FLORIDA MUNICIPAL POWER AGENCY, Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
Florida Power & Light Company, Intervenor
No. 01-1381.
Unitеd States Court of Appeals, District of Columbia Circuit.
Argued November 19, 2002.
Decided January 21, 2003.
On Petition for Review of Orders of the Federal Energy Regulatory Commission.
Robert A. Jablon argued the cause for petitioner. With him on the briefs was Daniel I. Davidson.
Judith A. Albert, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were Cynthia A. Marlette, General Counsel, and Dennis Lane, Solicitor.
Clifford (Mike) Naeve was on the brief for intervenor.
Before: SENTELLE, HENDERSON and TATEL, Circuit Judges.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge:
Granted access to Florida Power & Light's electricity transmission lines for the purpose of establishing network transmission service, Petitioner Florida Municipal Power Agency challenges three decisions of the Federal Energy Regulatory Commission rejecting its request for pricing credits. Finding the Commission's decisions supported by substantial evidence and neither arbitrary nor capricious, we deny the petition.
I.
After determining that utilities were discriminatorily denying power suppliers access to electricity transmission lines, the Federal Energy Regulatory Commission issued Order No. 888 requiring public utilities that own, control, or operate transmission facilities to file open access tariffs under which they agree to provide nondiscriminatory access to their transmission networks in addition to thе point-to-point service they had been offering. Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, F.E.R.C. Stats. & Regs. ¶ 31,036, 61 Fed.Reg. 21540, 21541,
Three additional features of Order No. 888 are relevant to this case. First, the order requires load ratio pricing for network transmission service, a form of transmission that "provides the customer with the same full system ability for transmitting power as the transmission owner." TAPS,
The second relevant principle from Order No. 888 responded to arguments made by utility customers (like Petitioner Florida Municipal Power Agency (FMPA)) that because some customers sell power in a way that does not bear on network resources — known as behind-the-meter generation — load ratio pricing's use of total load for determining a customer's rate might require payment for unneeded network transmission. TAPS,
Third, Order No. 888 adopts the principle of "comparability," meaning that the same integration standard that applies to transmission customers fоr the purpose of determining eligibility for pricing credits also applies to transmission providers for rate determination purposes. Order No. 888, 61 Fed.Reg. at 21,630 n.452. Thus, if a transmission provider includes a facility in its rate base, then its transmission customers may receive rate credits for any similarly situated facilities.
Running parallel to the development of Order No. 888, and in many respects providing a basis for it, this case began in 1993 when FMPA, a nonprofit public agency that provides point-to-point electric power supply to its twenty-nine member cities that sell retail electricity to the public, developed a plan for offering network transmission service. FMPA requested the right to purchase transmission service from Intervenor Florida Power & Light, owner of the state's largest transmission system. When Florida Power rejected that request, FMPA filed a complaint with FERC. Granting FMPA's request for network transmission service, FERC ordered the parties to agree on rates, conditions, and terms of service within sixty days. Fla. Mun. Power Agency v. Fla. Power & Light Co., 65 F.E.R.C. ¶ 61,125,
When FMPA and Florida Power failed to reach an agreement, FERC issued a final order addressing cost-of-service issues. Fla. Mun. Power Agency v. Fla. Power & Light Co., 67 F.E.R.C. ¶ 61,167,
If FMPA has transmission facilities that will operate as part of the integrated transmission system, a credit would be reasonable. Indeеd, this is in line with Florida Power's position that it is redefining the native load served by the Florida Power transmission system to include all of FMPA's resources and loads. If FMPA owns grid facilities that are now used to integrate the same resources and loads, those facilities are part of the integrated transmission system, and Florida Power must include an appropriate credit for any such grid fаcilities when it submits its compliance filing in this case.
Id. at 61,482 n. 76.
In 1996, acting on several requests for rehearing, FERC rejected FMPA's argument that Florida Power had improperly refused to grant FMPA pricing credits, holding that none of FMPA's facilities was integrated into Florida Power's network. Fla. Mun. Power Agency v. Fla. Power & Light, 74 F.E.R.C. ¶ 61,006,
In FMPA II, FERC rejected FMPA's request to supplement the record to include evidence relating to a facility FMPA operates in Lake Worth, Florida, as well as evidence relating to the "Rate Case." Id. аt 61,007. The latter refers to a separately docketed FERC proceeding that began in 1993 when Florida Power filed a proposed tariff adjustment that would have affected the prices it charged transmission users, including FMPA. Fla. Power & Light Co., 64 F.E.R.C. ¶ 61,361,
Finally, in FMPA III, the Commission denied FMPA's second petition for rehearing. Fla. Mun. Power Agency v. Fla. Power & Light, Co., 96 F.E.R.C. ¶ 61,130,
II.
FMPA now challenges the Commission's denial of pricing credits in FMPA I, FMPA II, and FMPA III. We review FERC's orders under the arbitrary and capricious standard and uphold FERC's factual findings if supported by substantial evidence. See, e.g., Pacific Gas & Elec. Co. v. FERC,
FMPA argues that the Commission erred by excluding evidence from the Rate Case, or alternatively, that it improperly refused to consolidate the Rate Case with the FMPA cases. As to its first argument, FMPA claims not that the excluded evidence pertains directly to the integration of its facilities, but rather that FERC has allowed Florida Power to include facilities in its rate base that are identical to FMPA facilities in terms of network benefits. According to FMPA, because the comparability principle requires equal treatment of transmission providers and users, the Commission must grant FMPA credit for facilities similar to ones the Commission allowed Florida Power to include in its rate base. We disagree.
To begin with, FMPA never argues — fatally for its position — that Rate Case evidence directly establishes that its facilities are integrated into Florida Power's network. Moreover, even if FERC treats FMPA facilities differently from similar Florida Power facilities, the Commission's denial of рricing credits does not violate the comparability principle for an obvious reason: FERC has yet to rule on FMPA's request for reductions in Florida Power's rate base. See Petitioner's Br. at 16 (noting that the Commission has not ruled on reductions in Florida Power's rate base). "As a theoretical matter," FMPA concedes, "FERC could order relief in the Rate Case." Petitioner's Br. at 20. Theоretical? That FERC "could order relief in the Rate Case" is dispositive. Until FERC resolves FMPA's request for reductions in Florida Power's rate base (one of the "reserved issues"), FERC's denial of pricing credits cannot violate the comparability principle. FERC's exclusion of Rate Case evidence was thus not an abuse of discretion.
Nor did FERC improperly refuse to consolidate the Rate Case with the FMPA proceedings. Administrative agencies enjoy "broad discretion" to manage their own dockets, Telecomm. Resellers Assoc. v. FCC,
FMPA next argues that FERC ignored evidencе demonstrating the integration of its facilities with those of Florida Power's. This contention appears to rest almost entirely on FERC's statement in FMPA III that "FMPA has not demonstrated, nor does FMPA even argue, that its facilities meet the [integration] test." FMPA III, 96 F.E.R.C. at 61,545. "These statements," FMPA insists, "show that FERC was unaware of and, therefore, could not have considered basic evidence and argument of integration." Petitioner's Br. at 21. Other statements in FMPA III, however, indicate that FERC understood FMPA's arguments and its evidence, but found them insufficient to justify granting credits. "The key issue in the case," the Commission wrote in FMPA III, "is whether FMPA's facilities are integrated with Florida Power's transmission system.... In FMPA II, the Commission found that a credit was not appropriate." FMPA III, 96 F.E.R.C. at 61,543. The Commission also discussed its core finding in FMPA II that FMPA's facilities are "interconnected with Florida Power's facilities [,] ... not integrated" with them. Id. Because FMPA presented no new evidence of integration in FMPA III — a point FMPA counsel conceded at oral argument — FERC's reliance on findings and conclusions from FMPA II was entirely appropriate.
So what did FERC mean when it said that FMPA neither argued nor presented sufficient evidence of integration? We have no idea. The Commission's brief provides no explanation, nor was agency counsel able to do so at oral argument. This enigma is not fatal, however, for under our deferential standard of review, we uphold agency decisions if supported by substantial evidence, "notwithstanding their expository shortcomings." Pan-Alberta Gas, Ltd. v. FERC,
Here, substantial evidence supports FERC's denial of pricing credits. Florida Power's expert testified that five of the seven FMPA cities at issue — Key West, Lake Worth, Clewiston, Green Cove Springs, and Jacksonville Beach — "аre interconnected only with the [Florida Power] transmission system" and that each city is essentially a "`dead-end' off the [Florida Power] system, in that ... power delivered from the Florida Power transmission system necessarily must be consumed wholly within the city." Third Adjemian Aff. ¶ 7. The expert also testified that the five FMPA facilities provide no benefit to the Florida Power network: "[W]hile the internal facilities enable each utility to distribute power within its own system, the facilities in no way reduce [Florida Power's] costs in integrating the loads of each city with all of FMPA's other network resources because they do not impact the facilities required by [Florida Power] to transmit power to and from these utilities." Id. ¶ 16. Although FMPA's other two cities — Ft. Pierce and Vero Beach — interconnеct to Florida Power's network at multiple points, Florida Power's expert testified that those "facilities do not reduce [Florida Power's] costs in providing network transmission service because the [Ft. Pierce-Vero Beach] line has a negligible electrical impact on [Florida Power's] ability to transmit power to and from the two cities." Id. ¶ 18. It is true, as FMPA points out, that the expert also testified that "a negligible amount of power can flow over the line," but the expert further explained that this flow provided no benefit to Florida Power because "even without the line, [Florida Power] is able to deliver power to retail customers in that area and to transmit power to [Florida Power's] other load centers in South Florida." Third Adjеmian Aff. ¶ 19. According to FMPA, Florida Power relied on the Ft. Pierce-Vero Beach line during a planned transmission system outage, but Florida Power presented evidence that the line may not actually have assisted its network and that it had sufficient capacity to serve its customers during the outage. See Fourth Adjemian Aff. at ¶ ¶ 2-7; Birch Aff. ¶ ¶ 7, 10.
Based on this and other record evidence, FERC concluded that "[t]he transmissiоn facilities of most FMPA members are interconnected with the Florida Power transmission system at single points that are used only to transfer power between the Florida Power transmission system and each FMPA member's transmission system." FMPA II, 74 F.E.R.C. at 61,010. The Commission further explained:
While the FMPA facilities may serve a transmission function on the FMPA side of the interconnection point between FMPA and the Florida Power system, they are not usеd by Florida Power to provide transmission service to FMPA or any other party. Nor are they used to transmit Florida Power's power to its non-FMPA customers.
Id. Crediting Florida Power's expert regarding the Ft. Pierce-Vero Beach lines, FERC also concluded that the lines were not integrated because they provided, at best, "unneeded redundancy" with Florida Power's network. Id. The Commission explained, "[a]n integrated transmission system (as opposed to two interconnected transmission systems) is comprised of transmission facilities operated as part of the same network, integrating all resources and loads on that network." Id.
To be sure, FMPA points to some contradictory evidence. See Petitioner's Br. at 22-23 (arguing that FMPA facilities benefit Florida Power by increasing reliability and that the Ft. Pierce-Vero Beach lines allow Florida Power to sell power in South Florida, increase Florida power grid capacity, and effect Florida Power planning). The question we must answer, however, is not whether record evidence supports FMPA's version of events, but whether it supports FERC's. Ark. Elec. Energy Consumers v. FERC,
FMPA's remaining challenges are equally unpersuasive. FMPA says that FERC failed to consider evidence regarding Key West. But the lone document FMPA cites never mentions Key West; instead, it discusses FMPA's general arguments regarding integration which FERC addressed in FMPA II. See Fourth Malmsjo Aff. ¶ 19. FMPA says that FERC improperly rejected its motion to lodge Florida Power's proposal to buy the Lake Worth utility (allegedly showing that Florida Power would have included Lake Worth in its rate base) and ignored Breaker Diagrams showing the configuration of Florida Power's system. But because both the Lake Worth evidence and the Breaker Diagrams relate to Florida Power's rate base, not to the integration of FMPA's facilities, FERC properly excluded them for the same reason that it properly excluded the rest of the Rate Case evidence. See supra pp. 366-67. FMPA says that the Commission applies the integration standard inconsistently, but we rejected just that argument in TAPS. See TAPS,
Finally, FMPA argues that FERC's recently published Standard Market Design Notice of Proposed Rule Making, see Remedying Undue Discrimination Through Open Access Transmission Service and Standard Electricity Market Design, 67 Fed. Reg. 55452 (Aug. 29, 2002) ("SMD-NPRM"), "appears to reflect a significant shift in Commission рolicy," Petitioner's Rep. Br. at 6-10, regarding the integration standard, thus requiring remand pursuant to Williston Basin Interstate Pipeline Co. v. FERC,
The petition for review is denied.
So ordered.