109 F.4th 583
D.C. Cir.2024Background
- In response to a 2021 cold snap that exposed growing grid reliability issues, the Midcontinent Independent System Operator (MISO) proposed significant revisions to its capacity market, shifting to a seasonal market, changing resource accreditation methodologies, and updating planned outage rules.
- The Federal Energy Regulatory Commission (FERC) approved these changes after finding them just and reasonable, and denied rehearing requests from various stakeholders.
- Entergy, a group of utilities operating in several southern states and members of MISO, challenged three specific aspects: the new capacity accreditation methodology, a rule requiring replacement capacity for outages over 31 days/season, and a 120-day advance notice requirement for planned outages.
- The D.C. Circuit reviewed the case under the arbitrary-and-capricious standard of the Administrative Procedure Act, focusing only on issues properly preserved by Entergy.
- Intervenors supported Entergy on the overlapping issues but also raised additional arguments, most of which were not addressed due to jurisdictional or procedural limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Capacity Accreditation Weighting | Overweights a small subset of hours, causing volatility | New method is more accurate for peak demand periods | FERC’s approval upheld |
| Volatility in Accreditation | Volatility imposes costs and planning uncertainty | System-wide and participant-level volatility is low | FERC’s approval upheld |
| 31-Day Outage Replacement Rule | Unduly burdens units needing longer maintenance | Rule balances reliability and maintenance needs | FERC’s approval upheld |
| 120-Day Notice for Planned Outages | Not adequately justified; shorter notice possible | Needed for planning and reliability coordination | FERC’s approval upheld |
Key Cases Cited
- Public Citizen v. FERC, 7 F.4th 1177 (D.C. Cir. 2021) (describing how MISO’s capacity market operates)
- Ameren Servs. Co. v. FERC, 893 F.3d 786 (D.C. Cir. 2018) (discussing the Federal Power Act's exhaustion requirement)
- New England Power Generators Ass’n v. FERC, 879 F.3d 1192 (D.C. Cir. 2018) (addressing the jurisdictional nature of the exhaustion requirement)
- Petal Gas Storage, LLC v. FERC, 496 F.3d 695 (D.C. Cir. 2007) (FERC need only choose a reasonable solution, not the best one)
- California Dep’t of Water Res. v. FERC, 306 F.3d 1121 (D.C. Cir. 2002) (intervenors generally limited to issues raised by petitioners)