Transcanada Power Marketing Ltd. v. Federal Energy Regulatory Commission
421 U.S. App. D.C. 1
D.C. Cir.2015Background
- ISO New England filed an emergency, time-limited Winter 2013–14 Reliability Program to secure oil inventory from oil- and dual-fuel generators to protect winter reliability after observing fuel shortfalls.
- The Program paid selected generators their as-bid prices for maintaining fuel and providing energy; ISO New England conducted a bid-selection process using price plus non-price criteria.
- ISO New England estimated Program costs at $16–$43 million; accepted bids totaled ~$78.8 million for ~1.995 million MWh.
- FERC conditionally approved the Program in Docket ER13-1851 but rejected ISO New England’s proposed cost allocation to Regional Network Load, ordering allocation to Real-Time Load Obligation (i.e., Load‑Serving Entities).
- In Docket ER13-2266 FERC accepted the bid results and approved the as-bid rates; TransCanada sought rehearing and then petitioned for review, arguing FERC lacked evidence to determine whether bids included excessive profit/risk markups.
- The D.C. Circuit upheld FERC’s cost‑allocation decision but remanded the rate-approval decision in ER13-2266 for a reasoned explanation regarding profit/risk markups (or revision) to ensure rates are just and reasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ripeness of judicial review for FERC’s conditional approval in ER13-1851 | TransCanada: FERC approved Program prematurely without costs and process details; review appropriate now | FERC: approval was plainly tentative and contingent on bid results in ER13-2266 | Not ripe — court declined to review conditional program approval because final review depended on subsequent bid‑result proceedings |
| Cost‑allocation (Regional Network Load vs. Real‑Time Load Obligation) | TransCanada: allocation to Load‑Serving Entities violates cost‑causation and is unfair because end‑users are true beneficiaries and costs were unforeseeable | FERC: Program addresses generation/reliability for entities that serve real‑time load; cost causation and agency precedent support allocation to Real‑Time Load | Held for FERC — allocation to Real‑Time Load was reasonable and consistent with cost‑causation principles and precedent |
| Approval of as‑bid rates without inquiry into profit/risk markups | TransCanada: record lacks evidence on profit/risk markups; FERC could not determine rates were just and reasonable | FERC: Program was an urgent, novel, as‑bid competitive solicitation; higher actual cost alone does not prove excessive profits; non‑cost reliability considerations justified rates | Remanded — court found FERC’s explanation inadequate; FERC must either justify the rates with reasoned analysis on markups/competition or adjust disposition to ensure just and reasonable rates |
| Consolidation of dockets (procedural) | TransCanada: FERC abused discretion by not consolidating ER13‑1851 and ER13‑2266 | FERC: separate dockets appropriate given sequence and subject matter | Court did not decide (moot in part because only ER13‑2266 remanded) |
Key Cases Cited
- PSEG Energy Res. & Trade LLC v. FERC, 665 F.3d 203 (D.C. Cir.) (background on ISO functions and tariff filing)
- Braintree Elec. Light Dep’t v. FERC, 667 F.3d 1284 (D.C. Cir.) (tariff filing and FERC approval framework)
- NRG Power Mktg., LLC v. Me. Pub. Utils. Comm’n, 558 U.S. 165 (U.S.) (context on ISO-administered markets and tariffs)
- OMYA, Inc. v. FERC, 111 F.3d 179 (D.C. Cir. 1997) (ripeness doctrine for FERC rate decisions)
- Northern Indiana Pub. Serv. Co. v. FERC, 954 F.2d 736 (D.C. Cir. 1992) (no review where only conceptual approval given)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S.) (arbitrary-and-capricious review standard)
- Farmers Union Cent. Exch., Inc. v. FERC, 734 F.2d 1486 (D.C. Cir.) (rates permitting excessive profits are unlawful)
- Tejas Power Corp. v. FERC, 908 F.2d 998 (D.C. Cir.) (limits of relying on competitive-market assumptions without market-power findings)
- Pub. Serv. Comm’n v. FERC, 397 F.3d 1004 (D.C. Cir.) (agency must respond meaningfully to arguments)
- FirstEnergy Serv. Co. v. FERC, 758 F.3d 346 (D.C. Cir.) (standard of review for FERC factual findings)