Dynegy Midwest Generation, Inc. v. Federal Energy Regulatory Commission
633 F.3d 1122
D.C. Cir.2011Background
- Dynagy Midwest Generation, Inc. and other petitioners own/operate generators within the Midwest ISO, providing real and reactive power.
- Reactive power supports voltage and transmission; historically, reactive power was compensated on a cost-based basis under Schedule 2 for all generators in the Midwest ISO.
- In 2007, certain transmission owners proposed Schedule 2-A, which would grant zones the option to pay no compensation for reactive power within a deadband, while continuing to pay for outside the deadband.
- The Schedule 2-A option would govern compensation for all generators in a zone, whether affiliated or unaffiliated.
- FERC approved the tariff amendment creating Schedule 2-A, amid challenges that it could cause undue discrimination and potentially exceed authority under the FPA § 205.
- The DC Circuit granted review on the discrimination issue but upheld the filing authority, ultimately vacating the Schedule 2-A approval for undue discrimination under § 205(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Schedule 2-A cause undue discrimination under FPA § 205(b)? | Dynagy argues that zonal variation in compensation creates competitive disparities across zones. | FERC contends comparability within zones prevents undue discrimination and that zonal variations are permissible. | Yes; Schedule 2-A is unduly discriminatory and must be vacated. |
| Is petitioners' challenge a collateral attack on Orders Nos. 2003/2003-A jurisdictionally barred? | Petitioners contend the challenge attacks the prospect of comparability rule. | FERC argues no timely collateral attack under § 313(b) since the rule content was not reasonably clear. | Not a collateral attack; § 313(b) does not bar jurisdiction. |
| Did FERC have authority to file Schedule 2-A under FPA § 205 and the Filing Rights Settlement? | Challenge to whether § 3.9 of the Settlement restricted filings to entities providing ancillary services. | FERC found § 3.9 ambiguous but reasonable that transmission owners could file Schedule 2-A. | Yes; FERC reasonably interpreted § 3.9 to authorize filing Schedule 2-A. |
| Did the Commission adequately address comparability and potential discrimination across zones? | Petitioners warn that even with arrayed comparability, cross-zone competition makes zone-based decisions discriminatory. | Commission treated zonal compensation as analogous to zonal transmission rates with no discrimination. | No; the Commission failed to justify cross-zone competitive equality; discrimination violated § 205(b). |
Key Cases Cited
- Southern Company Services, Inc. v. FERC, 416 F.3d 39 (D.C.Cir.2005) (collateral attack timeliness and notice standards under § 313(b))
- RCA Global Communications, Inc. v. FCC, 758 F.2d 722 (D.C.Cir.1985) (notice and timing for agency rule challenges)