717 F.3d 177
D.C. Cir.2013Background
- SoCal Edison challenged FERC’s use of median vs. midpoint to set base ROE for three transmission projects with incentive adders and CWIP recovery (Incentives Order, 2007).
- FERC updated SoCal Edison’s base ROE to 10.55% (median of a zone) and later reduced the locked-in period ROE to 9.54% using updated ten-year Treasury yields (2008–2008).
- SoCal Edison argued the Commission’s method violated FPA § 205 and APA § 556(e), and that updating with outside-record data was improper.
- The agency relied on a DCF proxy group approach, with screens, and concluded the median better represents a single utility of average risk as to central tendency.
- The court ultimately remanded for failure to comply with 5 U.S.C. § 556(e) while considering official-notice data, granting in part and denying in part the petition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether median or midpoint is the proper central tendency for a single electric utility of average risk | SoCal Edison: midpoint is just and reasonable | FERC: median is more accurate for a single utility of average risk | Median is permissible; remand for notice issues |
Key Cases Cited
- Morgan Stanley Capital Grp., Inc. v. FERC, 554 U.S. 527 (Supreme Court 2008) (deference to FERC in rate decisions; just and reasonable is the result, not the method)
- Hope Natural Gas Co. v. FERC, 320 U.S. 591 (Supreme Court 1944) (result controls; method permissible if not arbitrary and capricious)
- Union Electric Co. v. FERC, 890 F.2d 1193 (D.C. Cir. 1989) (official notice procedures require opportunity to contest noticed facts)