Old Dominion Elec. Coop. v. Fed. Energy Regulatory Comm'n
892 F.3d 1223
D.C. Cir.2018Background
- In January 2014 a Polar Vortex caused extreme cold across the PJM region, spiking electricity demand and natural gas prices. Several PJM generators (including Old Dominion) faced generation costs above the PJM day-ahead bid cap of $1,000/MWh.
- PJM, invoking emergency authority, directed generators to be prepared to run and announced it would seek waivers: a prospective waiver (allowing offers above $1,000/MWh going forward) and a “make-whole” waiver (to compensate past losses).
- PJM filed waiver requests with FERC on January 23–24, 2014. FERC granted the prospective waiver effective January 24 but denied retroactive relief and make-whole payments for earlier days.
- Old Dominion sought retroactive relief and reimbursement for (1) costs incurred above the $1,000 cap before the prospective waiver, (2) start-up costs from cancelled/curtailed dispatch, and (3) costs from shortened dispatch periods — claiming nearly $15 million.
- FERC denied Old Dominion’s requests as barred by the filed rate doctrine and the rule against retroactive ratemaking; Old Dominion petitioned for review. The court denied the petition and also denied intervention by PJM’s Independent Market Monitor for lack of Article III standing, granting it amicus status instead.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FERC could waive the filed tariff retroactively to permit Old Dominion to recover costs incurred before FERC’s prospective waiver | Old Dominion: equities and unusual emergency justify retroactive waiver to make it whole for Polar Vortex losses | FERC: filed rate doctrine and retroactive-ratemaking rule bar any retroactive change; FERC lacks authority to rewrite filed rates | Held: Denied. Retroactive waiver would violate the filed rate doctrine and prohibition on retroactive ratemaking |
| Whether notice existed such that rate adjustments could be treated as non-retroactive (i.e., whether the tariff functioned as a formula rate) | Old Dominion: market conditions and PJM statements put purchasers on notice that rates could change with market, so adjustments would not be retroactive | FERC: Tariff contains a firm $1,000/MWh cap and no formula permitting post-hoc upward adjustments; public website post was not filed notice | Held: Denied. Tariff cap is explicit; no filed formula or filed notice authorized retrospective increases |
| Whether PJM’s website announcement constituted sufficient notice to permit retroactive relief | Old Dominion: PJM’s public statement gave prospective notice that retroactive make-whole payments might follow | FERC: Only filings with the Commission provide legally sufficient notice under the Federal Power Act | Held: Website post insufficient; required filings were not in place before the relevant service dates |
| Whether the Independent Market Monitor may intervene in the appeal | Monitor: its contractual role monitoring market integrity gives it a direct interest requiring intervention | Parties/FERC: Monitor lacks a legally protectable interest in the adjudication; its role is advisory/observational | Held: Denied intervention for lack of Article III standing; Monitor may appear as amicus curiae |
Key Cases Cited
- Towns of Concord, Norwood, and Wellesley Mass. v. FERC, 955 F.2d 67 (D.C. Cir. 1992) (explains rule against retroactive ratemaking)
- Columbia Gas Transmission Corp. v. FERC, 895 F.2d 791 (D.C. Cir. 1990) (precludes retroactive tariff changes; limits FERC’s equitable waiver power)
- Consolidated Edison Co. v. FERC, 958 F.2d 429 (D.C. Cir. 1992) (filed rate doctrine limits on charging rates other than those on file)
- Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571 (U.S. 1981) (neither regulated sellers nor the Commission may charge or impose rates differing from filed rates)
- West Deptford Energy, LLC v. FERC, 766 F.3d 10 (D.C. Cir. 2014) (discusses exceptions for formula rates and notice required for rate adjustments)
- Public Utilities Comm’n v. FERC, 254 F.3d 250 (D.C. Cir. 2001) (treats acceptable formula rates and the notice principle for variable-rate mechanisms)
- Transwestern Pipeline Co. v. FERC, 897 F.2d 570 (D.C. Cir. 1990) (Commission may approve formula/rule rates but cannot apply them retroactively without proper notice)
- FERC v. Electric Power Supply Ass’n, 136 S. Ct. 760 (U.S. 2016) (standard of review for FERC orders under the APA)
- Natural Gas Clearinghouse v. FERC, 965 F.2d 1066 (D.C. Cir. 1992) (advance notice preserves later rate adjustments when the filed rate contemplates them)
- City of Piqua v. FERC, 610 F.2d 950 (D.C. Cir. 1979) (approving apparent retroactive effect only where pre-existing contractual notice sufficed)
- NSTAR Elec. & Gas Corp. v. FERC, 481 F.3d 794 (D.C. Cir. 2007) (deference to agency interpretations of tariffs and limits on retroactive pricing)