Nw. Requirements Utilities v. Fed. Energy Regulatory Comm'n

• Decision Date: 10 August 2015
• Docket Number: Nos. 13–70391,13–70581,13–70499,13–72928.,s. 13–70391
• Citation: 798 F.3d 796
• Parties: NORTHWEST REQUIREMENTS UTILITIES ; Public Power Council ; The City of Seattle, Petitioners, Powerex Corporation; Sacramento Municipal Utility District; Turlock Irrigation District; Avista Corporation; Cannon Power Corporation, Caithness Shepherds Flat, LLC; E. On Climate & Renewables North America LLC; Eurus Combine Hills II LLC; Iberdrola Renewables, LLC ; M–S–R Public Power Agency; Northwest Utilities ; Puget Sound Energy, Inc.; PacifiCorp; Portland General Electric Company; Public Utility District No. 1 of Snohomish County, Washington ; PPL Montana, LLC; Charles Pace, Intervenors, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. National Rural Electric Cooperative Association; Pacific Northwest Generating Cooperative; American Public Power Association, Petitioners, Caithness Shepherds Flat, LLC; Cannon Power Corporation ; E. On Climate & Renewables North America LLC; Eurus Combine Hills II LLC; Iberdrola Renewables, LLC ; M–S–R Public Power Agency; Northwest Utilities ; Puget Sound Energy, Inc.; PacifiCorp; Powerex Corporation; Sacramento Municipal Utility District; Turlock Irrigation District; PPL Montana, LLC; Public Utility District No. 1 of Snohomish County, Washington ; Charles Pace, Intervenors, v. Federal Energy Regulatory Commission, Respondent. Public Utility District No. 1 of Snohomish County, Washington, Petitioner, Caithness Shepherds Flat, LLC; Cannon Power Corporation ; E. On Climate & Renewables North America LLC; Eurus Combine Hills II LLC; Iberdrola Renewables, LLC ; M–S–R Public Power Agency; Northwest Utilities ; Puget Sound Energy, Inc.; PacifiCorp; Powerex Corporation; Sacramento Municipal Utility District; PPL Montana, LLC; Charles PACE, Intervenors, v. Federal Energy Regulatory Commission, Respondent. Northwest Requirements Utilities ; Public Power Council ; The City of Seattle ; Public Utility District No. 1 of Snohomish County, Washington ; National Rural Electric Cooperative Association; Pacific Northwest Generating Cooperative; American Public Power Association, Petitioners, EDP Renewables North America LLC ; Industrial Customers of Northwest Utilities ; M–S–R Public Power Agency; Northwest and Intermountain Power Producers Coalition; Puget Sound Energy, Inc; Portland General Electric Company; Powerex Corporation; Sacramento Municipal Utility District; Transalta Energy Marketing (U.S.), INC., Intervenors, v. Federal Energy Regulatory Commission, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

798 F.3d 796

NORTHWEST REQUIREMENTS UTILITIES ;

Public Power Council ;

The City of Seattle, Petitioners

Powerex Corporation;

Sacramento Municipal Utility District;

Turlock Irrigation District;

Avista Corporation;

Cannon Power Corporation, Caithness Shepherds Flat, LLC;

E. On Climate & Renewables North America LLC;

Eurus Combine Hills II LLC;

Iberdrola Renewables, LLC ;

M–S–R Public Power Agency;

Northwest Utilities ;

Puget Sound Energy, Inc.;

PacifiCorp;

Portland General Electric Company;

Public Utility District No. 1 of Snohomish County, Washington ;

PPL Montana, LLC;

Charles Pace, Intervenors

v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

National Rural Electric Cooperative Association;

Pacific Northwest Generating Cooperative;

American Public Power Association, Petitioners

Caithness Shepherds Flat, LLC;

Cannon Power Corporation ;

E. On Climate & Renewables North America LLC;

Eurus Combine Hills II LLC;

Iberdrola Renewables, LLC ;

M–S–R Public Power Agency;

Northwest Utilities ;

Puget Sound Energy, Inc.;

PacifiCorp;

Powerex Corporation;

Sacramento Municipal Utility District;

Turlock Irrigation District;

PPL Montana, LLC;

Public Utility District No. 1 of Snohomish County, Washington ;

Charles Pace, Intervenors

v.Federal Energy Regulatory Commission, Respondent.

Public Utility District No. 1 of Snohomish County, Washington, Petitioner

Caithness Shepherds Flat, LLC;

Cannon Power Corporation ;

E. On Climate & Renewables North America LLC;

Eurus Combine Hills II LLC;

Iberdrola Renewables, LLC ;

M–S–R Public Power Agency;

Northwest Utilities ;

Puget Sound Energy, Inc.;

PacifiCorp;

Powerex Corporation;

Sacramento Municipal Utility District;

PPL Montana, LLC;

Charles PACE, Intervenors

v.Federal Energy Regulatory Commission, Respondent.

Northwest Requirements Utilities ;

Public Power Council ;

The City of Seattle ;

Public Utility District No. 1 of Snohomish County, Washington ;

National Rural Electric Cooperative Association;

Pacific Northwest Generating Cooperative;

American Public Power Association, Petitioners

EDP Renewables North America LLC ;

Industrial Customers of Northwest Utilities ;

M–S–R Public Power Agency;

Northwest and Intermountain Power Producers Coalition;

Puget Sound Energy, Inc;

Portland General Electric Company;

Powerex Corporation;

Sacramento Municipal Utility District;

Transalta Energy Marketing (U.S.), INC., Intervenors

v.Federal Energy Regulatory Commission, Respondent.

Nos. 13–70391

13–70499

13–70581

13–72928.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 5, 2015.

Filed Aug. 10, 2015.

Zabyn Towner, Portland, OR, for Petitioner Pacific Northwest Generating Cooperative.

Betsy Bridge (argued), Portland, OR, for Petitioner Northwest Requirements Utilities.

Irene A. Scruggs, Portland, OR, for Petitioner Public Power Council.

Thomas L. Blackburn and Peter K. Matt, Schiff Hardin LLP, Washington, D.C., for Petitioners National Rural Electric Cooperative Association and American Public Power Association.

Sarah Dennison–Leonard, Portland, OR, for Petitioner The City of Seattle.

Giuseppe Fina, Assistant General Counsel, and Anne L. Spangler, General Counsel, Everett, WA, for Petitioner Public Utility District No. 1 of Snohomish County, Washington.

David L. Morenoff, Acting General Counsel, Robert H. Solomon, Solicitor, and Beth G. Pacella (argued), Senior Attorney, Washington, D.C., for Respondent Federal Energy Regulatory Commission.

Michael G. Andrea, Spokane, WA, for Intervenor Avista Corporation.

Scott G. Seidman, Tonkon Torp, LLP, Portland, OR, for Intervenor Portland General Electric Company.

Donald G. Kari and Jason T. Kuzma, Perkins Coie LLP, Bellevue, WA, for Intervenor Puget Sound Energy, Inc.

Paul L. Gale (argued), Troutman Sanders LLP, Irvine, CA; Lara L. Skidmore, Troutman Sanders LLP, Portland, OR, for Respondent–Intervenor Iberdrola Renewables, LLC.

Stephen C. Hall, Troutman Sanders LLP, Portland, OR, for Respondent–Intervenor Cannon Power Group, LLC.

Kari L. Vander Stoep and Andrew B. Young, K & L Gates LLP, Seattle, WA, for Respondents–Intervenors Northwest and Intermountain Power Producers Coalition and TransAlta Energy Marketing (U.S.), Inc.

Thomas J. McCormack, Chadbourne & Parke LLP, New York, New York, for Respondent–Intervenor Eurus Combine Hills II LLC.

John A. Cameron, Davis Wright Tremaine LLP, Portland, OR, for Respondent–Intervenor Caithness Shepherds Flat, LLC.

Jay T. Waldron and Sara Kobak, Schwabe, Williamson & Wyatt, PC, Portland, OR; Jeffrey B. Erb, PacifiCorp, Portland, OR, for Respondent–Intervenor PacifiCorp.

On Petition for Review of an Order of the Federal Energy Regulatory Commission. FERC Nos. EL11–44–000, EL11–44–001, EL11–44–0040.

Before: WILLIAM A. FLETCHER and ANDREW D. HURWITZ, Circuit Judges and DONALD E. WALTER,^* Senior District Judge.

OPINION

HURWITZ, Circuit Judge:

These are consolidated petitions for review of orders by the Federal Energy Regulatory Commission (“FERC”) that require the Bonneville Power Administration—a federal agency that both markets electricity and operates a large portion of the transmission grid in the Pacific Northwest—to provide transmission services on terms “not unduly discriminatory or preferential.” Bonneville has complied with the orders, and is not a party to this proceeding. The petitioners, instead, are wholesale electricity customers of Bonneville who challenge the orders on substantive and procedural grounds. We conclude that they lack statutory standing to pursue their claims.

I

A

Bonneville markets electric power generated at federal hydroelectric dams in the Columbia River Basin. Its power customers are primarily public and private utilities that purchase wholesale electricity. See Nw. Envt'l Def. Ctr. v. Bonneville Power Admin., 477 F.3d 668, 672–73 (9th Cir.2007) ; Ass'n of Pub. Agency Customers, Inc. v. Bonneville Power Admin., 126 F.3d 1158, 1164 (9th Cir.1997). Bonneville also operates 80% of the electricity transmission network in the Pacific Northwest. Thus, Bonneville supplies interconnection and transmission services to public and private power generators, including itself.

Bonneville is self-funded and must recover its costs through rates charged to customers. See 16 U.S.C. §§ 838g, 839e(a)(1) ; see also id. § 839(4). Its rates are “based upon [its] total system costs.” Id. § 839e(a)(2)(B). Bonneville is also subject to a potentially conflicting mandate to market power “with a view to encouraging the widest possible diversified use of electric power at the lowest possible rates to consumers consistent with sound business principles.” Id. § 838g ; see also Ass'n of Pub. Agency Customers, 126 F.3d at 1164.

Bonneville must also comply with various environmental protection requirements. The amount of water that can be stored behind Bonneville's dams is limited. See, e.g., Bonneville Power Admin., BPA's Interim Environmental Redispatch and Negative Pricing Policies, Administrator's Final Record of Decision 11 (May 2011) (“2011 ROD”), http://tinyurl.com/pcgt3pj. But so is the amount of water that can pass over a dam's spillway.See Nat'l Wildlife Fed'n v. Nat'l Marine Fisheries Serv., 422 F.3d 782, 789 & n. 3 (9th Cir.2005) (per curiam); Nat'l Wildlife Fed'n v. U.S. Army Corps of Eng'rs, 92 F.Supp.2d 1072, 1074–75 (D.Or.2000) ; 2011 ROD 5–6. Under the Clean Water Act, states have authority to cap the amount of dissolved gas in Columbia River Basin water. See Nat'l Wildlife, 92 F.Supp.2d at 1074–75 ; 2011 ROD 5–6. Dissolved gas, which harms fish, increases when water is spilled over a dam; spill must therefore “be carefully managed to avoid gas supersaturation.” Nat'l Wildlife, 422 F.3d at 789.

Bonneville is further constrained by the realities of operating hydroelectric dams on an electrical grid. Water that cannot be spilled over Bonneville's dams must pass through the turbines, generating electricity. This electricity must be consumed to maintain transmission stability. Reliability standards therefore require Bonneville to maintain the balance between supply and demand on its electrical grid. 2011 ROD 7.

B

The demand for electricity is finite. When spill must be limited, Bonneville can dispose of excess electricity by marketing it to other generators at low prices or giving it away, thereby displacing electricity those sources would ordinarily generate. Fossil fuel and nuclear generators gladly accept such inexpensive hydropower because it allows them to save on fuel costs by reducing their more costly output or shutting down entirely. Wind generators, in contrast, do not have fuel costs, and are federally subsidized based on the amount of energy they generate. The availability of free hydropower therefore does not generally cause them to reduce production.

In response to a substantial increase in wind generation on Bonneville's transmission system and anticipated high water levels in the Columbia River Basin, Bonneville promulgated an Environmental Redispatch Policy (“ER Policy”) in May 2011, to remain in effect until the end of March 2012. Id. at 8, 14–17. The ER Policy allowed Bonneville to curtail the customers' electricity generation unilaterally through “Dispatch Orders.” Id. at 8, 16–17. Dispatch Orders were to be issued only as a last resort during “overgeneration events” when spill limits were reached, water levels required Bonneville to generate electricity that outpaced demand, and excess hydropower could not be disposed of at low or zero prices or by curtailing non-wind generation. Id. at 14–16.

Under the ER Policy, Bonneville redispatched wind generation for over two hundred hours between May 18 and June 18, 2011, curtailing 5.4% of the wind generation on Bonneville's transmission system during that period. Bonneville initially estimated that this caused wind generators to lose approximately $50 million in federal credits, although the estimate was later reduced.

C

On June 17, 2012, a group of wind generators filed a FERC complaint against Bonneville, seeking an order that Bonneville “immediately revise its [ER...