energy texas incorporated versus nelson may please the court if you entergy operating companies for a decade have made and received payments as part of the program to roughly equalize costs in the energy system and as for contended each of these payments and costs has been passed through dollars payment that it received in twenty fourteen was preempted and that for the first time an interesting operating company could pass for a band with payment to it shareholders rather than its customers and as this court cautioned in white buffalo preemption radically alters the balance of federal and state authority and for that reason only a clear federal command justifies constraining a state's exercise of its traditional police powers and none is present here in concluding otherwise the district court over the meaning of a single cell in a chart infers operative decision and fell victim to a shell game played by u t i same game e t i plays on appeal before we get to those issues however i'd like to discuss e settlement of a prior p u c proceeding because this issue can short circuit much of the debate in this case e t i his claim of preemption boils down to the following assertion that the p c cannot order to pass through more than it has received i points to first decision to say that it is only entitled to forty one point three million dollars in two thousand and six baseband with payments and then the prior p u c proceeding the p c ordered it to pass through forty nine million dollars but e t i settled it dispute in that prior proceeding and in doing so it agreed that it had in fact received that full amount forty nine million dollars that it was ordered to pass through or the upshot being that with the forty nine million dollars of e t i agreed that it received in two thousand dispute here regardless of how one reads first decision e t i only argues that it's agreement doesn't mean what it says and that argument answers itself contracts must be applied as written and e t s agreement which was adopted in a pew c order states that e t i receive the full forty nine million dollars in bandwidth payments and so there is no dispute or so there is no conflict here regardless of what the first decision means if i mail turn to first decision and e t i shell again e t i claims that it is entitled to keep the current payment because in a prior p c proceeding the one just discussed it had already paid more than it was entitle to receive for the two thousand and six test year to they see they see pass through that much and no more are not if that was the only issue if that was the only issue then that would get directly passed or if there were some other costs they were able to take into account and that could factor in but if that honor but but the important point is if you go ahead the important point is is what the purpose of that was so e t i points to the chart and it says forty one point three million dollars was all that e t i what it would have been entitled to receive had it existed in two thousand and seven when the original payment was made and it points to the forty nine million dollar number and it says look that shows that we paid too much but those two numbers forty nine and forty one point three are answering two different questions so it makes no sense to compare them the first is a is an answer to a local retail question that is how much of the one hundred twenty million dollars payment that the predecessor company received there's no dispute that it received that payment how much of that was due to texas customers and firk looked at that and said there's no conflict with federal law now e t i points that says well we're the ones that passed it through but they didn't pass it through because of any judgment as to what they were entitled to receive in two thousand and seven that wasn't part of that proceeding they had to pass it through because by then they had stepped into the shoes of the predecessor company and had to take on its liability so that forty nine million dollars number has never had anything to do with how much e t i was entitled to receive had it existed in in two thousand and seven when the payment was made so the sort of look at that forty one point three number and find a conflict here you would have to conclude not just  to say well this is what you would have received and the reason for did that was because that was the only way to figure out how much of a true up payment each i would get but you would have to say that first intended that to mean that that's how much your predecessor company should have passed through or now i think it seems to me there  were not trying to work andy what happened with where the specter the p c said and all were saying is that going forward we don't we keep it but we we don't get we don't have to pay double pay basically will honor but in order to show a double payment you have to point to that forty nine million dollar number and unless those numbers are payments for the same thing there's no overpayment and so then so the forty nine million dollar number unless that number was was connected to how much e t i should have received then there's no overpayment and it's not if you look at page fifty four of a brief it tells you where this forty nine million dollars came from it says that the p u c correctly concluded that the predecessor company had received one hundred twenty million dollars and that the only issue in dispute in that case was the method that the p u c would use to allocate that payment to texas customers and ferk has not only concluded that it has no jurisdiction to to consider that question but it it said that the pc's answer was correct and so again the fact that e t i passed this payment through this forty nine million dollars has nothing to do with how much they were entitled to receive and therefore they can't point to this forty nine point three and and simply say because those numbers don't match we've overpaid what they have to argue is that first contended that forty one point three to mean that that's the that's the amount owed that that's the total amount that the price that the previous company should have passed through but nothing in first order talks about texas retail customers and how much the predecessor company had to pass through and in fact on page three of it was brief they say that the band with formulas only concerned with what operating companies get not concerned with what retail customers get and first itself in its order said look we need to distinguish the prior payment the one hundred twenty million dollars that the processor company received from these true up payments it's these true of payments that need to reflect the current companies it's not what happened with the previous payment and said we're only concerned with the latter we're not concerned with the former and with the limited time that i have left i want to stress that at the very least there's nothing clear in this order that that justifies the the injunction that the federal court enter here sorry that the district court entered here as this court explained in white buffalo when there are two interpretations of the federal authority both rooted in the text that ambiguity triggers the strong presumption against preemption let me ask you there's there's a chart that we've cited every single one has passed that or that's what we've done in every case and so for something to change here you would expect some sort of clear statement but there is none and as as the supreme court said in bates if there are two plausible readings you take the one that just favors preemption and so sorry the court the supreme court has also said the unique clear evidence to overcome the presumption against preemption there's nothing clear in this case and the court i plan to discuss three things first the p c s two thousand and nine decision assigning forty nine million to texas customers second e t i two thousand and ten acceptance of that decision abandonment of all of its heels and stipulation that it had in fact received that full forty nine million and third that there's no way to look at each attempt to keep the ten point nine million that he got in in twenty fourteen other than as a challenge to this final decision in two thousand and nine which made us too so you know in two thousand and seven gulf states was operating and it received the last six months two thousand and seven a monthly this total amount of one hundred twenty million dollars all parties agreed it goes to rate payers but which state texas says decides for texas louisiana decides for louisiana for multi drug stiction utility texas said well we're for forty one percent of the sales in the cost we get forty one percent  of louisiana took a different approach which gave louisiana eighteen point six million dollars more than that and texas eighteen point six million less consequently the utilities were ordered to refund eighteen point six million more always exactly match up and back in texas e t i appealed cision state federal courts and a few months later it filed for a rate case and a fuel reconciliation case that covered this period two thousand and seven stipulation among other things to credit rate payers with the remaining eighteen point six million dollars which they hadn't really put in the account yet dismiss both of the appeals of three five two six nine with prejudice so there was no longer any judicial vehicle for challenging the commission's decision back in two thousand and nine that for nine million was the appropriate amount and in a belt and suspenders approach make it even clear each yeah i specifically that's when it took the assets and liabilities of gulf states so why did we do that to ensure that there could never be a claim that forty nine million was wrong because he had stipulated there's no harm e t i paid out forty nine million it now previously refunded which it claims still in this case was eighteen point six million too much now admits it can't directly get back to forty nine million it can't surcharge forty million but it search that it can do indirectly the same thing it received this ten point nine million it got a check for ten point nine million in two thousand and fourteen just has received many time for made payments many times before and when that check comes in or the check is written the commission must accept that and so had i had as a result this recalculation had to pay ten million more that would have been surcharge rate payers instead they got a check i got a check really first check from the other utilities for this period for ten point nine million that goes to the read rate payers just as it has in every time for every other r p c payments they have to be so what's the basis for e t i to say this time is ten point nine million dollars so i just got is mine not the right papers there's only one basis for that that in two thousand and nine the texas commission awarded forty nine million when it should have only awarded thirty point four million according to its chart and as a result we've paid too much because at forty good morning may it please the court i'm marty mccormack here on behalf of entergy texas sir e t i and in my time this morning here i hope to address or explain why all three of the pellets main arguments are wrong first in the recalculation for the two thousand and seven band with filing for it did approve a single total amount of money that e t i should receive to equalize production costs and that decision did not result in a mere supplement to the initial calculation the recalculation replaced the initial calculation second purposes i'm sorry your honor for purposes i mean in other words let's suppose that originally there been no just b you've gotten the forty three was a forty three point one million dollars the p c said you're you're entitled that past history to write pay or whatever there's no to speak now there's a true up two point three million dollars you would automatically pass that through correct your honor when under normal circumstances payments are passed through as there are stated in first orders this is a very unique situation because in this case the money that was passed through under the initial calculation that was an interim calculation and it was replaced in the right increase that it was forty nine not forty three so i don't see how you can go back and that's actually the point that i was getting going to get to is e t i has not stipulated that it actually received forty nine million dollars of the initial calculation that is actually an argument that they've manufactured for the first time in their briefs to this court it is not a basis of the p u c order that's before the court today p u c in its order before the court gave one reason and one reason only for ordering this pass through the p c said it was interpret ing for recalculation order that's all the pay you see said it did not say it was ordering this passed through for some different reason or for its interpretation of a past stipulation i'll also note that that stipulation is not in the record counsel's apparently provided you a copy of a snippet of the stipulation and aside from the fact that it's not a basis for the p c s order this to their mis characterizing the stipulation they're taking one word out of the stipulation and spinning it out of context when you read the entire stipulation even the piece that they've reproduced in your bench hand out it's clear that what i did was agree to credit texas customers the amount that was at issue in the old  t i couldn't have waived its rights that hadn't even accrued at that point at the point that the settlement was undertaken everybody knew there were multiple for docket open where the bandwidth formula and how it should be calculated were being litigated for this very compliance filing those dockets wrong going all e t i did here was agree to pass through this eighteen point six million to customers and stop challenging how the p u c had done the retail allocation but u t i did not stipulate or give up its rights under a first decision that hadn't yet been made and wouldn't be made for another six years it took six more years before for actually got around to wrapping this all up and determining that an entirely new calculation had to be undertaken and when first did that in the two thousand and fifteen  order clearly said we are allocating eight grand total for the two thousand letters take a hypothetical let's say for the in the in the recalculation and come out exactly the same way would you now be able to go back and say wait a minute we get to pass through eighteen to so on billion dollars because we didn't we weren't made whole no your honor no one and we're not asking for money back here texas customers have been credited the eighteen million or eighteen point six million since like you can't you all had to come up to the global industry that existed before had to come up with dollars above and beyond the allocation to eighteen million dollars above and beyond what the true up the temporary true up was that was out of somewhere you're not going to get that back from the true up i mean that's you agreed to because you you paid more out of pocket than you were going to get back in the temporary to up and you seemed like to me you voluntarily agreed to pay that we did pay and we're not getting a dollar back from texas coast so if if the commission that fark and ultimately come out  everybody square we had it right on the money nobody's owes anybody else when done where would you be i think we would let it sit but you couldn't get the eighteen you couldn't get any kind of credit you know it's that maybe there may because the stipulation was only concerning the initial interim payment i may have had an argument that once for supplanted that entire initial calculation that it was entitled to get back to first final total but that's actually not what what e t i is asking and i'm just saying logically i'm trying to see where this plays out in in theory that maybe maybe something that you could have done but u t i hasn't done that it's not asking to get the money back there are still dollars trapped by folks final decision in the recalculation i think it might help to step back and look at what happened here in two thousand and seven the the bandwidth formula is actually a set complex formulas with lots of variables and the two thousand seven calculation was the first time that the formula had been applied and so it was that in the context of this two thousand and seven filing that most of the disputes  receiving end to t so when that initial calculation was made the multi jurisdictional operating company was in existence and so that's where the money flowed u t i did not receive that money you guys never stipulated that it received that money it makes no sense e t i didn't even exist in two thousand and seven it couldn't have received that money but its predecessor did its predecessor did and that's why the people you see got to decide how much of that payment went to texas customers at that time but since then something has critically changed burke decided after years of litigation over these the disputes about the components of the formula and whether it was meeting for objective after years of that interview system agreement changed when i split it was no longer a named operating company under the bandwidth formula for tariff the two successor companies were actually named in the entergy system agreement and so the bandwidth formula on its face required f problem where it has a you know data from an a company that no longer exists and a formula right that requires calculations and payments and receipts to be allocated to existing entities that didn't exist back in two thousand and six the first time ever was a confronted with this was actually an opinion five fourteen and that involved the two thousand and eight calculation and  e c made the same argument there that it's making here it's for you is the company that existed when these costs were being incurred and so you should allocate payments and receipts to each yes i and let retail regulators divvy them up how they see fit and firk disagreed that is very clear in opinion five fourteen ferk said it not only had the power but the duty to allocate those costs payments and receipts among the existing operating companies even though they didn't exist at the time that the costs were being incurred burke said that an opinion five fourteen and when it said that it recognized that its decision on this issue would impact retail rates but that did not deter fur from applying its filed rate the bandwidth formula as it was written in that same exact reasoning appears in for two thousand and fifteen order approving the recalculation for the two thousand and seven compliance year that's the filing that's before you now so actually address you see may the same argument but wait but wait size the company that existed in the past infer said no following the logic of opinion five fourteen where banned to allocate these dollars among the current currently existing operating companies and for even expressly rejected t i e c s argument that the two thousand and nine decision required a different result the two thousand and nine decision is the one that you heard counsel for the p c talk about this morning they hang their hat on and say ferk didn't step in and do anything about the p c s allocation of the interim payment brief all first said in that case was that the initial calculation resulted in a payment to e g s i and that is all that the bandwidth formula requires further allocates dollars to operating companies it doesn't allocate dollars to retail jurisdictions so first said we don't have jurisdiction to do anything about what the p u c did with the initial calculation that reasoning that is completely consistent i think my my point is firk did not say that the p u c correctly allocated those dollars and further didn't say in two thousand and nine what should happen to a recalculation or any calculation that occurred after split and that's what's at issue here and basically ferk has recalculated the entire thing and said here's the total amount of money i is entitle to for this band with filing that's forty one point three million dollars e t i has passed through more than that it's not asking for money back but it is asking you to uphold  decision that the p u c can't force it to pass through another ten point nine million now when it's already over paid the amount that for has finally settled on for this compliance year i want to spend a few minutes just  addressing councils argument that there's this sort of notion that the ten point nine million dollars in for two thousand and fifteen order was the whole point of the calculation that the whole point of this recalculation was to come to come up with a true up payment that's completely divorced with or from the initial calculation but there are multiple further orders that that that's wrong the whole point of the recalculation was to redo everything because so many things had changed over the years well here's here's where i think correct me if i'm wrong there was a total amount allocated to the old former global into tif for arc is is the band with payment and a on top of that the formal global company came up with another eighteen million dollars at its own pocket to settle the eighteen point nine million dollars because that was a above and beyond the total the global total that first was talking about so i don't see how they get to recoup the eighteen point any of the eighteen point nine that they themselves put on the table to settle the case so they're not recouping any of that money they've passed through the eighteen million and they're not asking for any of it back from texas customers i think what you're getting at here what you're the tension that you're feeling is that when stepped in and recalculate everything and supplant that initial allocation first decision had the effect of offsetting some of the track in a ten point to eighteen million offset ten point one of  the right that's right so there are still another seven or eight million that's trapped so but first ultimate decision here in the recalculation does mitigate some of the trapping that occurred but first recognize that would happen but it was that as a consequence of how the firk tariff is written and ferk applied it as written it said it was bound as a matter of law to do that that is the filed rate and so is the chart in the recalculation order the chart that we've seen so much about in the briefs and they say that interest you just provided those numbers to the commission of the commission just included them as some sort of just reprinted the but didn't approve them that's not correct that further itself has said that not only is the bandwidth formula filed right but the calculations under the formula once accepted by ferk become file rates themselves and ferk decided in two thousand and fifteen this is this is the amount of money that the revised bandwidth formula yields for the entire period for the entire period and it made its order effective from the beginning of the compliance period starting june two thousand and seven even though the decision was made in two thousand and fifteen so there's no question that for intended this to be a redo it was effective from the beginning of the compliance period here is the number that the federally approved tariff yields this is a filed rate and nobody appealed that decision that a decision is final and so the c is bound to respect that decision and what they're doing here is even though texas right payers have received every dime plus seven or eight million more than the number that first landed on there the p c is ordering e t i to pastor an additional ten point nine million dollars there's just no logical basis for that but their whole theory is that they're entitled to keep an eighteen million dollars worth of trapping that occurred but that's not what the federally approved rate dictates now and for has acknowledged that its decision under the filed right is going to impact retail rights and did it anyway and nobody exclusive jurisdiction to interstate wholesale rates like these like that brings you back to my original early question suppose for good said we got it right the miraculously the numbers came out the same nobody has to pay anybody anything so that there's zero day on full and final settlement where's that levy i mean under your logic you wouldn't be able to go back to peace in say white we passed through more than we should have and we should get some of that back logically that that's possible it's not what interview has asked for all entergy is is recognizing us that first order had the effect the and or order had an effect of mitigating or offsetting some of the trapping that occurred under the interim payment that was an interim payment that was made subject to refund so there's really no logical inconsistency with mean texas customers have received the money it's just that for has stepped in and wiped out the basis for that payment to texas customers e t i is not asking for a refund but  i'd like to start just for counsel left off because she said something very important she said that for order wiped out the basis for the forty nine million dollar pastor but what she did not do in her entire argument was actually tell you what that forty nine million dollars passthrough was for but they say it in their brief at page fifty four that passed through had nothing to do with what e t i was entitled to under any first formula that forty nine million dollars was what the p c determined that of the one  hundred twenty million dollars payment that the predecessor company received how much was due to texas customers and fur and and and they also say that this was the first time that first had ever had to deal with this issue that's not true when  went to for the first time to challenge that forty nine million dollars payment they made the same argument they're making here and they said defer please amend the system agreement retroactive to june first two thousand and seven or sometime before then so that this is so that the system agreement will tell us how to allocate these things to retail jurisdictions and first said we simply don't have jurisdiction to do that but it's the same thing they're asking for here they're saying what f did was with this forty one point three is went back in time and said we're going to affect what happens with the jurisdictional allocation but the federal power act has not changed between now and then for it still has no jurisdiction to go back in effect a retail allocation so what happened here is the predecessor company and they talk about one total payment the total payment here was one hundred fifty million dollars the first one hundred twenty went through and the predecessor company exist at that time and so it was allocated by the state agencies and then an additional thirty million dollars payment came through by that time the companies that split so first took care of the allocation that's all that's happened here nothing has gone back and change that forty nine million and they have done nothing to connect those two so you cannot find that there was an overpayment based on the forty one point three compared to the forty nine because there's no connection there answering two different questions if i could talk about the settlement if you look at our away for eighty two this very language is cited in the record and the language says the signatories agreed that e t i will credit an additional eighteen point six million dollars to texas customers e t i want you to stop there they want to say ok all we agree to do is credit the money to customers but there's a comma there and what follows is this the signatory stipulated that this represents the remaining portion of bandwidth payments that e t i received in two thousand and seven and they say well we didn't exist in two thousand and seven again not true the predecessor company split on december thirty first two thousand and seven and with that liabilities and assets went to the two companies so a perfect way to read this is that  got forty nine million dollars in bank with payments exactly the amount that the that the p c has ordered them to point through or to pass through and they say that the p c s order below didn't rely on this again not true the finding of fact forty nine in the p c s order below which i believe can be found on our away six forty seven sites the settlement and then if you go back a page before finding of fact thirty three it says what happened was forty nine million dollars in bandwidth payments was passed through bandwidth payments they didn't say well thirty point four million dollars was passed through and then eighteen point six million dollars was passed through but you know we don't know what that was it has forty nine million dollars in bandwidth payments was was passed through and we argued to the district court that entergy that e t i had bargained their claim away by settling this we raised this issue with the district court we've cited this finding of fact numerous times below and so there's there's no argument that we forfeited anything here and in fact they didn't argue forfeiture in their brief and so if anything is forfeited it's their argument of about forfeiture if i could just end again with  presumption against preemption they didn't mention it in their argument the presumption against preemption requires clear evidence requires only one way to read a federal authority in joining a state utility action is a very serious matter this is in the heart of what states are entitled to do and it is simply not enough to rely on a single cell in a chart that even it doesn't even correspond with the purpose of that era cipher create cre treated single texas provider for the calendar year of two thousand and seven in its final trip order it is it is fair to say that it that it calculated it as if it existed as an independent entity throughout the year in two thousand and seven when the payment was made so in order to figure out how much was owed to e t i it had to put it in the place that two thousand and seven and that's what it was doing it said if you existed in two thousand and seven how much would you have gotten under the old formula and how much would you have gotten for the new formula so it tree it is as in existence in solely a texas provider if you will throughout the two thousand and seven was this is what you do now that the company has split up you calculate what's owed to the company and then you split it up to the two new companies to make them have the same deviation from the average so what what entergy did here was they said  old company is owed twenty two million dollars and then they said all right how not including interest twenty nine point nine including interest and that was the true payment then there's a separate section of the system agreement that says this is how you split it up and that's where they went through and they said all right the way that we're going to split this up as we're going to say if e t i existed in two thousand and seven this is how much they would have gotten under the old formula is how much they would have gotten under the new formula ten point nine which e t i the remainder went to the louisiana counterpart there's nothing in first decision that says everything that happened before including three tell allocations now must look as if e t i existed in two thousand and seven and if you go back to the  decision that we were talking about earlier i asked it to do that it said with the forty nine million it said please we exist now please amend the system agreement retroactive to before the payment was made so that we can decide how these things go and first so we don't have jurisdiction to do that the allocation is outside of our purview so we can't do anything we can amend a system agreement we can't issue an order we can't do anything that has any contemplati about what it's going to do for retail rates now of course it's going to affect retail rates because you have to pass those things through or you have charges and things like that but but their argument that first intended to go through and say well this is going to completely wipe