Northern Indiana Public Service Co. v. F.E.R.C., 90-1528
| Decision Date | 21 January 1992 |
| Docket Number | No. 90-1528,90-1528 |
| Citation | 954 F.2d 736 |
| Parties | NORTHERN INDIANA PUBLIC SERVICE COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Drexel D. Journey, with whom Patricia D. Ryan, Washington, D.C., was on the brief, for petitioner.
Robert K. Johnson, Indianapolis, Ind., for intervenor, Indiana Office of Utility Consumers Counselor.
Samuel Soopper, Atty., F.E.R.C., with whom William S. Scherman, Gen. Counsel, and Jerome M. Feit, Solicitor, Washington, D.C., were on the brief, for respondent.
Clifford M. Naeve, with whom John N. Estes, III, Washington, D.C., and Cheryl M. Foley, Plainfield, Ind., were on the brief, for intervenor, PSI Energy, Inc. Stephen G. Kozey, Washington, D.C., also entered an appearance for intervenor.
Earle H. O'Donnell, Washington, D.C., entered an appearance for intervenors, Ad Hoc Committee for a Competitive Elec. Supply System and American Iron and Steel Institute.
Before MIKVA, Chief Judge, SENTELLE and HENDERSON, Circuit Judges.
Opinion for the Court filed by Chief Judge MIKVA.
The Federal Energy Regulatory Commission approved an open-access tariff filed by PSI Energy, Inc., an electric utility serving parts of Indiana. Northern Indiana Public Service Company (NIPSCO), a neighboring utility whose transmission facilities are connected to PSI's, contests FERC's approval, arguing that the Commission abdicated its statutory obligations, acted without substantial evidence, and employed inadequate procedures.
We dismiss NIPSCO's claims as not yet ripe. NIPSCO's arguments all flow from the company's belief that open-access transmissions through PSI would overstress NIPSCO's facilities, imposing costs on the utility and degrading the reliability of electric service to its customers. But the Commission tells us that the orders do not authorize any specific transactions, approving merely the concept and outline of open-access transmission through PSI. Under the challenged orders, as FERC explains them to us, before any utility can use PSI's facilities to transmit electricity, the parties will have to file a service agreement with the Commission. NIPSCO, FERC promises, will be able to raise its objections to the proposed open-access transmission at that time, and FERC's decision whether to accept the filing will be subject to judicial review.
Although FERC's orders are ambiguous, we find the Commission's interpretation of its orders reasonable and so we accept it. Because NIPSCO will be able to raise its objections in a far less speculative setting than the one before us, and because NIPSCO has not convinced us that delay would cause it harm, we decline to review NIPSCO's claims at this time.
NIPSCO and PSI, which was formerly named Public Service Company of Indiana, Inc., are neighboring utilities whose transmission grids are interconnected, allowing electricity to flow back and forth between them. NIPSCO and PSI are also connected to other large electric utilities in and outside Indiana, forming part of a nationwide transmission grid.
An interconnected system for transmitting electricity has the benefit of allowing utilities to buy electricity from one another when, for example, the demand on a utility's power exceeds its ability to supply it, or when it is less expensive for a utility to purchase electricity from a neighbor than to self-generate.
An interconnected system in which utilities exchange electricity also has its drawbacks. Electricity flowing from one utility to another can enter, and possibly overload, the facilities of neighboring utilities, potentially causing brownouts and blackouts. That happens because electricity cannot be directed along specific transmission lines within the grid. When electricity reaches an intersection of several alternative transmission paths, it will flow along many if not all of them, guided by the laws of physics rather than the intention of the parties to the sales contract. Flows of power along multiple alternative paths are called "loop flows" or "parallel path flows." NIPSCO is concerned that loop flows generated by PSI's open-access program will wreak havoc with NIPSCO's transmission system, imposing on it substantial costs and harming its ability to serve its customers reliably.
On September 25, 1989, PSI filed with FERC the proposed tariffs that the Commission eventually approved with modifications and that NIPSCO now challenges. Under PSI's proposed rate tariff (designated "FS-1"), the utility would sell firm power at market rates, instead of cost. NIPSCO does not challenge FERC's approval of market-based pricing. PSI also proposed an open-access transmission tariff. PSI proposed and FERC approved open access so that the utility would not have market dominance over prospective FS-1 customers. Public Service Company of Indiana, Inc., 51 FERC p 61,367 at 62,186, 62,190-93. Under PSI's open-access tariff, the utility obliged itself to give other utilities access to PSI's transmission system upon request and at specified rates, as long as those utilities meet the criteria set forth in the tariff. Id. at 62,186. Access to PSI's facilities would ensure that suppliers other than PSI could sell electricity to prospective FS-1 customers.
On December 18, 1989, FERC suspended the FS-1 rate schedule, granted NIPSCO's motion to intervene, and requested comments on PSI's proposal and on a preliminary FERC staff analysis. Public Service Company of Indiana, 49 FERC p 61,346 (1989). In its comments, NIPSCO urged rejection of the open-access tariff. The utility's basic contention was, and remains, that open access transfers through PSI will result in loop flows that would place severe burdens on NIPSCO's transmission system, imposing costs and reducing the reliability of the service it offers customers. Approving the open-access tariff despite the effect on the reliability of NIPSCO's electric service, the utility argued, would be inconsistent with the Commission's statutory obligation to assure that rates are "just and reasonable" under the Federal Power Act, 16 U.S.C. §§ 824d(a)-(b) & 824e(a). NIPSCO also complained that FERC's procedures for considering PSI's proposed tariffs were inadequate. On March 5, 1990, NIPSCO requested that FERC abandon the "paper hearing" procedures promulgated in the December order and replace them with "trial type procedures" including full hearings; it also asked that FERC revise the original schedule to allow more time for factual development.
On June 28, 1990, FERC issued Opinion 349, the first of the orders NIPSCO challenges. Public Service Company of Indiana, Inc., 51 FERC p 61,367 (1990). In Opinion 349, the Commission approved the open-access transmission tariff as well as the FS-1 rate schedule. FERC rejected NIPSCO's arguments that open access would lead to reliability problems. Id. at 62,210-12. And, as for NIPSCO's procedural arguments, FERC concluded that oral testimony and cross examination were unnecessary in this case. Id. at 62,217-19.
NIPSCO filed a petition for rehearing and submitted new written and videotaped evidence incorporating case studies and analyses to demonstrate the likelihood of reliability and financial problems under PSI's open-access program. In Order 349-A, the second of the orders challenged in this case, FERC denied NIPSCO's request for rehearing. PSI Energy, Inc., 52 FERC p 61,260 (1990). The Commission termed "insufficient and unacceptable" NIPSCO's reasons for submitting new evidence for the first time on rehearing. Id. at 61,969. FERC nevertheless addressed the merits of the utility's motion for rehearing and rejected the utility's arguments based on the newly submitted evidence as "conclusory and speculative." Id. at 61,970.
NIPSCO now petitions for review of Orders 349 and 349-A. The utility also lists as a "ruling under review" the third and final FERC order in the same docket, PSI Energy, Inc., 53 FERC p 61,131 (1990). But we see nothing in that order relevant to NIPSCO's claims and we do not discuss it further.
Settled principles of ripeness require that we postpone review of administrative decisions where (1) delay would permit better review of the issues while (2) causing no significant hardship to the parties. See Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967); State Farm Mut. Auto. Ins. Co. v. Dole, 802 F.2d 474, 480 (D.C.Cir.1986), cert. denied sub nom. New York v. Dole, 480 U.S. 951, 107 S.Ct. 1616, 94 L.Ed.2d 800 (1987). The consequences of postponing review in this case turn on the meaning of the challenged orders. If, as NIPSCO contends, the orders authorize PSI to provide open-access service...
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