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Dallas, TX, Dec. 27, 2005 -- In a decision that will be of considerable benefit to power generators in Texas, the United States District Court for the Southern District of Texas, Houston Division, dismissed claims that major power producers had manipulated the wholesale energy market in Texas.
The case, Utility Choice Electric, et al. v. TXU Corp., et al., was brought by two retail electric providers against the major power producers in Texas. The plaintiffs alleged that the power producers had driven up wholesale electricity prices through manipulation of the market. They claimed that this manipulation violated federal and state antitrust laws, federal RICO laws, and a variety of other state laws. The plaintiffs sought damages and equitable relief. In the decision, which was rendered by Judge David Hittner, the court dismissed with prejudice all the federal claims and declined to retain jurisdiction over the state law claims.
Hunton & Williams, representing TXU Corp. and various subsidiaries (collectively, TXU), was lead counsel in preparing and arguing the motion to dismiss. On behalf of TXU, Hunton & Williams' lead attorney Thomas G. Slater, Jr. argued for dismissal of the entire complaint on the basis of the "filed rate doctrine." The filed rate doctrine was originally developed in the context of rates that were set by agencies pursuant to cost-based factors. In Texas and many other states, however, the price of energy is now set by market participants - power generators and retailers - with agency oversight, using processes approved by the Public Utility Commission of Texas.
In his ruling, Judge Hittner drew significantly from a previous ruling in the United States Court of Appeals for the Fifth Circuit, which affirmed the dismissal of antitrust and other claims against TXU earlier this year. Hunton & Williams represented TXU in that earlier case in the Fifth Circuit. Judge Hittner also addressed additional issues that had not been directly addressed in the Fifth Circuit ruling. Most importantly, he concluded that the filed rate doctrine applies to the bilateral segment of the Texas wholesale electricity market, and that the filed rate doctrine barred plaintiffs' requests for injunctive relief.
"This ruling is likely to be of great significance going forward in the recently restructured Texas wholesale electricity market," said Benjamin L. Hatch of Hunton & Williams, a member of the litigation team.
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