Transmission Access Policy Study v. Fed Energy Comm'n.

• Court: U.S. Court of Appeals — District of Columbia Circuit
• Writing for the Court: Edward Berlin argued the cause for intervenors. With him on the briefs were J. Phillip Jordan, Robert V. Zener, Edward H. Comer, William M. Lange, Deborah A. Moss, James H. McGrew, Steven J. Ross, Elizabeth W. Whittle, Richard M. Lorenzo, David M. St
• Citation: Transmission Access Policy Study v. Fed Energy Comm'n., 225 F.3d 667, 343 U.S.App.D.C. 151 (D.C. Cir. 2000)
• Decision Date: 30 June 2000
• Docket Number: No. 97-1715,97-1715
• Parties: (D.C. Cir. 2000) Transmission Access Policy Study Group, et al. Petitioner v. Federal Energy Regulatory Commission, Respondent Vermont Department of Public Service, et al., Intervenors Consolidated with 98-1111, 98-1112, 98-1113, 98-1114, 98-1115, 98-1118,98-1119, 98-1120, 98-1122, 98-1124, 98-1125, 98-1126,98-1127, 98-1128, 98-1129, 98-1131, 98-1132, 98-1134,98-1136, 98-1137, 98-1139, 98-1140, 98-1141, 98-1142,98-1143, 98-1145, 98-1147, 98-1148, 98-1149, 98-1150,98-1152, 98-1153, 98-1154, 98-1155, 98-1156, 98-1159,98-1162, 98-1163, 98-1166, 98-1168, 98-1169, 98-1170,98-1171, 98-1172, 98-1173, 98-1174, 98-1175, 98-1176,98-1178,98-1180

Page 667

225 F.3d 667 (D.C. Cir. 2000)

Transmission Access Policy Study Group, et al. Petitioner v. Federal Energy Regulatory Commission, Respondent

Vermont Department of Public Service, et al., Intervenors

No. 97-1715 Consolidated with 98-1111, 98-1112, 98-1113, 98-1114, 98-1115, 98-1118,98-1119, 98-1120, 98-1122, 98-1124, 98-1125, 98-1126,98-1127, 98-1128, 98-1129, 98-1131, 98-1132, 98-1134,98-1136, 98-1137, 98-1139, 98-1140, 98-1141, 98-1142,98-1143, 98-1145, 98-1147, 98-1148, 98-1149, 98-1150,98-1152, 98-1153, 98-1154, 98-1155, 98-1156, 98-1159,98-1162, 98-1163, 98-1166, 98-1168, 98-1169, 98-1170,98-1171, 98-1172, 98-1173, 98-1174, 98-1175, 98-1176,98-1178,98-1180

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 3, 1999

Decided June 30, 2000

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On Petitions for Review of Orders of the Federal Energy Regulatory Commission

Sherilyn Peterson, John T. Miller, Jr., Robert C. McDiarmid, Stanley C. Fickle, Sara D. Schotland, Jeffrey L. Landsman, Lawrence G. Malone, Jeffery D. Watkiss, Richard M. Lorenzo, Isaac D. Benkin, Wallace E. Brand, Daniel I. Davidson, Cynthia S. Bogorad, Harvey L. Reiter and Randolph Lee Elliott argued the causes for petitioners. With them on the briefs were William R. Maurer, Ben Finkelstein, David E. Pomper, Ronald N. Carroll, John Michael Adragna, Sean T. Beeny, Wallace F. Tillman, Susan N. Kelly, Craig W. Silverstein, A. Hewitt Rose, Bryan G. Tabler, James D. Pembroke, David C. Vladeck, Robert F. Shapiro, Lynn N. Hargis, Wallace L. Duncan, Richmond F. Allan, Alan H. Richardson, Michael A. Mullett, C. Kirby Mullen, Robert A. Jablon, Sara C. Weinberg, John F. Wickes, Jr., Todd A. Richardson, Brian A. Statz, John P. Cook, Charles F. Wheatley, Jr., Christine C. Ryan, Robert S. Tongren, Joseph P. Serio, Barry E. Cohen, Carrol S. Verosky, Jennifer S. McGinnity, Jonathan D. Feinberg, Charles D. Gray, Robert Vandiver, Cynthia Miller, Helene S. Wallenstein, William H. Chambliss, C. Meade Browder, Jr., Mary W. Cochran, Paul R. Hightower, Brad M. Purdy, Gisele L. Rankin, Robert D. Cedarbaum, Edward H. Comer, Edward Berlin, Robert V. Zener, Elizabeth W. Whittle, James H. McGrew, Donald K. Dankner, Frederick J. Killion, Joseph L. Lakshmanan, Stephen C. Palmer, Michael E. Ward, Steven J. Ross, Marvin T. Griff and Thomas C. Trauger. Leja D. Courter, Robert E. Glennon, Jr., Neil Butterklee, Zachary D. Wilson, Sheila S. Hollis, Janice L. Lower and James B. Ramsay entered appearances.

John H. Conway, Deputy Solicitor, Federal Energy Regulatory Commission, and Timm L. Abendroth and Larry D. Gasteiger, Attorneys, argued the causes for respondent.With them on the brief was Jay L. Witkin, Solicitor. Susan J. Court, Special Counsel, and Edward S. Geldermann, Attorney, entered appearances.

Edward Berlin argued the cause for intervenors. With him on the briefs were J. Phillip Jordan, Robert V. Zener, Edward H. Comer, William M. Lange, Deborah A. Moss, James H. McGrew, Steven J. Ross, Elizabeth W. Whittle, Richard M. Lorenzo, David M. Stahl, D. Cameron Findlay, Peter Thornton, J. Phillip Jordan, Robert V. Zener, Robert C. McDiarmid, Cynthia S. Bogorad, Ben Finkelstein, Peter J. Hopkins, Margaret A. McGoldrick, Jeffery D. Watkiss, Ronald N. Carroll, Sara D. Schotland, Alan H. Richardson, Wallace L. Duncan, Richmond F. Allan, A. Hewitt Rose, Wallace F. Tillman, Susan N. Kelly, John M. Adragna, Sean T. Beeny and Randolph Lee Elliott. Edward J. Twomey, Richard P. Bonnifield, Frederick H. Ritts, David L. Huard, Dan H. McCrary, Mark A. Crosswhite, John N. Estes, III, Kevin J. McIntyre, John S. Moot, Clark E. Downs, Martin V. Kirkwood, Robert S. Waters, John T. Stough, Jr., Bruce L. Richardson, Floyd L. Norton, IV, William S. Scherman, Douglas F. John, Gary D. Bachman, Nicholas W. Fels, Robert Weinberg, Robert A. Jablon, Peter G. Esposito, Christine C. Ryan, Sheila S. Hollis, Stephen L. Teichler, James K. Mitchell, Gordon J. Smith, Edward J. Brady, Kevin F. Duffy, Michael P. May, Barbara S. Brenner, Michael J. Rustum, Sandra E. Rizzo, Kirk H. Betts, Pierre F. de Ravel d'Esclapon, Glen L. Ortman and William D. DeGrandis entered appearances.

Before: Sentelle, Randolph and Tatel, Circuit Judges.

Opinion for the Court filed Per Curiam ¹:

Table of Contents
                I.     Introduction................................................... 681
                II.    FERC's Authority to Require Open Access.........................683
                       A. Statutory Challenges:  FPA §§ 205 and  206...................685
                          1.ss 205 and 206 and Otter Tail Power Company................685
                          2.s 206(a) Procedural and Evidentiary  Requirements..........687
                          3.Discriminatory Effect of Order 888.........................688
                       B. Constitutional Challenge:  Fifth Amendment Takings Clause....690
                III .  Federal versus State Jurisdiction over Transmission Services....690
                       A. Bundled Retail Sales.........................................692
                       B. Local Distribution Facilities................................695
                IV.    Reciprocity.....................................................697
                       A. Indirect Regulation of Non-Jurisdictional Utilities..........697
                       B. Limitation on Reciprocity....................................698 
                

V.     Stranded Cost Recovery Provisions................................698
                       A. Wholesale Stranded Costs......................................699
                       1. FERC's Authority to Provide for Stranded Cost Recovery........701
                          a. Reasonable expectation of continued service................702
                          b.Sections 206 and 212 of the FPA.............................703
                          c. Implications of Cajun......................................704
                       2. Natural Gas Precedent and Conformance to Cost Causation
                            Principles..................................................704
                           a. Natural gas precedent:  AGD, K  N Energy, and UDC.........705
                           b. Conformance to cost causation  principles.................707
                       3. FERC's Mobile-Sierra Findings.................................709
                           a. FERC's authority to make a generic public interest
                               finding..................................................710
                           b. FERC's stranded cost public interest finding..............711
                           c. FERC's public interest finding  regarding customers.......712
                       4. Availability of Stranded Cost Recovery to Nonjurisdictional
                            Utilities and G & T  Cooperatives...........................712
                       5. Challenges to Technical Aspects of Order 888's Stranded
                            Cost Recovery Provisions....................................713
                           a. POSCR's challenges to the stranded cost formula...........714
                           b. Inclusion of known and measurable costs...................715
                           c. Treatment of energy costs in the market option............715
                           d. Rescission of notice of termination provision.............716
                           e. Provision for benefits lost...............................717
                    B. Retail Stranded Costs............................................717
                       1. Stranded Costs Arising from Retail Wheeling...................717
                         a. FERC's jurisdiction over retail stranded costs..............718
                         b. FERC's refusal to assert jurisdiction over all retail
                             stranded costs.............................................719
                       2. Stranded Costs Relating to Retail-Turned-Wholesale Customers..722
                VI.  Credits for Customer-Owned Facilities and Behind-The-Meter
                        Generation......................................................724
                VII. Liability, Interface Allocation, and Discounting...................727
                     A. Liability and Indemnification...................................727
                     B. Interface Allocation............................................729
                     C. Delivery-Point-Specific Discounting.............................730
                VIII.Tariff Terms and Conditions........................................733
                     A. Headroom Allocation.............................................733
                     B. Headroom Prioritization.........................................733
                     C. Duplicative Charges.............................................734
                     D. Multiple Control Areas..........................................734
                     E. Right-of-First-Refusal..........................................735
                IX.  National Environmental Policy Act and Regulatory Flexibility
                      Act Compliance....................................................735
                     A. NEPA Compliance.................................................735
                        1. Adequacy of Base Case........................................735
                        2. Failure to Adopt Mitigation Measures.........................736
                     B. Regulatory Flexibility Act Compliance...........................737
                

PER CURIAM:

Following two notices of proposed rulemaking, the Federal Energy Regulatory Commission issued Orders 888 and 889 on April 24, 1996.² Reflecting the Commission's effort to end discriminatory and anticompetitive practices in the national electricity market and to ensure that electricity customers pay the lowest prices possible, these orders represent, as the Commission described in a later order not before us, "the foundation necessary to develop competitive bulk power markets...." Regional Transmission Organizations, Order No. 2000, 65 Fed. Reg. 810, 812 (2000).

Open access is the essence of Orders 888 and 889. Under these orders, utilities must now provide access to their transmission lines to anyone purchasing or selling electricity in the interstate market on the same terms and conditions as they use their own lines. By requiring...