NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

SACRAMENTO MUNICIPAL UTILITY DISTRICT; et al.,

Petitioners, PUGET SOUND ENERGY INC; et al.,

Intervenors

- Pending,

v. BONNEVILLE POWER ADMINISTRATION,

Respondent. No. 18

- 71753

MEMORANDUM *

On Petition for Review of an Order of the Bonneville Power Administration Argued and s ubmitted June 7, 2019 ** Portland, Oregon Before: MURGUIA and HURWITZ, Circuit Judges, and GAITAN, ** District Judge. The Sacramento Municipal Utility District, Transmission Agency of Northern

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Cir cuit Rule 36

- 3.

** The Honorable Fernando J. Gaitan, Jr., United States District Judge for the Western District of Missouri, sitting by designation. 

# FILED

JUN 17 2019 MOLLY C. DWYER, CLER K U.S. COURT OF APPEAL S2

California, and Turlock Irrigation District petition for review of a ratemaking order of the Bonneville Power Administration (“BPA”) for fiscal years 2018 and 2019 (“BP

- 18”)

. In BP

- 18 , the BPA raised the hourly rate for transmission service on the Southern Intertie , a system of power line s operated by the agency
. We have jurisdiction under 16 U.S.C. § 839f(e)(5) and (e)(1)(G), and we deny the petition. 1. Substantial evidence supports the BPA’s decision to rai s e the hourly rate to incentivize the purchase of long

- term firm (“LTF”) transmission service , which provides a more reliable and predictable source of income than hourly service

. See 16 U.S.C. § 839f(e)(2); see also Cent. Lincoln Peoples’ Util. Dist. v. Johnson , 735 F.2d 1101, 1122 (9th Cir. 1984) (noting that the BPA can design rates “to give BPA customers price signals”). Citing the number of LTF contracts up for renewal and the decrease in the queue of new requests for service, the BPA reasonably concluded
that it faced a risk of LTF non

- renewals . The agency reasonably deter mined that in the absence of an increase in the hourly rate, its customers were less likely to renew LTF service , in part because of increase s in solar generating capacity in California and seams issues between the Southern Intertie and neighboring markets

. In so concluding, the BPA cited independent research showing that the number of peak hours for transmission had declined , and comments from LTF customers considering
nonrenewal of their contracts

. 2. The BPA did not arbitrarily and capriciously depart from a 20163

ratemaking decision (“BP

- 16”)

. See 16 U.S.C. § 839f(e)(2); FCC v. Fox Television Stations, Inc. , 556 U.S. 502, 515

– 16 (2009)

. In BP

- 16 , the BPA declined to adopt a proposal to increase the hourl y rate, conclud ing that additional research was required. After gathering that evidence and considering non

- rate alternatives, the BPA adopted a different rate solution than proposed in the prior ratemaking.
3. The BPA did not arbitrarily and capriciousl y depart from any relevant non

discrimination or cost

- based rate setting principles. By incentivizing LTF service, the revised rate for hourly service in BP

- 18 complies with the BPA’s statutory mandate to recover its costs. 16 U.S.C. § 839e(a)(1). No undue discrimination
standard applies here, because the Federal Energy Regulatory Commission (“FERC”) did not order the BPA “to provide transmission service” on the Southern
Interti e under 16 U.S.C. §§ 824i, 824j, or 824 l

. Id. § 824k(i). Nor does FERC Order No. 888 apply; the BPA agreed to follow that order only in relation to the terms and conditions of transmission service, not transmission rates

. 4

. Th e petitioners failed to ex haust their contention that BP

- 18 violates 16 U.S.C. § 838g by failing to provide “the lowest possible rates to consumers consistent with sound business principles.” Therefore, even assuming the argument is subject in general to judicial review, w e declin e to address it here

. See Marathon
Oil Co. v. United States , 807 F.2d 759, 767

– 68 (9th Cir. 1986).
PETITION DENIED.