Six cities including Anaheim, Azusa, Banning, Colton, Pasadena and Riverside contested the decision allowing the new rates to be put into effect early, arguing that applying the increase retroactively was not permitted.
"Effectively they were seeking a rate increase," said Bonnie S. Blair, an attorney in Washington, D.C., who represented the municipalities before the U.S. Court of Appeals for the District of Columbia.
Blair said that her clients together will receive several hundred thousands of dollars. Other cities and utilities such as Southern California Edison and Pacific Gas and Electric should also get refunds, she said.
Individual cities and utilities will decide how and whether the refunds will be passed on to customers.
Barbara Connors, a FERC spokeswoman, had no comment.
During the 2001 electricity crisis, the FERC required wholesale electricity generators serving the state's markets to supply available electricity. The temporary measure was supposed to shore up the energy shortfall but the requirement stayed in place for several years.
Generators began arguing that they should be compensated for the costs of energy production. In 2005, a group of wholesale electricity generators through the Independent Energy Producers Association filed their complaint.