N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
EXELON GENER

ATION C OM PANY, LLC , Pe t i tione r, C ALIFOR

NIA PUB LIC UTILITIES C OM M ISSION; e t a l.,

Inte rve nors,
v. FEDER AL ENER GY REGULATOR Y C OM M ISSION,

R e sponde nt. No. 15-73836 FER C No. EL00-95-280
M EM O R ANDUM *

On Pe tition for Re vie w of a n Orde r of the Fe de ra l Ene rgy

R e gula tory C om m ission Subm itte d August 1, 2016 ** San Fran c isc o , C a lifornia B e fore : THOM AS, C hie f Judge , a nd M c KEOW

N, a n d C LIFTON, C irc uit Judge s.



# FIL ED AUG 04 2016 M OLLY C. DW Y ER, CLERK U
. S
. CO URT O F APPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3. ** The pa

ne l una nim ously c onc lude s this c a se is suita ble for de c ision without ora l a

rgum e nt. Se e Fe d. R . App. P. 34(a )(2).Exe lon Ge ne ration C om pa ny , LLC (“ Exe lon” ), suc c e ssor in intere st to AES Ne w Ene rgy , Inc ., pe titions for re vie w of c e rta in orde rs issue d by the Fe de ra l Ene rgy R e gula t ory C om m ission (“ FER C ” ). W e de ny the pe tition for re vie w. B e c a use the pa rtie s a re fam i lia r with the history

of the c a se , we ne e d not re c ount it he re . 1 I FER C c orre c t l y

c o nc l ude d tha

t the Mobile -Sie rra pre s um ption of
re a s ona bility doe s not a

pply to Exe lon’ s forwa

rd sa le
. Se e ge ne rally Morgan Stanle y C apital Grp., Inc . v . Pub. Util. Dist. N o. 1 , 554 U.S. 527, 532-34 (2008) (e xpla ining thepre sum

ption a nd its origins in Unite d Gas Pipe LineC o. v . Mobile Gas Se rv . C

orp. , 350 U.S. 332 (1956) a nd Fe d. Pow e r C

o mm’n v
. Sie rra Pac
. Pow e r C o. , 350 U.S. 348 (1956)). FER C re a sona b ly inte rpre te d Se c tion 19 of the C a l-ISO Tariff a s a Me mphis c l a use tha t pe rm itte d the C a lifornia Inde pe nde nt Sy ste m Ope ra tor C orporat ion (“ C a l-ISO” ) unila te ra lly to se e k m odific a tions to
c ontra c t rate s. Se e PSEG Ene rgy Re s . & TradeLLC

v . FERC, 665 F.3d 203, 208 (D.C
. C ir. 2011) (e sta

blishing “two-ste p, C

he v ron -like ” re vie w for FER C ’ s inte rpre tations of file d ta

riffs), C al. e x re l. Harris v . FERC, 809 F.3d 491, 502 n.6

1 The pa ne l’ s Ja nua ry 20, 2016, orde r c onsolida t e d this a nd se ve ra l pe titions for argum e nt. W e se ve r this pe tition from tha t group in a

n orde r file d c onc urre ntly with this disposition. 2(9th C ir. 2015) (de sc ribing holding in Unite d Gas Pipe Line C o. v . Me mphis Light, Gas & W ate r Div
. , 358 U.S. 103, 110-13 (1958), tha t pa rtie s m ay c ontra c t out of the M obile -Sie r ra pre sum

ption by spe c ify ing in the ir c ontra c ts tha t a ne w rate file d with theC om

m ission would supe

rse de the c ontra c t

ra te ). Exe lon provide s no a

uthority for the argum e nt tha

t C a l-ISO c ould opt out of the M obile -Sie r ra pre sum

ption only by

“ m a k [ing] a Se c t ion 205 ra

t e filing.” Se e Morgan Stanle

y , 554 U.S. a

t 534 (“ [P] artie s c [a

n] c ontra c t out of the Mobile -Sie rra pre s um ption by s pe c ify ing in the ir c ontrac ts tha t a ne w rate file d with the C om m ission would supe

rse d e the c ontra c t rate .” ) (e m pha s is a d de d). Ac c ordingly , the M obile -Sie r ra doc trine doe s not a

pply to Exe lon’ s forwa

rd sa le . FER C the re fore prope rly

a sse sse d whe the r that sa le ’ s te rm s we re just a nd re a s ona

ble
. Se e San Die go Gas &Ele c . C

o. v . Se lle rs of Ene r

gy , 149 FER C ¶ 61,116 a t pa ra s. 216, 230 (Nov. 10, 2014). I I Substa ntia l e v i de nc e supports FERC ’ s finding tha t the te rm s of Exe lon’ s forward sa le we re unjust a nd unre a sona

ble
. S e e San Die

go Gas &Ele c . C

o. , 149 FER C ¶ 61,116 a

t pa ra s. 230-36, 16 U.S.C
. § 825 l (b) (2012). This c onc lusion follows from

our de c ision in Pub. Utils. C omm’n of State of C

a l. v . FERC, 462 F.3d 1027 (9th C ir. 2006). In tha t c a se , we he ld tha

t FER C re a sona

bly m itiga te d
3out-of-m arke t (“ OOM ” ) spot e le c tric ity tra nsa c tions e nte re d by C a l-ISO be twe e n Oc tobe r 2, 2000, a

nd June 20, 2001 (the“ R e fund Pe riod” ). Id. at 1051-53. W e de fine d “ spot” tra

n sa c tions a s “ sa le s tha

t a re 24 hours or le ss a

nd tha t a re e nte re d into theda

y of or da y prior to de live ry .” Id. at 1055. W e uphe ld FER C ’ s
m itiga tion of suc h tra

nsa c tions be c a

use “ the re wa s sy ste m ic dy sfunc tion in the whole sa l e e ne rgy

m arke t a nd . . . during the

tim e tha t C a l-ISO wa s m ak ing OOM purc ha se s, it wa s in a

n e m e rge nc y

m ust-buy situa tion, whic h

gave the se l le rs e ve n gre ate r m arke t powe r[.] ” Id. at 1052. Substa ntia l e v ide nc e supports FERC ’ s c onc lusion tha

t the se c onditions preva ile d during De c e m

be r 2000. Se ealso id. at 1056-57 (c re diting e xpe rt te stim ony e sta blishing tha

t “ purpose ful[] m anipula

t[ion] [of] short-te rm

e n e rgy m arke ts . . . [ha d] forc [e d] C a l-ISO to buy ne c e ssa ry e ne rgy outside of the spot m arke t at highe r pric e s and for longer c ontrac t pe r iods ” ) (e m pha sis a dde d ). Exe lon ha s not distinguishe d its forwa rd sa le from the out-of-m arke t transa c tions tha

t we he ld tha

t FER C re a sona

bly m itiga te d. Exe l on c o rre c tly obse rve s tha

t forwa rd sa le s shift risk. B ut Exe lon doe s not e xpla in why the risk
a ssoc iate d with a

“ forward” sa le for 32 hours, be ginning thre e hours a fte r the sa le ’ s e xe c ution, produc e s a

Se c t ion 206 re sult diffe re nt tha n the risk a ssoc iate d with a

4“ spot” sa le for 24 hours, be ginning 24 hours afte r the sa le ’ s e xe c ution. Se e id. at

1055. M ore ove r, we c annot hold FER C ’ s Se c tion 206 de t e rm i nation a rbitra ry or c a pric ious for fa iling to re c ogniz e that Exe l on’ s forwa rd sa le would “ c re a t e sta bility in powe r supply

c osts[.] ” S

e e 5 U.S.C . § 706(2)(A) (2012). Exe lon’ s sa le
c re ate d no suc h sta

bility : C a l-ISO a gre e d to pa y Exe lon’ s c osts, whic h— a c c ording to a n Exe lon e xpe rt a

n d C a l-ISO’ s disputelogs— va rie d ove r the duration of the transa c tion. Inde e d, the pa rtie s’ “ e xpe c tat ion[s] of future pric e s” in no wa y de te rm i ne d the tra

n sa c tion’ s te rm s, se e San Die go Gas &Ele c . C

o. v . Se lle rs of Ene rgy , 153 FER C ¶ 61,144 a t pa ra . 159 (Nov. 4, 2015), whic h m e re ly pa sse d Exe lon’ s m om e n t-to-m om e nt c osts on to C a l-ISO. 2 FER C re a sona bly de t e rm ine d that Exe lon’ s forwa

rd sa le “ wa s ve ry

sim ila r to OOM spot tra

n sa c tions . . . pre v iously

m itiga te d [.] ” San Die

go Gas &Ele c . C

o . , 149 FER C ¶ 61,116 a

t pa ra . 230. The re fore , we de ny

the pe tition for re vie w.

PE T IT IO N DE NIE D
.

2 Exe lon ha s not y e t

sought this c ourt’ s re vie w of FER C ’ s de te rm inations re ga rding the c om

pa ny ’ s c ost offse t filing. Ac c ordingly , we re s e rve the que stion whe the r those de te rm inations we re arbitra ry and c a pric ious. 5