Seminole Electric Cooperative, Inc. v. Federal Energy Regulatory Commission
861 F.3d 230
D.C. Cir.2017Background
- Seminole Electric (a transmission customer) purchases transmission from Florida Power & Light and is charged for "energy imbalance" when actual usage deviates from scheduled amounts under Schedule 4 of Florida Power’s tariff.
- Schedule 4 sets three deviation bands with associated multipliers of incremental/decremental cost: up to ±1.5% (100%) with a 2 MW minimum; >1.5%–7.5% (110%/90%); and >7.5% (125%/75%).
- Seminole alleged two tariff violations: (1) Florida Power applied a band’s rate when EITHER the percentage threshold OR the MW threshold was crossed (rather than requiring BOTH), causing overcharges; (2) Florida Power charged the highest applicable band’s rate to the entire deviation (non-apportionment) instead of applying each band’s rate only to the portion of deviation within that band (apportionment).
- FERC agreed Seminole was overcharged under claim (1) and ordered refunds, but limited the refund period to 24 months based on a service-agreement time-bar (Section 12.0). FERC rejected claim (2), holding the tariff does not require apportionment and leaves the method to providers.
- Seminole petitioned for review in the D.C. Circuit challenging (a) FERC’s interpretation of the 24-month billing-challenge provision and the refund limitation, and (b) FERC’s interpretation of Schedule 4 regarding apportionment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the service agreement’s 24‑month time bar (Section 12.0) precludes refunds older than 24 months for tariff-based overcharges | Seminole: “correctness”/time bar applies only to clerical or arithmetical bill accuracy, not to tariff violations; thus longer refunds allowed | FERC & Florida Power: Section 12.0 plainly bars challenges to any bill rendered under the tariff unless raised within 24 months, including tariff-based errors | Court: Affirmed FERC — 24‑month bar applies to tariff overcharge claims; FERC’s broad reading is reasonable and textually supported |
| Whether Schedule 4 requires apportionment (tiered rates applied only to the portion of deviation within each band) | Seminole: Tariff should be read like progressive tax brackets (only the portion in highest band bears highest rate); FERC’s model (Order No. 890) and Bonneville practice support apportionment | FERC & Florida Power: Schedule 4’s plain text allows applying the rate for the applicable deviation to the entire deviation; model tariff omitted Bonneville’s explicit apportionment language, permitting non‑apportionment | Court: Affirmed FERC — Schedule 4 does not compel apportionment; ambiguity resolved by deferring to FERC’s reasonable interpretation |
Key Cases Cited
- Entergy Servs., Inc. v. FERC, 568 F.3d 978 (D.C. Cir. 2009) (standard for reviewing FERC orders under the Administrative Procedure Act)
- Sithe/Independence Power Partners v. FERC, 165 F.3d 944 (D.C. Cir. 1999) (stating requirement that agency provide a reasoned decision and clear path of reasoning)
- Koch Gateway Pipeline Co. v. FERC, 136 F.3d 810 (D.C. Cir. 1998) (deference principles for FERC interpretation of contracts/tariffs)
- Boston Edison Co. v. FERC, 856 F.2d 361 (1st Cir. 1988) (upholding contractual time limits on challenges to billing/propriety of bills)