The Mobile-Sierra doctrine prohibits the Federal Energy Regulatory Commission from raising the rates charged by a natural gas producer unless the producer’s contract permits it or if the current rate is deemed to be potentially harmful to the public. This doctrine originated from two court cases in 1956 and is also known as the Sierra-Mobile doctrine.
The Mobile-Sierra Doctrine, also known as the Sierra-Mobile Doctrine, is a principle that prohibits the Federal Energy Regulatory Commission (FERC) from granting a rate increase to a natural gas producer unless the producer’s contract allows for such an increase or if the current rate is unreasonably low and could harm the public interest. In cases where the producer’s contract states that both parties must agree to a rate increase, FERC cannot grant an increase without the consent of both parties. However, if the current rate is so low that it could negatively impact the public interest, FERC may grant a rate increase to ensure the continued operation of the public utility. The Mobile-Sierra Doctrine was established through two Supreme Court cases: United Gas Pipe Line Co. v. Mobile Gas Serv. Corp. and Federal Power Comm’n v. Sierra Pac. Power Co.
The Mobile-Sierra Doctrine is a legal principle that governs the interpretation and enforcement of long-term contracts for the sale of electricity or natural gas in the United States.
The doctrine protects the contractual rights of parties involved in long-term energy contracts, ensuring that the terms and conditions agreed upon at the time of contract formation are upheld.
Under the Mobile-Sierra Doctrine, energy prices agreed upon in long-term contracts are generally presumed to be just and reasonable, even if market conditions change. This provides stability and predictability for both buyers and sellers.
Yes, parties can challenge the prices set in long-term energy contracts, but they face a high burden of proof. They must demonstrate that the contract prices are so unjust and unreasonable that they violate public interest.
No, the doctrine only applies to long-term contracts for the sale of electricity or natural gas. Short-term contracts or contracts for other forms of energy may not be subject to the Mobile-Sierra Doctrine.
Yes, parties can include provisions in their contracts that waive or modify the application of the Mobile-Sierra Doctrine. However, such waivers or modifications must be clear and explicit to be enforceable.
Yes, FERC has the authority to override the Mobile-Sierra Doctrine in certain circumstances. If FERC determines that a contract’s prices are unjust and unreasonable, it can modify or set aside those prices.
Yes, state regulatory agencies can challenge long-term energy contracts, but they must demonstrate that the contracts harm the public interest or violate state law. The burden of proof for state agencies is generally higher than for individual parties.
Yes, the Mobile-Sierra Doctrine applies retroactively to contracts entered into before its establishment. It provides protection for both existing and future contracts.
Yes, parties can seek damages for breach of a long-term energy contract under the Mobile-Sierra Doctrine. If one party fails to fulfill its contractual obligations, the other party may be entitled to compensation for any resulting losses.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 30th April 2024.
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