Opinion ID: 2790973
Heading Depth: 3
Heading Rank: 4

Heading: Zone Elimination

Text: Petitioners also claim that FERC should have required NYISO to establish a process for the elimination of the new Lower Hudson Valley Zone when it established that zone. As discussed, FERC now concedes that price separation between the Lower Hudson Valley Zone and the remaining portions of the New York Control Area may continue even if the transmission constraint justifying the creation of the Lower Hudson Valley Zone is eliminated. See Zone Order at P 83. But assuming arguendo that Petitioners are correct that such price separation would lead to unjust and unreasonable rates, FERC was not required to address that potential future concern in the orders under review. In its Zone Rehearing Order, FERC explained that “any new rules for discontinuing a capacity zone must apply to all capacity zones and not just the recently‐approved new [Lower Hudson Valley Zone] and, therefore, should be the subject of a separate proceeding that develops a record for establishing tariff criteria and procedures for eliminating any capacity zone, including any future new 52 capacity zone and not just the new [Lower Hudson Valley Zone] at issue here.” Zone Rehearing Order at P 45. FERC “enjoys broad discretion in determining how best to handle related, yet discrete, issues in terms of procedures.” Mobil Oil Exploration & Producing Se., Inc. v. United Distrib. Cos., 498 U.S. 211, 230 (1991) (citation omitted); see also Heckler v. Chaney, 470 U.S. 821, 831‐32 (1985). The D.C. Circuit has logically applied this reasoning to the context of market rules adopted by FERC, holding that FERC may appropriately address one market problem even if it potentially exacerbates another. See TC Ravenswood, LLC v. FERC, 705 F.3d 474, 478‐79 (D.C. Cir. 2013) (holding that FERC could adopt rules regarding supply‐side market power without simultaneously addressing buy‐side market power). We agree with this reasoning. FERC can address the current problem it has diagnosed—i.e., that rates do not reflect true market conditions because a transmission constraint prevents capacity from reaching the Lower Hudson Valley Zone—without simultaneously addressing problems that may result from changed market conditions. FERC’s argument that a mechanism for eliminating unneeded zones should be consistent across zones, and that such a rule should not be dealt with in this proceeding because it implicates other parties, is reasonable. See Zone Rehearing Order at P 45. Further, FERC has 53 instructed NYISO to work with stakeholders to address the issue of zone elimination. Id. Although the D.C. Circuit has held that FERC abuses its discretion in addressing related yet discrete issues where “its manner of proceeding significantly prejudices a party or unreasonably delays a resolution,” La. Pub. Serv. Comm’n v. FERC, 482 F.3d 510, 521 (D.C. Cir. 2007), FERC has not significantly prejudiced Petitioners in this case. New York Petitioners concede that even if New York’s planned transmission upgrades are completed as scheduled, they will not all be complete until 2018, leaving FERC time to address the potential issue created by elimination of the transmission constraint in another proceeding. However, significant prejudice does not occur where the harm caused to a party is speculative. See id. In the event that the transmission constraint on which the Lower Hudson Valley Zone is based is eliminated and FERC has not yet established a process for zone elimination, Petitioners are free to file a complaint under Section 206 of the Federal Power Act, 16 U.S.C. § 824e, challenging NYISO’s tariff as unjust and unreasonable. 54