Second Circuit Applies the Filed Rate Doctrine to Electricity Rates Set by Market-Based Auctions

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The filed rate doctrine precludes antitrust challenges to rates set or approved by federal agencies. The doctrine is broadly applied and covers, for example, wholesale electricity rates that are filed with the Federal Energy Regulatory Commission (FERC or the Commission), even in circumstances where the claimant alleges that the rates were initially set in a fraudulent or improper manner. Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 577 (1981). On September 20, 2012, the Second Circuit affirmed the dismissal of a complaint alleging collusion between two rival New York City electricity producers — defendants KeySpan Corp. (KeySpan) and Astoria Generating Company (Astoria) — and facilitation of anticompetitive conduct by an affiliate of the financial firm Morgan Stanley. Simon v. KeySpan Corp., et al., No. 11-2265-cv, 2012 U.S. App. LEXIS 19815 (2nd Cir. Sep. 20, 2012). The Court held that the filed rate doctrine can apply even where the allegedly supracompetitive rate was the product of a market-based auction. Id. at 30 (declining to set a per se rule, but applying the doctrine because “the regulator created a process for setting rates, reviewed the resulting rates, and, after investigation, determined that the anticompetitive behavior did not undermine its process and that the resulting rates were reasonable.”). The Court also found that the plaintiff, an indirect purchaser of electricity, lacked standing.

The New York City electricity market is overseen by the New York Independent System Operator (NYISO). In order to determine the price at which wholesalers can sell their electricity to New York City distributor Consolidated Edison, Inc. (Con Ed), NYISO established an auction system that results in a market-based rate. Con Ed then passes on the rate, which is approved by the FERC, to consumers like the plaintiff.

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