United States Court of Appeals, District of Columbia Circuit
October 24, 2017
Petition for Review of Orders of the Federal Energy
Regulatory Commission Adrienne Elizabeth Clair argued the
cause for petitioner. With her on the briefs was Dennis Lane.
Susanna Y. Chu, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on the
brief were Robert H. Solomon, Solicitor, and Elizabeth E.
W. Mayes was on the brief for intervenor-movant Independent
Market Monitor for PJM in support of respondent.
Before: Tatel, Griffith and Millett, Circuit Judges.
Millett, Circuit Judge
weather conditions giving rise to this case may have been out
of the ordinary, but the legal principles controlling its
resolution are decidedly routine. In January 2014, a period
of exceptionally cold temperatures, commonly referred to as a
"Polar Vortex, " descended on the Eastern United
States. As temperatures plunged, the demand for electricity
soared. In working to help meet that demand, Old Dominion
Electric Cooperative, an electricity generator and provider,
found that its operational costs outstripped the amounts it
could charge for electricity under the governing tariff. Old
Dominion then asked the Federal Energy Regulatory Commission
to waive provisions of the governing tariff retroactively so
that it could recover its costs. The Commission declined on
the ground that such retroactive charges would violate the
filed rate doctrine and the rule against retroactive
ratemaking. The Commission was right to do so, and we
accordingly deny Old Dominion's petition for review. We
also deny the motion of the Independent Market Monitor to
intervene, but will accord it amicus curiae status.
Federal Power Act charges the Commission with ensuring that
"[a]ll rates and charges made, demanded, or received by
any public utility for or in connection with the transmission
or sale of electric energy subject to the jurisdiction of the
Commission * * * shall be just and reasonable." 16
U.S.C. § 824d(a). To effectuate those goals, regulated
utilities must file with the Commission and keep open for
public inspection a schedule of the rates they intend to
charge ratepayers. Id. § 824d(c), (d). While
the Act permits regulated utilities to set their filed rate
unilaterally and record it in a tariff, see id.
§ 824d(c), the rates actually charged may not exceed
those on file with the Commission, Towns of Concord,
Norwood, and Wellesley Mass. v. FERC, 955 F.2d 67, 68
(D.C. Cir. 1992).
also empowers the Commission to fix or change rates and
charges, but only prospectively. 16 U.S.C. § 824e(a).
When a utility wishes to alter the rates it charges, it must
provide sixty-days' notice to the Commission and file new
rate schedules "stating plainly the change or changes to
be made in the schedule or schedules then in force and the
time when the change or changes will go into effect."
Id. § 824d(d). The Commission may waive the
sixty-day notice requirement for good cause, but the
Commission has no authority under the Act to allow
retroactive change in the rates charged to consumers. See
id.; Columbia Gas Transmission Corp. v. FERC,
895 F.2d 791, 795-796 (D.C. Cir. 1990) (Columbia
III); see also Consolidated Edison Co. v. FERC,
958 F.2d 429, 434 (D.C. Cir. 1992).
rules mandating the open and transparent filing of rates and
broadly proscribing their retroactive adjustment are known
collectively as the "filed rate doctrine." At
bottom, that doctrine means that "a regulated seller of
[power]" is prohibited "from collecting a rate
other than the one filed with the Commission, " and
"the Commission itself" cannot retroactively
"impos[e] a rate increase for [power] already
sold." Arkansas Louisiana Gas Co. v. Hall, 453
U.S. 571, 578 (1981).
similar vein, the rule against retroactive ratemaking
"prohibits the Commission from adjusting current rates
to make up for a utility's over- or under-collection in
prior periods." Towns of Concord, 955 F.2d at
71 n.2. That otherwise categorical prohibition against
retroactively charging rates that differ from those that were
on file during the relevant time period yields in only two
limited circumstances: (i) when a court invalidates the set
rate as unlawful, and (ii) when the filed rate takes the form
not of a number but of a formula that varies as the
incorporated factors change over time. See West Deptford
Energy, LLC v. FERC, 766 F.3d 10, 22-23 (D.C. Cir. 2014)
(compiling cases). Neither of those exceptions apply to this
Interconnection, LLC ("PJM") is a Regional
Transmission Organization and Independent System Operator
that exercises operational control over, but not ownership
of, the electrical transmission facilities belonging to its
participating members. See Midwest ISO Transmission
Owners v. FERC, 373 F.3d 1361, 1364 (D.C. Cir. 2004).
The Commission has tasked PJM, as a Regional Transmission
Organization, with supervising and coordinating the movement
of electricity throughout its market area, 18 C.F.R. §
35.34, which comprises thirteen states and the District of
Columbia, see Hughes v. Talen Energy Mktg., LLC, 136
S.Ct. 1288, 1292-1293 (2016).
that electricity is transferred throughout the PJM market is
through competitive auctions. See Hughes, 136 S.Ct.
at 1293. In same-day auctions, generators bid to provide the
immediate delivery of electricity needed to slake sudden
spikes in demand. In next-day auctions, generators bid to
satisfy anticipated near-term demand. And in a "capacity
auction, " generators make bids that, if accepted, bind
them to providing needed electricity in the longer term.
Dominion Electric Cooperative is a not-for-profit electrical
generation and transmission utility that participates as both
a generator and a load-serving entity (that is, a public
utility) in the PJM market. This case involves three of Old
Dominion's natural-gas-fired electrical power plants in
Maryland and Virginia: Marsh Run, Louisa, and Rock Springs.
Each of those facilities is a "generation capacity
resource, " which means that Old Dominion contractually
committed itself to offer all of those units' available
generation capacity into PJM's daily market and to
generate electricity whenever called upon by PJM.
Old Dominion Elec. Coop.,
151 FERC ¶ 61, 207 at P 2 n.2 (2015).
fulfills its oversight and market management responsibilities
through rules prescribed in (1) the PJM Open Access
Transmission Tariff and (2) the PJM Operating Agreement, to
which participating generators like Old Dominion subscribe.
Several provisions of those instruments bear on the dispute
in this case.
the Operating Agreement empowers PJM to take "measures
appropriate to alleviate an Emergency, in order to preserve
reliability" in the electricity market and to meet
consumer need. Agreement § 1.6.2(vii). That authority
includes directing generators "to start, shutdown, or
change [the] output levels of [their] generations
units[.]" Agreement § 1.7.20(b). According to Old
Dominion, generators "understand PJM dispatch
instructions to be determinations with which [they are]
expected to comply" under the PJM Tariff §
1.8.2(a). J.A. 56 n.2.
generation capacity resources "must offer" capacity
into the same-day and day-ahead auctions. Agreement §
1.10.1A(d). That "must offer" requirement commands
generators to submit offers for all "available
capacity" of any designated capacity generation
facilities. Tariff § 1.10.1A(d).
the Tariff caps the prices at which generators may offer
their capacity into the day-ahead market at $1,