United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 2, 2016 Decided August 8, 2017

No. 14-1063

LOUISIANA PUBLIC SERVICE COMMISSION,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

MISSISSIPPI PUBLIC SERVICE COMMISSION, ET AL.,

INTERVENORS

On Petition for Review of Orders of the 

Federal Energy Regulatory Commission

Michael R. Fontham argued the cause for petitioner. With 

him on the briefs were Paul L. Zimmering and Noel J. Darce.

Lona T. Perry, Deputy Solicitor, Federal Energy 

Regulatory Commission, argued the cause for respondent. 

With her on the brief was Robert H. Solomon, Solicitor.

Clifford M. Naeve argued the cause for intervenors

supporting respondent. On the brief were John S. Moot, 

Matthew W.S. Estes, Gregory W. Camet, Glen Ortman, Dennis 

Lane, and Paul Randolph Hightower. Adrienne E. Clair

entered an appearance.
2

Before: ROGERS, KAVANAUGH and WILKINS, Circuit 

Judges.

Opinion for the Court filed by Circuit Judge WILKINS.

WILKINS, Circuit Judge: This case continues a lengthy 

saga of litigation dealing with the allocation of production costs

among Entergy Corporation’s utility operating companies 

(“Operating Companies”). During the period relevant here, 

Entergy1 sold electricity, both wholesale and retail, in 

Arkansas, Louisiana, Mississippi, and Texas, through five 

Operating Companies under the framework provided by the 

Entergy System Agreement. The System Agreement sets forth 

a rate schedule administered by the Federal Energy Regulatory 

Commission (“FERC”) that allocates certain costs among the 

Operating Companies and seeks to maintain rough equalization 

of those costs among them. In Louisiana Public Service 

Commission v. FERC (“LPSC”), 522 F.3d 378 (D.C. Cir.

2008), we affirmed FERC’s imposition of a so-called 

“bandwidth” remedy (“Bandwidth Remedy” or “Remedy”) to 

address unjust allocations of production costs among the 

Operating Companies and return them to “rough equalization.” 

We remanded to FERC, however, to address, among other 

things, its decision to delay the effective date of the Remedy 

until January 2006 when FERC had decided the Remedy was 

necessary in June 2005. The Louisiana Public Service 

Commission (“LPSC”) petitions this Court for review of 

FERC’s decision on remand.

 1 We use “Entergy” in this Opinion to refer to either Entergy 

Corporation (the corporate parent of the Operating Companies and 

their affiliates) or Entergy Services, Inc. (a service affiliate that has 

acted on behalf of the Operating Companies in various FERC 

proceedings). 
3

I.

We described the relevant background at length in LPSC

and we recount it only briefly here. In Opinion No. 480, issued 

on June 1, 2005, FERC determined that cost allocations under 

the System Agreement were unjust and unreasonable, and 

announced the Bandwidth Remedy to cure the disparities going 

forward. See La. Pub. Serv. Comm’n v. Entergy Servs., Inc. et 

al., 111 F.E.R.C. ¶ 61,311 (2005) (“Op. No. 480”), on reh’g, 

113 F.E.R.C. ¶ 61,282 (2005) (“Op. No. 480-A”). The Remedy 

provides that when an Operating Company’s production costs 

deviate more than 11 percent above or below the Entergy 

System’s average on an annual basis,2 the Operating 

Companies with the lower costs will make payments 

(“Bandwidth Payments” or “Payments”) to the ones with 

higher costs such that their overall costs return to rough 

equalization. Op. No. 480, 111 F.E.R.C. ¶ 61,311, at 62,372.

At the outset, FERC ordered that the Remedy be implemented 

prospectively and declared it would be “effective” in 2006. Id.

at 62,373. FERC later clarified that the first of any Bandwidth 

Payments would be made in 2007, once a full year of 2006 cost 

data was available. Op. No. 480-A, 113 F.E.R.C. ¶ 61,282, at 

62,140. Such data is reported in Entergy’s annual Form 1 filed 

with FERC each April, covering the previous calendar year. 

FERC envisioned the first set of Bandwidth Payments 

would be calculated and exchanged as follows: in April 2007, 

Entergy would report the production costs of each of the 

Operating Companies for the 2006 calendar year in its Form 1. 

Based on that data, Entergy would use a formula to determine 

whether any Operating Company’s production costs exceeded 

the established bandwidth. If so, Bandwidth Payments based 

 2 This range – from 11 percent above average to 11 percent below 

average – is the “bandwidth,” hence the term “Bandwidth Remedy.” 
4

on 2006 data would be exchanged thereafter, but no later than 

December 2007, to eliminate any severe disparities. The 

process would repeat the following year, with Entergy 

determining in 2008 to what extent Bandwidth Payments 

should be exchanged based on 2007 production cost data. 

Putting aside certain disputes about the formula used, LPSC 

acknowledges that Payments were made in 2007 based on 2006 

disparities, and again in 2008 based on 2007 disparities. 

In LPSC, we held that FERC’s “remedial choice” of the 

Bandwidth Remedy was a lawful way to return the Entergy 

System to rough equalization of its production costs. 522 F.3d 

at 391. But we remanded to FERC to address certain issues 

with its implementation. Of particular relevance here, we 

determined that FERC would need to explain its decision to 

delay implementation of the Bandwidth Remedy to a later date 

– i.e., making it “effective” January 1, 2006 with Payments 

commencing in 2007 – when it found that as of June 1, 2005, 

the cost allocations under the System Agreement were unjust 

and unreasonable. See id. at 400.

On remand, FERC advanced the “effective date” of the 

Bandwidth Remedy from January 1, 2006 up to June 1, 2005, 

and ordered that Bandwidth Payments be exchanged based on 

production cost disparities that occurred in the June –

December 2005 period. See La. Pub. Serv. Comm’n v. Entergy 

Servs., Inc. et al., 137 F.E.R.C. ¶ 61,047 (2011) (“Order on 

Remand”); La. Pub. Serv. Comm’n v. Entergy Servs., Inc. et 

al., 146 F.E.R.C. ¶ 61,152 (2014) (“Reh’g Order”). FERC 

explained that although the agency initially contemplated that 

the Remedy would apply to cost data on an annual basis, it 

made an exception for the 7-month period now lodged between 

the old and new “effective” dates of the Remedy – i.e., the 

period from June 1, 2005 through December 31, 2005. Reh’g
5

Order, 146 F.E.R.C. ¶ 61,152, at 61,624-25. It ordered the 

Remedy to be applied to that period. Id. at 61,625-26.

In the instant case, LPSC is satisfied with FERC’s decision 

that the Remedy should begin as of June 1, 2005, but it 

challenges the way in which the Remedy has been 

implemented. Specifically, LPSC claims that FERC neglected 

to provide a remedy for a portion of the post-2005 period and 

that FERC engaged in unlawful retroactive ratemaking with 

respect to its application of the Remedy to the June – December 

2005 period.

3

II.

We review FERC’s orders under the Administrative 

Procedure Act’s “arbitrary and capricious” standard. 

Sithe/Independence Power Partners, L.P. v. FERC, 165 F.3d 

944, 948 (D.C. Cir. 1999). The “scope of review under [that] 

standard is narrow.” Motor Vehicle Mfrs. Ass’n of United 

States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 

(1983). As we explained in LPSC when approving FERC’s 

selection of the Bandwidth Remedy, “[T]he breadth of agency 

discretion is, if anything, at zenith when the action assailed 

relates primarily . . . to the fashioning of policies, remedies and 

sanctions.” 522 F.3d at 393 (quoting Niagara Mohawk Power 

Corp. v. FPC, 379 F.2d 153, 159 (D.C. Cir. 1967)). Similarly, 

we owe FERC “great deference” in fashioning electricity rate 

design. FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760, 

 3 In its petition for review, LPSC also challenged FERC’s decision 

on remand regarding Section 206 refunds for the September 2001 –

May 2003 effective period. FERC has since requested that we

remand this issue to FERC in light of our more recent decision in 

Louisiana Public Service Commission v. FERC, 772 F.3d 1297 (D.C. 

Cir. 2014). We agree that FERC should reconsider this issue and

remand to FERC for further proceedings. 
6

782 (2016), as revised (Jan. 28, 2016) (quoting Morgan Stanley

Capital Grp. Inc. v. Pub. Util. Dist. No. 1, 554 U.S. 527, 532 

(2008)). “A court is not to ask whether a regulatory decision is 

the best one possible or even whether it is better than the 

alternatives.” Id. Rather, we ask whether the agency has 

“examined the relevant considerations and articulated a 

satisfactory explanation for its action, including a rational 

connection between the facts found and the choice made.” Id. 

(quoting State Farm, 463 U.S. at 43) (alterations omitted). 

III.

LPSC contends that, on remand, FERC eliminated a 7-

month delay (i.e., by providing a remedy for June to December 

2005) but still left open a 17-month gap (i.e., January 2006 to 

May 20074

) to which it asserts FERC failed to apply the 

Bandwidth Remedy. At first glance, this argument appears to 

contradict LPSC’s acknowledgment that Bandwidth Payments 

have been exchanged based on all production cost disparities 

from June 1, 2005 onward. But LPSC’s challenge stems

primarily from a disagreement with FERC about what it means

for the Remedy to be “effective.”

When FERC said the Remedy was “effective” January 1, 

2006, that meant production cost disparities would be roughly 

equalized from that date forward, with Payments commencing 

once the prior year’s data had been collected. In LPSC’s view,

however, the Remedy could not effectuate the “just and 

reasonable rate” under 16 U.S.C. § 824e(a) until Payments 

were exchanged – only then could the proper rate be 

“thereafter observed and in force.” As such, FERC’s original 

 4 This is the gap between the 2005 period addressed on remand and 

the date the first set of Bandwidth Payments were exchanged as 

originally contemplated by FERC.
7

announcement in Opinion No. 480 that the Bandwidth Remedy 

would be “effective” in 2006 was a “fiction” because no 

Payments were made until June 2007. Pet’r Br. 34, 42. Under 

that premise, LPSC sought on remand to have the Remedy 

(theoretically) begin with Payments in 2005 based on 2004 

data, Payments in 2006 based on 2005 data, and so on, until the 

purported “two year delay” was resolved. See Reh’g Order, 

146 F.E.R.C. ¶ 61,152, at 61,625.

FERC addressed this point on remand, explaining there 

was simply no basis for LPSC’s assertion that FERC was 

required to provide a remedy for a “two year delay” or 

Payments based on disparities occurring in “calendar years 

2004 and 2005.” Id. FERC correctly observed that this Court’s 

decision ordering remand did not provide the directive sought 

by LPSC. Id. at 61,625-26.

LPSC relies here – as it did before FERC – on a reference 

in LPSC to the delay of the Bandwidth Remedy “until 2007,”

522 F.3d at 400, as an endorsement of its view that the Remedy 

does not begin until Bandwidth Payments commence. In that 

decision, although we took issue with the unexplained delay of 

the Remedy beyond June 2005, we did not purport to resolve 

the outer bound of that delay. See id. In any event, we 

understood the “effective” date of the Remedy was January 1, 

2006, even though Payments would not commence until 2007. 

See, e.g., id. at 388, 399. Read in its proper context, our 

reference to 2007 simply did “not tak[e] sides in any dispute” 

over the meaning of the effective date of the Bandwidth 

Remedy. AT&T Wireless Servs., Inc. v. FCC, 365 F.3d 1095, 

1103 (D.C. Cir. 2004).

On remand, rather than attempting to offer an explanation 

for delaying the Remedy to a date beyond June 2005, FERC 

sought to cure it by advancing the “effective date” to June 1, 
8

2005. Order on Remand, 137 F.E.R.C. ¶ 61,047, at 61,214-15. 

In doing so, FERC reiterated its conceptualization of the 

Bandwidth Remedy as one that would come into play only “if 

the Entergy System exceeded historical cost disparities” – that 

is, if any Operating Company has production costs more than 

11 percent above or below the Entergy System average. Id. at 

61,210; see also Op. No. 480, 111 F.E.R.C. ¶ 61,311, at 62,356.

In practice, that meant the Remedy would be “effective” in 

2006 but Payments would only be triggered if severe 

production cost disparities existed among the Operating 

Companies across the entire year – a determination that would 

not be made until after that year’s end. See Reh’g Order, 146 

F.E.R.C. ¶ 61,152, at 61,625-26. On remand, FERC explained 

that Payments had already been exchanged for 2006 and 2007 

production cost disparities, and thus there was no basis for 

LPSC’s contention that FERC had left a “two year delay” 

unresolved. Id. at 61,625 (“[T]he 2006 calendar year’s data is 

accounted for under the bandwidth formula th[r]ough 

payments the following year. Similarly, the 2007 calendar 

year’s data is roughly equalized through payments 

commencing in 2008.”). LPSC offers no basis for undermining 

the great deference we owe to FERC in fashioning the 

Bandwidth Remedy the way it did.

LPSC claims that FERC’s explanation on remand is 

“specious” because it deviates from the way FERC typically 

designs formula rates. Pet’r Br. 31. But FERC confronted an 

unusual problem here – one that is only highlighted by LPSC’s 

comparison of this case to Louisiana Public Service 

Commission v. FERC, 482 F.3d 510 (D.C. Cir. 2007). There, 

we held that it was unlawful for FERC to continue to allow any

amount of “interruptible load” to be included in cost allocations 

among the Operating Companies after FERC determined that 

such inclusion resulted in an unjust and unreasonable rate. See

id. at 514, 518. However, the Bandwidth Remedy evaluates 
9

total production costs for disparities among the Operating 

Companies at year’s end – there is no factor comparable to 

interruptible load that can be preemptively controlled for to 

maintain a just and reasonable rate going forward. To the 

extent LPSC asserts the Remedy should have used historical 

disparities as a proxy for future ones, we are mindful of our 

obligation to refrain from asking “whether a regulatory 

decision is . . . better than the alternatives,” as long as the 

agency gives a “satisfactory explanation” for its decision. Elec. 

Power Supply Ass’n, 136 S. Ct. at 782. We have reviewed 

LPSC’s remaining arguments challenging FERC’s decision to 

proceed as it did on remand and find they are all without merit. 

On remand, FERC retroactively applied its Remedy such 

that it cured any severe disparities from June 1, 2005 onward. 

LPSC does not dispute that, prior to FERC’s final decision on 

remand, the Bandwidth Remedy (as conceived of by FERC) 

had been applied and Payments exchanged based on cost data 

from 2006 and 2007 – the period it claims FERC has 

neglected.5

 Nor does it dispute that FERC applied the Remedy 

to the June – December 2005 period on remand. Thus, any

severe production cost disparities that post-date June 2005 have 

been accounted for with Bandwidth Payments, and we agree 

with FERC that there was nothing left for it to resolve on

remand. Accordingly, LPSC’s petition is denied with respect 

to FERC’s advancement of the effective date to the 2005 

period. 

 5 To the extent LPSC claims that “[t]he 2007 payments and receipts 

did nothing to remedy undue discrimination in 2006,” it is taking 

issue with the fact that the Bandwidth Remedy was not structured to 

use prior year data as a proxy for disparities going forward, and 

instead Payments were not exchanged until 2007. Pet’r Br. 34.
10

IV.

LPSC also challenges the particular formula FERC applied 

to the 2005 period, arguing FERC engaged in unlawful 

retroactive ratemaking. To be sure, LPSC does not object to 

FERC’s altering the “effective date” of the Bandwidth Remedy 

to cure disparities in the previously-overlooked 2005 period. 

Indeed, that is the result LPSC urged. That result is also 

consistent with FERC’s ample authority to remedy its own 

errors after being reversed in court, notwithstanding the 

prohibition on retroactive ratemaking. See, e.g., Pub. Utils. 

Comm’n v. FERC, 988 F.2d 154, 162 (D.C. Cir. 1993); see also

Xcel Energy Servs. v. FERC, 815 F.3d 947, 955-56 (D.C. Cir. 

2016).6

Rather, LPSC contends that FERC should have 

retroactively applied to that period the methodology announced 

in Opinion No. 480 in June 2005 (which was not to go into 

effect until January 2006), instead of the methodology later 

integrated into the System Agreement in 2006. LPSC agrees 

that if the 2006 formula “had adhered to” the one announced in 

Opinion No. 480, FERC’s decision on remand “would be 

lawful.” Pet’r Br. 57. However, when presented with the 2006 

methodology, FERC determined that it did adhere to the one 

announced in Opinion No. 480. See La Pub. Serv. Comm’n v. 

Entergy Servs., Inc., 117 F.E.R.C. ¶ 61,203, at 62,000-01

(2006), on reh’g, 119 F.E.R.C. ¶ 61,095 (2007), aff’d, La. Pub. 

Serv. Comm’n v. FERC, 341 Fed. App’x 649 (D.C. Cir. 2009). 

As we previously held, LPSC waived any dispute it had with 

that conclusion by failing to raise it in the compliance 

 6 City of Anaheim v. FERC does not control the outcome here 

because, in that case, FERC was not “responding to a court decision 

when it imposed retroactive surcharges.” 558 F.3d 521, 525 (D.C. 

Cir. 2009). 
11

proceedings. See La. Pub. Serv. Comm’n v. FERC, 606 F. 

App’x 1, 5 (D.C. Cir. 2015). In sum, there is no basis for 

LPSC’s contention that FERC engaged in unlawful retroactive 

ratemaking. Accordingly, we deny its petition as to the 

application of the Bandwidth Remedy to the 2005 period. 

V.

For the foregoing reasons, LPSC’s petition for review of 

FERC’s decisions regarding the implementation of the 

Bandwidth Remedy to the June 2005 – May 2007 period is 

denied. We grant FERC’s request to remand to FERC for 

further consideration of the denial of Section 206 refunds for 

the September 2001 – May 2003 effective period.

So ordered.