges have been filed against a number of energy
traders and executives. For example, the California Parties
allege that Powerex Corporation engaged in fraudulent power
scheduling to serve false load schedules. The Vice President
of Powerex’s Western Trading Desk pleaded guilty to wire
fraud for submitting false Cal-ISO schedules. According to
the California Parties, executives of Reliant Energy Services,
Inc. directed traders to engage in manipulative strategies.

   Beginning in May 2000, energy prices in California began
to escalate dramatically. Low cost hydroelectric power from
the Northwest was not available in the volume of previous
years, and wholesale electricity prices skyrocketed, particu-
larly in the CalPX spot markets. In May 2000, the average
prices in the CalPX spot market were double those of May
1999.

   On June 14, 2000, energy consumers in Northern California
experienced their first wave of rolling blackouts. The Califor-
nia Parties allege that this occurred because of market manip-
8788                        PUC v. FERC
ulation. They claim that the data indicates that the large
California generators utilized economic or physical withhold-
ing strategies 94% of the time during the May through
November 2000 period.

   Under its operating procedures, Cal-ISO would declare a
“System Emergency” when its operating reserves dipped
below a predetermined percentage of its projected demand.
Whenever reserves in California fell below seven percent, the
ISO declared a “Stage 1 System Emergency.” June 19, 2001
Order, 95 FERC ¶ 61,418 at 62,546. The hours during which
Cal-ISO declared a system-wide emergency are also called
“reserve deficiency hours.” San Diego Elec. Co., et al., 97
FERC ¶ 61,275 at 62,246 (2001) (“December 19, 2001
Order”). During the summer of 2000, high temperatures and
lack of supply forced the Cal-ISO to declare system emergen-
cies 39 times. See San Diego Elec. Co., et al., 93 FERC
¶ 61,121 at 61,353 (2000).

   In addition to blackouts, brownouts,6 and system emergen-
cies, the crisis proved enormously expensive to purchasers of
retail power, who were unable to pass along the increased cost
to their consumers. In June 2000, California spent more on
purchasing energy than in the entire summer of 1999. This
increase occurred despite the fact that peak demand was lower
in 2000 than in 1999. The California investor-owned utilities,
who were still subject to the price freeze that was supposed
to lock in their profits, lost billions of dollars. Cooler weather
in the fall did not cool prices. Prices continued to escalate
throughout the last quarter of 2000.

   In August 2000, SDG&E filed a complaint under § 206 of
the Federal Power Act, 16 U.S.C. § 824e(a), against all sellers
of energy and ancillary services in the CalPX and Cal-ISO
markets. SDG&E requested that FERC impose a price cap on
  6
    A brownout occurs when power is not lost completely, but is provided
at reduced voltage levels.
                         PUC v. FERC                         8789
sales into those markets. Other parties, including PG&E and
the State of California, joined the complaint.

   On August 23, 2000, FERC issued an order denying the
relief requested by SDG&E, but determining that it was
appropriate to investigate the justness and reasonableness of
the rates for all sales in the CalPX and Cal-ISO markets. San
Diego Gas & Elec. Co., et al., 92 FERC ¶ 61,172(2000)
(“August 23, 2000 Order”). Therefore, it established its own
investigatory proceeding in FERC Docket Nos. EL-00-95 and
EL00-98 (“the Remedy Proceedings”). The August 23, 2000
Order established October 29, 2000 as the refund effective
date, which was determined by calculating the date sixty days
after publication of notice of the order in the Federal Register.
Id. at 61,608.

   On November 1, 2000, FERC issued an order proposing
structural changes to the operation of the CalPX and Cal-ISO
markets. San Diego Gas & Elec. Co., et al., 93 FERC
¶ 61,121 (2000) (“November 1, 2000 Order”). In the Novem-
ber 1, 2000 Order, FERC concluded that:

    [T]he electric market structure and market rules for
    wholesale sales of electric energy in California are
    seriously flawed and . . . these structures and rules,
    in conjunction with an imbalance of supply and
    demand in California, have caused, and continue to
    have the potential to cause, unjust and unreasonable
    rates for short-term energy (Day-Ahead, Day-of,
    Ancillary Services and real-time energy sales) under
    certain conditions.

Id. at 61,349.

   FERC concluded that there was “clear evidence” that sell-
ers could “exercise market power when supply is tight” and
produce “unjust and unreasonable rates” for wholesale power
sales. Id. at 61,349-50.
8790                    PUC v. FERC
   The November 1, 2000 Order proposed, effective sixty
days after the date of the order, to (1) eliminate the require-
ment that the investor-owned utilities buy and sell power
exclusively through the CalPX; (2) require market partici-
pants to schedule 95 percent of their transactions in the day-
ahead market or be subject to a penalty charge; (3) replace the
existing CalPX and Cal-ISO stakeholder boards with indepen-
dent non-stakeholder boards; and (4) require the filing of gen-
erator interconnection procedures.

   In addition to ordering structural and rule changes, FERC
ordered an evidentiary hearing to determine the appropriate
refund. At the behest of the California Parties, FERC changed
the refund effective date from October 29, 2000 to October 2,
2000, based on the filing of the SDG&E complaint. FERC
also limited the refund to Cal-ISO and CalPX spot market
transactions completed during the period from October 2,
2000 through June 20, 2001 (hereinafter referred to as the
“Refund Period”).

   Emergency conditions continued following the issuance of
the November 1, 2000 Order, requiring Cal-ISO to serve
increasingly larger portions of its load through the real time
imbalance energy market and depleting Cal-ISO’s operating
reserves. As a result, Cal-ISO proposed changes to its tariff,
which FERC approved in an order dated December 8, 2000.
Cal. Indep. Operator Corp., et al., 93 FERC ¶ 61,239 (2000).
One provision of this order lifted the Cal-ISO price caps, with
the goal of attracting more supply into the auction markets.

   On December 15, 2000, FERC issued an order substantially
adopting the remedies proposed in the November 1, 2000
Order. San Diego Gas & Elec. Co., et al., 93 FERC ¶ 61,294
(2000) (“December 15, 2000 Order”). The December 15,
2000 Order attempted to reduce the reliance on spot markets
by terminating CalPX’s wholesale rate schedules, thereby
eliminating the requirement that the investor-owned utilities
buy and sell all generation through CalPX. CalPX sought a
                         PUC v. FERC                       8791
writ of mandamus from our Court challenging the December
15, 2000 Order’s prohibition of the investor-owned utilities’
selling power on a voluntary basis in the CalPX market and
the termination of the wholesale tariff. The City of San Diego
also challenged the December 15, 2000 Order by writ of man-
date, arguing that FERC had unreasonably delayed taking
action on the purchasers’ requests for refunds. We denied
those petitions on April 11, 2001. In re Cal. Power Exch.
Corp., 245 F.3d 1110 (9th Cir. 2001).

   On December 26, 2000, Edison filed a suit against FERC,
alleging that it had failed in its responsibility to ensure that
wholesale electricity was sold at reasonable rates.

   The CalPX market began to collapse and the investor-
owned utilities were fast becoming insolvent. On January 17,
2001, the Governor of California declared a State of Emer-
gency and ordered the California Department of Water
Resources to purchase energy on behalf of California consum-
ers to halt the rolling blackouts. Subsequently, the California
legislature on February 1, 2001 enacted Assembly Bill 1 of
the 2001-2002 First Extraordinary Session authorizing the
Department of Water Resources to purchase power until
December 31, 2002. Cal. Water Code § 80000, et. seq.

   Following the Governor’s declaration, CERS began buying
power on January 18, 2001. Energy sellers began refusing to
sell to Cal-ISO, and instead sold directly to the investor-
owned utilities and CERS through bilateral contracts. Most
sales after January 18, 2001 were made directly to CERS,
rather than through CalPX or Cal-ISO. CalPX ceased market
operations on January 30, 2001 and filed for protection under
Chapter 11 of the Bankruptcy Code on March 9, 2001. The
California Parties allege that from January 18, 2001 to June
18, 2001, CERS purchased more than $5 billion of energy in
the spot market.

  On March 1, 2001, the California Electricity Oversight
Board (“Cal-EOB”) filed a motion with FERC, asking FERC
8792                      PUC v. FERC
to clarify that the Remedy Proceedings included CERS trans-
actions outside of the CalPX and Cal-ISO markets. The Cal-
EOB contended that the sellers that had manipulated the mar-
kets were now charging the same or higher rates for the CERS
sales.

   On March 9, FERC issued an order establishing a provi-
sional formula governing refunds during the January 2001
period. San Diego Gas & Elec. Co., et al., 94 FERC ¶ 61,245
(2000) (“March 9, 2001 Order”). The order directed whole-
sale sellers to provide refunds or, alternatively, to justify their
charges and costs for transactions made during power emer-
gencies that were above a rate it calculated as appropriate.
FERC estimated that approximately $69 million in January
2001 electricity sales would be subject to refunds.

   On April 6, 2001, PG&E filed a voluntary petition in bank-
ruptcy pursuant to Chapter 11 of the Bankruptcy Code.
Although Edison and SDG&E were in similar financial peril,
they avoided bankruptcy filings through arrangements with
creditors.

   On April 26, 2001, FERC issued an order establishing a
prospective mitigation and monitoring plan for wholesale
prices through the real time markets operated by Cal-ISO. San
Diego Gas & Elec. Co., et al., 95 FERC ¶ 61,115 (2001)
(“April 26, 2001 Order”). The April 26, 2001 Order estab-
lished a pricing mechanism for sales by California generators
made to Cal-ISO when reserves fell below seven percent. The
order also established conditions, including refund liability,
for market-based rate authority with the goal of preventing
anti-competitive bidding behavior in the real time Cal-ISO
market.

  On June 19, 2001, FERC issued an order reaffirming that
“as a result of the seriously flawed electric market structure
and rules for wholesale sales of electric energy in California,
unjust and unreasonable rates were charged, and could con-
                        PUC v. FERC                       8793
tinue to be charged during certain times and under certain
conditions, unless certain targeted remedies were implement-
ed.” June 19, 2001 Order, 95 FERC at ¶ 62557.

   The June 19, 2001 Order imposed price caps on all spot
market sales from June 20, 2001 through September 30, 2002,
and imposed a “must-offer” obligation on generators to pre-
vent them from withholding supply. The prospective price
mitigation plan applied to all sellers that voluntarily sold
power into the Cal-ISO and other designated spot markets, or
that voluntarily used Cal-ISO’s or other interstate transmis-
sion facilities subject to FERC jurisdiction. According to the
California Parties, the effect of the June 19 Order was to put
an end to the rolling blackouts, catastrophically high prices,
and near-continuous power emergencies.

   On July 12, 2001, the Administrative Law Judge (“ALJ”)
issued a report and recommendation to FERC regarding a
refund methodology to govern sales during the Refund
Period. San Diego Gas & Elec. Co., et al., 96 FERC ¶ 63,007
(2001). In response to the report and recommendation, FERC
issued an order on July 25, 2001 in the Refund Proceedings
establishing the framework for refunds of past sales in the
spot markets operated by CalPX and Cal-ISO. San Diego Gas
& Elec. Co. et al., 96 FERC ¶ 61,120 (2001) (“July 25, 2001
Order”). FERC ordered limited refunds for the rates it had
determined to be unjust and unreasonable and established a
mitigated market clearing price (“MMCP”) in an attempt to
replicate what it believed to be the just and reasonable rates
that an unmanipulated competitive energy market would have
produced. Under the MMCP methodology, refunds were to be
determined by the difference between the market clearing
price, which was the price charged by all electricity suppliers
at a given time, and the MMCP calculated for each hour of
the Refund Period, subject to certain adjustments. FERC also
ordered an evidentiary hearing to calculate the appropriate
MMCPs for each hour of the Refund Period and the amount
of refunds owed.
8794                     PUC v. FERC
   However, FERC declined to order refund relief for sales
that occurred before the Refund Period, or for any sales out-
side of the CalPX and Cal-ISO markets. FERC also excluded
transactions of more than twenty-four hours in length, even if
those sales were made in the CalPX and Cal-ISO markets
within the Refund Period. The California Parties contend that
refunds for sales prior to the Refund Period would total $2.3
billion in seller overcharges; that refunds for emergency pur-
chases made by CERS would total $3.5 billion in seller over-
charges; and that other improperly excluded transactions
would amount to over $200 million in seller overcharges.

  On December 2, 2001, Enron Corporation filed a voluntary
petition in bankruptcy under Chapter 11 of the United States
Bankruptcy Code.

  On December 19, 2001, FERC issued another order
addressing mitigation of the California spot market prices and
conditions. December 19, 2001 Order, 97 FERC ¶ 61,275, et.
seq. The order clarified that the price mitigation plans applied
to all sales into the FERC-regulated spot markets and pro-
vided further explanation for why FERC chose October 2,
2000 as the refund effective date. FERC issued an order deny-
ing rehearing of the December 19, 2001 Order on May 15,
2002.

   On February 13, 2002, FERC opened a non-public investi-
gation (“FERC Enforcement Proceeding”) pursuant to 18
C.F.R. § 1b.1 et. seq. into seller market manipulation of the
energy markets in the Western United States. Fact-Finding
Investigation of Potential Manipulation of Elec. & Natural
Gas Prices, 98 FERC ¶ 61,165 at 61,614 (2002). FERC noted
that allegations had been made in the Enron bankruptcy that
Enron had used its market position to distort electric and natu-
ral gas markets. FERC directed its staff to investigate
“whether any entity, including Enron Corporation (through its
affiliates or subsidiaries), manipulated short-term prices in
electric energy or natural gas markets in the West or other-
                        PUC v. FERC                      8795
wise exercised undue influence over wholesale prices in the
West, for the period January 1, 2000, forward.” Id.

   In June 2002, some of the California Parties moved this
Court for permission to present additional evidence of market
manipulation in the Remedy Proceedings. FERC opposed the
motion. On August 21, 2002, we directed FERC to allow the
parties to present evidence of market manipulation in the
Remedy Proceedings, to reconsider its earlier orders denying
relief, and to provide to the Court supplemental findings of
fact and any recommended modifications to FERC’s orders
on the basis of such new evidence.

   On March 20, 2002, the State of California, through its
Attorney General, filed a complaint alleging that generators
and marketers selling power into markets operated by CalPX
and Cal-ISO, as well as those making spot market sales of
energy to CERS, violated § 205 of the Federal Power Act by
failing to comply with various filing requirements. The com-
plaint also challenged FERC’s approval of market-based tar-
iffs. On May 31, 2002, FERC dismissed the complaint as
constituting a collateral attack on prior FERC orders and
denied the complaint with respect to the allegations that
FERC’s market-based rate filing requirements violated the
Federal Power Act as a matter of law. State of California ex
rel. Lockyer v. B. C. Power Exch., et al., 99 FERC ¶ 61,247
(2002) (“May 31, 2002 Order”). California filed a petition for
review of the May 31, 2002 Order.

   In December 2002, the ALJ determined that suppliers owed
approximately $1.8 billion to Cal-ISO and CalPX for sales at
rates in excess of a just and reasonable rate. San Diego Gas
& Elec. Co., et al., 101 FERC ¶ 63,026 (2002). FERC
adopted in part, and modified in part, the ALJ’s proposed
findings in an order issued March 26, 2003 Order, 2003. San
Diego Gas & Elec. Co., et al., 102 FERC ¶ 61,317 (2003)
(“March 26, 2003 Order”).
8796                     PUC v. FERC
   In its March 26, 2003 Order, FERC stated that it would not
alter any of its previous orders in the Remedy Proceedings
concerning the time or transaction limitations in light of the
evidence presented to the ALJ. This position was reaffirmed
in subsequent FERC orders on October 16, 2003, which also
clarified some refund calculation issues. San Diego Gas &
Elec. Co., et al., 105 FERC ¶ 61,066 (2003); San Diego Gas
& Elec. Co., et al., 105 FERC ¶ 61,065 (2003). Subsequently,
FERC issued a number of orders pertaining to calculation of
refunds during the Refund Period. San Diego Gas & Elec.
Co., et al., 107 FERC ¶ 61,165 (2004); San Diego Gas &
Elec. Co., et al. 107 FERC ¶ 61,166 (2004); San Diego Gas
& Elec. Co., et al., 108 FERC ¶ 61,311 (2004), and San Diego
Gas & Elec. Co., et al., 109 FERC ¶ 61,219 (2004), order on
reh’g, 109 FERC ¶ 61,074 (2004).

   On September 9, 2004, we granted in part California’s peti-
tion for review challenging the May 31, 2002 Order. State of
California ex rel. Lockyer v. FERC, 383 F.3d 1006 (9th Cir.
2004) (“Lockyer”). We held that FERC’s decision to approve
market-based tariffs in the wholesale electricity market did
not violate the Federal Power Act. Id. at 1013. We also held
that FERC erred as a matter of law in concluding retroactive
refunds were not available under § 205. Id. at 1015. We
remanded the case to FERC for further proceedings.

   Before us in the instant case are those portions of the peti-
tions for review that involve the Scope/Transaction issues.
We review FERC orders to determine whether they are “arbi-
trary, capricious, an abuse of discretion, unsupported by sub-
stantial evidence, or not in accordance with law.” Cal. Dep’t
of Water Res. v. FERC, 341 F.3d 906, 910 (9th Cir. 2003).
FERC’s factual findings are conclusive if supported by sub-
stantial evidence. 16 U.S.C. § 825l(b); Bear Lake Watch, Inc.
v. FERC, 324 F.3d 1071, 1076 (9th Cir. 2003). Substantial
evidence “means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.” Id. (quot-
ing Eichler v. SEC, 757 F.2d 1066, 1069 (9th Cir. 1985)). “If
                         PUC v. FERC                        8797
the evidence is susceptible of more than one rational interpre-
tation, we must uphold [FERC’s] findings.” Id. We review
questions of law de novo. Am. Rivers v. FERC, 201 F.3d
1186, 1194 (9th Cir. 1999). We review FERC’s interpretation
of the FPA under the familiar analysis established in Chevron
U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842
(1984) and its progeny. Bonneville Power Admin., 422 F.3d
at 914.

                              III

                Temporal Scope of Refunds

   [1] Under § 206(a) of the Federal Power Act, FERC may
investigate whether a particular rate or charge is “just and rea-
sonable.” 16 U.S.C. § 824d(a). If FERC finds a rate unreason-
able, it must order the imposition of a just and reasonable rate.
Id. § 824d(d). FERC may then order refunds for any period
subsequent to the “refund effective date,” a date FERC estab-
lishes that must be at least sixty days after the filing of the
complaint. Id. § 824e(b). Under the express language of
§ 206, however, FERC may not order refunds for any period
prior to the filing of the complaint. Id. Section 309 of the Fed-
eral Power Act, on the other hand, gives FERC authority to
order refunds if it finds violations of the filed tariff and
imposes no temporal limitations. Consol. Edison v. FERC,
347 F.3d 964, 967 (D.C. Cir. 2003); 16 U.S.C. § 825h.

   In its August 23, 2000 Order, FERC established October
29, 2000 as the refund effective date pursuant to § 206. In its
November 1, 2000 Order, FERC modified the refund effective
date to October 2, 2000. The Competitive Suppliers Group
argues that October 29, 2000 was the proper refund effective
date. The California Parties do not dispute FERC’s establish-
ment of October 2, 2000 as the refund effective date for the
§ 206 proceedings, but argue that FERC arbitrarily and capri-
ciously refused to order refunds for tariff violations under
§ 309 for periods prior to October 2, 2000.
8798                     PUC v. FERC
                               A

   We conclude that FERC’s order establishing October 2,
2000 as the refund effective date for the § 206 Refund Pro-
ceedings was not arbitrary or capricious, an abuse of discre-
tion, unsupported by substantial evidence, or not in
accordance with law.

   SDG&E filed its initial § 206 complaint on August 2, 2000.
In its response to SDG&E’s filing, FERC, in its August 23,
2000 Order, announced that it would commence its own
investigation and set the refund effective date sixty days after
FERC published an announcement of the investigation. The
notice was published August 29, 2000; therefore, the refund
effective date was set as October 29, 2000.

   On September 22, 2000, some of the California Parties,
notably PG&E and Edison, requested that FERC establish an
earlier refund date based on the filing of the SDG&E com-
plaint, rather than on FERC’s commencement of the Enforce-
ment Proceedings. Given SDG&E’s August 2, 2000 filing
date, the earliest possible refund effective date was October
2, 2000. In the November 1, 2000 Order, FERC granted the
request and reset the refund effective date to October 2, 2000.

   [2] Thus, the question at issue here is whether FERC prop-
erly tethered the refund effective date to the SDG&E com-
plaint. Although FERC denied the remedy sought by SDG&E
in its complaint, it did not dismiss the SDG&E complaint;
rather, it consolidated the SDG&E complaint with its own
investigation “for purposes of hearing and decision in view of
their common issues of law and fact.” December 19, 2001
Order, 97 FERC ¶ 61,275 at 62,198. Despite consolidation,
FERC made it clear that the August 23, 2000 Order “estab-
lished two separate, but related, investigations.” Id. at 62,197.
According to FERC, the investigation into the “justness and
reasonableness of sellers’ rates in the ISO and PX markets”
                         PUC v. FERC                        8799
that resulted in the refund order grew out of SDG&E’s com-
plaint. Id.

   In addition, FERC noted that its policy “is to establish the
earliest refund effective date allowed in order to give maxi-
mum protection to consumers.” Id. at 62,198. This interpreta-
tion is consistent with FERC’s “primary purpose” in
“protecting consumers.” Lockyer, 383 F.3d at 1017.

   The Competitive Suppliers Group argues that the SDG&E
complaint cannot form the basis for establishing the refund
effective date because SDG&E did not seek refunds pursuant
to § 206 in its complaint, and third-party FERC complaints
must specify relief sought. To be sure, § 206(a) requires third-
party complaints to FERC to “state the change or changes to
be made in the rate, charge, classification, rule, regulation,
practice, or contract then in force. . . .” 16 U.S.C. § 824e(a).
It is also quite true that SDG&E did not seek a refund remedy
in its initial complaint. SDG&E’s complaint sought an emer-
gency order capping prices in the CalPX and Cal-ISO markets
and a ruling enforcing the cap through limitations on market-
based authorizations.

   [3] However, the relief sought in the initial complaint is not
dispositive of this issue. The key question is whether the
SDG&E complaint afforded sufficient notice to alert market
participants that sales and purchases might be subject to
refund. The gravamen of the SDG&E complaint was that the
rates charges by sellers were unjust and unreasonable. As
FERC points out, a complaint challenging the reasonableness
of the rates can lead to a refund under § 206, even if a refund
remedy is not specifically designated in the initial complaint.
FERC is empowered to investigate the reasonableness of a
rate either in the context of a third-party complaint or sua
sponte. Indeed, as we have noted, the Federal Power Act
requires FERC to establish a refund effective date whenever
it institutes a § 206 investigation. 16 U.S.C. § 824e(b).
8800                     PUC v. FERC
   [4] Further, some of the California Parties promptly sought
rehearing of FERC’s initial determination of the refund effec-
tive date in its August 23, 2000 Order. In short, market partic-
ipants were quickly apprised that the original refund effective
date might be subject to revision. As FERC noted: “Requests
for rehearing of the August 23 Order raising the refund effec-
tive date issue were timely filed. Thus, any reliance by sellers
on the October 29 refund effective date prior to the issuance
of a final order was at their own risk.” December 19, 2001
Order, 97 FERC ¶ 61,275 at 62,198. Therefore, because
SDG&E’s § 206 complaint unquestionably could have led to
a FERC refund order, because the original FERC order estab-
lishing the refund effective date was not final, and because
rehearing petitions were timely filed challenging the refund
effective date, SDG&E’s filing of its complaint provided suf-
ficient notice to the market to satisfy § 206.

   The fact that two investigations were initiated by FERC
does not alter this conclusion. The investigation initiated by
SDG&E’s complaint focused on whether the sellers’ rates in
the CalPX and Cal-ISO markets were just and reasonable; the
separate FERC investigation focused on whether the CalPX
and Cal-ISO market rules and institutional factors required
modification. As FERC noted in its August 23, 2000 Order:

    While the SDG&E has focused on the performance
    of sellers in the market, the action of sellers may in
    part be caused by the current market rules and insti-
    tutional structures. Accordingly, we conclude that it
    is appropriate to investigate not only the justness and
    reasonableness of public utility sellers’ rates in the
    PX and ISO markets, but also to investigate the tar-
    iffs and agreements of the ISO and PX to determine
    whether market rules or institutional factors
    embodied in those tariffs and agreements need to be
    modified.

92 FERC ¶ 61,172 at 61,606.
                         PUC v. FERC                        8801
   [5] In short, FERC launched a § 206 investigation into the
justness and reasonableness of the rates pursuant to the
SDG&E complaint and initiated its own investigation into the
CalPX and Cal-ISO tariffs and agreements to determine
whether market rules required modification. The Competitive
Suppliers Group argues that the § 206 investigation became
subsumed into the market investigation. However, this con-
tention contradicts the plain language employed by FERC
when it established the two investigations and the subsequent
treatment of the investigations in later FERC orders. No sub-
stantive consolidation was ever ordered. Even if the cases had
been substantively consolidated, consolidation would not nec-
essarily eviscerate a validly established refund effective date
based on the original SDG&E complaint. Refunds were even-
tually ordered as a direct result of the SDG&E complaint.
Given all these considerations, we conclude that FERC did
not act arbitrarily or capriciously, abuse its discretion, or act
in violation of law in setting the refund effective date based
on the SDG&E complaint.

                               B

   [6] FERC’s authority to order refunds for filed rates that are
later determined to be unjust, unreasonable, or discriminatory
derives from §§ 205 and 206 of the Federal Power Act. FERC
also has remedial authority to require that entities violating
the Federal Power Act pay restitution for profits gained as a
result of a statutory or tariff violation. Consol. Edison, 347
F.3d at 967; Towns of Concord, Norwood & Wellesley v.
FERC, 955 F.2d 67 (D.C. Cir. 1992), S. Cal. Edison Co. v.
FERC, 805 F.2d 1068, 1071-72 (D.C. Cir. 1986). This author-
ity derives from § 309 of the Federal Power Act, which autho-
rizes FERC “to perform any and all acts, and to prescribe,
issue, make, amend, and rescind such orders, rules, and regu-
lations as it may find necessary or appropriate to carry out the
provisions of this Act.” 16 U.S.C. § 825h. Unlike refund pro-
ceedings commenced under § 206, no time limits apply to
remedial actions filed pursuant to § 309.
8802                     PUC v. FERC
   In its July 25, 2001 Order, FERC declined to award any
relief pursuant to § 309. The California Parties sought review
of that decision. We granted the California Parties’ motion for
an order requiring FERC to entertain further evidence of mar-
ket manipulation and tariff violation and to reconsider its
orders limiting remedies. After receiving further evidence,
FERC ruled that it would not consider further remedies.
March 26, 2003 Order, 102 FERC ¶ 61,317 at 62,083. The
California Parties petition for review of FERC’s refusal to
consider § 309 remedies.

   We conclude that FERC’s decision not to consider a § 309
remedy for tariff violations was arbitrary and capricious, an
abuse of discretion, and not in accordance with law. On appel-
late review, FERC “must be able to demonstrate that it has
made a reasoned decision based upon substantial evidence in
the record.” N. States Power Co. v. FERC, 30 F.3d 177, 180
(D.C. Cir. 1994) (internal quotations omitted). FERC must
“articulate a satisfactory explanation for its action including
a rational connection between the facts found and the choice
made.” Motor Vehicle Mfrs. Assn of the U. S., Inc. v. State
Farm Mut. Ins. Co., 463 U.S. 29, 43 (1983).

   In this case, FERC offers several rationales for refusing to
grant tariff relief. First, it claims that § 206 precludes refunds
prior to the refund effective date. Second, it contends that no
tariff violations occurred. Third, it argues that it need not pro-
vide remedies to the California Parties because it has com-
menced prosecutorial investigations into the question of
whether tariff violations occurred, and those investigations
may result in remedies which would make the market whole.
None of these justifications is sufficient to sustain FERC’s
decision under the applicable standard of review.

  First, FERC’s claim that it is precluded from ordering pre-
Refund Period relief under § 206 may be quickly dispatched.
The relief sought by the California Parties in this part of the
proceeding is based on § 309, not § 206. Although the § 206
                         PUC v. FERC                         8803
proceedings seeking refunds because of unjust and unreason-
able rates are limited to the Refund Period, § 309 proceedings
based on tariff violations are not. FERC’s apparent conclusion
that the time limits applicable to § 206 proceedings also apply
to § 309 proceeding is incorrect as a matter of law. Indeed,
FERC emphasized as much in its own filings in the investiga-
tory proceedings:

    Thus, with respect to the period prior to the October
    2, 2000 refund effective date, the Commission can
    order disgorgement of monies above the post Octo-
    ber 2, 2000 refunds ordered in the California Refund
    Proceeding, if it finds violations of the ISO and PX
    tariffs and finds that a monetary remedy is appropri-
    ate for such violations. Further, while refund protec-
    tion has been in effect for sales in the ISO and PX
    short-term energy markets since October 2, 2000, the
    Commission can additionally order additional dis-
    gorgement of unjust profits for tariff violations that
    occurred after October 2, 2000 (i.e., to June 20,
    2001).

Enron Power Mktg, Inc., 103 FERC ¶ 61,346 at 62,351
(2003). To the extent that FERC is claiming that the § 206
time limits apply to § 309 proceedings, FERC is wrong.

   Second, FERC alleges there were no tariff violations, con-
tending that “there is no basis for finding that the sellers acted
inconsistently with Commission-filed tariffs or with specific
requirements in their filed rate authorizations.” July 25, 2001
Order, 96 FERC at 61,508. This conclusion is flatly inconsis-
tent with FERC’s commencement of the FERC Enforcement
Proceeding, which was initiated to investigate and prosecute
tariff violations. It contradicts the conclusion of FERC staff,
accepted by FERC, that bid prices in the pre-Refund Period
were “excessively elevated solely for the purpose of raising
prices” in violation of the Cal-ISO and CalPX rules. Investi-
gation of Anomalous Bidding Behavior and Practices in the
8804                     PUC v. FERC
Western Markets, 103 FERC ¶ 61,347 at 62,360 (2003).
FERC concluded that “the remedy for these tariff violations,
if found to exist, would be the disgorgement of any unjust
profits attributable to these tariff violations.” Id. at 62,359.

   FERC’s assertion in this proceeding that there were no tar-
iff violations prior to the Refund Period is contravened by its
own findings in American Electric Power Services Corp., to
wit:

    As discussed below, the entities listed in the caption
    (Identified Entities) appear to have participated in
    activities (Gaming Practices), that constitute gaming
    and/or anomalous market behavior in violation of the
    California Independent System Operator Corpora-
    tion’s (ISO) and California Power Exchange’s (PX)
    tariffs during the period January 1, 2000 to June 20,
    2001, that warrant a monetary remedy of disgorge-
    ment of unjust profits and that may warrant other
    additional, appropriate non-monetary remedies.
    These determinations are based on certain of the tar-
    iffs’ provisions, an ISO study, a report by Commis-
    sion Staff, and evidence and comments submitted by
    market participants.

103 FERC ¶ 61,345 at 62,328 (2003). See also Enron Power
Mktg, Inc., 103 FERC ¶ 61,346.

   In addition to FERC’s own conclusions, the California Par-
ties also presented significant evidence of pervasive tariff vio-
lations during the pre-Refund Period. In sum, there is no
support for FERC’s second rationale for denying the Califor-
nia Parties’ request for pre-Refund Period relief.

   FERC’s third stated reason for denying the request is that
it is pursuing tariff violations in the separate FERC Enforce-
ment Proceeding. Obviously, this rationale contradict’s
FERC’s second rationale — that no tariff violations exist.
                        PUC v. FERC                         8805
This reason for rejecting the California Parties’ request for
§ 309 relief is also unsupportable.

  In explaining its third reason for denying the request, FERC
describes at length its broad investigatory and prosecutorial
authority under § 307(a) (16 U.S.C. § 825(f)) and § 309 (16
U.S.C. § 825h). However, no one disputes this authority.
What FERC fails to explain, or support, is how its inherent
authority to commence investigations and enforcement pro-
ceedings under 18 C.F.R. § 1b.1 et. seq. precludes a civil pro-
ceeding instituted by third party complaint.

   The two types of proceedings are quite distinct. One is
investigative and prosecutorial; the other is a contested pro-
ceeding. FERC enjoys broad discretion in the management of
its own § 1b prosecutorial investigations. FERC “[i]nvestiga-
tions may be formal or preliminary, and public or private.” 18
C.F.R. § 1b.4. In contrast to an adjudicated, contested pro-
ceeding, in a § 1b proceeding, FERC may settle claims with-
out review, and need not justify its decision to order refunds,
or to decline to order refunds.

   Because § 1b investigations are prosecutorial in nature,
third parties do not participate. 18 C.F.R. § 1b.11. For exam-
ple, in this case FERC denied the California Parties’ motion
to intervene in the FERC Enforcement Proceeding, explain-
ing:

    The Commission intends the proceedings listed in
    the caption of this order to proceed as investigative
    and, where appropriate, enforcement proceedings.
    Their purpose is to examine instances of potential
    wrongdoing and take remedial action where needed.
    The Commission is thus acting in a prosecutorial
    manner in these matters, rather than strictly as an
    adjudicator. . . .

    . . . [This] has important implications, particularly
    with respect to potential intervenors. There are no
8806                    PUC v. FERC
    parties to an investigative proceeding. 18 C.F.R.
    § 1b.11 (2003). Moreover, only a party can contest
    a settlement, 18 C.F.R. § 385.602(h) (2003) . . . .
    Another implication of the application is the Com-
    mission’s rules governing off-the-record communi-
    cations. These rules apply only to contested, on-the-
    record proceedings; they do not apply to Part 1b
    investigations unless the Commission specifically
    makes an exception to allow formal interventions
    and party status. 18 C.F.R. § 385.2201(c) (2003)
    ....

    . . . Consequently, the Commission is treating all
    pending motions for intervention as motions to file
    comments and, to the extent the Commission to date
    may have erroneously allowed intervention, rescind-
    ing those interventions that have heretofore been
    granted.

Fact-Finding Investigation of Potential Market Manipulation
of Elec. & Natural Gas Prices, 105 FERC ¶ 61,063 at 61,352
(2003)

  Commissioner Massey dissented from this decision, writ-
ing:

    I do not agree that the investigation of Anomalous
    Bidding Behavior and Practices in the Western Mar-
    kets should be treated exclusively as an investigation
    under Part 1b and that there should be no parties to
    the proceeding. Much of the evidence supporting the
    investigation was adduced by parties pursuant to a
    court order in the California refund proceeding. The
    California parties are integral to the assessment of
    and weight to be given the evidence. The Commis-
    sion should not decide, in isolated enforcement pro-
    ceedings, issues upon which the court-ordered
    adduced evidence has a bearing where those that
                        PUC v. FERC                       8807
    adduced the evidence are not parties and have no
    appeal rights.

Id. at 61,353.

   At various times, FERC has stated that it reserves the right
to impose market-wide inquiries in the FERC Enforcement
Proceedings; however, in these proceedings to date, it has
only pursued “company-specific” investigations into the
actions of various market participants, rather than conducting
a market-wide inquiry. San Diego Gas & Elec. Co., et al., 105
FERC ¶ 61,066 at 61,385. FERC itself casts its company-
specific approach as supplemental to the adjudicative refund
proceedings undertaken pursuant to § 206. See, e.g., San
Diego Gas & Elec. Co., et al., 105 FERC ¶ 61,066 at 61,391
(“Any such company-specific disgorgement or other appropri-
ate remedies would be in addition to the refunds associated
with the mitigated market clearing prices developed pursuant
to this order and could apply to conduct both prior to the
Refund Period and during the Refund Period.”); 102 FERC
¶ 61,108 at 61,289 (2003) (“The payment to be made by Reli-
ant will be in addition to any refund ultimately owed by Reli-
ant as part of the refund proceeding in Docket No. EL00-95,
et al.”).

   [7] In contrast, the California Parties seek a market-wide
refund remedy for tariff violations pursuant to § 309 through
its adjudicative filing. The fact that FERC may be seeking
similar remedies against specific companies in its §1b investi-
gations does not justify its denial of the California Parties’
request for § 309 relief. When parties seek adjudicative relief
from an agency, they are entitled to a reasoned response from
the agency. Here, the California Parties filed a cognizable
request for relief and tendered credible evidence in support of
their request. A party’s valid request for relief cannot be
denied purely on the basis that the agency is considering its
own enforcement action that may impart a portion of the relief
sought. If an aggrieved party tenders sufficient evidence that
8808                      PUC v. FERC
tariffs have been violated, then it is entitled to have FERC
adjudicate whether the tariff has been violated and what relief
is appropriate.

   [8] In sum, none of the reasons given by FERC for refusing
to adjudicate whether tariffs were violated is sustainable. Sec-
tion 309 relief is not limited by § 206. FERC’s determination
that no tariff violations occurred is not supported by the
record. FERC cannot avoid adjudicating a third-party petition
because it may or may not choose to commence a separate
enforcement action. For these reasons, we conclude that
FERC’s categorical rejection of the California Parties’ request
for § 309 relief was arbitrary, capricious, and an abuse of dis-
cretion. Therefore, we grant the petition for review as it per-
tains to the California Parties’ challenge to FERC’s
foreclosure of relief for tariff violations. We deny the Califor-
nia Parties’ petition insofar as it calls for us to decide the mer-
its of its request for § 309 relief. We do not prejudge how
FERC should address the merits or fashion a remedy if appro-
priate. FERC cannot, however, categorically refuse to enter-
tain the application; it must address the merits.
PUC v. FERC            8809
              Volume 2 of 2
                         PUC v. FERC                       8827



                              IV

             Out of Market Spot Transactions

   FERC’s July 25, 2001 Order mandated retrospective relief
for sales to Cal-ISO, including out-of-market (“OOM”) trans-
actions. These purchases were made by Cal-ISO from sellers
outside the Cal-ISO single price auction market within 24
hours or less of delivery, and served to stabilize the grid when
supply was insufficient to meet demand. Because Cal-ISO
had no choice but to buy energy to ensure grid reliability,
potential sellers were in a position to exercise improper mar-
ket leverage by exploiting the structural flaws in the market.
FERC concluded that the OOM transactions provided the best
opportunity for extracting unjust and unreasonable rates and
therefore, made them subject to potential refunds.

   The Competitive Suppliers Group petitions for review of
FERC’s decision to include OOM sales into the Cal-ISO
because (1) FERC made no express finding that the rates
charged for OOM sales were unjust and unreasonable and (2)
the Remedy Proceedings had been limited since their incep-
8828                    PUC v. FERC
tion to the Cal-ISO/CalPX single-price auction market. We
deny this petition for review.

                               A

   Section 206(a) of the Federal Power Act requires that
before FERC can exercise its remedial power to mitigate an
existing rate, it must find an existing rate “unjust, unreason-
able, unduly discriminatory or preferential.” 16 U.S.C.
§ 824e(a); Fed. Power Comm’n v. Sierra Pac. Power Co., 350
U.S. 348, 353 (1956). The Competitive Suppliers Group
argues that although FERC made a finding that prices within
the auction markets were unjust and unreasonable, they never
made such a finding with respect to OOM sales to Cal-ISO.

   In its July 25, 2001 Order, FERC adopted the MMCP to
calculate just and reasonable rates for Cal-ISO and CalPX.
The MMCP was the benchmark for determining the amount
of refunds that sellers had to pay — FERC simply looked at
their transactions during the refund period then ordered them
to pay the difference between the rate and the MMCP.

  Application of the MMCP was a determination that a rate
was unjust and unreasonable. As FERC explains in its brief,

    [B]ecause the conditions under which [Cal-ISO]
    OOM spot transactions were entered into made it
    likely that the rates for those transactions were unjust
    and unreasonable, FERC required that all transac-
    tions be examined to decide which ones would be
    subject to refund. . . . [A] market-wide mitigation
    methodology was needed in the [Cal-ISO] and
    CalPX auction markets because systemic dysfunc-
    tions caused by structural problems in those markets
    had the potential to cause unjust and unreasonable
    rates ‘independent of any conclusive showing of a
    specific abuse of power.’ In addition, a showing of
    market power abuse is not a prerequisite for finding
                         PUC v. FERC                       8829
    rates are outside the zone of reasonableness and,
    therefore, unjust and unreasonable.

FERC Br., citing July 21, 2001 Order.

   [9] FERC’s analysis of this issue is correct. The Federal
Power Act does not require the detailed individualized finding
that Competitive Suppliers Group requests, nor does it require
a showing of market power abuses, and no court has held that
it does.

   [10] FERC found that there was systemic dysfunction in
the wholesale energy market and that, during the time that
Cal-ISO was making OOM purchases, it was in an emergency
must-buy situation, which gave the sellers even greater mar-
ket power, and thus increased the likelihood that the rates
were unjust and unreasonable. These facts constituted a suffi-
cient finding that the rates were unjust and unreasonable.
FERC was not required to make an additional individualized
finding, in addition to the imposition of the MMCP, that rates
for Cal-ISO OOM transactions were unjust and unreasonable.

                               B

   [11] Contrary to the Competitive Suppliers Group’s argu-
ment, the Remedy Proceedings were not limited to the Cal-
ISO and CalPX single-price auction markets. First, nothing in
the language of the August 2, 2000 complaint or early orders
necessarily limited the Remedy Proceedings to the Cal-ISO
and CalPX in-market transactions. Indeed, the SDG&E com-
plaint was “directed against all sellers in the ISO and PX mar-
kets.” FERC did not add the Cal-ISO OOM transactions to the
proceeding. Rather, it clarified in its orders that the transac-
tions were encompassed in the scope of the SDG&E com-
plaint proceeding.

  [12] Second, FERC offered a sufficient explanation as to
why the Cal-ISO OOM transactions were subject to refunds,
8830                    PUC v. FERC
namely that the purchases, like in-market purchases, were
made to “procure the resources necessary to reliably operate
the grid.” July 25, 2001 Order, 96 FERC ¶ 61,120 at 61,515.
Therefore, there was no meaningful distinction to be drawn
between the in- and out-of-market transactions. FERC further
noted that the Cal-ISO OOM transactions were contemplated
in the Cal-ISO tariff as a backstop to the Cal-ISO auction
market.

   The Competitive Suppliers Group points out that OOM
transactions made by Cal-ISO are fundamentally different
from those made in the Cal-ISO market. Certainly, there are
significant differences. The OOM transactions at issue here
were bilaterally negotiated sales of power at different prices
than the market clearing price established in the auction mar-
ket. However, as FERC points out, these bilateral transactions
were closely intertwined with the Cal-ISO single price auction
spot market because manipulation of the single price auction
market could create artificial market forces, making it proba-
ble that rates charged in the OOM transactions were unjust
and unreasonable. Although different in form, both the single
price auction purchases and Cal-ISO OOM purchases
occurred in the same market, so the structural flaws that
allowed unjust and unreasonable prices to be charged in the
single-price auction also allowed unjust and unreasonable
prices to be charged in the Cal-ISO OOM transactions. Given
this structural relationship, it was reasonable for FERC to
examine those Cal-ISO OOM transactions that were affected
by the manipulated market conditions and order refunds when
appropriate.

   [13] It is also significant to note that FERC did not order
refunds for all Cal-ISO OOM transactions. Rather, FERC
ordered all Cal-ISO OOM spot transactions to be examined to
decide which ones would be subject to potential refund. An
agency’s discretion is at its zenith when it is “fashioning [ ]
policies, remedies and sanctions, including enforcement and
voluntary compliance programs in order to arrive at maximum
                        PUC v. FERC                       8831
effectuation of Congressional objectives.” Niagara Mohawk
Power Corp. v. Fed. Power Comm’n, 379 F.2d 153, 159 (D.C.
Cir. 1967). Given this level of deference, coupled with
FERC’s reasoned explanation of its decision, we conclude
that FERC did not act arbitrarily, capriciously, or in abuse of
its discretion when it included the Cal-ISO OOM transactions
in the Remedy Proceedings.

                              V

           Non-Emergency Hours Transactions

                              A

   In its initial mitigation orders, FERC limited price mitiga-
tion only to “emergency hours” when supply was deficient
and suppliers knew that their bids, however high, would be
accepted. June 19, 2001 Order, 95 FERC ¶ 61,418 at 62,546-
62,547. FERC believed that during hours when there were
sufficient energy reserves to ensure that the Cal-ISO con-
trolled grid would remain reliable, called “non-emergency
hours,” suppliers would be motivated to bid competitive
prices. FERC reasoned that with excess supplies in the mar-
ket, suppliers would bid competitively because they ran the
risk that their bids would not be accepted. See id. at 62,547.

   Over time, however, FERC observed that because energy
supply was generally low, suppliers could count on their bids
being accepted in both emergency and non-emergency hours.
So, the incentive to bid high prices was as evident during non-
emergency hours as it was during emergency hours. See
December 19, 2001 Order, 97 FERC ¶ 61,275 at 62,247
(“[D]uring non-emergency periods where there were no
excess supplies in the market and all suppliers would be dis-
patched, the incentive to bid high prices remained.”).
Although FERC’s targeted remedies had improved the whole-
sale power market to some extent, see June 19, 2001 Order,
8832                      PUC v. FERC
95 FERC ¶ 61,418 at 62,546, the market remained generally
dysfunctional, id. at ¶ 62,556.

   Thus, in an attempt to provide “the incentives needed to
correct the [remaining] market dysfunctions,” FERC
expanded the market monitoring and mitigation plan to
address all operating hours. Id. at ¶ 62,547. FERC imple-
mented prospective relief for non-emergency hours by modi-
fying the formula it had used to set the market clearing price
in emergency hours. Id. at ¶ 62,558. Recognizing that rates
should decrease in non-emergency hours due to an increase in
supply, FERC set the market clearing price for non-
emergency hours at 85 percent of the market clearing price
established during the last system emergency. Id. at ¶ 62,548.
FERC would permit a higher bid only if justified by the sup-
plier. Id. at ¶ 62,558. FERC’s intention was to “emulate . . .
a competitive market,” and “prevent possible abuses that
could lead to unjust and unreasonable rates.” Id. at 62,558.

   In its July 25, 2001 Order, FERC declined to order refunds
because it felt that an evidentiary hearing was necessary to
resolve “material issues of fact” before deciding whether to
order a refund. July 25, 2001 Order, 96 FERC ¶ 61,120 at
61,519-61,520. FERC ordered Cal-ISO to apply the MMCP to
each operating hour and report the data to an ALJ. Id. at
¶ 61,520. FERC then directed the ALJ to

      make findings of fact with respect to: (1) the miti-
      gated price in each hour of the refund period; (2) the
      amount of refunds owed by each supplier according
      to the methodology established herein; and (3) the
      amount currently owed to each supplier (with sepa-
      rate quantities due from each entity) by the ISO, the
      investor owned utilities, and the State of California.

Id.

   FERC explained that its decision to review rates in all oper-
ating hours was based on its original finding of systemic mar-
                        PUC v. FERC                       8833
ket dysfunction, which “was not limited to reserve deficiency
periods.” December 19, 2001 Order, 97 FERC ¶ 61,275 at
62,246. Referencing the finding in its November 1, 2000
Order that the market was structurally flawed, FERC stated:
“We determined that structural problems, which existed in all
hours, had the potential to cause market prices to exceed that
which one would expect in a competitive market. While our
solution requires review for all hours, that does not mean that
this will result in refunds for all hours.” Id.

   The Competitive Suppliers Group petitions for review of
FERC’s decision to apply the MMCP to non-emergency oper-
ating hours. It argues that FERC’s decision to order mitigation
for non-emergency hours was arbitrary and capricious
because FERC did not expressly find that rates during non-
emergency hours were unjust and unreasonable.

                              B

   As we have noted, before FERC can exercise its remedial
powers under FPA § 206, it must find that the rate at issue is
unjust and unreasonable. 16 U.S.C. 824e(a). The Competitive
Suppliers Group attacks the adequacy of FERC’s general
finding of systemic market dysfunction, arguing that it did not
satisfy the condition precedent to § 206(a) authority.

   The Competitive Suppliers Group claims that FERC was
required to make explicit findings that specific rates charged
in each operating hour were unjust or unreasonable. However,
as we have noted, no such requirement exists. FERC “may
rely on ‘generic’ or ‘general’ findings of a systemic problem
to support imposition of an industry-wide solution.” Interstate
Natural Gas Ass’n of Am. v. FERC, 285 F.3d 18, 37 (D.C.
Cir. 2002). “[P]roportionality between the identified problem
and the remedy is the key.” Id.

   [14] To be sure, if FERC found isolated problems within
the wholesale electric energy market, its market-wide remedy
8834                     PUC v. FERC
would have been inappropriate. See Assoc. Gas Distribs. v.
FERC, 824 F.2d 981, 1019 (D.C. Cir. 1987) (“Neither Wis-
consin Gas nor any other case of which we are aware supports
an industry-wide solution for a problem that exists only in iso-
lated pockets. In such a case, the disproportion of remedy to
ailment would, at least at some point, become arbitrary and
capricious.”). However, faced with a market plagued by struc-
tural problems and operating under “seriously flawed” rules,
FERC could have reasonably considered a market-wide rem-
edy necessary.

   FERC’s response was proportional to the identified prob-
lem: It ordered wholesale review of a market that it had iden-
tified as wholly dysfunctional. Moreover, the method FERC
used to review the system resulted in an individualized analy-
sis of the rates charged in each operating hour. FERC
explained that its expansion of mitigation measures over time
was a reflection of both the “rapidly changing circumstances”
during the refund period and its attempt to balance competing
interests while fulfilling its FPA obligations:

    In response to [its November 1 dysfunctional mar-
    ket] findings, the Commission has sought to inter-
    vene in markets in as limited a manner as possible
    consistent with its responsibilities to ensure just and
    reasonable rates under the FPA, to rely on market
    principles whenever it can, and to balance carefully
    the need for price relief against the need for price
    signals to attract critical supply entry.

December 19, 2001 Order, 97 FERC ¶ 61,275 at 62,246.

   [15] Given all of these considerations, we cannot say that
FERC’s decision to include non-emergency hours transactions
in its market mitigation orders was arbitrary, capricious, or an
abuse of discretion.
                             PUC v. FERC                              8835
                                    VI

          Spot Market Limitation (24-Hour Limit)

                                    A

   In it July 25, 2001 Order, FERC restricted the refund pro-
ceedings to “spot transactions in the organized markets oper-
ated by the ISO and PX during the [Refund Period].” July 25,
2001 Order, 96 FERC ¶ 61,120 at 61,499. In its June 19
Order, it defined the spot market at issue as constituting “sales
that are 24 hours or less and that are entered into the day of
or day prior to delivery.” June 19, 2001 Order, 95 FERC
¶ 61,418 at 62,545. By these two orders, FERC excluded sales
made in the Cal-ISO and CalPX spot markets of greater than
24 hours. Although this limitation was made without explana-
tion, it apparently was based on FERC’s construction of the
original SDG&E complaint. The California Parties petition
for review of this limitation.7

  In order to analyze this issue properly, a brief procedural
review is appropriate. In the original complaint, SDG&E
asked FERC to put a price cap on all sales into the Cal-ISO
and CalPX markets and urged FERC to enter into a “full
examination of the reasons why the ISO/PX markets are not
workably competitive.” In its August 23, 2000 Order, FERC
  7
    As a threshold matter, FERC argues that the California Parties’ and
Cal-ISO’s arguments are procedurally defaulted because they were not
raised on rehearing. 16 U.S.C. § 825l(b) provides that a party may obtain
review in this court by filing a petition “within sixty days after the order
of the Commission upon the application for rehearing.” We, however, can-
not consider an objection “unless such objection shall have been urged
before the Commission in the application for rehearing.” Id. In their multi-
ple requests for rehearing of FERC’s orders, the California Parties fairly
raised objections to FERC’s limitation of price mitigation to the Cal-ISO
real-time market, and its limitation of refunds to “spot sales.” Thus, FERC
had the opportunity to address the California Parties’ challenges and we
have jurisdiction to consider FERC’s limitation. See Transmission Access
Policy Study Group, 225 F.3d at 685 n. 4.
8836                     PUC v. FERC
instituted hearing proceedings to “detect and . . . to resolve as
expeditiously as possible, any defects in the operation of com-
petitive power markets in California.” 92 FERC ¶ 61,172 at
61,603.

   Although FERC mentioned the “spot market” in the body
of its August 23 order, it did not explicitly define spot transac-
tions or limit its investigation to transactions of a certain
length. See id. at 61,605, 61,607. FERC did inform interested
parties that it may “further refine” or “narrow the focus” of
the hearing after it reviewed its own staff’s investigative find-
ings. See id. at 61,603, 61,609.

   On November 1, 2000, after FERC’s staff issued its find-
ings, FERC issued an order identifying serious market flaws
that had caused and “ha[d] the potential to cause, unjust and
unreasonable rates for short-term energy (Day-Ahead, Day-of,
Ancillary Services and real-time energy sales) under certain
conditions.” November 1, 2000 Order, 93 FERC ¶ 61,121 at
61,349. FERC proposed remedies designed to “facilitate for-
ward contracting” and discourage an “over reliance on spot
markets.” Id. at 61,359.

   On December 15, 2000, FERC again stressed that high
prices were mostly due to over-reliance on short-term con-
tracts, and encouraged market participants to acquire both
short-term and long-term contracts. December 15, 2000
Order, 93 FERC ¶ 61,294 at 61,993-61,994. Although market
participants expressed concerns that long-term contracts
would be affected by the “spiraling spot prices” from the pre-
vious summer, FERC assured them that it would “monitor
prices in [long-term] markets and also adopt a benchmark that
we will use as a reference point in addressing any complaints
regarding the pricing of long-term contracts negotiated over
the next year.” Id. at ¶ 61,994.

  FERC first explicitly limited refunds to spot markets in its
July 25, 2001 Order, stating, “[t]he Commission makes clear
                         PUC v. FERC                       8837
that transactions subject to refund are limited to spot transac-
tions in the organized markets operated by the ISO and PX
during the [refund period].” July 25, 2001 Order, 96 FERC
¶ 61,120 at 61,499. FERC used the same description for “spot
market” as it had in its June 19 order. Id. at ¶ 61,515-61,516.

   In contesting this limitation, the California Parties offered
testimony from economist Dr. Peter Fox-Penner and Director
of Market Monitoring and Analysis for Southern California
Edison Dr. Gary A. Stern to support their claim that sellers
manipulated both short-term energy markets and forward
markets and succeeded in raising rates above just and reason-
able levels in both. Dr. Fox-Penner testified that sellers had
purposefully manipulated short-term energy markets to cause
an increase in forward rates by withholding supply from the
short-term market, forcing Cal-ISO to buy necessary energy
outside of the spot market at higher prices and for longer con-
tract periods. Dr. Stern testified that if the MMCP mitigation
method were applied to Cal-ISO’s forward contracts, refunds
would exceed $54.5 million.

   Despite this testimony, FERC continued to limit refunds to
“spot market” transactions as described in its June 19, 2001
order. See March 26, 2003 Order, 102 FERC ¶ 61,317 at
62,084. The California Parties requested rehearing of FERC’s
decision, arguing that after they had submitted additional evi-
dence showing that the sellers’ insistence on longer duration
sales was often an element of the exercise of market power,
and that FERC should have reconsidered its decision to
exclude forward contracts from the monitoring and mitigation
plan. The California Parties argued that FERC should include
in the Remedy Proceedings all sales up to one month in dura-
tion. FERC responded on October 16, 2003, by rejecting the
California Parties’ arguments as being “identical to those they
have already raised,” and stating that it had “already thor-
oughly considered and rejected” the same arguments. San
Diego Gas & Elec.. Co., et al., 105 FERC ¶ 61,066, 61,365
(2003).
8838                    PUC v. FERC
                              B

   FERC’s primary reason for excluding the forward market
transactions is that, in its view, these transactions were not
included in the original SDG&E complaint. It notes that its
§ 206 refund authority “is discretionary and limited to those
rates challenged as the subject of a proceeding.” Thus, FERC
argues that it was prevented from mitigating forward transac-
tions because the original complaint limited the scope of the
proceeding to only “spot market” transactions.

   [16] The record does not support FERC’s conclusion. The
original complaint explicitly referred to both short-term and
forward sales in the Cal-ISO and CalPX markets. SDG&E
expressed concern about the “day-ahead, hour-ahead, and
block forward markets conducted by the PX.” The complaint
clearly challenged rates for forward transactions, asserting
that “until workable competition is established, supply bids
into the California forward and real-time markets should be
capped at $250 per Mwh.” (emphasis added). The complaint
logically did not reference sales outside the ISO and PX’s for-
mal markets because SDG&E was, at that time, required to
purchase energy through the formal spot markets. However,
within that limitation, SDG&E cast as wide a net as possible,
including challenging those forward transactions it was
allowed to enter. The original complaint did not limit FERC’s
section 206 refund authority to only “spot market” transac-
tions. Thus, the primary reason given by FERC for excluding
the transactions is without adequate foundation in the record.

   FERC does not offer any other justification for excluding
the transactions. Significantly, even in the face of new evi-
dence concerning forward markets, FERC simply reiterated
that the issue was outside the scope of the original complaint.
FERC’s failure to even address the additional evidence is
another reason that we reject its exclusion of these transac-
tions.
                         PUC v. FERC                        8839
   FERC initially thought spot prices would discipline for-
ward prices, and that more forward contracting was the
answer to the market dysfunction. Thus, early in the Remedy
Proceedings, FERC focused its mitigation measures on short-
term sales and actually encouraged market participants to
acquire more forward contracts. See December 15, 2000
Order, 93 FERC ¶ 61,294 at 61,993-61,994. However, later
evidence suggested that forward prices had not been reigned
in by FERC’s mitigation of the spot markets, and that sellers
had successfully manipulated forward markets to raise prices.

   In denying rehearing of its continued exclusion of forward
transactions, FERC did not explain why the new evidence had
no effect on its decision. See 105 FERC ¶ 61,066 at 61,365-
61,366. FERC merely referenced its previous explanation,
from its December 19, 2001 Order, in which it found that only
the rates in “spot markets” were potentially unjust and unrea-
sonable. However, FERC issued that order before the Califor-
nia Parties had offered additional evidence to support their
claim. FERC never explained why the additional evidence did
not affect its decision to limit mitigation procedures to only
“spot market” transactions.

   We should uphold FERC’s decision if its path to making
that decision “may reasonably be discerned.” See Motor Vehi-
cle Mfrs. Ass’n, 463 U.S. at 43. However, it is difficult, if not
impossible, to discern FERC’s analytical path here, particu-
larly when its decision is viewed in light of its simultaneous
decision to expand mitigation measures to include other previ-
ously excluded categories of transactions.

   For instance, FERC expanded its mitigation measures to
include non-emergency hours, even though it had earlier
believed that rates in non-emergency hours would be suffi-
ciently disciplined by its mitigation measures in emergency
hours. See December 19, 2001 Order, 97 FERC ¶ 61,275 at
62,247. FERC later recognized new evidence that refuted its
earlier belief and acted accordingly, expanding its mitigation
8840                        PUC v. FERC
measures to include all operating hours. When sellers argued
against this expansion, FERC responded:

      As Commission orders are not final while subject to
      rehearing, and rehearing was requested of all orders
      in this proceeding, the mitigation measures and
      related procedures implemented in those orders were
      subject to adjustment or replacement. Sellers could
      not reasonably have expected therefore, that the miti-
      gation measures and related procedures implemented
      in earlier orders in this proceeding would remain
      unchanged during the rehearing process.

Id. at 62,218.

   FERC’s explanation applies with equal force here.
Throughout the proceedings, FERC emphasized that it was
engaged in a continuing examination of all market forces. Its
investigation was not static and yet it proffered no reason for
rejecting the new evidence that suggested that the forward
market was affected by market manipulation that may have
produced unjust and unreasonable rates. When faced with a
similar situation in which FERC acted differently in two
related situations without offering a reasoned explanation, we
have granted a petition for review. See Cal. Dep’t of Water
Res. v. FERC, 341 F.3d 906, 910 (9th Cir. 2003).

   [17] FERC’s decision to foreclose relief in the forward
markets cannot be sustained. Its cramped reading of the origi-
nal SDG&E complaint is not supported by a close examina-
tion of the record, and FERC does not offer any other
explanation for its decision. In view of the evidence tendered
by the California Parties that sellers manipulated both the
short term and long term spot markets, FERC’s limitation of
remedy without a reasonable explanation was arbitrary, capri-
cious, and an abuse of discretion.8
  8
   The Public Entities argue that FERC erred in finding that some of the
Public Entities’ transactions with Cal-ISO were spot market transactions
                              PUC v. FERC                              8841
                                    VII

                 Energy Exchange Transactions

                                     A

   Exchange transactions involved two different sellers. The
first seller, the “Exchange Seller,” agreed to provide Cal-ISO
with energy in exchange for an in-kind return of the same
amount of energy plus an additional agreed-upon amount. See
March 26, 2003 Order, 102 FERC ¶ 61,317at 62,083-62,084.
Cal-ISO then purchased energy from the second seller, the
“Spot Seller,” on the spot market and used that energy to pay
back the Exchange Seller. In a typical exchange transaction,
an Exchange Seller would provide Cal-ISO with one unit of
power in exchange for Cal-ISO’s promise to return two units
of power at a later time. Cal-ISO would use the one unit of
power to supply its power grid. Then Cal-ISO would buy two
units of power from a Spot Seller in order to pay back the
Exchange Seller. Exchange transactions had varying return
ratios. At times, the parties agreed that Cal-ISO must return
the energy in “like time,” for instance in “on-peak” hours.

  Cal-ISO’s purchases on the spot market were mitigated
when FERC ordered Spot Sellers to refund amounts they had
charged in excess of the MMCP. See id. at 62,084. However,
FERC declined to include Exchange Sellers in the Refund
Proceedings.

— not multi-day transactions — and thus subject to refunds pursuant to
FERC’s orders. The California Parties have moved to strike this conten-
tion because it involves implementation questions not appropriate for this
phase of the proceedings. Given our decision that the forward market
transactions are subject to refund liability, the issues raised by the Public
Entities are likely moot. However, to the extent that any issues remain, we
grant the California Parties’ motion because the questions raised by the
Public Entities are fact-specific inquiries as to the nature of particular
transactions that are appropriately considered in conjunction with imple-
mentation issues.
8842                     PUC v. FERC
   The California Parties and Cal-ISO challenge the exclusion
of Exchange Sellers, contending that they also should be lia-
ble for refunds because they used exchange transactions to
exert market power by demanding exorbitant exchange ratios.
The California Parties’ witness, Dr. Carolyn Berry, an inde-
pendent economic consultant and former FERC economist,
testified in support of their claim that Exchange Sellers had
violated the Federal Power Act. Dr. Berry testified that “re-
turn ratios were excessively high.” She suggested that
Exchange Sellers “may have been hoping to avoid refund lia-
bility by making sales in-kind rather than for explicit mone-
tary payment.” Dr. Berry noted that some of the sellers’
internal emails supported her conclusion that those sellers
were aware that using in-kind exchanges was a way for them
to avoid FERC’s scrutiny.

   Economist Dr. Peter Fox-Penner also testified on behalf of
the California Parties regarding exchange transactions. He tes-
tified that “[t]here is no economic difference to a buyer
between paying for a power purchase in dollars and paying
for it in a commodity whose price is well-established in dol-
lars in the marketplace. . . . [thus], there is no economic basis
for excluding such transactions from mitigation.”

   The Public Entities argue that Cal-ISO actually benefitted
from exchange transactions because the Exchange Sellers
offered desperately needed flexibility in a crisis situation. In
support of their claim, the Public Entities referred to a Wall
Street Journal article in which Cal-ISO Vice President Jim
Detmers was described as praising exchange transactions
because they were “a good deal” for California and “might
even have saved [the state] money because daily peak prices
were sometimes more than twice the off-peak prices the ISO
paid for BPA’s replacement power.”

   In its March 26, 2003 Order, FERC held that it would not
subject the Exchange Sellers to refund liability for exchange
transactions. The primary reason given by FERC in excluding
                         PUC v. FERC                       8843
Exchange Sellers from the Refund Proceedings was the diffi-
culty in calculating a refund. March 26, 2003 Order, 102
FERC ¶ 61,317 at 62,084.

                               B

   [18] FERC improperly excluded the Exchange Sellers from
the refund proceeding. There is no doubt that energy
exchanges are considered sales, subject to FERC’s jurisdic-
tion. 18 C.F.R. § 35.2(a). By refusing relief simply because
the calculation was difficult, FERC abandoned its duty under
the Federal Power Act to ensure just and reasonable rates. See
16 U.S.C. § 824d(a). As we have previously stated, “[t]he
FPA cannot be construed to immunize those who overcharge
and manipulate markets in violation of the FPA.” Lockyer,
383 F.3d at 1017. FERC is obligated to protect consumers
from unjust or unreasonable rates, charges, or classifications,
and any rules, regulations, practices, or contracts affecting
such rates, charges or classifications. See 16 U.S.C. § 824e(a).
Nothing in the Federal Power Act limits its application to
those transactions that are easy to value. Although multiple
variables may make certain transactions difficult to analyze,
consumers must still be assured that those transactions are just
and reasonable.

  FERC’s approach to the exchange transactions created a
loophole through which Exchange Sellers could exercise mar-
ket power and manipulate the energy market without being
subjected to the requirements of the Federal Power Act.
FERC’s failure to exercise its broad remedial discretion to
analyze exchanges of power during the Refund Period and
address any unjust and unreasonable practices was arbitrary
and capricious, and an abuse of discretion.

  FERC argues that it is impossible to determine whether the
Exchange Sellers demanded unjust and unreasonable
exchange ratios because there is no way to assign a monetary
value to exchange transactions. FERC claims that, because
8844                     PUC v. FERC
exchange transactions involved multiple variables like the
shortage of hydro-electric generation power in the Pacific
Northwest, it cannot determine whether Exchange Sellers
demanded and received value in excess of what would have
been just and reasonable under the circumstances. However,
FERC did not conduct a specific analysis to conclude that the
rates were just and reasonable, given the variables, nor did it
make a finding that the variables showed that the rate was just
and reasonable. FERC simply concluded that the calculation
was too difficult.

   The challenge of monetizing the transactions does not give
FERC a safe harbor to throw up its hands and say it can’t be
done. Significantly, FERC did not provide a reasoned expla-
nation of impossibility, only a conclusory observation of diffi-
culty. But saying so doesn’t make it so. Constructing a
methodology did not prove too taxing for the California Par-
ties, who tendered a mitigation methodology for examining
the Exchange Sellers’ transactions. FERC rejected the Cali-
fornia Parties’ proposed mitigation method because it did not
account for all relevant variables. See March 26, 2003 Order,
102 FERC ¶ 61,317at 62,084 (“The CA Parties’ request to
reform the exchange ratio completely ignores the severe
energy shortfall in the Pacific Northwest, where most of these
energy exchange transactions originated, during the 2001 time
period.”).

   The fact that FERC was dissatisfied with the California
Parties’ proposed mitigation method does not justify its deci-
sion to exclude Exchange Sellers from the refund proceeding
on a categorical basis. FERC’s own precedent shows that
when parties have failed to propose an acceptable mitigation
method, it may fashion a method on its own. See Re Green
Mountain Power Corp., 61 FERC ¶ 61,203 (1992) (using the
value of a contemporaneous cash sale from the same power
unit to value an exchange of capacity for purposes of ordering
a refund).
                        PUC v. FERC                           8845
  FERC also argues that because the energy exchanges were
conducted over periods greater than 24 hours, the transactions
cannot be considered spot market transactions subject to miti-
gation. However, we have already rejected this argument as
a general matter, so it does not afford FERC a valid basis for
excluding the transactions at issue here.

   [19] In sum, because FERC did not articulate a valid basis
for excluding the energy exchange transactions from the
Refund Proceedings, we conclude that its action was arbitrary,
capricious, and an abuse of discretion.

                             VIII

                    Sleeve Transactions

   “Sleeve transactions” were used when the investor-owned
utilities were on the brink of insolvency and credit problems
began to limit the ability of the investor-owned utilities to
purchase power. As FERC described it:

    A “sleeve” transaction involves three parties: a
    seller, a purchaser and a creditworthy third party
    “sleever” or “sleeving party” who provides the
    financial underpinnings for the transaction. Thus, if
    either party to a transaction determines that it cannot
    buy from or sell to its commercial counterparty due
    to concerns about the other party’s creditworthiness,
    the sleeving party steps in to provide the necessary
    financial backing so that the transaction can go for-
    ward.

San Diego Gas & Elec. Co., et al., 107 FERC ¶ 61,165 at
61,640 (2004).

   To obtain adequate supplies of energy to continue to power
the grid, Cal-ISO entered into transactions whereby sleeving
parties would buy power directly from energy sellers and then
8846                          PUC v. FERC
resell the power to Cal-ISO at a premium to reflect the credit
risk.

   Cal-ISO decided that certain sleeve transactions should not
be subject to mitigation, but the ALJ reached the opposite
conclusion. After considering the ALJ report, FERC deter-
mined that the sleeve transactions should be subject to mitiga-
tion; in other words, those transactions should not be excluded
from potential refund liability. FERC concluded that the
sleeve transactions were similar to other sales and that the
sleeving parties assumed the same risks of making spot
energy sales to Cal-ISO, including the risk of refund liability.
Therefore, FERC adopted the ALJ’s findings and included the
sleeve transactions as part of the refund proceedings. The
Public Entities now petition for review of that decision, argu-
ing that sleeve transactions were individually negotiated
transactions outside the scope of the Remedy Proceedings.9

   The Public Entities contend that the sleeve transactions
should not be included in the refund proceedings because the
sleeving parties merely acted as financial intermediaries and
facilitators. In their view, the sleeve transactions were individ-
ually negotiated transactions that did not take place in the
   9
     The California Parties moved to strike the portion of Public Entities’
briefs addressing sleeve transactions, and El Paso Merchant Energy moved
to defer consideration of sleeving issues. Both parties argue that consider-
ation of sleeving is an issue of implementation, not an issue of scope, and
therefore belongs in the next round of briefing. However, there is no prin-
cipled way to distinguish a hypothetical exemption for sleeve transactions,
as a distinct category, from the exemptions or non-exemptions FERC has
considered, and we are now considering, for OOM, energy exchange, for-
ward market, and other categories of transactions. Sleeve transactions
appear to be a distinct category, subject to the same type of analysis as the
other issues. We therefore deny the California Parties and El Paso Mer-
chant Energy’s motions as to sleeve transactions and consider the merits
of Public Entities’s claim that sleeve transactions as a category should
have been exempted. However, to the extent that the Public Entities are
raising fact-specific issues related to implementation, as opposed to a cate-
gorical challenge, we grant the California Parties’ motion.
                         PUC v. FERC                        8847
single-price auction market. FERC contends that the parties
saw the sleeve transactions as comprising two sales: one from
the supplier to the sleeving party and the second from the
sleeving party to Cal-ISO. In FERC’s view, the sleeving par-
ties were subject to Cal-ISO rules because all sellers in the
Cal-ISO market had the responsibility to comply with market
rules and the tariff. The final transaction of the two-step pro-
cess occurred, according to FERC, in the Cal-ISO market.

   [20] The record supports FERC’s conclusion. All sleeve
transactions that are subject to challenge here occurred as spot
market transactions in the Cal-ISO market. The fact that the
sleeving parties received a risk premium does not relieve
them from liability if, independent of the risk premium, they
charged an unjust and unreasonable rate in the spot market,
which was part and parcel of the Cal-ISO market. Thus,
FERC did not act arbitrarily or capriciously, or abuse its dis-
cretion in including the sleeve transactions in the refund pro-
ceeding.

                               IX

   California Energy Resources Scheduling (“CERS”)
                 Division Transactions

                               A

   In its December 8, 2001 Order, FERC lifted the Cal-ISO
price caps, hoping to attract more supply into the auction mar-
kets. December 8, 2000 Order, 93 FERC ¶ 61,239. In its
December 15, 2001 Order, FERC eliminated the requirement
that the investor-owned utilities buy and sell all energy
through CalPX. December 15, 2001 Order, 93 FERC
¶ 61,294. As we have discussed, when these remedies did not
stem the rise of electricity prices, and the investor-owned util-
ities were on the brink of insolvency, Governor Davis ordered
CERS to enter into contracts to buy power directly on behalf
of California consumers. These purchases were made in bilat-
8848                     PUC v. FERC
eral contracts outside the CalPX and Cal-ISO markets and
totaled more than $5 billion of purchases.

   On March 1, 2001, the Cal-EOB filed a motion with FERC,
asking FERC to clarify that the Remedy Proceedings included
CERS transactions. FERC denied the motion, concluding that
the bilateral transactions were entered into outside the CalPX
and Cal-ISO markets, and therefore, were outside the scope of
the Remedy Proceedings. In its order, FERC noted that “if
DWR or another party believes that any of its contracts are
unjust or unreasonable, it may file a complaint under FPA
Section 206 . . . .” CPUC and Cal-EOB filed such complaints,
which are the subject of separate petitions for review before
this Court. See Pub. Utilits. Comm’n of State of Cal. et al. v.
FERC, nos. 03-74207, et al. In this case, the California Parties
petition for review of FERC’s decision to exclude the CERS
transactions from the Remedy Proceedings, and the various
FERC orders denying rehearing. We conclude that FERC’s
decision to exclude the CERS transactions was not arbitrary,
capricious, or an abuse of discretion.

                               B

   One of the fundamental tenets in FERC jurisprudence is the
rule against retroactive ratemaking. Arkansas Louisiana Gas
Co. v. Hall, 453 U.S. 571, 578 (1981). This theory underpins
the limitations on FERC’s remedies under § 206 to the post-
complaint period. § 824e(b). Consol. Edison Co. of N. Y., Inc.
v. FERC, 347 F.3d 964, 967 (D.C. Cir. 2004). If FERC finds
a rate unjust and unreasonable pursuant to a § 206 complaint,
it must order imposition of a just and reasonable rate; how-
ever, the refund is limited to periods subsequent to the “re-
fund effective date” established by FERC, which must be at
least sixty days after the filing of the complaint. Id. By this
procedure, once a complaint is filed, sellers are on notice that
their sales may be subject to refund.

   Thus, while FERC has considerable latitude in fashioning
§ 206 relief, the remedies afforded pursuant to a third party
                        PUC v. FERC                       8849
§ 206 complaint must have a sufficient nexus to the substan-
tive allegations of the complaint so that market participants
are placed on notice that they are at risk for sales made after
the refund effective date. We have already concluded that the
substantive allegations of the SDG&E complaint were suffi-
cient to put sellers on notice that the OOM, non-emergency,
energy exchange, and sleeve transactions might be subject to
refund. All of these transactions were directly associated with
the CalPX and Cal-ISO markets. However, the bilateral CERS
transactions occurred in a different market — one that did not
even exist when the SDG&E complaint was filed. Thus, nei-
ther the SDG&E complaint nor the subsequent actions by
FERC in establishing the Remedy Proceedings were sufficient
to put participants in the CERS transactions on notice that
their sales might be subject to refund.

   There are fundamental differences between the CalPX/Cal-
ISO markets and the bilateral contracts negotiated by CERS.
As we have discussed, the CalPX and Cal-ISO markets were
centralized, single-price, auction markets, involving multiple
participants. In contrast, the CERS transactions were two-
party contracts of varying prices, terms and duration that were
mutually negotiated — ostensibly at arms-length — outside
the CalPX and Cal-ISO markets. Unlike the Cal-ISO OOM
and sleeve transactions that we have concluded were properly
considered in the Refund Proceedings, the CERS transactions
occurred in a market that was not directly influenced by the
market manipulations in the Cal-ISO and CalPX spot markets.
The record reflects no direct nexus between the CERS bilat-
eral transactions and the CalPX and Cal-ISO spot markets.

   Given these differences, and the fact that the entire focus
of the SDG&E complaint and FERC’s orders creating the
Remedy Proceedings were directed at the CalPX and Cal-ISO
markets, it is clear that the substantive allegations of the
SDG&E complaint did not bear a sufficient nexus to the bilat-
eral CERS transactions to afford parties to the CERS con-
8850                     PUC v. FERC
tracts sufficient notice that their sales might be subject to
refund.

   Indeed, when the SDG&E complaint was filed, the
investor-owned utilities were required to conduct all of their
sales and purchases through the CalPX and Cal-ISO markets.
It was not until FERC’s December 15, 2000 Order, some six
months after the filing of the SDG&E complaint, that
investor-owned utilities were free to conduct energy transac-
tions outside the CalPX and Cal-ISO markets. And, it was not
until January, 8, 2001 that CERS began to make its purchases.

  Thus, FERC concluded that:

    DWR transactions are negotiated bilateral contracts
    for the procurement of energy on behalf of Califor-
    nia [investor-owned utilities], and are distinctly
    beyond the realm of ISO and PX centralized market
    operations that have been the subject of this proceed-
    ing since its inception . . . . No party could reason-
    ably have believed that the Commission intended the
    proceeding to be broader.

December 19, 2001 Order, 97 FERC ¶ 61,275 at 62, 195.

   [21] We agree with FERC’s analysis. Because the SDG&E
complaint was not sufficient to put the CERS transaction par-
ticipants on notice, expanding the Refund Proceeding to
include the CERS transactions would violate the rule against
retroactive ratemaking.

   The California Parties argue, with considerable force, that
unjust and unreasonable rates were charged in the CERS
transactions and that the transactions in substance were indis-
tinguishable from transactions within the CalPX and Cal-ISO
markets. However, FERC did not close the door on potential
§ 206 relief based on the CERS transactions; in fact, it invited
aggrieved participants to file new complaints directed specifi-
                        PUC v. FERC                       8851
cally at the CERS transactions. Thus, while the bilateral
CERS transactions are beyond the scope of the Remedy Pro-
ceedings at issue here, those transactions may be the subject
of other challenges, the posture and merits of which are
beyond the scope of the instant case.

   [22] Given all of this, we conclude that FERC’s construc-
tion of the SDG&E complaint as not including the CERS
transactions was not arbitrary, capricious, or an abuse of dis-
cretion.

                              X

   Port of Oakland and Other Bilateral Transactions

  [23] The Port of Oakland argues that its bilateral contracts
with energy suppliers, entered into during the CERS period to
meet the needs of Oakland’s airport, should also be subject to
the Refund Proceedings. FERC denied the request on the
same basis that it denied the California Parties’ entreaty to
include the CERS transactions in the Refund Proceedings.
The analysis of the CERS and Port of Oakland transactions is
the same. We deny the petition for review filed by the Port of
Oakland for the same reasons that we deny the petition by the
California Parities for review of the CERS transactions.

                              XI

                Section 202(c) Transactions

   By December 2000, in the middle of the energy crisis,
energy suppliers were reluctant to bid into the CalPX and Cal-
ISO auction markets because the investor-owed utility buyers
in those markets were verging on insolvency. In order to cor-
rect for this shortage of sales, Cal-ISO requested the United
States Department of Energy to intervene. Pursuant to Cal-
ISO’s request, the Department of Energy issued a series of
orders under the emergency provisions of Federal Power Act
8852                     PUC v. FERC
§ 202(c), which required energy suppliers to sell excess avail-
able power to Cal-ISO. The Public Entities were parties to
some of these sales, which were later exempted from a refund
by FERC because of the fact that they were compulsory.

   The Public Entities attack FERC’s affirmance of the ALJ’s
conclusion that certain of these sales were exempt from
refund liability. The California Parties have moved to strike
this argument on the basis that it constitutes an implementa-
tion issue to be decided in a different phase of this case, rather
than an issue that concerns the scope of the refund proceed-
ing.

   [24] No party challenges FERC’s determination that sales
pursuant to § 202(c) are exempt from refund liability. The
Public Entities do not argue that § 202(c) transactions cate-
gorically should or should not be included in the scope of the
refund proceeding. Rather, the Public Entities contest the
manner in which FERC determined the definition — the
scope — of the § 202(c) exemption. The Public Entities do
not argue that any particular category or subcategory of trans-
actions should be considered § 202(c) transactions. Instead,
they take issue with the methods and information FERC uses
to determine what is a § 202(c) exemption. Thus, we conclude
that the § 202(c) issues raised by the Public Entities should be
considered an implementation issue, rather than a scope trans-
action issue. Therefore, we grant the California Parties’
Motion to Strike with respect to § 202(c) transactions.

                               XII

                          Conclusion

   In general, we hold that all the transactions at issue in this
case that occurred within the CalPX or Cal-ISO markets, or
as a result of a CalPX or Cal-ISO transaction, were the proper
subject of the Refund Proceedings. We deny the petitions for
review that challenge FERC’s inclusion of such transactions;
                         PUC v. FERC                       8853
we grant the petitions for review that challenge FERC’s
exclusion of such transactions. We deny the petitions for
review that seek to expand the Refund Proceedings into the
bilateral markets other than the CalPX and Cal-ISO markets.
We hold that FERC properly established October 2, 2000 as
the refund effective date for the § 206 proceedings. We hold
that FERC erred in excluding § 309 relief for tariff violations
that occurred prior to October 2, 2000.

   Specifically, we (1) deny the Competitive Suppliers
Group’s petition for review challenging FERC’s establish-
ment of the effective refund date; (2) grant the California Par-
ties’ petition for review of FERC’s decision to exclude § 309
relief; (3) deny the Competitive Suppliers Group’s petition for
review challenging the inclusion of the OOM transactions in
the Refund Proceedings; (4) grant the California Parties’ peti-
tion for review challenging FERC’s exclusion of forward
market transactions from the Refund Proceedings; (5) grant
the California Parties’ petition for review challenging FERC’s
exclusion of the energy exchange transactions from the
Refund Proceedings; (6) deny the Public Entities’ petition for
review challenging FERC’s includion of sleeve transactions
in the Remedy Proceedings; (7) deny the California Parties’
petition for review challenging FERC’s exclusion of the
CERS transactions from the Remedy Proceedings; (8) deny
the Port of Oakland’s petition for review challenging FERC’s
exclusion of its bilateral CERS transactions from the Remedy
Proceedings; and (9) grant the motion of the California Parties
to exclude the Public Entities’ § 202(c) and challenges to the
categorization of multi-day transactions from this proceeding.
Each party shall bear its own costs on appeal.

  PETITIONS GRANTED IN PART; DENIED IN
PART; REMANDED FOR FURTHER PROCEEDINGS.
