Transmission Agency v. Federal Energy Regulatory Commission
393 U.S. App. D.C. 310
| D.C. Cir. | 2010Background
- CAISO proposed integrating SMUD and Turlock into an Integrated Balancing Authority Area (IBAA) to improve congestion management and pricing accuracy.
- CAISO’s tariff redesign (MRTU) includes locational marginal pricing and a full network model for the CAISO grid, with the IBAA proposal being a key element.
- The CAISO’s IBAA pricing used a single hub proxy for all twelve interconnection points, pricing imports at Captain Jack and exports at a hypothetical SMUD hub, subject to MEEAs for accuracy.
- The California-Oregon Intertie comprises the COTP and the PACI lines, with partial ownership and control by CAISO-affiliated entities; parallel or unscheduled flows create pricing and reliability concerns.
- FERC conditioned approval of the IBAA on preserving protections against loss-related over-collection, defining MEEA information, and treating certain information as confidential; orders denying rehearing followed.
- Petitioners (several municipal utilities) challenge FERC’s jurisdiction, contract conflicts under the Mobile-Sierra doctrine, and the reasonableness and nondiscrimination of the IBAA pricing scheme, seeking reversal of the orders.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FERC has jurisdiction to approve IBAA under the FPA. | Petitioners contend §201(f) exempts governmental entities, limiting FERC rate authority. | FERC asserts jurisdiction over CAISO-market rates and that IBAA affects only CAISO’s rates. | Jurisdiction affirmed; FERC may regulate CAISO market rates despite governmental status. |
| Whether the IBAA conflicts with the Pacifi c Gas & Electric Agreement (Mobile-Sierra/Cooperation). | Agreement bars charges for parallel flow, potentially limiting CAISO pricing. | Agreement governs joint operation but not CAISO’s market-rate setting; no conflict. | No conflict; IBAA pricing does not violate the Agreement; CAISO rates remain independent. |
| Whether IBAA pricing is unduly discriminatory under FPA §205. | Combining SMUD and Turlock and using a single hub discriminates against others. | Six factors justify consolidation; no similarly situated entities were unfairly treated. | Not unduly discriminatory; the record supports the six-factor justification. |
| Whether the use of default Captain Jack and SMUD hub proxy prices is just and reasonable. | Proxy pricing can misstate actual interchange sources and depress/inflate prices. | Proxy prices are reasonable given limited information and will reduce arbitrage; MEEAs available. | Proxy pricing reasonable; it mitigates arbitrage and supports congestion management. |
| Whether the Commission adequately addressed evidence on parallel flows and rate design. | Petitioners allege insufficient response to evidence on flow data and losses. | Commission thoroughly addressed data; reliance on expert analyses is permissible. | Record supports Commission’s rational reliance on data and experts; decision affirmed. |
Key Cases Cited
- Sacramento Mun. Util. Dist. v. FERC, 474 F.3d 797 (D.C. Cir. 2007) (burden-shifting framework for just and reasonable rates; jurisdiction and discrimination analysis)
- Sacramento Municipal Utility Dist. v. FERC, 616 F.3d 520 (D.C. Cir. 2010) (contextual background for CAISO market redesign and IBAA issues)
- TANC v. FERC, 495 F.3d 663 (D.C. Cir. 2007) (agency jurisdiction over jurisdictional and non-jurisdictional entities in integrated markets)
- NARUC v. FERC, 475 F.3d 1277 (D.C. Cir. 2007) (upholding Commission authority to regulate wholesale energy transactions)
- Bonneville Power Admin. v. FERC, 422 F.3d 908 (9th Cir. 2005) (limits refunds jurisdiction; distinction between CAISO regulation vs. non-jurisdictional entities)