PUC of State of CA, et al v. FERC

Filing

FILED OPINION (SIDNEY R. THOMAS, M. MARGARET MCKEOWN and RICHARD R. CLIFTON)Each party shall bear its own fees and costs on appeal. PETITION GRANTED IN PART; DENIED IN PART. Judge: SRT Authoring, FILED AND ENTERED JUDGMENT. [10405365] [01-71934, 01-71944, 02-70219, 02-71426, 02-72136, 02-72488, 02-72548, 02-72585, 03-74471, 03-74647, 03-74729, 04-70564, 04-72162, 04-72169, 04-72210, 04-72539, 04-72756, 04-73242, 04-73259, 04-73405, 04-73491, 04-74984, 04-75496, 04-75503, 04-75609, 04-75720, 04-75838, 04-75840, 04-76095, 05-71761, 05-72614, 05-72678, 05-72954, 06-71320, 06-71642, 06-72006, 06-72195, 08-74306, 08-74834, 09-71953, 09-71961, 10-71708, 11-71542, 12-70406, 12-70407, 12-71034]

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 1 of 44

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

CALIFORNIA PUBLIC UTILITIES
COMMISSION,
Petitioner,
MIRANT AMERICAS ENERGY
MARKETING, LP; NEVADA POWER
COMPANY; SIERRA PACIFIC POWER
COMPANY; CITY OF SEATTLE; CITY
OF GLENDALE; MIECO, INC.,
Intervenors,

No. 01-71934
FERC No.
EL00-000, et al.

OPINION

and
CITY OF GLENDALE, CALIFORNIA,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA , Attorney General,
Petitioners,

No. 01-71944

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 2 of 44

2

CALIFORNIA PUC V. FERC

NEVADA POWER COMPANY; SIERRA
PACIFIC POWER COMPANY; CITY OF
SEATTLE; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,
NRG POWER MARKETING, INC.;
PUBLIC UTILITY DISTRICT NO. 2 OF
GRANT COUNTY, COMMISSION OF
THE STATE OF CALIFORNIA; PORT OF
SEATTLE, WASHINGTON; CITY OF
TACOMA, WASHINGTON; THE
PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General; EL
PASO MERCHANT ENERGY L.P.;
SACRAMENTO MUNICIPAL UTILITY
DISTRICT; MIRANT AMERICAS
ENERGY MARKETING, LP; MIRANT
CALIFORNIA, LLC; MIRANT DELTA,
LLC, MIRANT POTRERO, LLC;
DYNEGY POWER MARKETING, INC.;
EL SEGUNDO POWER LLC, LONG

No. 02-70219

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 3 of 44

CALIFORNIA PUC V. FERC
BEACH GENERATION, LLC;
CABRILLO POWER I, LLC; CABRILLO
POWER II, LLC; PORTLAND
GENERAL ELECTRIC COMPANY;
PACIFICORP; TRANSMISSION
AGENCY OF NORTHERN CALIFORNIA
(TANC); NORTHERN CALIFORNIA
POWER AGENCY, PUBLIC SERVICE
COMPANY OF NEW MEXICO; CORAL
POWER, L.L.C., CONSTELLATION
POWER SOURCE; CORAL POWER,
L.L.C.; CONSTELLATION ENERGY
COMMODITIES GROUP, INC.;
CALIFORNIA INDEPENDENT SYSTEM
OPERATOR CORPORATION; SALT
RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER
DISTRICT; CA STATE ASSEMBLY;
PACIFIC GAS & ELECTRIC COMPANY,
Intervenors,
PORT OF SEATTLE; CITY OF TACOMA;
THE PEOPLE OF THE STATE OF
CALIFORNIA; CITY OF SAN DIEGO;
CA STATE ASSEMBLY,
Petitioners-Intervenors,
NEVADA POWER COMPANY; SIERRA
PACIFIC POWER COMPANY; CITY OF
SEATTLE,
Intervenors,

3

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 4 of 44

4

CALIFORNIA PUC V. FERC

CITY OF PASADENA,
Petitioner-Intervenor,
MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

CALIFORNIA PUBLIC UTILITIES
COMMISSION,
Petitioner,
SOUTHERN CALIFORNIA EDISON
COMPANY; THE PEOPLE OF THE
STATE OF CALIFORNIA, EX REL.
XAVIER BECERRA, Attorney
General; CITY OF TACOMA,
WASHINGTON; PORT OF SEATTLE
WASHINGTON,
Petitioners-Intervenors,
PORTLAND GENERAL ELECTRIC
COMPANY; AVISTA CORPORATION;
EL PASO MERCHANT ENERGY L.P.;
CORAL POWER, L.L.C.; NORTHERN
CALIFORNIA POWER AGENCY;
AVISTA ENERGY, INC.; MORGAN
STANLEY CAPITAL GROUP, INC.;

No. 02-71426

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 5 of 44

CALIFORNIA PUC V. FERC
MERRILL LYNCH CAPITAL SERVICES
INC.; DUKE ENERGY NORTH
AMERICA, LLC, DUKE ENERGY
TRADING AND MARKETING, LLC,
(COLLECTIVELY, “DUKE ENERGY”);
PACIFIC GAS & ELECTRIC COMPANY;
PACIFICORP; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
M-S-R PUBLIC POWER AGENCY;
MODESTO IRRIGATION DISTRICT;
CITY OF REDDING, CALIFORNIA;
CITY OF SANTA CLARA,
CALIFORNIA; DYNEGY POWER
MARKETING, INC., EL SEGUNDO
POWER LLC, LONG BEACH
GENERATION LLC, CABRILLO
POWER I LLC, AND CABRILLO
POWER II LLC (COLLECTIVELY,
“DYNEGY”),
Respondents-Intervenors.

5

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6

CALIFORNIA PUC V. FERC

PACIFIC GAS & ELECTRIC COMPANY,
Petitioner,
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioners-Intervenors,
AVISTA CORPORATION;
COGENERATION ASSOCIATION OF CA
(CAC), NEVADA INDEPENDENT
ENERGY COALITION (NIEC) AND
COGENERATION COALITION OF WA
(CCW); CALIFORNIA INDEPENDENT
SYSTEM OPERATOR CORPORATION;
PORTLAND GENERAL ELECTRIC
COMPANY; DYNEGY POWER
MARKETING, INC.; EL SEGUNDO
POWER; CABRILLO POWER;
CABRILLO POWER II LLC; MORGAN
STANLEY CAPITAL GROUP, INC.;
MODESTO IRRIGATION DISTRICT;
CITY OF SANTA CLARA,
CALIFORNIA; AVISTA ENERGY;
PUGET SOUND INVESTMENT GROUP;
THE CITY OF LOS ANGELES
DEPARTMENT OF WATER AND
POWER; CORAL POWER, L.L.C.;
MIRANT AMERICAS ENERGY
MARKETING, LP, MIRANT CA, LLC,
MIRANT DELTA, LLC, AND MIRANT

No. 02-72136

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 7 of 44

CALIFORNIA PUC V. FERC

7

POTEREO, LLC (COLLECTIVELY,
“MIRANT”; TRANSCANADA ENERGY
LTD.; NORTHERN CALIFORNIA
POWER AGENCY; CITY OF TACOMA,
WASHINGTON; PORT OF SEATTLE
WASHINGTON; PACIFICORP;
PACIFICORP; SALT RIVER PROJECT
AGRICULTURAL IMPROVEMENT AND
POWER DISTRICT; CITY OF REDDING,
CALIFORNIA; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA,
Respondent-Intervenor.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,
PACIFIC GAS & ELECTRIC COMPANY,
Petitioner-Intervenor,
SALT RIVER PROJECT
AGRICULTURAL IMPROVEMENT AND

No. 02-72488

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 8 of 44

8

CALIFORNIA PUC V. FERC

POWER DISTRICT; PACIFICORP;
MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,

No. 02-72548

MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SAN DIEGO GAS & ELECTRIC
COMPANY,
Petitioner,
MIECO, INC.,
Intervenor,

No. 02-72585

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 9 of 44

CALIFORNIA PUC V. FERC

9

v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

CALIFORNIA PUBLIC UTILITIES
COMMISSION,
Petitioner,

No. 03-74471

PORT OF SEATTLE WASHINGTON;
MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

PORTLAND GENERAL ELECTRIC
COMPANY,
Petitioner,
MODESTO IRRIGATION DISTRICT;
CITY OF SANTA CLARA; CITY OF
REDDING; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; TRANSCANADA
ENERGY; CALIFORNIA PUBLIC

No. 03-74647

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 10 of 44

10

CALIFORNIA PUC V. FERC

UTILITIES COMMISSION; SOUTHERN
CALIFORNIA EDISON COMPANY;
CALIFORNIA ELECTRICITY
OVERSIGHT BOARD; PACIFIC GAS &
ELECTRIC COMPANY; THE PEOPLE OF
THE STATE OF CALIFORNIA, EX REL.
XAVIER BECERRA, Attorney General;
NORTHERN CALIFORNIA POWER
AGENCY; PORT OF SEATTLE; TUCSON
ELECTRIC POWER COMPANY;
PACIFICORP; EL PASO MERCHANT
ENERGY L.P.; CONSTELLATION
ENERGY COMMODITIES GROUP, INC.;
MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,
MIECO, INC.,
Intervenor,
v.

No. 03-74729

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 11 of 44

CALIFORNIA PUC V. FERC

11

FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,

No. 04-70564

MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,
CALIFORNIA ELECTRICITY
OVERSIGHT BOARD; MIECO, INC.,
Intervenors,
v.

No. 04-72162

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 12 of 44

12

CALIFORNIA PUC V. FERC

FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
CALIFORNIA INDEPENDENT SYSTEM
OPERATOR CORPORATION,
Intervenor,

PORT OF SEATTLE WASHINGTON;
AVISTA ENERGY INC.; CALIFORNIA
ELECTRICTY OVERSIGHT BOARD;
DYNEGY POWER MARKETING, INC.,
EL SEGUNDO POWER LLC, LONG
BEACH GENERATION LLC,
CABRILLO POWER I LLC, AND
CABRILLO POWER II LLC
(COLLECTIVELY, “DYNEGY”),
Applicants-Intervenors.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General,
Petitioner,
CALIFORNIA ELECTRICITY
OVERSIGHT BOARD; PORT OF
SEATTLE; MIECO, INC.,
Intervenors,
v.

No. 04-72169

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 13 of 44

CALIFORNIA PUC V. FERC

13

FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
CALIFORNIA INDEPENDENT SYSTEM
OPERATOR CORPORATION,
Intervenor,

PORT OF SEATTLE WASHINGTON;
CORAL POWER, L.L.C.; AVISTA
ENERGY INC.; PUGET SOUND
ENERGY, INC; CALIFORNIA
ELECTRICTY OVERSIGHT BOARD;
DYNEGY POWER MARKETING, INC.,
EL SEGUNDO POWER LLC, LONG
BEACH GENERATION LLC,
CABRILLO POWER I LLC, AND
CABRILLO POWER II LLC
(COLLECTIVELY, “DYNEGY”),
Applicants-Intervenors.

PACIFIC GAS & ELECTRIC COMPANY,
Petitioner,
MIECO, INC.,
Intervenor,
v.

No. 04-72210

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 14 of 44

14

CALIFORNIA PUC V. FERC

FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
CALIFORNIA INDEPENDENT SYSTEM
OPERATOR CORPORATION,
Intervenor,

DUKE ENERGY NORTH AMERICA,
LLC, DUKE ENERGY TRADING AND
MARKETING, LLC, (COLLECTIVELY,
“DUKE ENERGY”); SOUTHERN
CALIFORNIA EDISON COMPANY,
(EDISON); PORT OF SEATTLE
WASHINGTON; CORAL POWER,
L.L.C.; AVISTA ENERGY, INC.;
CALIFORNIA ELECTRICTY
OVERSIGHT BOARD; DYNEGY POWER
MARKETING, INC., EL SEGUNDO
POWER LLC, LONG BEACH
GENERATION LLC, CABRILLO
POWER I LLC, AND CABRILLO
POWER II LLC (COLLECTIVELY,
“DYNEGY”),
Applicants-Intervenors.

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 15 of 44

CALIFORNIA PUC V. FERC
PACIFIC GAS & ELECTRIC COMPANY,
Petitioner,

15
No. 04-72539

MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,
MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

No. 04-72756

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 16 of 44

16

CALIFORNIA PUC V. FERC

PACIFIC GAS & ELECTRIC COMPANY,
Petitioner,

No. 04-73242

MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA; XAVIER BECERRA,
Attorney General,
Petitioners,
MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

No. 04-73259

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 17 of 44

CALIFORNIA PUC V. FERC
CALIFORNIA PUBLIC UTILITIES
COMMISSION; CALIFORNIA
ELECTRICITY OVERSIGHT BOARD,
Petitioners,

17
No. 04-73405

PORT OF SEATTLE, WASHINGTON;
MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA; XAVIER BECERRA,
Attorney General,
Petitioners,
MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

No. 04-73491

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 18 of 44

18

CALIFORNIA PUC V. FERC

PACIFIC GAS & ELECTRIC COMPANY,
Petitioner,
CALIFORNIA ELECTRICITY
OVERSIGHT BOARD; SOUTHERN
CALIFORNIA EDISON COMPANY,
Petitioners-Intervenors,
MODESTO IRRIGATION DISTRICT;
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General; AVISTA
ENERGY INC.; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; ENRON POWER
MARKETING INC.; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
DYNEGY POWER MARKETING, INC.;
MODESTO IRRIGATION DISTRICT;
NORTHERN CALIFORNIA POWER
AGENCY; CALIFORNIA INDEPENDENT
SYSTEM OPERATOR CORPORATION;
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General,
Respondents-Intervenors.

No. 04-74984

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 19 of 44

CALIFORNIA PUC V. FERC
SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,

19
No. 04-75496

MODESTO IRRIGATION DISTRICT;
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
SEMPRA ENERGY TRADING CORP.;
AVISTA ENERGY INC.; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; ENRON POWER
MARKETING INC.; CITY OF LOS
ANGELES DEPARTMENT OF WATER
AND POWER; WILLIAMS POWER
COMPANY, INC; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

CALIFORNIA PUBLIC UTILITIES
COMMISSION; CALIFORNIA
ELECTRICITY OVERSIGHT BOARD,
Petitioners,
MODESTO IRRIGATION DISTRICT;
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER

No. 04-75503

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 20 of 44

20

CALIFORNIA PUC V. FERC

BECERRA, Attorney General;
SEMPRA ENERGY TRADING CORP.;
AVISTA ENERGY INC.; ENRON
POWER MARKETING INC.; WILLIAMS
POWER COMPANY, INC; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General,
Respondent-Intervenor.

PACIFIC GAS & ELECTRIC COMPANY,
Petitioner,
MODESTO IRRIGATION DISTRICT;
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
SEMPRA ENERGY TRADING CORP.;
AVISTA ENERGY INC.; PUGET SOUND
ENERGY, INC; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; ENRON POWER

No. 04-75609

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 21 of 44

CALIFORNIA PUC V. FERC

21

MARKETING, INC.; WILLIAMS POWER
COMPANY, INC; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,
TUCSON ELECTRIC POWER
COMPANY,
Intervenor,
MODESTO IRRIGATION DISTRICT,
Respondent-Intervenor,
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General; AVISTA
ENERGY INC.; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; ENRON POWER
MARKETING INC.; WILLIAMS POWER
COMPANY, INC; MIECO, INC.,
Intervenors,
v.

No. 04-75720

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 22 of 44

22

CALIFORNIA PUC V. FERC

FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
______________________________
WILLIAMS POWER COMPANY, INC;
PACIFICORP,
Applicants-Intervenors.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General,
Petitioner,
MODESTO IRRIGATION DISTRICT;
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General; AVISTA
ENERGY INC.; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; ENRON POWER
MARKETING, INC.; WILLIAMS POWER
COMPANY, INC; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

No. 04-75838

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 23 of 44

CALIFORNIA PUC V. FERC
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General,
Petitioner,
MODESTO IRRIGATION DISTRICT;
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
SEMPRA ENERGY TRADING CORP.;
AVISTA ENERGY INC.; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; ENRON POWER
MARKETING, INC.; CALIFORNIA
INDEPENDENT SYSTEM OPERATOR
CORPORATION; CITY OF LOS
ANGELES DEPARTMENT OF WATER
AND POWER; AVISTA ENERGY INC.;
WILLIAMS POWER COMPANY, INC;
SEMPRA ENERGY TRADING CORP.;
MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

23
No. 04-75840

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 24 of 44

24

CALIFORNIA PUC V. FERC

CALIFORNIA PUBLIC UTILITIES
COMMISSION; CALIFORNIA
ELECTRICITY OVERSIGHT BOARD,
Petitioners-Appellants,

No. 04-76095

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General; AVISTA
ENERGY INC.; ENRON POWER
MARKETING INC.; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent-Appellee.

PACIFIC GAS & ELECTRIC COMPANY,
Petitioner,
MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

No. 05-71761

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 25 of 44

CALIFORNIA PUC V. FERC
SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,

25
No. 05-72614

MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA,
Petitioner,
PORT OF SEATTLE,
Petitioner-Intervenor,
PORTLAND GENERAL ELECTRIC
COMPANY; EL SEGUNDO POWER
LLC; CALIFORNIA EDISON COMPANY,
Intervenors,
MIECO, INC.,
Intervenor,
and
PINNACLE WEST COMPANY,

No. 05-72678

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 26 of 44

26

CALIFORNIA PUC V. FERC
v.

FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
______________________________
SOUTHERN CALIFORNIA EDISON
COMPANY,
Applicant-Intervenor.

CALIFORNIA PUBLIC UTILITIES
COMMISSION; CALIFORNIA
ELECTRICITY OVERSIGHT BOARD,
Petitioners,

No. 05-72954

MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

PACIFIC GAS & ELECTRIC COMPANY,
Petitioner,
SOUTHERN CALIFORNIA EDISON
COMPANY; THE PEOPLE OF THE

No. 06-71320

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 27 of 44

CALIFORNIA PUC V. FERC
STATE OF CALIFORNIA, EX REL.
XAVIER BECERRA, Attorney General,
Petitioners-Intervenors,
MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
TUCSON ELECTRIC POWER
COMPANY; PACIFICORP,
Respondents-Intervenors,
______________________________
CALIFORNIA ELECTRICITY
OVERSIGHT BOARD; WILLIAMS
POWER COMPANY, INC;
CONSTELLATION ENERGY
COMMODITIES GROUP, INC.;
PORTLAND GENERAL ELECTRIC
COMPANY; AVISTA ENERGY INC.;
CONSTELLATION ENERGY
COMMODITIES GROUP, INC.; ENRON
POWER MARKETING, INC.; CITY OF
SEATTLE, WASHINGTON; MIDWAY
SUNSET COGENERATION COMPANY,
Applicants-Intervenors.

27

Case: 01-71934, 04/21/2017, ID: 10405365, DktEntry: 814-1, Page 28 of 44

28

CALIFORNIA PUC V. FERC

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General,
Petitioner,
SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner-Intervenor,
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
PACIFIC GAS & ELECTRIC COMPANY;
AVISTA ENERGY; THE CITY OF LOS
ANGELES DEPARTMENT OF WATER
AND POWER; ENRON POWER
MARKETING INC.; PORTLAND
GENERAL ELECTRIC COMPANY;
CALIFORNIA ELECTRICITY
OVERSIGHT BOARD; MIECO, INC.,
Intervenors,
v.
MODESTO IRRIGATION DISTRICT; THE
CITY OF SANTA CLARA; CITY OF
REDDING,
Respondents-Intervenors.

No. 06-71642

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CALIFORNIA PUC V. FERC
CALIFORNIA PUBLIC UTILITIES
COMMISSION; CALIFORNIA
ELECTRICITY OVERSIGHT BOARD,
Petitioners,

29
No. 06-72006

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner-Intervenor,
MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioner,
PACIFIC GAS & ELECTRIC COMPANY;
CORAL POWER, L.L.C..; MIECO, INC.,
Intervenors,
and
CALIFORNIA ELECTRICITY
OVERSIGHT BOARD,

No. 06-72195

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30

CALIFORNIA PUC V. FERC
v.

FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; PACIFIC GAS &
ELECTRIC COMPANY; SOUTHERN
CALIFORNIA EDISON COMPANY,
Petitioners,

No. 08-74306

MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; PACIFIC GAS &
ELECTRIC COMPANY; SAN DIEGO

No. 08-74834

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CALIFORNIA PUC V. FERC

31

GAS & ELECTRIC COMPANY;
SOUTHERN CALIFORNIA EDISON
COMPANY,
Petitioners,
SACRAMENTO MUNICIPAL UTILITY
DISTRICT; CITY OF PASADENA,
CALIFORNIA; MIECO, INC.,
Intervenors,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; SOUTHERN
CALIFORNIA EDISON COMPANY;
PACIFIC GAS & ELECTRIC COMPANY,
Petitioners,
MIECO, INC.,
Intervenor,
v.

No. 09-71953

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32

CALIFORNIA PUC V. FERC

FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; SOUTHERN
CALIFORNIA EDISON COMPANY;
PACIFIC GAS & ELECTRIC COMPANY,
Petitioners,

No. 09-71961

MIECO, INC.,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; PACIFIC GAS &
ELECTRIC COMPANY; SOUTHERN
CALIFORNIA EDISON COMPANY,
Petitioners,

No. 10-71708

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CALIFORNIA PUC V. FERC

33

v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; PACIFIC GAS &
ELECTRIC COMPANY; SOUTHERN
CALIFORNIA EDISON COMPANY,
Petitioners,
MIDWAY SUNSET COGENERATION
COMPANY,
Intervenor,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

No. 11-71542

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34

CALIFORNIA PUC V. FERC

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; PACIFIC GAS &
ELECTRIC COMPANY; SOUTHERN
CALIFORNIA EDISON COMPANY,
Petitioners,

No. 12-70406

v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; PACIFIC GAS &
ELECTRIC COMPANY; SOUTHERN
CALIFORNIA EDISON COMPANY,
Petitioners,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

No. 12-70407

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CALIFORNIA PUC V. FERC
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL. XAVIER
BECERRA, Attorney General;
CALIFORNIA PUBLIC UTILITIES
COMMISSION; PACIFIC GAS &
ELECTRIC COMPANY; SOUTHERN
CALIFORNIA EDISON COMPANY,
Petitioners,

35
No. 12-71034

v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent.

On Petition for Review of an Order of the
Federal Energy Regulatory Commission
Argued and Submitted March 22, 2017
San Francisco, California
Filed April 21, 2017
Before: Sidney R. Thomas, Chief Judge, and M. Margaret
McKeown and Richard R. Clifton, Circuit Judges.
Opinion by Chief Judge Thomas

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CALIFORNIA PUC V. FERC
SUMMARY**

Federal Energy Regulatory Commission
The panel granted in part, and denied in part, a petition
for review brought by various entities challenging the Federal
Energy Regulatory Commission (“FERC”)’s calculation of
certain refunds arising out of the California energy crisis in
2000 and 2001.
The panel held that FERC did not act arbitrarily or
capriciously in its construction of tariffs, and denied the
petition as to the question of whether refunds should be netted
hourly or across the entire refund period. FERC found that in
order to calculate the total refund shortfall resulting from
Bonneville Power Administration v. FERC, 422 F.3d 908 (9th
Cir. 2005), the California Independent System Operator
Corporation should net sales and purchases over hourly
intervals. FERC applied the same rationale to the California
Power Exchange Corporation (“Cal-PX”), and directed it to
perform its final refund netting purchases and sales over
hourly intervals to reflect the period during which the
obligation was incurred.
Addressing a $5 million deficit in the Cal-PX settlement
clearing account that resulted from a transfer of funds from
the settlement clearing account to the operating account in
March 2001, the panel held that FERC acted arbitrarily and
capriciously in allocating the refund only to net buyers and

**

This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

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37

not to all market participants. The panel granted the petition
as to this issue.

COUNSEL
Stan Berman (argued) and Eric Todderud, Sidley Austin LLP,
Seattle, Washington; Mark D. Patrizio and Joshua S.
Levenberg, Pacific Gas and Electric Company; for Petitioner
Pacific Gas and Electric Company.
Candace J. Morey; Arocles Aguilar, General Counsel; San
Francisco, California; as and for Petitioner Public Utilities
Commission of the State of California.
Kevin J. McKeon, Judith D. Cassel, and Whitney E. Snyder,
Hawke McKeon & Sniscak LLP, Harrisburg, Pennsylvania;
Danette E. Valdez, Supervising Deputy Attorney General;
Martin Goyette, Senior Assistant Attorney General; Mark
Breckler, Chief Assistant Attorney General; Office of the
Attorney General, San Francisco, California; for Petitioners
People of the State of California ex rel. Xavier Becerra,
Attorney General.
Richard L. Roberts and Catherine M. Giovannoni, Steptoe &
Johnson LLP, Washington, D.C.; Russell C. Swartz, J. Eric
Isken, and Russell A. Archer, Southern California Edison
Company, Rosemead, California; for Petitioners Southern
California Edison Company.
Beth Guralnick Pacella (argued), Deputy Solicitor; Robert H.
Solomon, Solicitor; Max Minzner, General Counsel;
Washington, D.C., for Respondent Federal Energy
Regulatory Commission.

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CALIFORNIA PUC V. FERC
OPINION

THOMAS, Chief Judge:
This petition for review returns to us as part of a long
series of administrative cases arising out of the California
energy crisis in 2000 and 2001, the background of which we
have described in detail in earlier opinions.1 This petition
requires us to determine whether the Federal Energy
Regulatory Commission (“FERC” or “Commission”) acted
arbitrarily or capriciously in calculating certain refunds.
We review FERC decisions to determine whether they are
“arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” Pac. Gas & Elec. Co. v. FERC,
373 F.3d 1315, 1319 (D.C. Cir. 2004) (citing 5 U.S.C.
§706(2)(A); Sithe/Indep. Power Partners v. FERC, 165 F.3d
944, 948 (D.C. Cir. 1999)). “FERC must be able to
demonstrate that it has made a reasoned decision based upon
substantial evidence in the record.” Id. (quoting N. States
Power Co. v. FERC, 30 F.3d 177, 180 (D.C. Cir. 1994)). The
Court also must ensure that FERC “articulate[s] a satisfactory
explanation for its action including a rational connection
between the facts found and the choice made.” Id. (alteration
in original) (quoting Motor Vehicle Mfrs. Ass’n of the U.S.,
Inc. v. State Farm Mut. Ins. Co., 463 U.S. 29, 43 (1983)).

1

See, e.g., MPS Merch. Servs., Inc. v.FERC, 836 F.3d 1155, 1160
(9th Cir. 2016); Cal. ex rel. Harris v. FERC, 809 F.3d 491, 496–98 (9th
Cir. 2015); Pub. Utils. Comm’n of State of Cal. v. FERC, 462 F.3d 1027,
1036–45 (9th Cir. 2006); Bonneville Power Admin. v. FERC, 422 F.3d
908, 911–14 (9th Cir. 2005); Cal. ex rel. Lockyer v. FERC, 383 F.3d 1006,
1008–11 (9th Cir. 2004).

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39

We grant the petition in part and deny it in part.
I
After we concluded in Bonneville Power Administration
v. FERC that FERC had acted outside its jurisdiction when
ordering governmental entities/non-public utilities to pay
refunds, 422 F.3d 908, 926 (9th Cir. 2005), the Commission
vacated each of its orders in the California refund proceeding
to the extent that they ordered governmental entities/nonpublic utilities to pay refunds. San Diego Gas & Elec. Co. v.
Sellers of Energy & Ancillary Servs. (“2007 Order on
Remand”), 121 FERC ¶ 61,067, 61,352–53, 2007 WL
3047581, at *9 (2007).2 The Commission directed the
California Power Exchange Corporation (“Cal-PX”) and the
California Independent System Operator Corporation (“CalISO”) to complete refund calculations with all entities that
participated in the Cal-PX and Cal-ISO markets and not to
redo the refund calculations to remove the governmental
entities/non-public utilities. Id.
FERC agreed with the California parties (“California”)3
that energy sales and purchases should be netted before
calculating each party’s refund amount, but it found that
netting these sales and purchases over the entire refund period
could have the indirect effect of requiring governmental

2

All proceedings below share this case name. Orders will be referred
to by their year and title for the sake of brevity and to avoid confusion.
3

Petitioners the California Parties consist of the Public Utilities
Commission of the State of California; the People of the State of
California ex rel. Xavier Becerra, Attorney General; Pacific Gas and
Electric Company; and Southern California Edison Company.

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entities and other non-public utilities to pay refunds. 2008
Order on Rehearing and Motions for Clarification and
Accounting, 125 FERC ¶ 61,214, 62,112–13, 2008 WL
4962565, at *4–5 (2008). FERC instead found that in order
to calculate the total refund shortfall resulting from
Bonneville, Cal-ISO should net sales and purchases over
hourly intervals. Id. The Commission noted that under the
Cal-ISO Tariff, a settlement period was defined in terms of
hourly intervals, and therefore, it directed Cal-ISO to net over
hourly intervals to ensure consistency with its tariff
requirements. Id.
In a later order, FERC applied the same rationale to CalPX, whose tariff also specified hourly settlement intervals,
and directed Cal-PX to perform its final refund calculations
netting purchases and sales over hourly intervals to reflect the
period during which the obligation was incurred. 2011 Order
Accepting Compliance Filings and Providing Guidance,
136 FERC ¶ 61,036, 2011 WL 2750775, at *11 (2011).
California argues that the applicable tariffs
unambiguously require Cal-ISO and Cal-PX to net for the
entire refund period, not over hourly intervals. Although
California makes a plausible case for its interpretation, we
cannot conclude that FERC acted arbitrarily or capriciously
in its interpretation of the tariffs. Though the tariffs provide
for netting in certain situations over an interval shorter than
an hour or for netting charges over an hour and later summing
the charges over the day and over the entire month to
generate monthly invoices, nothing suggests that the netting
interval should span the entire refund period, which lasted
nine months. Similarly, FERC’s interpretation of the tariff
amendments was likewise reasonable. Cal-ISO Amendment
No. 51 and Cal-PX Amendment No. 23 segregated

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41

transactions during the refund period. The amendments did
not address calculating the total net refunds; they related only
to performing settlement reruns and invoice adjustments
(prerequisites to calculating final refunds). FERC reasonably
interpreted the amendments as inapplicable.
California also argues that FERC’s decision to net
governmental entity sales on an hourly basis departed from its
prior orders without explanation. However, the prior orders
cited do not address how the refunds should be netted; they
address cost offset allocations.
California also suggests that the result is unduly
discriminatory because hourly netting improperly permits
governmental entities and non-public utilities to receive
unlawfully excessive rates charged for sales made in one hour
(without having to repay sellers for the excessive rates), while
collecting refunds if that same entity bought power in another
hour or in a different market in that same hour. The data do
suggest some disparity. However, that is a natural
consequence of our jurisdictional decision in Bonneville.
In sum, although the tariffs are not specific on these
points, we cannot conclude that FERC acted arbitrarily or
capriciously in its construction of the tariffs.
II
The second issue in the petition for review concerns a $5
million deficit in the Cal-PX settlement clearing account that
resulted from a transfer of funds from the settlement clearing
account to the operating account in March 2001; the $5
million was used for operating expenses. The Commission
determined that the deficit was attributable to an accounting

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CALIFORNIA PUC V. FERC

error on the part of Cal-PX and found that, given the delay in
discovering that the funds had erroneously been transferred,
it appeared unlikely that Cal-PX would “be able to determine
how, precisely, this $5 million was used, separate and apart
from other funds in the operating account during the same
period.” 2011 Order Accepting Compliance Filings and
Providing Guidance, 136 FERC ¶ 61,067, 2011 WL 2750775,
at *15. Therefore, the Commission determined that the most
efficient and equitable solution was to treat the settlement
account deficit “like a refund shortfall and allocate the
shortfall among all net refund recipients in proportion to their
final refund positions.” Id. The Commission denied
rehearing of its decision, concluding that only net refund
recipients (net buyers) would be financially affected by the
reduction in the total amount of available funds and that this
approach was consistent with its decisions about how to
allocate other shortfalls. 2012 Order Denying Rehearing (II),
138 FERC ¶ 61,092, 61,398, 2012 WL 372854, at *3 (2012).
California argues that FERC should have allocated the $5
million deficit to both buyers and sellers, rather than just to
net buyers. In this respect, we are guided by Pacific Gas &
Electric, in which the D.C. Circuit concluded that FERC was
required to allocate costs across the entire market. 373 F.3d
at 1319–22. Pacific Gas & Electric involved Cal-PX
“winding up” its business affairs. Id. at 1317–18. Because
CalPX had no funding source during the wind-up period,
FERC allocated the costs of Cal-PX’s wind-up and ongoing
operations among its customers on the basis of their prior
purchases. Id. at 1318, 1320. However, the D.C. Circuit held
that “FERC’s imposition of additional charges on Cal-PX’s
customers allocated on the basis of their prior purchases
without reflection of any new jurisdictional services directly
violate[d] the filed-rate doctrine or the rule against retroactive

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43

rulemaking.” Id. at 1320. Because Cal-PX’s former
customers had already paid the filed rate for the past
jurisdictional services, any imposition of new costs based on
the previous transactions was prohibited. Id. The court also
held that FERC’s cost allocation methodology was
unreasonable because there was no connection between “the
size of [a customer’s] account balance” and the “customer’s
likely benefit from . . . [Cal-Px’s] wind-up activities.” Id. at
1321.
Here, the allocation of the shortfall is not a new charge
but is the result of Cal-PX’s accounting error. Nonetheless,
the $5 million was used for operating expenses and, as noted
in Pacific Gas & Electric, all market participants benefitted
from the continued operation of Cal-PX. Id. at 1231.
Therefore, consistent with the treatment in Pacific Gas &
Electric, the shortfall should be allocated among all market
participants. See id.
FERC argues that its decision was consistent with prior
proceedings and, specifically, that the shortfall after
Bonneville was allocated to refund recipients based on their
final net refund positions. See 2007 Order on Remand,
121 FERC ¶ 61,067, 61,352–53, 2007 WL 3047581, at *9.
However, allocation of the Bonneville shortfall is
distinguishable because it was a shortfall in refunds. Because
governmental entities could not be ordered to pay refunds,
there was less money to be allocated to buyers. Here, on the
other hand, the shortfall exists in the account from which
refunds will be made, but is unrelated to the refund
proceeding.
In sum, we agree with the logic employed by the D.C.
Circuit and conclude that FERC acted arbitrarily and

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CALIFORNIA PUC V. FERC

capriciously in allocating the refund only to net buyers and
not to all market participants.
III
In conclusion, we deny the petition as to the question
whether refunds should be netted hourly or across the entire
refund period. We grant the petition as to the allocation of
the deficit in the Cal-PX settlement clearing account. Each
party shall bear its own fees and costs on appeal.
PETITION GRANTED IN PART; DENIED IN
PART.