The Supreme Court on Monday, without comment, turned down an appeal by PG&E Corp.'s Pacific Gas and Electric Co. in a case that centers on whether federal energy regulators have authority over municipalities. At issue in the dispute is whether the Federal Energy Regulatory Commission can order municipal government entities that aren't public utilities -- but that buy and sell electricity -- to issue refunds. The agency can order utilities to pay such refunds if it determines they sold power at 'unjust and unreasonable' prices.

Prices for electricity soared in California's auction markets during the 2000-2001 energy crisis. FERC eventually imposed price caps and ordered sellers to pay refunds to utilities, such as PG&E, that were forced to purchase power at inflated prices.

Municipalities, such as the California cities of Burbank, Pasadena and Palo Alto, among others, argued that FERC didn't have the authority to order them to pay refunds.

The 9th U.S. Circuit Court of Appeals agreed with the municipalities and ruled against PG&E in 2005.

The Bush administration, meanwhile, urged the Supreme Court to reject the case. The Justice Department's Solicitor General said that energy legislation approved by Congress in 2005 gave FERC limited authority, going forward, to order refunds in some cases from municipalities. As a result, the issues raised by the case are 'of minimal ongoing importance,' Peter Clement, the Solicitor General, wrote.

The court's decision lets the appeals court ruling stand.

The case is Pacific Gas and Electric Co. v. Bonneville Power Administration, 07-155.