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Ameren Servs. Co. v. FERC

Ameren Servs. Co. v. FERC

United States Court of Appeals for the District of Columbia Circuit

September 22, 2017, Argued; January 26, 2018, Decided

No. 16-1075 Consolidated with 16-1304, 16-1373

Opinion

 [**69]  [*573]   Silberman, Senior Circuit Judge: When new sources of power generation connect to the existing transmission grid, the grid often requires new construction beyond the point of interconnection in order to accommodate the increased flows of electricity. FERC issued a series of orders empowering incoming generators within the Midcontinent Independent System Operator (MISO) region1 to elect to self-fund this new construction, or to seek financing from third parties, regardless [***2]  of whether the current grid owners wish to fund the construction themselves.

The Commission justified the orders on two grounds. First, it found that allowing transmission owners to choose between funding options — and thus, potentially, to impose subsequent charges to generators via transmission owner funding — could allow the transmission owners to discriminate among generators. Secondly, it held that the charges to generators would be (or could be) unjust and unreasonable under the Federal Power Act. Petitioning transmission owners challenge both grounds. We conclude that Petitioners are correct regarding the discrimination point: there is neither evidence nor economic logic supporting FERC's discriminatory theory as applied to transmission owners without affiliated generation assets.

FERC's second ground raises a unique and important conceptual issue. Petitioners argue that involuntary generator funding compels them to construct, own, and operate facilities without compensatory network upgrade charges — thus forcing them to accept additional risk without corresponding return as essentially non-profit managers of these upgrade facilities. We  [*574]   [**70]  do not think that FERC adequately responded [***3]  to this argument. We therefore remand the case to the Commission.

We have previously explained the series of steps FERC took to unbundle the electric power system, enabling and encouraging new independent generators to create a competitive market for power generation.2 Transmission owners, which had previously served their own vertically integrated sources of power generation, were obliged to accept power from any source on a non-discriminatory basis.

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880 F.3d 571 *; 434 U.S. App. D.C. 67 **; 2018 U.S. App. LEXIS 1950 ***; 2018 WL 559893

AMEREN SERVICES COMPANY, ET AL., PETITIONERS v. FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT, AMERICAN WIND ENERGY ASSOCIATION, ET AL., INTERVENORS

Subsequent History: Decision reached on appeal by, On remand at Midcontinent Indep. Sys. Operator v. Midcontinent Indep. Sys. Operator, 164 F.E.R.C. P61158, 2018 FERC LEXIS 1292, 2018 WL 4184282 (F.E.R.C., Aug. 31, 2018)

Prior History:  [***1] On Petitions for Review of Orders of the Federal Energy Regulatory Commission.

Midcontinent Indep. Sys. Operator, Inc. v. Midcontinent Indep. Sys., 151 F.E.R.C. P61220, 2015 FERC LEXIS 944 (F.E.R.C., June 18, 2015)

CORE TERMS

transmission, generator, upgrades, funding, network, costs, interconnection, risks, Tariff, orders, capital cost, customers, unilateral, grid, challenged order, discriminatory, facilities, non-profit, investors, reliability, unjust, generator-funded, connected, financing, regional, percent, Intervenors', unduly, rates, rulemaking

Energy & Utilities Law, Utility Companies, Rates, US Federal Energy Regulatory Commission, Hearings & Orders, Judicial Review