Florida Municipal Power Agency v. Federal Energy Regulatory Commission

602 F.3d 454, 602 F. Supp. 3d 454, 390 U.S. App. D.C. 223, 2010 U.S. App. LEXIS 7866, 2010 WL 1508067
CourtCourt of Appeals for the D.C. Circuit
DecidedApril 16, 2010
Docket09-1060
StatusPublished

This text of 602 F.3d 454 (Florida Municipal Power Agency 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
Florida Municipal Power Agency v. Federal Energy Regulatory Commission, 602 F.3d 454, 602 F. Supp. 3d 454, 390 U.S. App. D.C. 223, 2010 U.S. App. LEXIS 7866, 2010 WL 1508067 (D.C. Cir. 2010).

Opinion

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge.

The Florida Municipal Power Agency (“Florida Municipal”) petitions for review of two orders of the Federal Energy Regulatory Commission (“FERC”) regarding the rate base for network transmission service using the facilities of Florida Power & Light Company (“Florida Power”). Florida Municipal resists the conclusion that the comparability principle, under which FERC applies the same integration standard to Florida Municipal and Florida Power in determining whether their facilities provide any benefit to Florida Power’s transmission system, bars the relief Florida Municipal seeks. In regard to FERC’s approval of Florida Power’s April 2005 compliance filing, Florida Municipal first challenges the sufficiency of the evidence supporting the finding that the test Florida Power used in 2005 on its facilities to identify “unneeded redundancy” was comparable to the test Florida Power used in 1994 to evaluate Florida Municipal’s Vero Beach — to—Fort Pierce facilities. Second, Florida Municipal contends its facilities were required to be treated no differently than Florida Power’s local facilities, so that Florida Power’s rate base must exclude the costs associated with Florida Power’s local facilities. We deny the petition.

I.

The background to these proceedings appears in Florida Municipal Power Agency v. FERC, 411 F.3d 287, 288-91 (D.C.Cir.2005)(“Fionda Municipal I ”). Florida Municipal obtained access to Florida Power’s network transmission system but did not receive pricing credits for using its own transmission facilities if they were “interconnected” rather than “integrated” with Florida Power’s transmission system. See Fla. Mun. Power Agency v. FERC, 315 F.3d 362, 364-68 (D.C.Cir.2003) (“Florida Municipal II”). 1 In de *457 nying credits, FERC explained that it had “not directed] a merging of the parties’ transmission systems or the operation of a joint transmission network.” Fla. Mun. Power Agency v. Fla. Power & Light Co., 74 FERC ¶ 61,006, 61,009, 1996 WL 12316 (1996)(“FMPA III”). In affirming that denial, the court described FERC’s pricing system as allocating the price of network transmission services based on the ratio of each network customer’s load to the total load on the transmission system. Fla. Mun. II, 315 F.3d at 363. In addition, the court described FERC’s “principle of ‘comparability,’ ” in which “the same integration standard that applies to transmission customers for the purpose of determining eligibility for pricing credits[,] also applies to transmission providers for rate determination purposes.” Id. at 364.

On January 25, 2005, FERC agreed with Florida Power that to be considered “integrated” into its transmission system, a facility would need to pass a four-factor test, with one factor being “a facility that provides only unneeded redundancy is not eligible for cost recovery.” Fla. Power & Light Co., 110 FERC ¶ 61,058 at ¶ 13, 2005 WL 159589 (2005) (“January 2005 Order”). FERC determined Florida Power had not applied this factor to its facilities in the same way it applied the factor to Florida Municipal’s facilities, and Florida Power needed to show that “each facility included in its transmission rate base was needed to deliver power to customers in the area where the facility is located and to other [Florida Power] load centers.” Id. (emphasis added).

In April 2005, Florida Power submitted a compliance filing proposing to remove approximately $29 million in costs from its network transmission service rate. FERC concluded it was unclear whether Florida Power had failed to test its non-radial (i.e., looped) facilities in a manner comparable to the way it tested Florida Municipal’s facilities. See Fla. Power & Light Co., 113 FERC ¶ 61,263 at P 20, 2005 WL 3445803 (2005)(“December 2005 Order”). Specifically, Florida Power had not indicated whether “unserved load” resulting from tests of its facilities referred to “load that is directly connected to or supplied by” the facility being tested “and/or load in other [Florida Power] load centers.” Id. at P 23. So FERC accepted Florida Power’s compliance filing in part but stated that the test Florida Power had applied to its facilities should have been whether, even without the facility being tested, Florida Power is able to deliver power to its customers in the facility’s area “and to other [Florida Power] load centers.” Id. at P 21. Florida Power requested rehearing on the ground that through this use of the word “and” FERC had shifted the comparability standard from that previously used in evaluating the 1994 tests of Florida Municipal’s facilities’ eligibility for pricing credits. FERC denied the request as untimely. See Fla. Power & Light Co., 116 FERC ¶ 61,013 at P 17, 2006 WL 1868200 (2006)(“July 2006 Order”). Florida Power sought rehearing and reconsideration.

By order of February 21, 2008, FERC reconsidered its denial of rehearing. Fla. Power & Light Co., 122 FERC ¶ 61,159, 2008 WL 461047 (2008)(“2008 Recons. Order”). FERC acknowledged that it had “erred” in its interpretation of the 1994 test applied to Florida Municipal’s Vero Beach — to—Fort Pierce facilities, and concluded that the test Florida Power applied to its facilities to determine whether they provide “unneeded redundancies” was comparable to the 1994 test. Id. at P 9-10. In support of this change in position, FERC relied on the affidavits of two experts, Karabet Adjemian and Hector Sanchez, submitted by Florida Power. FERC accepted Florida Power’s April 2005 compliance filing. One Commissioner dissented on the ground the majority had not *458 adequately explained its reversal of previous findings on comparability and Florida Municipal had raised “serious concerns” about the speculativeness of the Adjemian and Sanchez affidavits. 2008 Recons. Order, Dissenting Statement 2-3.

FERC denied Florida Municipal’s request for rehearing, reiterating that in its January and December 2005 Orders it had “misinterpreted” Adjemian’s 1994 affidavit and thus misstated the test for integration. Fla. Power & Light Co., 125 FERC ¶ 61,344 at P 7, P 20, 2008 WL 5330526 (2008) (“2008 Order Den. Reh’g ”). FERC affirmed its determination that the Florida Municipal facilities were “unneeded” because they were not necessary to serve either Florida Power’s local or remote load, and that Florida Power’s similarly “unneeded” facilities were properly eliminated from its transmission rate base. Id. at P 21. Weighing the evidence, FERC concluded Sanchez’s affidavit describing his testing of Florida Power’s facilities in 2005 showed he used models and methodologies consistent with Adjemian’s 1994 testing of Florida Municipal’s facilities.

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602 F.3d 454, 602 F. Supp. 3d 454, 390 U.S. App. D.C. 223, 2010 U.S. App. LEXIS 7866, 2010 WL 1508067, Counsel Stack Legal Research, https://law.counselstack.com/opinion/florida-municipal-power-agency-v-federal-energy-regulatory-commission-cadc-2010.