Opinion ID: 146475
Heading Depth: 2
Heading Rank: 2

Heading: The Interchangeability Standard

Text: Gas interchangeability was raised in the proceeding below because end users were concerned about the interchangeability of imported LNG compared to the historic quality of delivered gas. Initial Order ¶ 31. Although natural gas is primarily composed of methane, it also includes other constituents, and its precise composition can vary from source to source. Id. ¶ 28. Gas interchangeability refers to the extent to which a substitute gas can safely and efficiently replace gas normally used by an end-use customer in a combustion application. Id. ¶ 29. The Wobbe Index is a measure of gas interchangeability. As the Commission explains it, If a fuel gas stream has a constant Wobbe Index, regardless of fuel composition, a constant heat release rate will be supplied through a specific orifice at a constant supply pressure. Id. The Modified Wobbe Index is closely related to the Wobbe Index, but adds temperature as a variable and uses a slightly different measure for heat value. Id. ¶ 49 & n. 79. As we understand it, and as the parties seem to assume, the differences between the Wobbe Index and the Modified Wobbe Index are immaterial when considering the percentage ranges at issue in this case. Indeed, the Commission has explained that when the focus is on percentage ranges, the differences between these indices are so minor that they are virtually interchangeable. Order on Rehearing ¶ 39. The historical Wobbe Index for gas delivered in the Market Area ranged from 1,346 to 1,371, with an average of 1,356. Initial Order ¶ 35. Florida Gas proposed a Wobbe Index range of 1,340 to 1,396, which was plus or minus 2 percent from the historical average. Id. The LNG suppliers sought a range of 1,302 to 1,400 (plus or minus 4 percent with a cap at 1,400). Id. ¶ 36. Conversely, the Florida generators (including Florida Power) pushed for a range of 1,346 to 1,371 (plus or minus 1 percent). Id. The ALJ determined that the range Florida Gas proposed was just and reasonable, and the Commission agreed. Id. ¶¶ 38, 43. The dispute over the appropriate Wobbe Index range revolves around 55 Dry Low NOx (DLN) turbines that operate in the Market Area. Id. ¶ 46. These turbines, some of which were manufactured by General Electric (GE) and others manufactured by Siemens-Westinghouse, are especially sensitive to changes in gas quality. Id. Florida Power has 32 DLN turbines on the FGT system. In selecting a Wobbe Index range, the Commission considered evidence introduced at the hearing, including the manufacturers' specifications for the DLN turbines, other documents concerning the turbines, expert witness testimony, and the Natural Gas Council Plus Interim Guidelines (NGC + Interim Guidelines). Initial Order ¶¶ 48-127. Weighing this evidence, the Commission found the manufacturers' published specifications to be the most reliable evidence in this record as to the allowable Wobbe Index ranges of the gas the turbines may burn without operational problems. Id. ¶ 47. It found these specifications particularly reliable because they were public documents that customers rely upon for ordering, operating their equipment and warranties. Id ¶ 54 (footnotes omitted). According to GE's specifications, its DLN turbines could operate within a range of plus or minus 5 percent around the Modified Wobbe Index midpoint for which they were built. Id. ¶¶ 50-51. Likewise, the Siemens-Westinghouse specifications stated that its DLN turbines could operate within a Modified Wobbe Index range of plus or minus 2 percent around their midpoint and maintain their emission standards without needing auto-tuning. Id. ¶ 55. Based on this evidence, the Commission concluded that a Wobbe Index range of plus or minus 2 percent around the historical average was appropriate. Id. ¶ 34. In reaching this conclusion the Commission departed from the NGC+ Interim Guidelines, which recommended adopting a Wobbe Index range of plus or minus 4 percent from the historical mean, with a maximum no greater than 1,400. It found that the special requirements of the electric generators support Florida Gas's proposal of a Wobbe Index range with only a plus or minus 2 percent allowable variation from the midpoint, with an upper limit of 1,396, instead of the plus or minus 4 percent variation, with an upper limit of 1,400, allowed by the NGC + Interim Guidelines. Id. ¶ 44. It concluded that the ALJ properly used the NGC+ Interim Guidelines as a starting point in determining the appropriate Wobbe Index range on the Florida Gas system, but deviated from them to the extent necessary to accommodate the circumstances on the Florida Gas system as reflected in this record. Id. ¶ 128. The Commission also discounted contrary testimony from three combustion experts provided by the Florida generators. The Initial Order gives an exhaustive account of why it found these witnesses less reliable than the manufacturers' published specifications. Id. ¶¶ 89-115. Although it credited some witness testimony, it gave little weight to testimony in which the witnesses were not specific, had not considered relevant data, made inconsistent statements, or relied on anecdotal information. For example, one witness had not reviewed the manufacturers' specifications before reaching his conclusions, was not able to identify a specific Wobbe Index range that the turbines could safely accommodate, and admitted that he was not certain whether the proposed range would actually create operational problems. Id. ¶¶ 97-98. Florida Power challenges the Commission's decision adopting a Wobbe Index range of 1,340 to 1,396, contending this decision was neither reached through reasoned decisionmaking nor supported by substantial evidence. It accuses the Commission of rejecting relevant evidence, deciding against the weight of the evidence, and failing to make a rational connection between the facts in the case and [the] choice made. Florida Power Br. at 21-22. In evaluating this argument, we give the Commission's decision substantial deference. When considering FERC's evaluation of `scientific data within its technical expertise,' we afford FERC `an extreme degree of deference.' Wash. Gas Light Co. v. FERC, 532 F.3d 928, 930 (D.C.Cir.2008) (quoting Nat'l Comm. for the New River, Inc. v. FERC, 373 F.3d 1323, 1327 (D.C.Cir.2004)). Likewise, when agency orders involve complex scientific or technical questions ... we are particularly reluctant to interfere with the agency's reasoned judgments. B & J Oil & Gas v. FERC, 353 F.3d 71, 76 (D.C.Cir. 2004). Thus we will not second-guess the Commission's technical judgment concerning the appropriate Wobbe Index range as long as that judgment was reached through reasoned decisionmaking and supported by substantial evidence. Florida Power first contends that the Commission's decision was not based on substantial evidence. It characterizes the manufacturers' specifications the Commission relied on as a single piece of evidence that cannot constitute substantial evidence. Florida Power Reply Br. at 2-3. We disagree. When reviewing for substantial evidence, we do not ask whether record evidence could support the petitioner's view of the issue, but whether it supports the Commission's ultimate decision. Fla. Mun. Power Agency v. FERC, 315 F.3d 362, 368 (D.C.Cir.2003). The substantial evidence inquiry turns not on how many discrete pieces of evidence the Commission relies on, but on whether that evidence adequately supports its ultimate decision. In this case, what Florida Power characterizes as a single piece of evidence is actually two separate documents of 24 and 25 pages respectively. Moreover, the Commission explained that it considered these public documents particularly reliable because GE and Siemens-Westinghouse had an interest in making the specifications broad enough to maximize their sales, but not too broad, lest the turbines prove unable to handle the full range, thereby disappointing customers and possibly giving rise to warranty claims. The `substantial evidence' standard requires more than a scintilla, but can be satisfied by something less than a preponderance of the evidence. FPL Energy Me. Hydro LLC v. FERC, 287 F.3d 1151, 1160 (D.C.Cir.2002). We conclude that the manufacturers' published specifications constitute substantial evidence for the Commission's decision. Florida Power also contends that the Commission's decision to adopt a Wobbe Index range between 1,340 and 1,396 was not reached through reasoned decisionmaking. We disagree. The Commission considered the NGC+ Interim Guidelines, which suggested a Wobbe Index range of plus or minus 4 percent, with a cap of 1,400. It also considered the sensitivity of the DLN turbines, relying on the manufacturers' specifications and a reasonable assumption that the turbines were already centered within the historical Wobbe Index range for the Market Area. Ultimately the Commission settled on a Wobbe range that was within the manufacturers' specifications, recognizing that there may be some costs associated with retuning or recentering the turbines, but finding that those costs should not be beyond ordinary business costs that could be expected in operating sophisticated equipment with special needs as to the fuel it burns. Initial Order ¶ 56. Florida Power also asserts that the Commission should not have adopted the new standards until it knew exactly what effect those new standards would have on Florida Power's DLN turbines. But reasoned decisionmaking does not require complete prescience. In its reply brief, Florida Power argues that the Commission never considered whether end-user modifications necessitated by the new standards could be completed before revaporized LNG was introduced into the FGT system. This argument, which was not raised before the Commission or in Florida Power's initial brief, comes late and falls short. The Commission had no duty to respond to arguments Florida Power never made. The Commission provided a thorough and lucid explanation for its ultimate decision to adopt a Wobbe Index range of 1,340 to 1,396. It identified the evidence it credited, explained why it considered some evidence more reliable than other evidence, and demonstrated how that evidence supported its ultimate decision. Its decision exemplifies reasoned decisionmaking, and Florida Power's contention otherwise has no merit.