Opinion ID: 185743
Heading Depth: 2
Heading Rank: 1

Heading: Comparability Issue

Text: 7 The standard by which FERC reviews OATT filings, both original and revised, is whether they are consistent with or superior to the Order 888 pro forma OATT. Order No. 888, FERC Stats. & Regs. at 31,770. The pro forma tariff is set out in Appendix B to Order 888-A at 30,503-543. Order 888 requires transmission owners to provide transmission services to others and for such owners and their affiliates to take transmission on their own facilities on the same terms and conditions as those facilities are available to others. This requirement of nondiscrimination or comparability is one of the foundations of Order 888. 8 Petitioners submit that the new requirements of Attachment M violate this principle of comparability. Entergy's Attachment M requires that both a reservation of point-to-point (PTP) transmission capacity and the follow-on scheduling of that transmission specify both the electrical source from which the transmission arises and the electrical sink (or destination) into which the transmission will sink or disappear. Control areas, which are electric zones over whose boundaries with other such control areas the flow of electricity is measured and regulated, can be substituted for both sources and sinks, but a control area substituted for a source must have generation capacity and a control area substituted for a sink must have electrical demand located therein, or native load. Entergy will not accept a reservation or schedule that identifies a generation-only control area as the sink. Because Entergy has both native load and generation capacity within its control areas, this is no limitation on Entergy, and petitioners assert that Entergy does reserve and schedule into and out of its control area. However, because Enron and Virginia Power's Batesville, Mississippi, control area is generation only, and is a control-area island in an Entergy sea, Entergy will not accept Batesville as a sink when Enron or Virginia Power attempt to reserve and schedule transmissions on Entergy facilities. Per petitioners, this interferes with their ability to set up hub transactions that pass through Batesville, at least on paper, and other techniques of energy traders in a manner that Entergy, with both generation capacity and customer load native to its control areas, does not suffer. 9 In FERC's view, however, comparability of an OATT is tested on the basis of terms and conditions offered to customers, not on the usefulness of those terms and conditions to a particular customer because of that customer's capacities and needs. Arguably, this rationale alone may be sufficient to sustain FERC's decision on this point, but in any event, the question under review is whether FERC's interpretation of its own orders survives the arbitrary and capricious standard imposed by the Administrative Procedure Act. FERC's decision easily passes that test. See, e.g., Sithe/Independence Power Partners v. FERC, 165 F.3d 944, 948 (D.C.Cir.1999). At base, FERC's decision was that Attachment M is consistent with or superior to the pro forma tariff. It is neither arbitrary nor capricious for FERC to forbid the fictitious designation of a control area as a sink (ultimate user) site when the control area is only a generator. Cf. Wisconsin Power and Light Co., 84 F.E.R.C. ¶ 61,300, 1998 WL 649168 (1998) (disapproval of a generator as a point of receipt in a PTP transmission). Conversely, it is neither arbitrary nor capricious for FERC to conclude that a load-only control area (one without generating capacity) cannot serve as a source. For Enron to designate sinks as areas without load it would appear that it had not yet sold the power it sought to obtain. That is, if it had a true sink, why did it designate the fictitious one? 10 Petitioners' best attempt at displaying arbitrariness and capriciousness in FERC's decision is to claim that the decision reverse[s] unreasonably and without explanation two long standing FERC policies: one prohibiting discrimination and instead requiring service comparability in access to the interstate transmission grid, and the other requiring deference in matters pertaining to the reliable operations of that grid to the `true expert in the field,' NERC. Petitioners' argument fails in its first premise. FERC needed no explanation for any reversal of policy as to discrimination, since it found no discrimination. It is disingenuous of petitioners to claim that FERC did not explain why it was no longer prohibiting discrimination when it had found none as to which any prohibition could be lifted. 11 Petitioners argue that Attachment M also discriminates in the matter of net scheduling. Net scheduling refers to a practice, with respect to a particular electrical interface, of scheduling for the same time period partially offsetting inbound and outbound transmissions that differ arithmetically by no more than the capacity of the interface. In petitioners' illustration, the Batesville generation only control area has a rated generating capacity of 840 megawatts, and so should be an acceptable scheduling sink for a particular time period for 2,000 megawatts of inflow and, for the same period, an acceptable scheduling source for 2,840 megawatts of outflow because the arithmetical difference does not exceed Batesville's rated 840 megawatt generating capacity, provided the actual interchange, when it occurs, does not exceed Batesville's 840 megawatt generating capacity. Attachment M prohibits this scheduling practice, in effect, by limiting acceptable scheduling transactions by rated capacity — i.e., to the electric reality of power flows that petitioners' own illustration and argument conceded must ultimately be observed. According to petitioners, the discrimination arises because it is undisputed that Entergy net schedules for itself. But this undisputed discrimination is illusory. FERC's order adequately if briefly addresses this argument. As FERC makes plain, in its filing, Entergy commits to apply the proposed business practices on a nondiscriminatory basis. Petitioners' assertion that Entergy will discriminatorily allow itself net scheduling while discriminatorily burdening the scheduling of its customers, is no more than an assertion. Petitioners have offered no evidence to impeach FERC's conclusion. FERC's rejection may have been a terse one, but petitioners' proffer required no more. Cf. Lomak Petroleum, Inc. v. Federal Energy Regulatory Commission, 206 F.3d 1193, 1198 (D.C.Cir.2000) (petitioner had burden but failed to establish convincing inconsistencies). FERC's treatment is adequate given the clarity of FERC's position on fictitious reservation and scheduling data. Attachment M applies the scheduling limitations to all, which satisfies comparability, and the petitioners have not shown otherwise.