Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-14-03023/USCOURTS-ca7-14-03023-0/pdf.json

Parties Involved:
Ameren Illinois Company
Intervening Respondent
Federal Energy Regulatory Commission
Respondent
Midcontinent Independent System Operator, Inc.
Intervening Respondent
Settlers Trail Wind Farm, LLC
Petitioner

Document Text:

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

Nos. 13-2326, 14-3023 

PIONEER TRAIL WIND FARM, LLC, et al.,

Petitioners, 

AMERICAN WIND ENERGY ASSOCIATION, et al., 

Intervening Petitioners, 

v.

FEDERAL ENERGY REGULATORY COMMISSION,

Respondent, 

MIDCONTINENT INDEPENDENT SYSTEM OPERATOR, INC., et al.,

Intervening Respondents.

____________________ 

Petitions for Review of Orders of the 

Federal Energy Regulatory Commission 

Nos. ER11-3326-001, ER11-3326-002, ER11-3327-001, 

 ER11-3327-002, ER11-3330-001, and ER11-3330-002 

____________________ 

ARGUED APRIL 20, 2015 — DECIDED AUGUST 19, 2015 

____________________ 

Case: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
2 Nos. 13-2326, 14-3023 

Before WOOD, Chief Judge, HAMILTON, Circuit Judge, and 

DARRAH, District Judge.* 

WOOD, Chief Judge. Before deciding to build a power 

plant, energy companies and the system operator of an electrical grid must calculate the anticipated cost of connecting 

the proposed plant to the grid. These determinations occur 

in a highly regulated environment. Not surprisingly, sometimes the calculations need to be corrected. This case deals 

with who should bear the costs of additional upgrades to the 

grid when the initial studies of the costs of connection contained an error. Two wind-farm companies argue that the 

Federal Energy Regulatory Commission (FERC or the Commission) issued unreasoned orders when it assigned the corrected costs of connection to the wind farms that wanted to 

connect to the grid rather than to the grid’s system operator, 

which was the party that made the mistake. Our task is to 

decide whether the Commission’s decisions to impose the 

costs on the connecting parties and to require a certain 

methodology were arbitrary and capricious under Section 

706(2)(A) of the Administrative Procedure Act, 5 U.S.C. 

§ 706(2)(A). We conclude that the Commission’s decisions 

pass muster, and thus we deny the petitions for review. 

I 

Pioneer Trail Wind Farm, LLC (Pioneer), owns and operates a 150-megawatt wind-powered electric generation facility in Illinois. Settlers Trail Wind Farm, LLC (Settlers), owns a 

similarly sized facility, also in Illinois. Both Pioneer and Settlers are owned by companies that are in turn owned by a 

 

*Hon. John W. Darrah of the Northern District of Illinois, sitting by 

designation. 

Case: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
Nos. 13-2326, 14-3023 3

German company called E.ON SE. (The “SE” stands for “societas europaea,” which is the term given to companies that 

register under the European Union’s European Company 

Statute rather than under national law. See EUROPEAN 

COMM’N, The European Company – Your Business Opportunity?, 

http://ec.europa.eu/internal_market/company/societaseuropaea/index_en.htm, (all websites last visted Aug. 12, 

2015).) According to E.ON’s website, its power companies 

serve 33 million customers worldwide. See E.ON, Who We 

Are. An Overview., http://www.eon.com/en/about-us/profile.

html. We often refer to Pioneer and Settlers collectively as 

the Generators in this opinion. 

Midcontinent Independent System Operator, Inc. (MISO), 

was formed in 1998 by several independent transmissionowning utilities. Since its creation, MISO has linked up the 

transmission lines of the member utilities into a single interconnected grid that stretches across 11 states. The Generators 

wish to be connected to the transmission system of Ameren 

Illinois Company (Ameren), which is run by MISO. Ameren 

oversees 4,500 miles of electric transmission lines and approximately 45,400 miles of distribution lines in downstate 

Illinois; it serves roughly 1.2 million customers in Illinois. 

In order to put the questions before us in context, some 

background on the interconnection process is essential. In 

layman’s terms, we are talking about the regulatory hoops 

that a power plant must jump through in order to hook up to 

a grid. The Federal Power Act grants FERC jurisdiction to 

oversee “matters relating to generation ... and ... the transmission of electric energy in interstate commerce and the 

sale of such energy at wholesale in interstate commerce” because Congress has found such oversight to be “necessary in 

Case: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
4 Nos. 13-2326, 14-3023 

the public interest.” 16 U.S.C. § 824(a). In 2003, FERC standardized the generation interconnection process, to which we 

reluctantly refer as the GIP, following the industry jargon. 

Under the GIP, the interconnection customers, such as Pioneer and Settlers, submit requests to the grid operator—in 

this case, MISO. MISO then produces studies to assess the 

impact of the projects on the grid. These studies identify 

what additional upgrades are needed to ensure that those 

additional connections do not adversely affect the grid. 

These studies also inform interconnection customers what 

the cost of the upgrades will be. This step is supposed to enable the customers to decide if, in fact, they want to be connected to the grid or perhaps even build the plants at all. The 

interconnection customers cover the cost of MISO’s studies. 

Each case involves three separate studies. First, the grid 

operator prepares and sends to the interconnection customers the “base case,” which gives them an overview of the 

system conditions. Second, the grid operator prepares a 

“system impact study,” which includes a preliminary list 

(with non-binding cost estimates) of network upgrades required by the proposed project. At this point, the customers 

may choose whether to proceed. If they go forward, MISO 

performs the third study, called an “interconnection facilities 

study.” This sets out the nature and cost of the necessary 

network upgrades, as well as any information about pending 

upgrades that are entered into MISO’s interconnection 

queue. If another project is entered before the customer’s 

project, then the second customer could end up bearing the 

costs of the earlier project. That is because projects higher in 

the queue are included in the baseline against which the 

lower-queued project is assessed. 

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Nos. 13-2326, 14-3023 5

If the interconnection customer chooses to proceed in 

light of these studies, the grid operator provides the customer and the interconnecting transmission system owner with a 

Generator Interconnection Agreement (Agreement), which 

the parties must execute. The Agreement contains the specific upgrades and estimated costs identified in the studies. 

Once the parties execute the Agreement, it is effective under 

Section 205 of the Federal Power Act. See 16 U.S.C. § 824d. 

With that background, we detail the specific process that 

took place here between the interconnection customers—the 

Generators—and the grid’s system operator, MISO. In February 2009, MISO and Ameren entered a “study services 

agreement” in which Ameren agreed to perform the studies 

of the impact of the Generators’ interconnection requests. 

Pioneer and Settlers signed their Agreements on February 5, 

2010, with projects scheduled to begin in June and September of 2011. The Settlers Agreement included roughly $6 million in network upgrades, while Pioneer’s Agreement required no network upgrades. 

Everything was apparently proceeding smoothly until 

April 29, 2010, when MISO notified the Generators that the 

studies included a “significant error” that failed to include 

upgrades to a higher-queued project in the vicinity of the 

two companies’ proposed wind farms. The inadvertently 

omitted project was a 30-megawatt upgrade to another wind 

farm in Benton County. MISO told the Generators that something had to give: they would either have to agree to fewer 

megawatts (120 megawatts each) or pay for additional network upgrades estimated to cost $11.5 million. On May 11, 

2010, the Generators informed MISO that they rejected both 

options: the additional network upgrades, they asserted, 

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6 Nos. 13-2326, 14-3023 

were not their responsibility, and so they claimed they were 

entitled to proceed with their 150-megawatt wind farms. 

MISO did not acquiesce in their position. Instead, in November 2010, it informed both companies that they would 

need to pay for $10 million in additional network upgrades 

and $1.5 million in common use upgrades before they could 

interconnect. MISO presented superseding Agreements to 

both Pioneer and Settlers. The revised Agreements required 

the companies to pay for both the original and the additional 

network upgrades; they also provided for a Multi-Party Facilities Construction Agreement to address the common use 

upgrades. The two companies refused to sign. They asked 

MISO instead to file the superseding Agreements with 

FERC, so that it could resolve the dispute about who had to 

pay for the upgrades. MISO did so on April 8, 2011, and 

April 11, 2011. Before the Commission, the Generators protested that they should not be responsible for the cost of the 

additional network upgrades, and Ameren filed an answer, 

claiming it was not the source of the study error. The Commission found that the Generators should pay for the additional network upgrades and denied the companies’ requests 

for rehearing. 

The Generators also contest another aspect of FERC’s decision. The original Agreements (the ones that failed to account for the higher-queued wind farm) included a pricing 

scheme (Option 1), under which the Generators were to fund 

the cost of the network upgrades before construction, MISO 

would refund 100% of the upgrade costs after construction, 

and the Generators would then pay for the upgrades monthly through a “network upgrade charge.” In the course of a 

different FERC proceeding, however, the Commission 

Case: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
Nos. 13-2326, 14-3023 7

granted MISO’s request to do away with Option 1 pricing 

and replace it with Option 2. Under Option 2 pricing, the 

customer pays for only the unreimbursable cost of the upgrades before construction, and the transmission owner retains the funds. Despite doing away with Option 1 for future 

Agreements, the Commission grandfathered Option 1 pricing for the original network upgrades and applied Option 2 

pricing only to the upgrades added in light of MISO’s error. 

Pioneer and Settlers filed petitions seeking review of the 

Commission’s decisions to impose the costs of the additional 

upgrades on them and to apply Option 1 pricing to the original upgrades (they would prefer Option 2 pricing across the 

board, for reasons we need not explore). We granted motions to intervene as petitioners from the American Wind 

Energy Association (AWEA), a national trade association 

that represents wind power project developers and other 

companies involved in the wind power industry, and Wind 

on the Wires (WOW), a non-profit that collaborates with 

AWEA on wind farm work in the Midwest. Ameren and 

MISO have intervened as respondents. 

II

The Generators are seeking review of FERC’s decisions 

under Section 313(b) of the Federal Power Act, 16 U.S.C. 

§ 824l(b). That statute provides that the Commission’s findings of fact “if supported by substantial evidence, shall be 

conclusive.” It does not otherwise specify the standard of 

review, and so the applicable standard is found in Section 

706(2)(A) of the Administrative Procedure Act (APA), 

5 U.S.C. § 706(2)(A), which instructs a reviewing court to 

uphold an agency action unless it is “arbitrary, capricious, an 

abuse of discretion, or otherwise not in accordance with 

Case: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
8 Nos. 13-2326, 14-3023 

law.” While deferential, these standards are not toothless. 

We must inquire whether FERC “examined the relevant data 

and articulated a rational connection between the facts 

found and the choice made.” Eastern Ky. Power Co-op, Inc. v. 

FERC, 489 F.3d 1299, 1306 (D.C. Cir. 2007) (citing Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 

(1983)). The petitioners have the burden of showing “that the 

Commission’s choices are unreasonable and ... not within a 

‘zone of reasonableness.’” ExxonMobil Gas Mktg. Co. v. FERC, 

297 F.3d 1071, 1084 (D.C. Cir. 2002) (citation omitted). 

A 

We begin with the Generators’ primary challenge, which 

is to the Commission’s decision to allocate to them the cost 

of system upgrades that are necessary to accommodate their 

new 150-megawatt facilities. In so doing, FERC was following FERC Order No. 2003, in which it takes the position that 

when an interconnection customer (typically a generator 

such as Pioneer or Settlers) is the “but-for cause” of network 

upgrades, it is appropriate to have that customer assume the 

costs of the necessary upgrades. Consistently with that policy, the order allows regional system operators to implement 

participant funding, under which the costs of network upgrades fall on the interconnecting customer. MISO did this 

in 2006. 

Not surprisingly, modifications to the grid are often 

made to accommodate the change in power transmission 

brought about by new plants. “To the extent that a utility 

benefits from the costs of new facilities, it may be said to 

have ‘caused’ a part of those costs to be incurred, as without 

the expectation of its contributions the facilities might not 

have been built, or might have been delayed.” Ill. Commerce 

Case: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
Nos. 13-2326, 14-3023 9

Comm’n v. FERC, 576 F.3d 470, 476 (7th Cir. 2009). While the 

Commission is “not authorized to approve a pricing scheme 

that requires a group of utilities to pay for facilities from 

which its members derive no benefits,” id., here the Generators are the primary utilities that stand to benefit from being 

connected to the grid. See Old Dominion Elec. Co-op., Inc. v. 

FERC, 518 F.3d 43, 51 (D.C. Cir. 2008) (upholding FERC’s cost 

allocations of interconnection facilities to the interconnection 

customers “when facilities would not have been built but for 

the interconnection request”). The parties acknowledge that 

the additional upgrades, first neglected and later noticed by 

MISO, are required. 

In administering the regulatory process of updating an 

electrical grid, FERC needs a way to handle inevitable mistakes of fact. The question is how to think about this problem. The Generators argue that the legal framework within 

which we should answer the question is that of contract: 

they each had one Agreement; it was premised on a mistake 

of fact; and now a new Agreement is needed. FERC rejects 

the contract model and contends that the proper model is 

regulatory. We think that FERC has the better of this debate. 

It is true that the Generator Interconnection Agreements run 

between the interconnection customer (a generator), a 

transmission owner, and a transmission provider (MISO), 

but that is not the end of the matter. The parties are not free 

to contract as they wish; instead, they must structure their 

relationship within the elaborate regulatory regime that 

FERC has created. This case illustrates the point well: Pioneer and Settlers refused to sign the revised Agreements. 

They asked MISO instead to refer the matter to FERC, which 

MISO did. After proceedings in which everyone was heard, 

FERC decided that the cost should fall on the Generators. 

Case: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
10 Nos. 13-2326, 14-3023 

This was a regulatory decision. Indeed, every step leading to 

an Agreement is dictated by regulations: MISO must connect 

new power plants to the grid in accordance with the Federal 

Power Act and its implementing regulations; it must conduct 

(or contract for) the three types of studies described above; 

and it must accept the interconnection terms FERC dictates, 

when FERC has to become involved. 

Even if we were to focus on the contract-like aspects of 

the relationship, the Generators have problems. The record 

fails to show that they relied on the original, mistaken studies. There is no evidence that the added cost of the corrected 

upgrades was a dealbreaker for either Pioneer or Settlers’s 

project. MISO gave them the opportunity to avoid the extra 

cost for the additional upgrades and instead reduce the output (to 120 megawatts) of the wind farms so as to not overload the system. They did not show why this would have 

made their farms economically unsustainable. They also had 

an exit option. The results of the system impact and interconnection facilities studies are designed to give companies 

the opportunity to withdraw from a proposal; the Generators could have opted to do so once they learned of the additional upgrades that were necessary to avoid overloading the 

existing electrical grid. Finally, they always understood (or 

should have understood) that upgrades required by another 

project in the queue could cause exactly the kind of problem 

that occurred here. (We note that the Generators apparently 

went ahead and built their wind farms despite this dispute. 

That fact has no effect on our analysis.) 

We do not deny that the amount of money at issue, $11.5 

million, is significant. It is also possible, in another case, that 

a more developed record might demand a different apCase: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
Nos. 13-2326, 14-3023 11

proach. For instance, had there been evidence in the record 

about the cost of a proposed wind farm, the Commission initially, and now our court, would have had a better sense of 

how much the additional upgrades drove up the cost of construction. Our case is devoid of such evidence, and so we 

lack a benchmark against which to measure the cost of the 

mistake. If the record before FERC had demonstrated that 

the difference in the interconnection costs turned a profitable 

enterprise into a losing one for both companies, it is possible 

that FERC would have entered a different order. If it had entered the same order, there might have been a stronger argument for the proposition that the order was arbitrary. This 

is all speculation, however. We see nothing in evidence suggesting that the facts FERC found are not supported by substantial evidence, nor do we see the kind of legal error that 

requires us to set aside its order. 

We find further support for this conclusion in another 

point the Commission makes. It observes that there is nothing in the regulations that suggests it cannot modify agreements even if one party does not consent and the parties had 

not contemplated who would bear the cost of an error in the 

studies. That puts the Generators in a difficult spot, because 

they cannot point to something in the Agreements or FERC 

precedent that suggests they cannot be held liable for those 

costs. Article 11.3.1 of the Agreement lists aspects of the system configuration for which the system operator (MISO) is 

entitled to change the tariff without FERC’s approval. Article 

30.11, “the reservation of rights” section of the Agreement, 

allows MISO or Ameren “to make a unilateral filing with 

FERC to modify this [Agreement] with respect to any rates, 

terms, and conditions, classifications of service, rule or regulation under Section 205 of the Federal Power Act”; it also 

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12 Nos. 13-2326, 14-3023 

allows Pioneer and Settlers “to make a unilateral filing with 

FERC to modify this [Agreement] pursuant to Section 206 or 

any other applicable provision of the Federal Power Act and 

FERC’s rules and regulations thereunder.” The phrase “a 

unilateral filing with FERC” appears to be a clumsy way of 

saying that MISO or Ameren can go back to FERC and seek 

the agency’s modification of the Agreement. If they do so, 

the end result is still a regulatory order, not an arms-length 

agreement. 

Finally, the Generators contend that FERC’s decision to 

impose the costs of the mistake on them violates the filed 

rate doctrine. The filed rate doctrine, as the name suggests, 

requires utilities to charge the rate that is on file with the relevant regulatory agency. See Arkansas Louisiana Gas Co. v. 

Hall, 453 U.S. 571, 577 (1981) (defining the doctrine as one 

that “forbids a regulated entity to charge rates for its services 

other than those properly filed with the appropriate federal 

regulatory authority”). In order to evaluate the Generators’ 

argument, it is helpful to recall why the doctrine exists: “[to] 

preserv[e] the agency’s primary jurisdiction over reasonableness of rates,” “to insure that regulated companies charge 

only those rates of which the agency has been made cognizant,” and to “prevent[] the Commission itself from imposing a rate increase for [electricity] already sold.” Id. at 577–

78. The filed rate doctrine is intended to bind both the parties and the agency (here, FERC) to the rate on file. 

Nothing that happened in this case imperiled FERC’s 

primary jurisdiction, hid information from FERC, or imposed a retroactive fee on electricity already sold. Instead, 

what happened was an ex ante decision about cost allocation, 

untainted by fraud or discrimination. In a different line of 

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Nos. 13-2326, 14-3023 13

cases involving preemption of state regulation, the Supreme 

Court repeatedly has protected FERC’s discretion to modify 

cost allocations in this way. See, e.g., Entergy Louisiana, Inc. v. 

Louisiana Pub. Serv. Comm’n, 539 U.S. 39, 50 (2003) (“We see 

no reason to create an exception to the filed rate doctrine for 

tariffs of this type that would substantially limit FERC’s flexibility in approving cost allocation arrangements.”); Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 

354, 372 (1988). In fact, “[i]gnorance or misquotation of rates 

is not an excuse for paying or charging either less or more 

than the rate filed.” Louisville & Nashville R.R. Co. v. Maxwell, 

237 U.S. 94, 97 (1915). The filed rate doctrine protects parties 

not from misquoted rates, but from discriminatory or fraudulent ones. It is of no help to the Generators here. 

The Generators also complain that to allow FERC to allocate the costs as it has would create a bad precedent. The 

Commission responds, without data to back it up, that its 

decision was highly fact-specific and that, in any event, these 

cases are rare. That is unsatisfying, particularly if we accept 

for the sake of argument intervenor AWEA’s contention that 

such a decision makes investments less predictable. From 

our perspective, however, cases must be decided on the basis 

of their record. We do not know what FERC would have 

done if a utility had sunk significant money based on reasonable expectations about the costs of a regulated project 

and then was told that it had to bear additional, unforeseen 

costs. Much less do we know how we would evaluate an 

agency decision that was adverse to the utility in such a case. 

Federal courts do not decide hypothetical cases for a good 

reason; we leave these questions for another day, when they 

are properly before us. 

Case: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
14 Nos. 13-2326, 14-3023 

To sum up, the interconnection process at issue here includes three studies that give the affected parties multiple 

opportunities to choose to pursue or to abandon an interconnection agreement. There was an error in the original calculation of the costs that the new capacity proposed by the 

Generators would entail, and at the Generators’ request, 

FERC resolved the question who should bear those additional costs. The Generators had the option of connecting to 

the grid at the 120-megawatt level, paying, or walking away. 

They did not like those options, but FERC’s conclusion was 

based on substantial evidence and was not arbitrary. 

“[W]hen entities before FERC present intensely practical difficulties that demand a solution, FERC must be given the latitude to balance the competing considerations and decide on 

the best resolution.” NRG Power Mktg., LLC v. FERC, 718 F.3d 

947, 955–56 (D.C. Cir. 2013) (quotations and citation omitted). 

B 

We now turn to the Generators’ second challenge to the 

Commission’s orders. This one relates to FERC’s decision to 

apply Option 1 pricing for reimbursing the system operator 

the cost of the original network upgrades and Option 2 pricing for the additional upgrades that were deemed necessary 

after the mistake was discovered. They argue that Option 2 

pricing should apply to the entire package. Recall that under 

Option 1 pricing, the interconnection customer funds the entire cost of the network upgrades before construction, the 

transmission owner then refunds 100% of the upgrade costs 

after construction, and the customer then pays for the upgrades monthly, through a “network upgrade charge.” Under Option 2 pricing, the customer pays for the unreimbursCase: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
Nos. 13-2326, 14-3023 15

able costs of the upgrades before construction, and the 

transmission owner retains the funds. 

It is not hard to imagine why the Generators prefer Option 2. Under Option 1, the transmission owner (MISO) repays the full amount of the cost of the network upgrades to 

the interconnection customer, but the customer (i.e., Pioneer 

and Settlers) must then charge a monthly amount to recover 

the costs of the upgrades. Under Option 2, Pioneer and Settlers pay the nonrefundable amount for the interconnection 

and then do not have to pay monthly charges to MISO. Once 

again, the standard of review is deferential. As the D.C. Circuit put it, “we defer to FERC’s decisions in remedial matters, respecting that the difficult problem of balancing competing equities and interests has been given by Congress to 

the Commission with full knowledge that this judgment requires a great deal of discretion.” Koch Gateway Pipeline Co. v. 

FERC, 136 F.3d 810, 816 (D.C. Cir. 1998) (quotations and citation omitted). 

The Generators contend that the Commission’s finding 

that Option 1 may be used on the original network upgrades 

is contrary to its prior decisions. They rely heavily on West 

Deptford Energy, LLC v. FERC, 766 F.3d 10 (D.C. Cir. 2014), in 

which the D.C. Circuit granted an energy company’s petition 

for review and vacated FERC’s order on the ground that the 

Commission needed to provide a better explanation for why 

certain tariff rates governed that company’s interconnection 

request. In our view, however, West Deptford strengthens the 

Commission’s position here. The Commission did not apply 

Option 1 pricing to the additional upgrades required to connect Pioneer and Settlers’s windfarms. It chose to stay the 

course for the original upgrades, preserving the same pricCase: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
16 Nos. 13-2326, 14-3023 

ing scheme that it originally had approved. It provided reasons for its decision to do so, explaining that grandfathering 

the existing pricing scheme provided regulatory certainty 

and was easier to administer. The Commission also discussed how its decision serves the Federal Power Act’s purpose of preserving the expectations of parties. 

The Generators object that the Commission is being inconsistent, insofar as it rejects a reliance argument for purposes of cost allocation for the mistake and it embraces a reliance argument for this purpose. But we have explained 

why the reliance argument is at best weak for purposes of 

cost allocation. And it is hard to complain on the basis of reliance that the Commission did not change the pricing 

scheme for the original parts of the Agreement. We have no 

reason to think that the Commission misinterpreted its own 

orders when it decided to bifurcate the pricing options. See 

NRG Power Mktg., 718 F.3d at 957 (“[W]e afford FERC substantial deference in its interpretation of its own orders.”). 

As with their first challenge, the Generators also argue 

that the Commission’s decision to apply Option 2 pricing only for the additional upgrades violated the filed rate doctrine. But this argument founders on the fact that “[t]he filed 

rate doctrine simply does not extend to cases in which buyers are on adequate notice that resolution of some specific 

issue may cause a later adjustment to the rate being collected 

at the time of service.” Natural Gas Clearinghouse v. FERC, 965 

F.2d 1066, 1075 (D.C. Cir. 1992). Once MISO and Ameren 

filed the amended Agreements with the Commission, both 

Pioneer and Settlers were on notice. Compare Shetek Wind 

Inc. v. MISO, 138 FERC ¶ 61,250 (2012) (requiring that 

changes to terms and conditions of service laid out in the tarCase: 14-3023 Document: 56 Filed: 08/19/2015 Pages: 17
Nos. 13-2326, 14-3023 17

iff be filed with FERC). After FERC handed down its November 2011 decision, both companies knew that the additional network upgrades could be priced under Option 1 or 2. 

Pioneer and Settlers would have to pay for the upgrades under either pricing scheme, and the agency has the discretion 

to apply the 2011 order accordingly. 

Given the standard of review, the choice to grandfather 

Option 1 was FERC’s to make. FERC has the authority to decide to apply one reimbursement scheme for the original 

upgrades, and a different reimbursement scheme consistent 

with the regulatory scheme for the additional upgrades. The 

Commission reasonably interpreted its original order for the 

approximately $6 million worth of work and the later order 

for $11.5 million as two different instruments. It did not act 

arbitrarily in deciding to do so. 

 III 

We DENY Pioneer and Settlers’s petitions for review of the 

Commission’s orders. 

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