03-3339 | 3rd Cir. | Aug 9, 2004
NYGAARD, Circuit Judge.
In this appeal, Utilimax argues that *Honorable Milton I. Shadur, Senior the District Court erred when it dismissed District Judge for the United States its claims against PPL Energy Plus, LLC District Court for the Northern District of and PPL Energy Corporation (collectively Illinois, sitting by designation. “PPL”) based on the filed rate doctrine. contract with an entity that could supply it We will affirm the District Court’s order. with capacity, or it could purchase its
needed capacity in an auction market.
I.
Both the contractual and auction market A. The Regulatory Scheme options were regulated by FERC and authorized by PJM Interconnection, the The factual underpinnings of this FERC-established regional wholesale suit involve the wholesale and retail electricity market that coordinated the electrical energy markets in Pennsylvania. buying, selling and delivery of wholesale The wholesale market for electrical energy electricity. is regulated by the Federal Energy Regulatory Commission (“FERC”). See In the PJM daily auction market, Federal Power Act, 16 U.S.C. §§ 791a- which is the market relevant to this appeal, 828c. One of FERC’s duties is to set “‘just entities with excess capacity were able to and reasonable’” wholesale electric rates. sell capacity credits to retail suppliers See 16 U.S.C. §§ 824d, 824e. During the seeking to meet their daily obligations. period relevant to this appeal, FERC Those sellers offered their excess capacity utilized a market-based rate to determine at a price they set – a “sell offer.” The the cost of wholesale electricity. Under retail suppliers purchasing capacity credits this scheme, any retail supplier of made an offer to purchase capacity by electricity in Pennsylvania had to have placing a bid called a “buy bid.” Once all sufficient capacity [1] to provide one day’s the sell offers and buy bids were placed, worth of the electrical energy to those PJM set the market-clearing price by customers the retail supplier had ranking all sell offers and buy bids and contracted to serve. determining at what price the next sell
offer is equal to or less than the next buy A retail supplier could satisfy its bid. Once the market-clearing price was capacity obligations in one of two ways. It set, sellers who offered energy at or below could cover its retail contractual obligation that price received the market-clearing by having the ability to generate its own price and buyers who bid at or above that electrical energy. Alternatively, it could price paid it to obtain the capacity they purchase capacity credits from other need. entities. If the retail supplier chose to purchase energy to satisfy its capacity A regulatory penalty for failing to obligations, it again had two general meet capacity obligations added an choices. It could enter into a bilateral additional dimension to this auction
mechanism. If a retail supplier of electricity failed to meet its capacity obligations for a given day, it then had to
1. Capacity refers to the retail supplier’s pay a penalty (the “capacity deficiency ability to generate electrical energy. rate” or “CDR”). During the time period relevant to this appeal, the FERC- CDR for its excess energy either by approved CDR was $177.30/MW-day. offering it for sale in the daily auction This penalty was doubled on days when market at the CDR price or by simply there was an overall shortage of available collecting CDR revenues from any retail capacity. supplier that failed to meet its capacity
obligations. According to Utilimax, PPL The revenue from the CDR was engaged in these practices during the first given by PJM to entities that had unused quarter of 2001. As a result of this excess capacity and had made that capacity conduct, CDR revenues during that quarter available to the PJM. Thus, in essence, the were $11,767,541, compared to CDR penalty system forced deficient retail revenues of $1,000 or less during the suppliers of electricity to purchase their fourth quarter of 2000. PPL received needed capacity from entities with almost all of the CDR revenues for the available excess capacity at the CDR. first quarter of 2001. B. Utilimax and PPL’s roles in the Utilimax claims that PPL’s actions electrical energy market and the violated § 2 of the Sherman Act, §§ 1 and complained of conduct . 3 of the Clayton Act and various Utilimax was a retail supplier of Pennsylvania state laws. The District electricity that was licensed to purchase Court dismissed Utilimax’s complaint electrical energy in the wholesale market because it found that the filed rate doctrine and resell that energy to end-users of barred the claims. electricity in Pennsylvania. Utilimax was
II.
not capable of generating its own electricity and, therefore, had to purchase We have jurisdiction over this sufficient capacity to meet its capacity appeal under 28 U.S.C. § 1291 and obligations. During the relevant period of exercise de novo review over the District Court’s decision to dismiss Utilimax’s time, it used the PJM daily auction market as its primary method for satisfying its complaint pursuant to Federal Rule of capacity obligations. Civil Procedure 12(b)(6). Mariana v.
Fisher , 338 F.3d 189" date_filed="2003-07-30" court="3rd Cir." case_name="Mariana v. Fisher">338 F.3d 189, 195 (3d Cir. 2003). PPL is both a retail supplier of electricity and a seller of electricity in the The filed rate doctrine, and its wholesale market. According to exceptions, are central to this appeal. That Utilimax’s complaint, during the first doctrine bars antitrust suits based on rates quarter of 2001 PPL was the only entity that have been filed and approved by that had excess capacity available that federal agencies. In re Lower Lake Erie Utilimax could purchase to satisfy its Iron Ore Antitrust Litig. , 998 F.2d 1144" date_filed="1993-07-26" court="3rd Cir." case_name="In Re Lower Lake Erie Iron Ore Antitrust Litigation (Mdl No. 587). (Nineteen Cases). Wills Trucking v. Baltimore & Ohio Railroad Company">998 F.2d 1144, capacity obligations. Thus, under the 1157-58 (3d Cir. 1993); Keogh v. Chicago regulatory system described above, PPL & N.W. Ry. Co. , 260 U.S. 156, 162-63 (1922). The doctrine operates to bar both was able to ensure that it received the federal antitrust actions and state law competitor exception to the filed rate claims. See Arkansas Louisiana Gas Co. doctrine exists because “competitors are v. Hall , 453 U.S. 571" date_filed="1981-07-02" court="SCOTUS" case_name="Arkansas Louisiana Gas Co. v. Hall">453 U.S. 571, 580 (1981). Under not the intended beneficiaries of that rule the filed rate doctrine, a plaintiff may not of public utility regulation.” 610 F.2d sue the supplier of electricity based on 1114, 1121 (3d Cir. 1979). Based on this rates that, though alleged to be the result of reason, we refused to apply the filed rate anticompetitive conduct, were filed with doc trine to bar the suit of a the federal agency responsible for communications company’s competitor overseeing such rates. See Montana- based on the company’s actions in Dakota Utils. Co. v. N. W. Pub. Serv. Co. , formulating a tariff and in customer 341 U.S. 246" date_filed="1951-05-07" court="SCOTUS" case_name="Montana-Dakota Utilities Co. v. Northwestern Public Service Co.">341 U.S. 246, 251-52 (1951). service. Id. at 1122. Similarly, in Lower
Lake Erie , we held that the railroads’ Utilimax is claiming that PPL competitors were not precluded by the exerted undue market influence over the filed rate doctrine from suing the railroads wholesale capacity market and, as a result, for their antitrust activities. Lower Lake was able to charge excessive rates for its Erie , 998 F.2d 1144" date_filed="1993-07-26" court="3rd Cir." case_name="In Re Lower Lake Erie Iron Ore Antitrust Litigation (Mdl No. 587). (Nineteen Cases). Wills Trucking v. Baltimore & Ohio Railroad Company">998 F.2d at 1161. capacity. Those rates, though allegedly excessive, were the result of PPL’s Utilimax claims that because it temporary monopolistic position in the competes with PPL in the retail energy wholesale capacity market that was supply market, it is a competitor and, established and approved by FERC and therefore, the filed rate doctrine does not PJM. Other than a brief and unconvincing prevent its antitrust claims. PPL argues argument that PPL violated the “sound that while Utilimax is a competitor of PPL utility practices” and “good faith” in the retail electrical energy market, it is a requirements of PJM, Utilimax makes no customer in the wholesale market and it is claim that PPL charged rates that were not PPL’s actions in the wholesale market that in conformity with the requirements of the Utilimax is alleging were anticompetitive. FERC and PJM -approved market model. Thus, we must determine whether Thus, absent an exception, the filed rate Utilimax is suing as a competitor of PPL doctrine precludes Utilimax’s claims or as a customer. against PPL.
We are not the first court to have to Utilimax argues the District Court parse the capacity in which a plaintiff was erred in not accepting either of the two suing. In Georgia v. Pennsylvania R.R. pertinent exceptions to the doctrine – the Co. , the State of Georgia sued the c o m p e t i t o r a n d t h e n o n - r a t e defendant railroads for what it alleged to anticompetitive activity exceptions. be a conspiracy to fix their rates “so as to
prefer the ports of other States over the In Essential Communications ports of Georgia.” 324 U.S. 439, 443 Systems, Inc. v. American Telephone & (1945). Georgia sued the railroads in two Telegraph Co. , we explained that a relevant capacities: In its parens patriae capacity on behalf of its residents and as crushed and eviscerated by the owner of a competing railroad the artificially inflated company. Id. The Supreme Court prices set by PPL. determined that Georgia’s real claims were
J.A. at 47. in its parens patriae capacity, and its claim as a compet it or w as m er ely a The only fair reading of these “makeweight.” Id. at 450. Having so allegations is that Utilimax, as a customer concluded, the Court went on to hold that in the wholesale electricity market, could in its parens patriae capacity Georgia was not afford to pay the rates that PPL was suing on behalf of Georgia citizens who able to charge because of its allegedly were customers of the railroad. Therefore, anticompetitive conduct. The result of based on the filed rate doctrine, it could Utilimax’s inability to buy capacity offered not maintain its antitrust claims to the by PPL in the wholesale market was that it extent they were seeking damages based went out of business in the retail market on the defendant railroads’ alleged and PPL had one fewer competitor in that conspiracy to fix rates. Id . at 453 (relying latter market. That result, however, came on Keogh , 260 U.S. at 161-63). about because Utilimax (as a customer of
PPL) could not afford to buy capacity. The Supreme Court in Georgia had While the ramifications were felt in its the benefit of the plaintiff expressly stating competitor role, the damage to Utilimax the two different capacities in which it was occurred because of its status as a suing. Here, Utilimax argues that it is customer of PPL. As Utilimax states in its suing only as a competitor, not as a complaint, “[Utilimax] was required to customer. Its complaint, however, belies cover its capacity requirements per PJM this argument. In describing the conduct rules and was compelled to buy capacity of PPL that Utilimax claims violated the delivered by PPL under these Sherman Act, the Clayton Act and various anticompetitive conditions .” J.A. at 48 state laws, Utilimax alleges that PPL (emphasis added). exercised undue market power over the wholesale electricity market and, as a It hardly needs stating that when an result entity buys something from another entity
there is a customer/seller relationship for 65. Utilimax was effectively that transaction, even if the two entities are put out of business, as it competitors under other circumstances. could not operate under the See, e.g. , Montana-Dakota Utils. , 341 U.S. burden of the artificially at 251-52 (applying the substance of the inflated capacity prices . . . filed rate doctrine, without calling it such, 66. Utilimax and many to a suit where the plaintiff, who was a other [retail suppliers of competitor of the defendant in the electric electricity] simply were utility business, was suing based on rates it
negotiated with the defendant to purchase wholly separate from rates, here Utilimax electric energy and those rates were filed alleges that PPL simply positioned itself in with and accepted by FERC’s predecessor the wholesale capacity market to be able to commission). Based on Utilimax’s charge exorbitant rates for capacity. allegations, it is clear that although it may Utilimax does not allege any non-rate have been a competitor with PPL in one anticompetitive activity, but simply claims market, it was a customer in the wholesale that PPL exploited its market position by market. And it is PPL’s actions in that raising its rates. Therefore, Utilimax’s latter market that form the corpus of claims are not saved from the filed rate Utilimax’s complaint. Therefore, Utilimax doctrine by the non-rate anticompetitive does not qualify as a competitor of PPL activity exception. with respect to its claims, and the
III.
competitor exception to the filed rate doctrine does not apply. For the foregoing reasons, we will
affirm the District Court’s order. Utilimax also argues that the filed rate doctrine should not apply because its claims allege non-rate anticompetitive activity on the part of PPL. In Lower Lake Erie , several groups of plaintiffs sued various railroad companies alleging that those companies engaged in activities designed to prevent a new technology from entering the iron ore transportation market. 988 F.2d at 1154. According to the plaintiffs, this new technology would have allowed lower cost, non-railroad owned docks to enter the market for transporting iron ore from the shores of Lake Erie to inland sites. Id. We held that even those plaintiffs who were customers of the railroads, and who did not therefore qualify for the competitor exception to the filed rate doctrine, could maintain their suit against the railroads because their claims rested on non-rate anticompetitive activity. Id. at 1161.
Whereas Lower Lake Erie dealt with the defendant railroads’ activities related to a technological innovation