United States Court of Appeals, District of Columbia Circuit
February 6, 2019
Petition for Review of Orders of the Federal Energy
Lawrence G. Acker argued the cause for petitioner. With him
on the briefs were Philip W. Mone and Gabriel L. Tabak.
B. Fish, Attorney, Federal Energy Regulatory Commission,
argued the cause for respondent. With him on the brief were
James P. Danly, General Counsel, and Robert H. Solomon,
Solicitor. Carol J. Banta, Attorney, entered an appearance.
William D. Booth argued the cause for intervenors. With him
on the joint brief was David D'Alessandro. Jonathan P.
Trotta and Marie Denyse Zosa entered appearances.
Before: Garland, Chief Judge, Srinivasan, Circuit Judge, and
Silberman, Senior Circuit Judge.
Srinivasan, Circuit Judge
Circuit Judge: In 2015, Missouri River Energy
Services, a collection of municipal entities, became a member
of the Southwest Power Pool. Missouri River claimed it should
be exempt from certain charges assessed by the Pool, and the
parties submitted the dispute to the Federal Energy
Regulatory Commission. FERC sustained the charges, and
Missouri River now petitions for review of FERC's
decision. We conclude that FERC's determination was not
arbitrary and capricious and thus deny Missouri River's
petition for review.
River Energy Services is an organization of 61 municipal
utilities in the Upper Midwest. Missouri River helps its
member municipal electric systems source power. To that end,
in the 1970s, Missouri River teamed up with other
energy-related entities to construct the Laramie River
Station (a power plant) and various transmission facilities.
1977, those entities entered into a contract with Nebraska
Public Power District, under which Missouri River and its
partners agreed to help defray Nebraska Power's
construction and operation costs for new transmission
facilities. In exchange, Nebraska Power agreed to allow the
entities to use the new facilities to transmit some of the
power from the Laramie River Station. For the last four
decades, Missouri River has used that arrangement under the
1977 Contract to help move electricity generated by the
Laramie River Station part of the way from the power plant to
Missouri River's member utilities.
2008, Nebraska Power asked to join the Southwest Power Pool,
a Regional Transmission Organization that "provides
transmission service to approximately 6 million households
across portions of eight states." Okla. Gas &
Elec. Co. v. FERC, 827 F.3d 75, 77 (D.C. Cir. 2016). (A
Regional Transmission Organization oversees electricity grids
on a regional scale and coordinates transmission service to
ensure reliable and efficient transmission. See Morgan
Stanley Capital Grp. v. Pub. Utility Dist. No. 1, 554
U.S. 527, 535-37 (2008).) As part of the process of accepting
Nebraska Power into the Southwest Power Pool, the Pool filed
proposed revisions of its bylaws and Tariff. Those revisions
included adding the 1977 Contract to the Pool's list of
Grandfathered Agreements, which meant that service under the
1977 Contract would be exempt from certain provisions of the
Tariff. In late 2008, FERC approved the proposed revisions,
Nebraska Power became a member of the Pool, and Missouri
River's transmission service under the 1977 Contract
years later, the Pool decided to implement a new Integrated
Marketplace that included energy markets in which Pool
members could bid for energy services. As part of that
implementation, the Pool proposed imposing additional charges
on its members to account for energy loss due to transmission
and transmission congestion. A number of parties, including
Missouri River, protested the imposition of those charges on
transmission covered by Grandfathered Agreements (including
the 1977 Contract).
Pool stated that it would not impose additional charges on
Missouri River's reservation under the 1977 Contract
because Missouri River was outside the footprint of the Pool.
Missouri River then withdrew its protest. The Pool proceeded
to settlement negotiations with the other protesting parties,
and those negotiations produced a Carve-Out Settlement that
identified specific Grandfathered Agreements that were
eligible for exemption (i.e., eligible to be carved out) from
the congestion and marginal loss charges. In particular,
§ 2.2 of the Carve-Out Settlement stated that Schedule 1
of the Carve-Out Settlement "constitutes the exclusive
list of eligible 'Carved-Out GFAs,' meaning that only
those agreements and the megawatts associated with them
identified on Schedule 1 are eligible for carve-out
treatment." J.A. 377. And ...