783 F.3d 92
2d Cir.2015Background
- FERC approved NYISO’s Lower Hudson Valley capacity zone and related demand curve orders.
- Zone creation based on highway deliverability test to address transmission constraints.
- Zone boundary excludes Long Island Zone; NYC remains a separate zone with its own LCR/demand curve.
- FERC rejected phase‑in of the zone/demand curve; no elimination criteria in the Zone Orders.
- Petitioners argue higher in‑zone prices are unjust/unreasonable; challenge FERC’s reasoning and evidence.
- FERC relied on economic theory and record evidence predicting long‑term reliability benefits and price signals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Lower Hudson Valley Zone is justified. | New York Petitioners: insufficient evidence of benefits. | FERC: economic rationale supports zone for reliability and price signals. | Zone creation justified by economic principles and reliability rationale. |
| Phase‑in of the demand curve. | Phase‑in would soften price increases. | Phase‑in would delay needed price signals and reliability. | Phase‑in rejected; immediate higher prices upheld. |
| Consideration of transmission upgrades planned by NYPSC. | Upgrades could eliminate constraint; zone premature. | Upgrades speculative; rely on current market conditions. | Reliance on existing conditions; not bound by speculative upgrades. |
| Elimination criteria for the zone. | Need criteria for eliminating zone if constraint disappears. | Elimination criteria not required in these proceedings; separate process advisable. | Not required here; NYISO to address elimination in future proceeding. |
| Cost causation and LCR calculation. | LCR methodology affects who pays; mispricing risks. | LCR reviewed in Demand Curve proceeding; Zone proceeding focuses on creation. | LCR challenge was not properly in Zone proceeding; not barred but preserved for Demand Curve proceeding. |
Key Cases Cited
- Sacramento v. FERC, 428 F.3d 294 (D.C. Cir. 2005) (collateral attacks and notice exceptions to rehearing bar)
- Pac. Gas & Elec. Co. v. FERC, 533 F.3d 820 (D.C. Cir. 2008) (collateral attack, authority questions)
- TC Ravenswood, LLC v. FERC, 705 F.3d 474 (D.C. Cir. 2013) (discretion in handling related but discrete issues)
- Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361 (D.C. Cir. 2004) (budgeting of zone-related issues; economic justifications)
- Elec. Consumers Res. Council v. FERC, 747 F.2d 1511 (D.C. Cir. 1984) (economic theory may support agency findings when explained properly)