Justia U.S. D.C. Circuit Court of Appeals Opinion Summaries

Duke generates electricity for Power, a “joint agency” of 32 North Carolina municipalities. Power pays Duke an Energy Charge that “reimburses Duke only for its fuel costs and variable operations and maintenance costs associated with producing the energy consumed by Power" and a Capacity Charge, designed to cover Duke’s fixed costs and provide a return on its infrastructure investments, calculated by determining its pro-rata share of the demand on Duke’s system during a one-hour “snapshot” of system usage taken during the peak hour on Duke’s system each month.Their agreement regulates activities Power may employ to modify its electricity use, including Demand-Side Management and Demand Response. Demand-Side Management involves end-users accepting an inducement to sign up for a program where Power can turn off and on their appliances around high-demand periods. Demand Response involves a supplier providing end-users information on the price of energy at a given time and those end users then modifying their consumption to avoid elevated prices.In 2019, Power petitioned the Federal Energy Regulatory Commission (FERC) arguing that the provisions that permit Demand-Side Management and Demand Response activities permit deploying battery storage technology to reduce metered demand during peak load periods and drawing from those batteries during the high-demand “snapshot” hour. Concerned that Power would reduce its Capacity Charge to zero, Duke opposed the petition. The D.C. Circuit affirmed FERC’s grant of Power’s petition, finding that the agreement permits Power to use battery storage technology as either Demand-Side Management or Demand Response. View "Duke Energy Progress, LLC v. Federal Energy Regulatory Commission" on Justia Law

The DC Circuit granted the City's petitions for review of FERC orders rejecting the City's complaint regarding periodic outflow coming from the operation of the Pensacola Project, a downstream dam licensed by FERC. The court found FERC's position unpersuasive and remanded for the Commission to determine the role of the Corps, the responsibility the Authority bears if it caused flooding in the City, analyze the evidence petitioner has produced, and finally interpret the Pensacola Act. View "The City of Miami, Oklahoma v. Federal Energy Regulatory Commission" on Justia Law

Several utilities that are managed by the Southwest Power Pool (SPP), a regional transmission operator, paid for upgrades to the transmission grid. The operative tariff required other utilities who benefitted from these upgrades to share the costs of the expanded network. The tariff, however, also required SPP to invoice the charges monthly and to make adjustments within one year. The reimbursement calculation proved complicated. It took SPP eight years to implement it, during which time SPP did not invoice for the upgrade charges. FERC initially granted SPP a waiver of the tariff’s one-year time bar but later determined it lacked the authority to waive this provision retroactively. FERC’s revised determination meant the utilities that had made substantial outlays for upgrades were denied reimbursement for the eight years that had elapsed.The D.C. Circuit denied petitions for review filed by SPP and a company that sponsored upgrades and has been denied reimbursement. Once a tariff is filed, FERC has no statutory authority (16 U.S.C. 824d(d)) to provide equitable exceptions or retroactive modifications to the tariff. SPP may impose only those charges contained in the filed rate. Because the one-year time bar for billing is part of the filed rate, FERC could not retroactively waive it, even to remedy a windfall for users of the upgraded networks. View "Oklahoma Gas and Electric Co. v. Federal Energy Regulatory Commission" on Justia Law

Entergy, a public utility holding company, owns five operating companies that sell electricity in four states, including Louisiana. The companies have been governed by an agreement requiring them to act as a “single economic unit” and requiring “rough equalization” of their production costs. In 2005, the Federal Energy Regulatory Commission (FERC) determined that the production costs were not roughly equal and imposed a “bandwidth remedy”: Whenever the yearly production costs of an individual operating company deviated from the average by more than 11%, companies with lower costs were required to pay companies with higher costs as necessary to bring all five companies within that range. Entergy filed a tariff establishing a formula to calculate production costs subject to the bandwidth remedy, which FERC largely accepted.Utilities often spread their recovery of large, non-recurring costs by creating a regulatory asset, a type of credit. The company then amortizes the asset in later years, creating debits chargeable to customers. Historically, the Entergy companies recorded regulatory assets and their related amortization expenses in FERC accounts not referenced in the bandwidth formula; this effectively accounted for deferred production costs when they were incurred, rather than when the related amortization expenses were recorded. FERC rejected that approach and excluded purchased-power costs that a Louisiana affiliate incurred in 2005 and amortized in 2008 and 2009.The D.C. Circuit denied the Louisiana Public Service Commission’s petition for review. The Federal Power Act requires electric utilities to charge “just and reasonable” rates. 16 U.S.C. 824d(a). If FERC finds a rate unreasonable, it may establish a just and reasonable rate; FERC may reallocate production costs under the Entergy system agreement, including by ensuring compliance with the bandwidth remedy. View "Louisiana Public Service Commission v. Federal Energy Regulatory Commission" on Justia Law

A 2015 auction for electrical capacity (commitments by power plants to provide electricity to utilities in the future) in Illinois produced a striking result. Capacity in neighboring regions uniformly sold for less than $3.50 per megawatt-day; in a region covering much of Illinois, the auction resulted in capacity prices of $150 per megawatt-day, a nearly ninefold increase from the prior year’s price of $16.75. The Federal Energy Regulatory Commission identified numerous problems with the existing auction rules and ordered that the rules be changed prospectively. FERC also launched an investigation into potential market manipulation in the 2015 Auction but later ruled that the identified flaws in the auction rules and the high price range those rules established, plus the allegations of market manipulation, did not call into question the 2015 Auction or the price it produced.The D.C. Circuit granted a petition for review in part. Under the Federal Power Act, 16 U.S.C. 791, FERC need not approve every auction price before it goes into effect. That is not what the market-based rate scheme requires. However, FERC’s analysis of the 2015 Auction, was arbitrary and capricious; it failed to adequately explain why the problems it identified in the existing auction rules affecting pricing— problems it ordered fixed going forward—did not also affect the fairness of the 2015 Auction. View "Public Citizen, Inc. v. Federal Energy Regulatory Commission" on Justia Law

The Federal Energy Regulatory Commission authorized the construction and operation of three liquified natural gas (LNG) export terminals on the shores of the Brownsville Shipping Channel in Cameron County, Texas, and the construction and operation of two 135-mile pipelines that will carry LNG to one of those terminals. Objectors filed challenges under the National Environmental Policy Act (NEPA), 42 U.S.C. 4332(2)(C); the Administrative Procedure Act (APA), and the Natural Gas Act (NGA), 15 U.S.C. 717b(a).The D.C. Circuit dismissed the petition concerning the Annova Terminal as moot, and granted the petitions with respect to the Rio Grande and Texas Terminals, without vacatur. The Commission’s analyses of the projects’ impacts on climate change and environmental justice communities were deficient under NEPA and the APA, and the Commission failed to justify its determinations of public interest and convenience under Sections 3 and 7 of the NGA. On remand, the Commission must explain whether 40 C.F.R. 1502.21(c) requires it to apply the social cost of carbon protocol or some other analytical framework, as “generally accepted in the scientific community” within the meaning of the regulation, and if not, why not. View "Vecinos para el Bienestar de la Comunidad Costera v. Federal Energy Regulatory Commission" on Justia Law

The Clean Air Act’s Renewable Fuel Standard Program (42 U.S.C. 7547(o)(2)(A)(i)) calls for annual increases in the amount of renewable fuel introduced into the U.S. fuel supply and sets annual targets for renewable fuel volumes. Each year, EPA implements those targets but has certain waiver authorities to reduce the annual targets below the statutory levels. Companies that produce renewable fuels argued that EPA’s 2019 volume levels (83 Fed. Reg. 63,704) were too low; fuel refiners and retailers argued that the 2019 volumes were too high. Environmental organizations challenged various aspects of the 2019 Rule relating to environmental considerations.The D.C. Circuit denied their petitions for review except for the environmental organizations’ challenges concerning whether the 2019 Rule would affect listed species, which it remanded without vacatur. The court upheld EPA’s 2019 continuation of its practice of granting exemptions to small refineries after promulgating the annual percentage standards; EPA’s decision to exclude electricity generated from renewable biomass (a form of cellulosic biofuel) from its cellulosic biofuel projection in the 2019 Rule; EPA’s determination that the 2019 volumes would not cause severe economic harm; and EPA’s decision not to obligate ethanol blenders under the RFS Program. EPA adequately explained its refusal to exercise the inadequate domestic supply waiver. EPA did not act arbitrarily in estimating that 100 million gallons of sugarcane ethanol were “reasonably attainable” for 2019. View "Growth Energy v. Environmental Protection Agency" on Justia Law

The Federal Energy Regulatory Commission regulates the transmission and wholesale of electric energy in interstate commerce, 16 U.S.C. 824(b), and must approve changes to any rate or charge. PJM, a regional transmission organization that manages an electric grid covering 13 Mid-Atlantic and Midwestern states and the District of Columbia, meets its obligation to ensure sufficient generating capacity by conducting a yearly auction in which electricity suppliers submit offers to be available to provide capacity during a one-year period, three years in the future. The Variable Resource Requirement Curve (VRR Curve) represents the prices that consumers should pay for varying quantities of capacity. The intersection of the VRR and supply curves dictates the amount of capacity committed and the price suppliers are paid. The VRR Curve is set based on the amount of capacity that must be produced to meet peak demand to allow no more than one power outage every decade and how much revenue a hypothetical new generator (Reference Resource) would need to earn in the capacity market to justify construction.The Commission accepted PJM;s proposed revisions to the capacity market auction mechanism: keeping a combustion turbine plant as its Reference Resource and increasing the value of the Reference Resource’s estimated offer to supply energy by 10% (10% adder). The D.C. Circuit affirmed the approval of the Reference Resource as just and reasonable but vacated the approval of the 10% adder. View "Delaware Division of the Public Advocate v. Federal Energy Regulatory Commission" on Justia Law

Spire planned to build a St. Louis-area pipeline and unsuccessfully solicited natural gas “shippers” to enter into preconstruction “precedent agreements.” Spire later entered into a precedent agreement with its affiliate, Spire Missouri, for 87.5 percent of the pipeline’s projected capacity. Spire applied to the Federal Energy Regulatory Commission (FERC) for a certificate of public convenience and necessity (Natural Gas Act, 15 U.S.C. 717f(c)(1)(A)), conceding that the proposed pipeline was not needed to serve new load but claiming other benefits. As evidence of need, Spire relied on its precedent agreement with Spire Missouri. FERC released an Environmental Assessment, finding no significant environmental impact. EDF challenged Spire’s application, arguing that the precedent agreement should have limited probative value because the companies were corporate affiliates. The Order approving the new pipeline principally focused on the precedent agreement.The D.C. Circuit vacated the approval. FERC may issue a Certificate only if it finds that construction of a new pipeline “is or will be required by the present or future public convenience and necessity.” Under FERC’s “Certificate Policy Statement,” if there is a need for the pipeline, FERC determines whether there will be adverse impacts on existing customers, existing pipelines, or landowners and communities. If adverse stakeholder impacts will result, FERC balances the public benefits against the adverse effects. FERC’s refusal to address nonfrivolous arguments challenging the probative weight of the affiliated precedent agreement did not evince reasoned and principled decision-making. FERC ignored evidence of self-dealing and failed to thoroughly conduct the interest-balancing inquiry. View "Environmental Defense Fund v. Federal Energy Regulatory Commission" on Justia Law

The Union of Concerned Scientists sought review of a Department of Energy (DOE) rule concerning the designation of “critical electric infrastructure information,” 16 U.S.C. 824o-1(a)(3), exempted from FOIA disclosure and not to be “made available by any Federal, State, political subdivision or tribal authority pursuant to any Federal, State, political subdivision or tribal law requiring public disclosure of information or records.”The Union, a national nonprofit organization consisting of scientists, engineers, analysts, and policy and communication experts who conduct “independent analyses,” argued that the rule exceeds the Department’s authority under section 215A of the Federal Power Act, is arbitrary and capricious, and was promulgated in violation of the notice and comment requirements of the Administrative Procedure Act. The D.C. Circuit dismissed the petition for lack of Article III standing. There is no indication that DOE’s rule would deprive the Union or its members of information they would receive if DOE were to apply a 2016 Rule promulgated by the Federal Energy Regulatory Commission. View "Union of Concerned Scientists v. United States Department of Energy" on Justia Law