United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 19, 2018 Decided June 1, 2018

No. 16-1305

ARKANSAS PUBLIC SERVICE COMMISSION,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

ENTERGY SERVICES, INC., ET AL.,

INTERVENORS

On Petition for Review of Orders of the 

Federal Energy Regulatory Commission

Dennis Lane argued the cause for petitioner. With him on

the briefs were Glen L. Ortman, John E. McCaffrey, and

Randolph Hightower. Marie Denyse Zosa entered an

appearance.

Gregory W. Camet, Mark Strain, and Marnie A. McCormick

were on the briefs for intervenor Entergy Services, Inc. in

support of petitioner. Megan E. Vetula entered an appearance. 

Lona T. Perry, DeputySolicitor, Federal EnergyRegulatory

Commission, argued the cause for respondent. With her on the

brief were David L. Morenoff, General Counsel, and Robert H.
2

Solomon, Solicitor. Anand Viswanathan, Attorney, entered an

appearance.

David E. Pomper argued the cause for intervenors

Louisiana Public Service Commission, et al. With him on the

brief were Stephen Charles Pearson, Michael R. Fontham, Noel

J. Darce, Dana Shelton, Justin A. Swaim, Clinton Andrew Vince,

Presley Randolph Reed Jr., Jennifer Anne Morrissey, and Chad

James Reynolds. Paul L. Zimmering entered an appearance.

Before: HENDERSON and WILKINS, Circuit Judges, and

SENTELLE, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

SENTELLE.

SENTELLE, Senior Circuit Judge: The Arkansas Public

Service Commission petitions for review of a Federal Energy

Regulatory Commission (“FERC”) final order. Entergy Servs.,

Inc., 154 FERC ¶ 61,173 (Mar. 4, 2016), reh’g denied in part

and granted in part, 156 FERC ¶ 61,112 (Aug. 16, 2016). In the

order under review, FERC held that an operating company

withdrawing from a multi-state energy system must continue to

share the proceeds of a pre-departure settlement with the other

member companies. The Arkansas Public Service Commission

(the “Arkansas Commission”), acting on behalf of Arkansas

energy consumers, contends that FERC’s order to share the

settlement benefits and its method of allocating the benefits of

the settlement was unlawful, arbitrary, capricious, and

unsupported by substantial evidence. Because we conclude that

FERC had a lawful basis to order the sharing of the benefits of

the settlement and was reasoned in its allocation methodology,

we deny the petition for review.
3

I. Background

A. Factual History

Beginning in 1951, six companies in Arkansas, Louisiana,

Mississippi, and Texas (collectively, the “Operating

Companies”) entered into an arrangement to share the costs and

benefits of power generation and transmission. To that end, they

formed the Entergy Corporation, a publicly held and traded

utility holding company. The Entergy Corporation is the

corporate parent of intervenor Entergy Services, Inc. (“Entergy

Services”). The Operating Companies memorialized their

arrangement in the Entergy System Agreement (“System

Agreement”), a FERC-approved rate plan that governs the

multi-state system’s generation and transmissions facilities

operated as a single system (the “Entergy System”) and

administered by Entergy Services. Over the years, Entergy

Services supplemented the System Agreement with seven

service schedules, MSS-1 through MSS-7, which updated the

cost-sharing and energy capacity plan. The System Agreement

“has been a feature of many cases before this Court.” Council

of New Orleans v. FERC, 692 F.3d 172, 174 (D.C. Cir. 2012);

see, e.g., Arkansas Pub. Serv. Comm’n v. FERC, 712 F. App’x

3, 4 (D.C. Cir. 2018); Louisiana Pub. Serv. Comm’n v. FERC,

522 F.3d 378, 383 (D.C. Cir. 2008); Louisiana Pub. Serv.

Comm’n v. FERC, 174 F.3d 218, 220 (D.C. Cir. 1999). 

The System Agreement provided for the possibility of

withdrawal by an Operating Company and required an eightyear notice of intent to withdraw by any company preparing to

do so. On December 19, 2005, Operating Company Entergy

Arkansas gave such a notice, announcing its intention to

withdraw on December 18, 2013. Two years later, another

Operating Company, Entergy Mississippi, gave a similar notice.

The current controversy over the effects of the withdrawal
4

concerns a settlement entered with coal transporter Union

Pacific in state court litigation before the withdrawal of the two

Operating Companies. 

In April 2008, Entergy Arkansas, Entergy Services, and

other parties settled Arkansas state court litigation against Union

Pacific (the “Union Pacific Settlement”). The settlement, as

relevant to the present petition for review, locked in a belowmarket rate for the rail delivery of coal by extending an Entergy

Arkansas contract with Union Pacific to the period between July

1, 2012 and June 30, 2015. Entergy Arkansas remained in the

System Agreement until partway through this period. 

Under the System Agreement, the Operating Companies

purchase excess energy from other Operating Companies atcost. The service schedules set out the price for energy

purchases. That price incorporates the cost of coal

transportation as one component. Entergy Arkansas was still

participating in the System Agreement when Union Pacific

failed to make the coal deliveries in the conduct underlying the

settlement. Therefore, Entergy Arkansas passed a portion of the

increased coal costs to the other Operating Companies under

service schedule MSS-3. Likewise, prior to Entergy Arkansas’s

departure from the System Agreement, Entergy Arkansas also

shared its beneficial coal transportation costs under the Union

Pacific Settlement with the other Operating Companies. 

Additionally, some of the Operating Companies had other

mechanisms outside of the System Agreement to realize some

of the benefits of Entergy Arkansas’s reduced coal

transportation costs, such as shared ownership of the two

affected plants and separate power purchasing agreements.

However, the Union Pacific Settlement did not address Entergy

Arkansas’s impending withdrawal from the System Agreement. 
5

B. Procedural History

On November 19, 2009, FERC accepted Entergy Arkansas

and Entergy Mississippi’s notices of withdrawal from the

Entergy System. Entergy Servs., Inc., 129 FERC ¶ 61,143 (Nov.

19, 2009) (“Withdrawal Order”), reh’g denied, 134 FERC

¶ 61,075 (Feb. 1, 2011) (“Withdrawal Rehearing Order”)

(collectively, “Withdrawal Proceedings”). In the Withdrawal

Proceedings, FERC found that the System Agreement

“contain[ed] no provisions requiring withdrawing Operating

Companies to pay a fee or otherwise compensate other

remaining Operating Companies prior to withdrawing.”

Withdrawal Order P. 60. Accordingly, FERC held that Entergy

Arkansas and Entergy Mississippi should not have to pay any

exit fees to the other Operating Companies upon their departure

from the Entergy System. 

Intervenor Louisiana Public Service Commission (the

“Louisiana Commission”), which represents the interests of

Louisiana’s energy consumers, filed exceptions to the

Withdrawal Order, arguing that FERC should allocate the Union

Pacific Settlement benefits as part of the Withdrawal

Proceedings. FERC responded that the LouisianaCommission’s

concerns regarding the allocation of the Union Pacific

Settlement Benefits were “beyond the scope of this proceeding

and are more appropriately raised” in a future proceeding

regarding the structure of the post-withdrawal Entergy System. 

Withdrawal Rehearing Order at n.54. FERC went on to

reinforce that it would still review “future operating

arrangements” to ensure they were “just and reasonable” in

accordance with FERC’s statutory obligations under 16 U.S.C.

§ 824d. 

On September 14, 2011, still concerned about the

allocation of the Union Pacific Settlement benefits, the
6

Louisiana Commission filed a complaint under section 206 of

the Federal Power Act. Louisiana Pub. Serv. Comm’n, 138

FERC ¶ 61,029 (Jan. 19, 2012). Again, FERC reiterated that it

was “premature” to consider the allocation of the Union Pacific

Settlement benefits and opined that the Louisiana Commission’s

concerns would be resolved “in the future proceeding regarding

the structure of the post-withdrawal Entergy system.” Id. at

P. 53. Prior to the start of the Withdrawal Proceedings, the

Louisiana Commission had also raised the allocation of the

Union Pacific Settlement benefits during a 2008 bandwidth

proceeding, but it withdrew the issue without prejudice based on

the expectation it would be resolved in later proceedings. 

On August 14, 2012, this Court affirmed the Withdrawal

Proceedings, including FERC’s conclusion that the System

Agreement does not impose an exit fee or continuing obligation

on withdrawingOperatingCompanies. Council of New Orleans,

692 F.3d at 174-77. We also recognized that FERC “must still

review the post-withdrawal arrangements to ensure that they are

just, reasonable and not unduly discriminatory.” Id. at 177. 

In November 2012, under section 205 of the Federal

Power Act, Entergy Services filed its proposal for its postwithdrawal successor plan. The successor plan included the

necessary revisions to the System Agreement and the formation

of a new integrated utilitysystem (the Midcontinent Independent

System) comprised of the remaining OperatingCompanies. The

Louisiana Commission again protested the filing. Forthe fourth

time, the Louisiana Commission raised the issue of the Union

Pacific Settlement benefits. In response, the Arkansas

Commission and EntergyServices challenged FERC’s authority

to order Entergy Arkansas to share the Union Pacific Settlement

benefits because Entergy Arkansas was no longer participating

in the System Agreement. FERC established a hearing to

address these issues. Entergy Servs., Inc., 145 FERC ¶ 61,247
7

(Dec. 18, 2013), reh’g denied, 153 FERC ¶ 61,154 (Nov. 9,

2015). 

Following settlement discussions and a hearing, the

Administrative Law Judge determined that the Union Pacific

Settlement benefits should be allocated among the Operating

Companies and adopted an allocation methodology. Entergy

Servs., Inc., 149 FERC ¶ 63,022 (Dec. 12, 2014). On review

and rehearing, FERC affirmed the findings of the Administrative

Law Judge and rejected the challenge to its authority. Entergy

Servs., Inc., 154 FERC ¶ 61,173 (Mar. 4, 2016), reh’g denied in

part and granted in part, 156 FERC ¶ 61,112 (Aug. 16, 2016). 

FERC ordered Entergy Arkansas to make a compliance filing

that would refund benefits of the Union Pacific Settlement to the

other Operating Companies in accordance with the prescribed

allocation method. Id. 

The Arkansas Commission timely filed a petition for

review. The Court granted leave for the Louisiana Commission,

the Mississippi Public Service Commission, and the Council of

the City of New Orleans to intervene on behalf of FERC and for

Entergy Services to intervene on behalf of the Arkansas

Commission.

II. Analysis

We review FERC’s final orders undertheAdministrative

Procedure Act. We will vacate FERC decisions that are

“arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” 5 U.S.C. § 706(2)(A). Further, we will

uphold FERC’s factual findings if they are supported by

substantial evidence. 16 U.S.C. § 825l(b); Town of Norwood v.

FERC, 80 F.3d 526, 529 (D.C. Cir. 1996). 
8

Under the Federal Power Act, FERC is required to

ensure that electric rates are “just and reasonable.” 16 U.S.C.

§ 824d. We afford “great deference” to FERC’s decisions on

this subject because “[t]he statutory requirement that rates be

‘just and reasonable’ is obviously incapable of precise judicial

definition.” Morgan Stanley Capital Grp. Inc. v. Pub. Util. Dist.

No. 1 of Snohomish Cty., 554 U.S. 527, 532 (2008); see Maine

v. FERC, 854 F.3d 9, 22 (D.C. Cir. 2017). We do not ask

whether FERC’s “decision is the best one possible or even

whether it is better than the alternatives.” FERC v. Elec. Power

Supply Ass’n, 136 S. Ct. 760, 782 (2016), as revised (Jan. 28,

2016). Our review in ratemaking cases is therefore “‘limited to

ensuring that the Commission has made a principled and

reasoned decision supported by the evidentiary record.’”

Southern Cal. Edison Co. v. FERC, 717 F.3d 177, 181 (D.C. Cir.

2013) (quoting Complex Consol. Edison Co. of N.Y., Inc. v.

FERC, 165 F.3d 992, 1000-01 (D.C. Cir. 1999)).

The Arkansas Commission argues that FERC acted

unlawfully, arbitrarily, and capriciously by ordering Entergy

Arkansas to share the Union Pacific Settlement benefits with the

Operating Companies and by the method that it adopted to

allocate the settlement benefits. We will consider FERC’s order

for Entergy Arkansas to share the Union Pacific Settlement

benefits before reviewing the allocation method.

A. Order to Share the Union Pacific Settlement

 Benefits

The Arkansas Commission petitions for review of

FERC’s order for Entergy Arkansas to share the Union Pacific

Settlement benefits after its withdrawal from the EntergySystem

by arguing that the order is an unlawful exit fee and that it

violated the filed rate doctrine. We will address each argument

in turn.
9

Is sharing the settlement benefits an exit fee?

The Arkansas Commission argues that FERC’s order

essentially amounts to the imposition of an unlawful exit fee or

post-withdrawal continuing obligation contrary to the

Withdrawal Proceedings. It is undisputed that the Withdrawal

Proceedings confirmed that Entergy Arkansas has no obligation

to pay an exit fee and it has no continuing obligation to the

remaining member companies of the Entergy Corporation as a

result of its withdrawal from the System Agreement. This Court

affirmed that conclusion. Council of New Orleans, 692 F.3d at

174-77. However, that is not the question before us. A

determination that a withdrawing companycannot be compelled

to pay an exit fee is separate from the question of whether a

sharing of a settlement of pre-split recovery constitutes such a

forbidden exit fee. It doesn’t. By any logic, an exit fee must

have been generated because of the exit. Had Entergy Arkansas

remained in the cooperative group, there is little, if any, question

that the settlement would have been shared among it and the

other companies. 

The Withdrawal Proceedings did not settle this issue as

the Arkansas Commission maintains. In the Withdrawal

Proceedings, FERC put Entergy Arkansas on notice that

allocating the Union Pacific Settlement was “beyond the scope

of this proceeding and more appropriately raised in a future

proceeding regarding the structure of the post-withdrawal

Entergy system.” Withdrawal Rehearing Order n.54. Further,

we expressly limited our decision affirming the Withdrawal

Proceedings to FERC’s conclusions regarding “the obligation of

withdrawing Companies under the [System] Agreement.” 

Council of New Orleans, 692 F.3d at 174-77. We acknowledged

that FERC would still be reviewing “post-withdrawal

arrangements” to ensure that they are just and reasonable. 
10

Given this history, we must consider whether FERC

allocated the Union Pacific Settlement benefits based on its

obligation to ensure just and reasonable rates in the postwithdrawal successor arrangements or as an “exit fee” from the

System Agreement. 

All the Operating Companies were injured by Union

Pacific’s breach of contract. FERC relied on undisputed

evidence that the settlement was entered into for the benefits of

the entire Entergy System. The Operating Companies’ claims

to the settlement benefits arose from the nature of the collective

harm from Union Pacific’s contract breach. Prior to Entergy

Arkansas’s withdrawal from the Entergy System, the Operating

Companies received the benefits they were due by way of the

System Agreement’s cost-sharing mechanisms. FERC properly

reasoned that the Operating Companies’ claims to the Union

Pacific Settlement benefits did not arise from the System

Agreement just because the settlement sharing was effectuated

by the System Agreement. 

Further, the Arkansas Commission’s argument that the

allocation method is evidence that FERC’s order is an exit fee

is similarly unconvincing. It is true that FERC’s allocation

method was based on a calculation that assumed that Entergy

Arkansas remained part of the System Agreement. The use of

that method does not require us to draw the conclusion that the

obligation to share the benefits arises from the System

Agreement. Rather, FERC reached a reasoned conclusion that

using the System Agreement as a model would ensure the

benefits would continue to flow in a “just and reasonable”

manner. 

FERC defines an exit fee as one “imposed upon a party

because of its exit from [the System Agreement] . . . as

compensation for or a penalty for its departure.” This is not a
11

case of FERC ordering Entergy Arkansas to compensate the

other Operating Companies as a penalty for its departure. 

Entergy Services’ original proposed successor arrangement

would have deprived the Operating Companies of the

compensation they were due for their injuries, while Entergy

Arkansas would receive benefits greater than its injury. FERC

found that this would be an unjust and unreasonable cost

allocation. 

Because FERC was reasoned in concluding that sharing

the Union Pacific Settlement benefits was necessary under the

principles of equity, and was not a penalty or recompense for the

Company’s exit from the system, we reject the Arkansas

Commission’s argument that FERC’s order creates an unlawful

exit fee.

Did FERC violate the filed rate doctrine?

We next turn to the Arkansas Commission’s assertion that

FERC violated the filed rate doctrine by ordering Entergy

Arkansas to share the Union Pacific Settlement benefits. Under

that doctrine, public utilities may only charge rates filed with

FERC. Arkansas La. Gas Co. v. Hall, 453 U.S. 571, 578 (1981). 

This assures that customers receive adequate notice of their

utility costs. Transmission Access Policy Study Grp. v. FERC,

225 F.3d 667, 709 (D.C. Cir. 2000) (per curiam), aff’d sub nom.

New York v. FERC, 535 U.S. 1 (2002). The Arkansas

Commission argues that FERC’s order increases the cost to

Arkansas consumers without notice, creating a new public utility

rate contrary to the filed rate doctrine. We disagree.

The filed rate doctrine has never been construed as

requiring FERC to close its eyes to changes in circumstances

that render a rate that was once just and reasonable but no longer

comports with the new reality. FERC has “broad authority to
12

fashion equitable remedies in a variety of settings.” Columbia

Gas Transmission Corp. v. FERC, 750 F.2d 105, 109 (D.C. Cir.

1984).

In this case, FERC reasons that it is not overriding a filed

rate but merely effectuating the purpose of a non-jurisdictional

contract, the Union Pacific Settlement. Entergy Services was a

party to the Union Pacific Settlement, and FERC found it

entered into the settlement on behalf of all the Operating

Companies while they were under FERC’s jurisdiction through

the System Agreement, a filed rate. Even though FERC, in at

least one case, has relied on an existing filed rate provision in

deciding not to impose post-withdrawal obligations on a party,

that is not sufficient to limit FERC’s authority in this case. 

Midwest Indep. Transmission Sys. Operator, Inc., 124 FERC

¶ 61,219 at P. 173 (Sept. 3, 2008). In that decision, FERC noted

that it was reserving its authority to impose equitable relief “in

the future” in different circumstances, and it is not reasonable to

extend this one-time decision to bar equitable relief in all postwithdrawal successor arrangements. Id. We agree, FERC has

the authority to fashion a remedial rate.

Next, the Arkansas Commission points out that when the

Union Pacific Settlement was negotiated and executed, all the

parties knew that EntergyArkansas would be exiting the System

Agreement and yet the Union Pacific Settlement does not

contain any terms about post-withdrawal obligations. Further,

the Arkansas Commission argues that FERC cannot have

authority over the Union Pacific Settlement unless it was

actually filed as a rate or other amendment to the System

Agreement. Therefore, the Arkansas Commission urges, FERC

erred by inferring that the parties intended the settlement to be

shared after Entergy Arkansas’s withdrawal. 

 
13

However, FERC considered evidence that the whole

Entergy System was harmed by Union Pacific’s breach. 

Accordingly, FERC inferred that the benefits of the settlement

were meant to be shared by the entire system. In other contexts,

FERC has exercised its authority to interpret an unfiled contract,

even when that interpretation has implications on a filed rate, as

part of ensuring a just and reasonable rate. See e.g., Public

Utils. Comm’n of State of Cal. v. FERC, 254 F.3d 250, 255

(D.C. Cir. 2001); City of Osceola v. Entergy Ark., Inc., 791 F.3d

904, 908 (8th Cir. 2015) (citing Portland Gen. Elec. Co., 72

FERC ¶ 61,009, 61,021 n.14 (1995)). FERC’s authority extends

to remedial jurisdiction over cost allocation even when it is not

a filed rate, in order to prevent an unjust and unreasonable rate. 

See Louisiana Pub. Serv. Comm’n, 522 F.3d at 390. Given the

absence of any evidence that the parties did not intend that the

Union Pacific Settlement benefits would continue to be shared

between the Operating Companies, FERC was not arbitrary and

capricious by making a decision recognizing the change in

circumstances.

Persuasively, even here, the Arkansas Commission and

EntergyServices are not protesting FERC’s decision to orderthe

Operating Companies to continue to share the cost of the

Ouachita Plant transmission network upgrade as part of the

successor arrangements. Though the Arkansas Commission and

Entergy Services attempt to distinguish the post-withdrawal

requirement to share the cost of the Ouachita upgrade from the

Union Pacific Settlement benefits, both arose during Entergy

Arkansas’s operation as a member of the System Agreement. It

is true that System Agreement does not directly address the

Union Pacific Settlement benefits, nor the Ouachita Plant

upgrade cost sharing, post-withdrawal. But, FERC’s authority

regarding the Union Pacific Settlement stems from its authority

over the filed rate in force at the time the Operating Companies

were injured and the Union Pacific Settlement was executed. 
14

FERC has the obligation to review the successor

arrangements following the withdrawal of an Operating

Company under Federal Power Act because the conditions of the

withdrawal can impact other market participants. See Maine

Pub. Utilities Comm’n v. FERC, 454 F.3d 278, 285-87 (D.C.

Cir. 2006). In this case, FERC ordered the sharing of the Union

Pacific Settlement benefits precisely because failing to do so

would be unjust and unreasonable to the other market

participants who were injured by Union Pacific’s breach. 

FERC’s decision to enter a remedial order to prevent an unjust

and unreasonable rate is not the same as overriding a filed rate. 

Therefore, because FERC did not impose an exit fee or

override a filed rate, but effectuated a just and reasonable costbenefits allocation, we denythe Arkansas Commission’s petition

to review FERC’s order that Arkansas Entergy must share the

Union Pacific Settlement benefits. 

B. Allocation Method

The Arkansas Commission next petitions for review of

FERC’s method of allocation of the Union Pacific Settlement

benefits. We will review the method FERC adopted to allocate

the settlement benefits and the Arkansas Commission’s

proposed alternative before turning to FERC’s reasoning. 

FERC considered expert testimony regarding three

valuation analyses prepared by an Entergy Services witness,

Thomas D. Crowley. In 2008, Crowley performed an initial

study to estimate the value of the Union Pacific Settlement as

part of Entergy Arkansas’s prudence review to make sure the

terms of the settlement fairly compensated it for its damages. In

2010, Crowley updated the study with more current information

(the “2010 Crowley Study”). 
15

The 2010 Crowley Study quantified the hypothetical coal

transportation costs if Entergy Arkansas did not enter into the

Union Pacific Settlement. Without the settlement, Entergy

Arkansas’s coal transportation contract would have expired in

June 2011. The study assumed that Entergy Arkansas would

have procured replacement transportation through its usual

business practice of entering multi-yeartransportation contracts.

Crowley used the rate anotherrailroad offered EntergyArkansas

for coal transportation in November 2009 as the proxy for the

contract rate that Entergy Arkansas would have likely paid had

it entered into a replacement contract in 2011. The difference

between that hypothetical transportation contract and the more

advantageous contract afforded by the Union Pacific Settlement

was used to define the benefits of the settlement. FERC adopted

the results of the 2010 Crowley Study in order to quantify the

benefits of the Union Pacific Settlement. 

In the alternative, the Arkansas Commission advances a

2014 study also performed by Crowley (the “2014 Crowley

Study”) as a better estimate of the benefits of the bargain. As it

turns out, coal transportation prices were lower in 2012 than the

2010 Crowley Study predicted. Therefore, the 2014 Crowley

Study incorporates that price difference in its result, reducing the

valuation of the Union Pacific Settlement benefits compared to

the 2010 Crowley Study’s prediction. 

FERC reasoned that the 2014 Crowley Study was not a

good estimate of the benefits of the bargain. Specifically, the

2014 Crowley Study assumes that Entergy Arkansas knew that

the transportation prices would drop in 2012. To perform the

valuation, Crowley combined a hypothetical transportation

contract for 2011-2012 and a follow-on contract from 2012-

2015, which would take advantage of the reduced rates available

in 2012. FERC dismissed this study as suffering from

“hindsight bias” that does not reflect the reality of what Entergy
16

Arkansas would have paid for coal transportation in the absence

of the settlement. Without the Union Pacific Settlement, FERC

found it likely that Entergy Arkansas would have entered into a

multi-year transportation contract in 2011 and not benefited

from the price dip in 2012. To reach its findings, FERC

considered evidence of actual contracting practices and the

testimony of an economics expert. Further, there was no

evidence that Entergy Arkansas could have anticipated the 2012

drop in coal transportation prices and made different contracting

decisions. 

FERC’s adoption of the 2010 Crowley Study to allocate the

Union Pacific Settlement benefits was the product of a reasoned

decision and based on substantial evidence. Therefore, we

affirm FERC’s use of this allocation method.

III. Conclusion

For the reasons set forth above, we hold that FERC’s order

for Entergy Arkansas to share the Union Pacific Settlement

benefits and its method for allocating the settlement was not

arbitrary, capricious, or contrary to law. Accordingly, the

Arkansas Commission’s petition for review is denied.