NRG Power Marketing, LLC v. Federal Energy Regulatory Commission
405 U.S. App. D.C. 297
D.C. Cir.2013Background
- FERC approved a settlement among PJM, NYISO, ConEd, PSE&G, and the New Jersey Board of Public Utilities in September 2010 to resolve how pre-888 transmission arrangements would transition to open access.
- The settlement addressed two grandfathered contracts from 1975 and 1978 (TSAs) and implemented a non-conforming JOA protocol to manage through-New Jersey flows for ConEd’s service.
- PJM and ConEd sought to roll over the 2008 TSAs under § 2.2 of PJM’s OATT, but the roll-over included non-conforming elements not in the pro forma tariff.
- NRG Power Marketing objected, arguing the non-conforming terms violated open-access principles and created unduly preferential treatment for ConEd.
- FERC found the 2008 TSAs non-conforming but necessary to ensure reliable service and balance operational challenges with open-access goals.
- NRG challenged the order in court, arguing the Commission acted arbitrarily, relied on insufficient record, and approved a discriminatory and non-substantiated settlement; the court upheld FERC, denying the petition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FERC could approve non-conforming rollover under §2.2 | NRG argues rollover must conform to OATT and cannot be approved when non-conforming. | FERC may approve non-conforming terms when necessary to provide reliable service and balance open access with operational needs. | Yes; FERC could approve non-conforming rollover where justified by reliability and operational concerns. |
| Undue discrimination against other market participants | NRG contends ConEd’s unique JOA protocol discriminates by restricting flows to ConEd. | FERC found no unduly discriminatory impact because other parties are not similarly situated to ConEd in this context. | No; FERC's finding of no undue discrimination was upheld. |
| Substantial evidence supporting just and reasonable determination | NRG claims record and evidence do not support the decision. | FERC reasonably weighed costs and benefits and relied on substantial evidence, including 88% of hours economic benefits. | Yes; the decision was supported by substantial evidence. |
| Use of ongoing seams proceedings to justify settlement | NRG argues FERC relied improperly on unresolved NYISO-PJM seam proceedings to justify the settlement. | FERC appropriately referenced ongoing proceedings as context for broader market redesign and to justify balancing interests. | Yes; FERC reasonably cited ongoing proceedings without undermining the settlement. |
Key Cases Cited
- NorAm Gas Transmission Co. v. FERC, 148 F.3d 1158 (D.C. Cir. 1998) (contested settlements and necessary independent judgment required)
- Sacramento Municipal Utility District v. FERC, 428 F.3d 294 (D.C. Cir. 2005) (denial of extending grandfathered contracts under CAISO tariff in SMUD I)
- Sacramento Municipal Utility District v. FERC, 474 F.3d 797 (D.C. Cir. 2007) (SMUD II; non-discriminatory treatment in California context)
- Consumers Energy Co. v. FERC, 428 F.3d 1065 (D.C. Cir. 2005) (deference to agency interpretation of its own orders)
- Exxon Co. v. FERC, 182 F.3d 30 (D.C. Cir. 1999) (arbitrary and capricious review in agency decisions)
- Blumenthal v. FERC, 552 F.3d 875 (D.C. Cir. 2009) (deference to agency balancing of competing considerations)