Northern States Power Co. v. F.E.R.C.
| Decision Date | 14 May 1999 |
| Docket Number | No. 98-3000,98-3000 |
| Citation | 176 F.3d 1090 |
| Parties | Util. L. Rep. P 14,269 NORTHERN STATES POWER COMPANY, a Minnesota Corporation; Northern States Power Company, a Wisconsin Corporation; Petitioners, Minnesota Department of Public Service; Dairyland Power Cooperative, Intervenor on Appeal, v. FEDERAL ENERGY REGULATORY COMMISSION; Respondent, Wisconsin Electric Power Company; Southern Minnesota Municipal Power Agency; Missouri River Energy Services; Enron Power Marketing Incorporated, Intervenor on Appeal, |
| Court | U.S. Court of Appeals — Eighth Circuit |
Timothy Robert Thornton, Minneapolis, MN, argued (Michael C. Krikava and Gary R. Johnson, Minneapolis, MN, Dewey Ballantine, Washington, DC, on the brief), for petitioner.
Jeffrey L. Landsman, Madison, WI, argued, for intervenor Dairyland Power.
Larry D. Gasteiger, Washington, DC, argued (Jay L. Witkin and John H. Conway, Washington, DC, on the brief), for respondent.
Byron E. Starns, St. Paul, MN, argued, for intervenor Wisconsin Electric.
Jeffrey D. Watkiss, Washington, DC, argued, for intervenor Enron Power.
Before FAGG, LAY, and WOLLMAN, Circuit Judges.
On April 24, 1996, the Federal Energy Regulatory Commission ("FERC") promulgated Order No. 888 1 requiring "all public utilities that own, control or operate facilities used for transmitting electric energy in interstate commerce to have on file open access non-discriminatory transmission tariffs that contain minimum terms and conditions of non-discriminatory service." Order No. 888, 61 Fed.Reg. 21,540 (1996). FERC's stated goal was to encourage competition in the wholesale bulk power market place "and to bring more efficient, lower cost power to the Nation's electricity consumers." Id. Order No. 888 FERC rejected the proposed changes to the NSP Tariff's curtailment provisions on the grounds that: 1) NSP had defined curtailment priorities only through general references to unexplained procedures; 2) NSP had failed to demonstrate that the proposed terms were consistent with, or superior to, the pro forma tariff terms required by Order No. 888; and 3) NSP's description of the proposed procedures was misleading. Thereafter NSP filed this petition for review. On August 25, 1998, this court denied NSP's stay request and shortly thereafter denied FERC's motion to transfer the case to the United States Court of Appeals for the District of Columbia, or to hold the case in abeyance pending the omnibus appeal of FERC's Order No. 888 rule-making in the D.C. Circuit.
became final and effective on July 9, 1996. Thereafter, Northern States Power Company ("NSP") filed proposed revisions of its Open Access Transmission Tariff ("NSP Tariff") 2 to comply with the requirements of FERC Orders Nos. 888, 888-A, 888-B and 888-C and to file new tariffs that were consistent with the pro forma tariff of Order No. 888.
Initially, FERC has moved to dismiss these proceedings for lack of jurisdiction. It argues that the petitions for review filed by NSP constitute a collateral attack upon Order 888. In essence, NSP challenges FERC's regulation and possible curtailment of bundled retail electric sales, 3 arguing that such actions are outside of FERC's jurisdiction. In its Curtailment Orders, both rejecting and accepting NSP's petitions, FERC failed to raise the issue of collateral attack. Nevertheless, FERC now asserts that NSP's proposed revisions were not timely and should have been made at the time Order No. 888 was being promulgated. It urges that the belated challenges by NSP should have been included in the rule-making proceedings pending before the United States Court of Appeals for the District of Columbia. We disagree.
Section 313(b) of the Federal Power Act ("FPA"), 16 U.S.C. § 825l (b), provides that "[a]ny [aggrieved] party to a proceeding under [the FPA] ... may obtain a review of such order in the United States Court of Appeals for any circuit wherein ... the public utility to which the order relates is located or has its principal place of business." Id. The proceedings in this petition for review relate to the proposed tariffs filed by NSP pursuant to Order No. 888. Involved are the differing interpretations of the Orders as they affect the tariffs filed by NSP.
FERC asserts, as it must, that it has no intention of regulating retail sales to NSP customers, while also maintaining that its curtailment provisions apply only to wholesale sales, over which it has explicit jurisdiction. FERC concedes that its jurisdiction relates only to terms and conditions of electric transmission service provided by public utilities engaged in interstate commerce. See Respondent's Brief at 34. FERC's order requires that there be no discrimination in curtailment of electrical power when power constraints take place between the wholesale customer, who falls under FERC's jurisdiction, and the native/retail consumers, who are regulated solely by the state. See Order Denying Requests for Clarification, Rehearing and Stay, 84 FERC p 61,128 (1998). NSP points out that under FERC's interpretation We conclude that these adverse arguments defeat FERC's jurisdictional objections and lay bare the distinction between the rule-making proceedings pending before the United States Court of Appeals for the District of Columbia and the present petition for review in this case. We therefore reject FERC's argument to dismiss for lack of jurisdiction.
the direct effect of FERC's curtailment orders will cause a nonjurisdictional disruption of service affecting NSP's native/retail consumers.
The fundamental issue to be decided on this appeal is whether FERC may, through its tariff orders, require NSP, a state public utility, to curtail electrical transmission to wholesale (point-to-point) customers on a comparable basis with its native/retail consumers when it experiences power constraints. FERC acknowledges that it cannot permissibly affect state regulation of retail rates and practices. FERC argues that it has simply required that, as to transmission curtailment, NSP may not discriminate against a third party in favor of its own native/retail consumers. Thus, it asserts that Order No. 888 makes clear that a transmission provider must curtail electrical transmission on a comparable and nondiscriminatory basis, including the provider's own use of the system. Under the tariff, public utilities will not be allowed to continue curtailment practices that give priority to bundled, native/retail load consumers over point-to-point users involved in interstate commerce. FERC suggests that there is no justiciable issue here. It reasoned:
The pro forma tariff requires comparability of curtailments when consistent with Good Utility Practice. The Commission would not expect NSP Companies to violate Good Utility Practice when implementing curtailments. Further, the pro forma tariff allows the Transmission Provider the discretion to curtail firm transmission service when an emergency or other unforeseen condition impairs or degrades the reliability of its transmission system. Absent such system reliability concerns, however, NSP Companies must engage in a pro-rata curtailment.
Order on Requests for Clarification, 83 FERC p 62,338 (1998).
However, the mere fact that the provider may exercise curtailments within its sole discretion is not the problem. The problem arises when NSP exercises its discretion to curtail service, but may then do so only by curtailing both wholesale and native/retail electric sales on an equal basis and not by giving preferential treatment to its native/retail load. Thus, NSP argues, when there exists a power constraint, by providing curtailment to its native/retail consumers on a pro rata basis with wholesale users, NSP will be forced to provide interruptible service to its native/retail consumers. When such power outages occur, a pro rata curtailment will detrimentally affect native/retail consumers who have no other alternatives available to obtain electrical service. NSP urges that when wholesale (point-to-point) customers are curtailed in electrical transmission, the wholesale customer has alternative sources from which to obtain continuous electrical supply, through either the purchase of electricity from another provider, or via their own power generation facilities. Illustrative of this argument, NSP points to the circumstances involving Wisconsin Electric Power Company ("WEP"), an intervenor in this proceeding, and itself when WEP experienced curtailment of electrical transmission by NSP in the summer of 1998. WEP had to resort to alternative power, albeit at a higher price due to the emergency curtailment. 4 Unless we totally miscomprehend the arguments involved, we feel that FERC's observation that no inherent conflict exists between its mandates and practical application is viewed through an adversarial bias.
The more fundamental issue involved here, aside from the practicalities of the situation, is whether FERC has the jurisdiction to affect the curtailment practices of NSP when dealing with NSP's native/retail consumers. FERC argues that it does not, in any way, attempt to affect state regulation of retail rates and practices. At the same time, FERC points out that its jurisdiction over interstate sales is not made in a vacuum. As in Conway Corp. v. FPC, 510 F.2d 1264 (D.C.Cir.1975), aff'd sub nom., FPC v. Conway Corp., 426 U.S. 271, 96 S.Ct. 1999, 48 L.Ed.2d 626 (1976), it argues the jurisdiction of the FPC is not "insulated from nonjurisdictional factors." Id. at 1272. In Conway, an electric utility was engaged in jurisdictional (wholesale) and nonjurisdictional (retail) sales. A portion of the utility's wholesale customers competed against it by reselling gas purchased from the utility to other retail consumers. The wholesale customers alleged that the wholesale price was inflated in order to prevent them from competing for retail...
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