Constellation Energy Commodities Group, Inc. v. Federal Energy Regulatory Commission

602 F. App'x 536
CourtCourt of Appeals for the D.C. Circuit
DecidedApril 9, 2015
DocketNo. 11-1451
StatusPublished

This text of 602 F. App'x 536 (Constellation Energy Commodities Group, Inc. v. Federal Energy Regulatory Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Constellation Energy Commodities Group, Inc. v. Federal Energy Regulatory Commission, 602 F. App'x 536 (D.C. Cir. 2015).

Opinion

JUDGMENT

PER CURIAM.

This petition for review of Federal Energy Regulatory Commission orders was presented to the court and briefed and argued by counsel. The court has accorded the issues full consideration and has determined that they do not warrant a published opinion. See D.C. Cir. R. 36(d). It is

ORDERED AND ADJUDGED that the petition for review be dismissed in part and denied in part.

Constellation Energy Commodities Group and Constellation NewEnergy (collectively “Constellation”) petition for review of Commission orders allowing several load-serving entities to shift their seams elimination surcharge liabilities to Constellation. See Midwest Indep. Transmission Sys. Operator, Inc., Nos. ER05-6-001, et al., 181 FERC ¶ 61,173 (May 21, 2010) (“Initial Order”); Midwest Indep. Transmission Sys. Operator, Inc., Nos. ER05-6-043, et al., 136 FERC ¶ 61,244 (Sept. 30, 2011) (“Rehearing Order”).

The issues in this case arise because the geographic boundaries of two regional transmission organizations (“RTOs”)— Midwest Independent Transmission Operator Regional Transmission Organization (“Midwest”) and the PJM Interconnection Regional Transmission Organization (“PJM”) — align such that a large number of transactions are subject to “rate pancaking.” A pancaked rate occurs when an electric power transmission travels over the transmission systems of more than one RTO and each RTO charges a separate fee, called a through-and-out rate. The transmission is thus subject to multiple transmission fees and “pancaked.” See Wabash Valley Power Ass’n v. FERC, 268 F.3d 1105, 1116 (D.C.Cir.2001); see also Ill. Commerce Com’n v. FERC, 721 F.3d 764, 778 (7th Cir.2013) (describing pancaking as “exploiting a locational monopoly by charging a toll”).

In 2003, the Commission determined that the configuration of Midwest and PJM produced rate pancaking when transmissions crossed the boundary, or “seam,” between the RTOs. Midwest Indep. Transmission System Operator, Inc., 104 FERC ¶ 61,105, PP 1, 33-35, 39 (2003). The Commission held that the assessment of through-and-out rates was therefore unjust and unreasonable and replaced the through-and-out rates with a single transitional seams elimination surcharge. Midwest Indep. Transmission Sys. Operator, Inc., No. EL02-111-004, et al., 105 FERC ¶ 61,212, PP 42-53 (Nov. 17, 2003) (“November 2003 Order”).

This order left some load-serving entities receiving power from pre-existing con[538]*538tracts paying through-and-out rates on those contracts in addition to the seams elimination surcharge. Concerned that “generators may benefit ... from the elimination of [through-and-out rates], and that those savings may not all be passed on to load-serving entities,” the Commission developed a mechanism for load-serving entities to pass their seams elimination surcharges on to shippers. November 20Q3 Order at P 45. As part of the compliance filing process, load-serving entities “under existing contracts for delivered power” that continue to into the transition period may shift the relevant portion of the seams elimination surcharge to a supplier. Id. To do so, the load-serving entity must demonstrate that the supplier is the shipper for the transaction. Id.

A number of Michigan cities and other load-serving entities in the state filed shift-to-shipper claims to shift their surcharges to Constellation. Most of the claims were settled, and the remaining claims were addressed before the Commission. Midwest Indep. Transmission Sys. Operator, Inc., No. ER05-6-001, et al., 116 FERC ¶ 63,030, P 347 (Aug. 10, 20Q6) (“ALJ Determination”). Constellation challenges the Commission’s ruling on these claims.

Constellation raises five separate claims. Three of them require application of a benefits test to the shift-to-shipper mechanism and are, therefore, collateral attacks on the Commission’s November 2003 Order. We lack jurisdiction to review collateral attacks and so dismiss the petition as to these claims. On the remaining two claims, the Commission engaged in reasoned decision making and so we deny the petition as to these claims.

Constellation’s first claim is that several Michigan cities should not be able to shift their seams elimination surcharge to Constellation because Constellation did not benefit from the elimination of the through-and-out rates. Such a rule would impose a benefits test on shift-to-shipper claims, limiting load-serving entities to shifting charges only to shippers who carry power across the seam. Paragraph 45 of the November 2003 Order set requirements for making a shift-to-shipper claim and a benefits test was not among them. November 2003 Order at P 45. The effort to insert such a test now represents a collateral attack on the earlier order. We lack jurisdiction to consider collateral attacks on earlier Commission orders and so dismiss the petition as to this claim. See Pac. Gas & Electric Co. v. FERC, 533 F.3d 820, 825 (D.C.Cir.2008); Sacramento Mun. Util. Dist. v. FERC, 428 F.3d 294, 299 (D.C.Cir.2005).

Second, Constellation claims that American Electric Power, which intervened in support of the Commission, should be liable for a portion of the shift-to-shipper claims asserted against Constellation. This is so, Constellation argues, because it was American Electric Power and not Constellation that carried the power across the seam between the RTOs. The administrative law judge agreed, ALJ Determination at PP 427, 433, 460-62, but the Commission reversed, finding that this sort of “ripple” claim is not permitted under Paragraph 45, even as a defense to liability, Initial Order at PP 375, 393; Rehearing Order at P 175. The November 2003.Or-der did not provide a defense to a shift-to-shipper claim based on the shipper’s contractual situation with respect to its own suppliers. Therefore, the argument that the Commission should embrace this “ripple” defense is also a collateral attack on the original order and so we dismiss the petition as to this claim.

Third, Constellation argues that the load-serving entities’ shift-to-shipper claims should be reduced because a portion of the power Constellation delivered to the [539]*539Michigan cities was purchased on the day-ahead and real-time markets internal to the Midwest Independent RTO and so did not cross the seam. But the November 2003 Order did not condition shift-to-shipper claims on the ultimate source of the power delivered to a load-serving entity. Constellation’s attempt to insert such a condition is another collateral attack on the November 2003 Order and so we dismiss the petition as to this claim.

Fourth, Constellation argues that Michigan South Central’s shift-to-shipper claim should have been reduced by 21.8% because Michigan South Central sold that amount of power to third parties during the transition period. The administrative law judge agreed, ALJ Determination at P 435, but the Commission rejected the claim, Initial Order at P 378.

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