Document: 539 U.S. 39 ENTERGY LOUISIANA, INC.v.LOUISIANA PUBLIC SERVICE COMMISSION ET AL. No. 02-299. Supreme Court of United States. Argued April 28, 2003. Decided June 2, The Federal Energy Regulatory Commission (FERC), which regulates the sale electricity at wholesale in interstate commerce, must ensure that rates are "just and reasonable," 16 U. S. C. § 824d(a). Under filed rate doctrine, FERC-approved cost allocations between affiliated energy companies may not be subjected to reevaluation state ratemaking proceedings. Nantahala Power & Light Co. v. Thornburg, 476 953; Mississippi ex rel. Moore, 487 354 (MP&L). Petitioner Entergy Louisiana, Inc. (ELI), one five public utilities owned by Corporation (Entergy), shares capacity with its corporate siblings other States, allows each company access additional when demand exceeds supply generated alone. resulting costs allocated among companies; allocation is critical setting retail regulators, such as respondent Louisiana Public Service (LPSC). allocates through a tariff approved FERC called system agreement. Schedule MSS-1, included agreement, provides formula under those use more than they contribute make payments their fair share capacity. ELI has typically made, rather received, MSS-1 payments. In 1980's, operating committee initiated Extended Reserve Shutdown (ERS) program, responded systemwide overcapacity allowing some generating units immediately necessary for needs effectively mothballed. Because ERS could reactivated if needed, were considered available purposes calculating On August 5, 1997, found had violated agreement classifying available, but determined refund was due customers result overpayments companies. also an amendment unit treated determines it intends return service future date. made annual filing LPSC. One contested issues this proceeding whether should ELI's rates. Confining review after LPSC concluded pre-empted from disallowing related imprudent subsequent Thus, permitted charge reflected State District denied petition review, upheld LPSC's decision. Held: MP&L rest on foundation broad enough require pre-emption order. Pp. 47-51. (a) doctrine requires "that power or fixed given binding effect utility commissions determining intrastate rates," Nantahala, supra, 962. MP&L, applied hold FERC-mandated second-guessed regulators. order involved two siblings, Nantahala's purchases low-cost proportion FERC. By requiring calculate needed procure less high-cost FERC's order, "trapped" portion incurred procuring power. This ran counter rationale approval because, categorically excluded consideration rates, regulated entity cannot fully recover purchasing rate. that, contrary Court's ruling, pre-emptive jurisdiction does turn particular matter actually 47-49. (b) Applying here, impermissibly "traps" have been tariff. That discretion classify units, while specific mandates, provide room imprudence finding. Act specifically automatic adjustment clauses, constitutes clause. basis upholding order—that 5—revives precisely same erroneous reasoning advanced MP&L. It matters spoken precise classification only dictates how whom made. amended clearly so, second-guessing here pre-empted. Finally, respondents advance contention including calculations despite own prior holding determine acceptance concession. question MP&L; finding violated. Consequently, no occasion address exclusivity 49-51. 815 So. 2d 27, reversed. THOMAS, J., delivered opinion unanimous Court. CERTIORARI TO THE SUPREME COURT OF LOUISIANA. David W. Carpenter argued cause petitioner. With him briefs Virginia A. Seitz, J. Wayne Anderson, Kathryn Ann Washington. Austin Schlick States amicus curiae urging reversal. brief Solicitor General Olson, Deputy Kneedler, Cynthia Marlette, Dennis Lane. Michael R. Fontham respondents. Paul L. Zimmering, Noel Darce, Dana M. Shelton, Jason Bilbe.* JUSTICE THOMAS 1 (FERC) commerce. 824(b). capacity, 953 (1986), (1988) (MP&L), rate-making We consider today delegates similarly pre-empts adjudges imprudent. 2 * multistate company. operates Arkansas, Mississippi, Texas (collectively, companies). sharing arrangement But keeping excess all benefit shared companies, associated them. regulators establish sales, reasonable return. 3 205 (FPA), 41 Stat. 1063, 824d. administered committee, includes representative Services, subsidiary administrative services system. 10 equalization contributing share, i. e., using contribute, others capacity.1 Those making known "short" accepting "long" Each company's capability monthly, monthly basis— long receives payment equal average multiplied number megawatts long. variables can change clause 205(f) FPA, 824d(f),2 exempts FPA's ordinary requirements changes. 4 short month, know much siblings. easy asking facilities off, however, because mid-1980's program. Responding system-wide overcapacity, allowed identified However, these activated increased, meaning represented forever placed out reach As result, "available" Counting generally ELI, already company, even short, thus increasing 5 December 1993, 206 824e, decide available. Respondent (LPSC), participated entitled alleged misclassification agreed supported equities resultant allocations, violative tariff, unjust, unreasonable, unduly discriminatory. Servs., Inc., 80 ¶ 61,197, pp. 61,786-61,788 (1997) (Order 415). approved, over objection LPSC, date.3 Appeals Columbia Circuit Order 415. Comm'n FERC, 174 F. 3d 218 (1999). respect amendment, "FERC understandably [it] set parameters committee's discretion, discriminatory implementation remedied FPA 206." Id., 231. 6 May 1997. "whether System Agreement revenue requirement." App. Pet. Cert. 25a. Given determination inclusion 1997 (the date 415 issued), just reasonable, confined Its staff before 10.02(a) continuing count concluded, "pre-empted terms met, issue violation compliance peculiarly within purview." 64a. 7 Nevertheless, held MSS-1-related 1997: 8 "[T]hough exclusive violated, there currently exists Operating Committee's decision Agreement. absence determination, scrutinize prudence without violating [S]upremacy [C]lause insofar affects rates." 65a. 9 treatment would Louisiana. words, though recoup rates.4 petitioned denied, appealed 2001-1725 (La. 4/3/02), 27. barred federal "attempting regulate rates" "challeng[ing] validity declination refunds amounts paid amendment." 38. Further, court reasoned, never ruled continue include [after was] prudent one" "it mandatory [operating committee] calculations." Ibid. 11 granted writ certiorari decisions lead 537 1152 (2003). "res[t] enough," S., 369, case. II 12 When applies so Supremacy Clause. Arkansas Gas Hall, 453 571, 581-582 (1981). 13 Company Tapoco, former served North Carolina. Both Tapoco provided Tennessee Valley Authority (TVA), sold back them pursuant three parties. purchased uniform price. Low-cost both right pour into TVA grid. apportioned 80% exclusively parent 20% Nantahala. remainder higher prices. slight modification, received 22.5% entitlement Carolina Utilities Commission's (NCUC) properly 24.5%. resulted lower computation therefore customers, obtained respected NCUC. 14 pre-empted: 15 "Nantahala NCUC's expensive A `trapped.'" 971. Trapping "runs directly counter," id., 968, "cannot . .," 970. 17 further defined scope context. Predecessors concerned jointly construction Grand Gulf nuclear plant Mississippi. project turned significantly originally planned, units. high building recouped, purchase Gulf. original challenged ultimately modified required (MP&L, now Mississippi) 33% produced 18 pass along consumers increases. Court, reasoned "FERC's MP&L's assumption sister did obligate approve pass-through review." 367. distinguished limiting "matters determined, expressly impliedly, FERC." Pittman Comm'n, 506 978, 986 (Miss. 1987) (citation omitted). 19 disagreed, "erred adopting view proceedings." 374. Although explicitly prudent, any "if integrity regulation preserved, obviously unreasonable quantity high-priced ordered pay for." B 20 facts case, we conclude differs tariffs leaves whereas mandates. delegated where mandated not. Congress clauses uncontested schedule see reason create exception type substantially limit flexibility approving arrangements. 21 issued See 2d, 38 ("The one"). holding, revived There noted "view turn[s] proceedings" "long rejected." 22 respondents' consequently, shielded pre-emption. Curiously, argument 64a; 35-36. maintain correct initially regulatory agencies not, consistent disallow based assessment noncompliance us express statement confirms this. 23 For foregoing reasons, judgment 24 ordered. Notes: Charles G. Cole, Edward H. Comer, Barbara Hindin Edison Electric Institute Where, maintaining "the electric commerce." 824(b)(1) Section 824d(f)(4) definition "automatic clause": "a provision increases decreases (or both), hearing, reflecting both) utility. Such term takes subject later appropriate amount rate." 10.02 provides: "A extent demonstrated (1) control Operator, (2) down maintenance refueling, (3) extended reserve shutdown intent returning meet requirements. shall evidenced minutes Committee current resource needs, projected length time status, unit, service." 61,788-61,789 (emphasis deleted). disallowed were, fact, 1996, used 1997-1998 76a

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