Court Opinion

ID: 6112333
Source: CourtListenerOpinion
Date Created: 2022-01-25 17:00:36.357287+00
Date Added: 2024-06-11T08:54:23.257215
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 1, 2021            Decided January 25, 2022

                        No. 20-1084

         THE CITY AND COUNTY OF SAN FRANCISCO,
                       PETITIONER

                             v.

       FEDERAL ENERGY REGULATORY COMMISSION,
                    RESPONDENT

           PACIFIC GAS AND ELECTRIC COMPANY,
                       INTERVENOR

                 Consolidated with 20-1297

              On Petitions for Review of Orders
       of the Federal Energy Regulatory Commission

     Katharine M. Mapes argued the cause for petitioner. With
her on the briefs were William S. Huang and Jeffrey M. Bayne.

     Scott Ray Ediger, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on
the brief were Matthew R. Christiansen, General Counsel, and
Robert H. Solomon, Solicitor.
                             2
    Joshua S. Levenberg argued the cause for intervenor
Pacific Gas and Electric Company in support of respondent.
With him on the brief was Alexandra J. Ward. Alyssa T. Koo
entered an appearance.

                        No. 20-1313

           CITY AND COUNTY OF SAN FRANCISCO,
                      PETITIONER

                             v.

       FEDERAL ENERGY REGULATORY COMMISSION,
                    RESPONDENT

                 Consolidated with 20-1458

              On Petitions for Review of Orders
       of the Federal Energy Regulatory Commission

     Katharine M. Mapes argued the cause for petitioner. With
her on the briefs were William S. Huang and Jeffrey M. Bayne.

     Scott Ray Ediger, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on
the brief were Matthew R. Christiansen, General Counsel, and
Robert H. Solomon, Solicitor.
                               3
     Alexandra J. Ward argued the cause for intervenor Pacific
Gas and Electric Company in support of respondent. With her
on the brief were Joshua S. Levenberg, Laura Edelstein, Steven
J. Ross, and Shaun M. Boedicker. Alyssa T. Koo entered an
appearance.

    Before: SRINIVASAN, Chief Judge, ROGERS and TATEL,
Circuit Judges.

    Opinion for the Court by Circuit Judge ROGERS.

      ROGERS, Circuit Judge: San Francisco petitions for review
of orders by the Federal Energy Regulatory Commission
denying its complaints and requests for rehearing regarding its
delivery of electricity to end users. San Francisco purchases
distribution services from the Pacific Gas & Electric Company
(“PG&E”) under the terms of its open-access Tariff. It
challenged PG&E’s refusal to: (1) offer secondary-voltage
service in lieu of more burdensome primary-voltage service to
certain San Francisco sites and (2) provide service to delivery
points that San Francisco maintains are eligible for service
under the Tariff’s grandfathering provision. San Francisco
contends that the Commission erred both when it found that
PG&E’s denial of secondary-voltage service was consistent
with Tariff requirements and the Federal Power Act, and when
it interpreted the Tariff’s grandfathering provision narrowly to
allow PG&E’s interpretation. For the following reasons, the
court grants San Francisco’s petitions.

                               I.

     Electricity flows from generators to end users in two
stages: transmission and distribution. Transmission lines
transport bulk power from generators across long distances.
That power is reduced to a lower voltage by a transformer and
                               4
flows to consumers through distribution lines. U.S. Dep’t of
Energy, United States Electricity Primer, DOE/OE-0017, at
13, 21 (July 2015). Distribution lines operate at higher
(primary) and lower (secondary) voltages. Because consumers
typically cannot use electricity at primary voltages, consumers
that receive primary-voltage service require a transformer to
reduce the electricity’s voltage in addition to primary metering
and other equipment. Therefore, primary-voltage service
involves relatively high fixed costs, but is cheaper per unit of
electricity provided. By contrast, secondary-voltage service
has lower fixed costs but higher unit costs. See Complaint (No.
20-1313), Decl. of Rod Maslowski, Senior Consultant with
Flynn Resource Consultants, ¶¶ 7-8.

     San Francisco’s publicly owned utility, the San Francisco
Public Utilities Commission, owns a power supply system in
the Hetch Hetchy Valley and transmission lines that transmit
power to San Francisco. Id. at 5-6. San Francisco sells Hetch
Hetchy power directly to the end-users in the city. It obtained
the property rights to develop the Hetch Hetchy System under
the Raker Act of 1913, Pub. L. No. 63-41, 38 Stat. 242 (1913).
There, “Congress was motivated by a desire to provide the
people of San Francisco with the advantages of cheap power
and City competition with private power companies such as
Pacific Gas and Electric.” City & Cnty. of San Francisco v.
United Airlines, 616 F.2d 1063, 1068 (9th Cir. 1979).

     San Francisco does not own distribution lines, however,
and relies on PG&E’s distribution system to serve its end-users.
Complaint (No. 20-1313) at 2. It prefers to receive secondary
voltage from PG&E’s distribution system because electricity
from PG&E is delivered to over 2,200 metered interconnection
points, most of which serve a single building. Id. at 3,
Maslowski Decl. ¶ 6. Because a relatively small amount of
electricity is required at many points, San Francisco prefers to
                              5
avoid the high fixed costs of receiving primary-voltage service
at each point. Id. at 17. And because PG&E’s retail service
area covers the city, the San Francisco Commission is both a
customer and competitor of PG&E.

     From 1945 to 2015, San Francisco purchased wholesale
distribution service from PG&E under a series of bilateral
agreements, the most recent of which was signed in 1987.
While San Francisco was receiving service pursuant to the
1987 agreement, the Federal Energy Regulatory Commission
(the “Commission”) approved PG&E’s Tariff, which stated the
generally applicable terms for “open-access” wholesale
distribution service. Pac. Gas & Elec. Co., Wholesale
Distribution Tariff, FERC Electric Tariff Volume No. 4,
Docket Nos. EL15-3-002, et al., Ex. PGE-7.

                              II.

    San Francisco’s complaint in No. 20-1313 concerns
PG&E’s refusal to provide secondary-voltage distribution
service at certain interconnection points.

                              A.

     In 2015, San Francisco entered a new contract with PG&E
for service under its open-access Tariff. Complaint at 2. Under
their previous agreement, 96% of its end-users were connected
to PG&E’s distribution system at secondary voltage. Id.,
Maslowski Decl. ¶ 6. PG&E allows retail customers to receive
secondary voltage if their demand is below 3,000 kW.
Complaint, Maslowski Decl. ¶ 7. PG&E currently provides
secondary-voltage service to the Western Area Power
Administration (“Western”) and the Power and Water
Resources Pooling Authority (“Pooling Authority”) for
demands as high as 428 kilowatts (“kW”) for Western and
                               6
1,296 kW for the Pooling Authority. Request for Rehearing at
16-17.

     On January 28, 2019, San Francisco filed a complaint with
the Commission pursuant to Sections 206, 306, and 309 of the
Federal Power Act (“FPA”), 16 U.S.C. §§ 824e, 825e, 825h.
San Francisco alleged that PG&E has “consistently” refused to
make new interconnections at secondary voltage unless the
total electricity demand is less than 75 kW. Complaint at 10.
This practice, it claimed, (1) was unjust, unreasonable, and
unduly discriminatory, and (2) violated the terms of the
Wholesale Distribution Tariff. Id. at 1. Further, it alleged that
PG&E had categorically denied San Francisco’s applications
for secondary-voltage service for demands above 75 kW while
granting secondary-voltage service for much larger demands
for its own retail customers and other wholesale customers
such as Western. Id. at 3, 21, Maslowski Decl. ¶ 27. PG&E’s
denials of secondary-voltage service, allegedly, “have imposed
undue burdens and costs on San Francisco,” including
“delays.” Id. at 31-32. Yet PG&E’s Tariff required it to offer
secondary service whenever requested, and to expand its
infrastructure when such service was initially infeasible. Id. at
23-27. San Francisco also objected to PG&E’s refusal to
provide “primary plus” service in the alternative, where San
Francisco would receive secondary voltage while paying
PG&E for maintaining the facilities necessary to provide
secondary voltage. Id. at 16, Maslowski Decl. ¶ 9.

     PG&E acknowledged that its Tariff provides for two levels
of service but maintained that it had not given customers the
right to dictate the level of service to be received. Answer to
Complaint at 5-6. It also denied that it had a categorical 75 kW
threshold for secondary-voltage applications, noting that most
of San Francisco’s new interconnections were at secondary
voltage, including many above 75 kW, and that it had regularly
                               7
granted variances to San Francisco. Id. at 7-15. Any denials
of secondary-voltage service, it asserted were supported by
“technical, safety, reliability, and operational reasons.” Id. at
15. Further, PG&E claimed that San Francisco was to blame
for many of the delays in service, id. at 23, and that Western’s
secondary-voltage service was governed by a settlement
agreement to which San Francisco is not a party, id. at 28-29.

     Evidence before the Commission showed that since 2015,
many of San Francisco’s new interconnection requests
exceeding 75 kW have been denied secondary service by
PG&E, and that the proportion of new interconnections above
75 kW receiving primary service has increased since 2015. See
id. at 11 (chart 3). Specifically, PG&E had stated that “if the
requested [demand] exceeds 75 kW, PG&E informs [San
Francisco] that it will need to take primary service.” Id. at 30.
In some instances, San Francisco was initially denied
secondary-voltage service, but negotiated for secondary
voltage or a “secondary metering” arrangement, reducing its
costs of receiving primary voltage. Complaint at 13-14; Decl.
of Barbara Hale, Asst. Gen. Mgr., San Francisco Public
Utilities Commission, ¶¶ 9-11. In July 2019, PG&E advised
San Francisco that it “is not willing to make additional
accommodations without a long-term solution.” Letter from
Yilma Hailemichael, PG&E Mgr., to Ramon Abueg, Dep. Mgr.
Operations at San Francisco Pub. Utils. Comm’n, at 3 (July 1,
2019) (hereinafter, the July 1, 2019 Letter).

     The Commission denied San Francisco’s complaint, ruling
that PG&E should retain discretion to determine what level of
service is most appropriate for a customer because the provider
“is ultimately responsible for the safety and reliability of its
distribution system.” Order, 171 FERC ¶ 61,021 at P 38
(2020). It found that San Francisco received secondary service
for the “majority of its interconnections with PG&E,” id. P 36,
                              8
as well as variances for other interconnections. Id. P 37.
Noting that “primary service is the norm for utility-to-utility
interconnections,” id., the Commission distinguished the
service provided to retail customers and wholesale customers
whose service was governed by a settlement agreement. Id. PP
37-38, 42. In its view, San Francisco was to blame for delays,
which were “largely a consequence of requesting
interconnection for projects with [demands] greater than what
PG&E has normally accepted for secondary service” and “San
Francisco’s own delays in responding to PG&E.” Id. PP 39-
40. The Commission denied San Francisco’s request for
rehearing. Order Addressing Arguments Raised on Rehearing,
172 FERC ¶ 61,021 (2020) (Rehearing Order).

   San Francisco petitions for review of the Order and
Rehearing Order (collectively, the “Voltage Orders”).

                              B.

     San Francisco contends in petitioning for review that (1)
the Commission’s Voltage Orders were arbitrary and
capricious in deeming PG&E’s secondary-service practice just
and reasonable, (2) the Commission failed to meet its mandate
under the FPA to prevent undue discrimination, and (3) the
Voltage Orders are inconsistent with PG&E’s Tariff and the
filed-rate doctrine.

                              1.

    As a threshold matter, PG&E maintains that San
Francisco’s first and second challenges are moot in light of
PG&E’s proposal of a revised tariff that offers only primary
service. Thus, ruling in San Francisco’s favor on either of the
two issues would have no remedial effect, it claims, because
PG&E “no longer has discretion . . . to allow secondary voltage
                              9
interconnections.” PG&E Br. 15. PG&E concedes that San
Francisco’s claim that PG&E violated its original tariff is not
moot because retrospective relief is still available. PG&E Br.
19. PG&E’s mootness argument is unpersuasive given the
provisional nature of the proposed tariff revision.

      A “case is moot if the dispute is no longer embedded in
any actual controversy about the plaintiffs’ particular legal
rights.” Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013)
(internal quotation marks omitted). San Francisco petitioned
for review of the Order denying its complaint on August 17,
2020. On September 15, 2020, PG&E filed proposed tariff
changes, which the Commission accepted on November 13,
2020, while expressing no view on whether the revised tariff
was just, reasonable, and nondiscriminatory. Pac. Gas & Elec.
Co., 173 FERC ¶ 61,140 at P 42 (2020). The Commission
suspended the proposed revisions for five months, to be
effective April 15, 2021, and ordered an evidentiary hearing on
its legality. Id. The hearing was held in abeyance to encourage
settlement discussions, which, as of November 23, 2021, are
ongoing. Status Report of Settlement Judge, FERC Docket No.
ER20-2878 (Nov. 23, 2021).

     The Commission’s “[a]cceptance of a filing decides
nothing concerning the merits of a case; it merely reserves the
issues pending a hearing.” Papago Tribal Util. Auth. v. FERC,
628 F.2d 235, 240 (D.C. Cir. 1980). There, the court held that
the Commission’s refusal to reject a rate filing was an
interlocutory decision that was not final, reviewable agency
action. Id. Under PG&E’s logic, a utility could moot any
challenge to its conduct by filing a revised tariff with the
Commission that would require that conduct. Because the
Commission has not ruled on the legality of the revised tariff,
and because San Francisco also seeks retrospective relief, its
claims are not moot.
                               10

                               2.

     Turning to the merits, San Francisco contends that the
Commission did not identify any “safety or reliability risks”
that would arise from providing secondary-voltage service to
San Francisco. SF Br. 28. Rather, it maintains that the
Commission “offers only vague conclusory statements about
PG&E’s general need to assure safety and reliability,” which
are not grounds on which the Voltage Orders can be upheld.
Id. at 29.

     The court reviews the Commission’s orders under the
arbitrary and capricious standard. See, e.g., Emera Me. v.
FERC, 854 F.3d 9, 21 (D.C. Cir. 2017). A court “must uphold
a rule if the agency has ‘examine[d] the relevant
[considerations] and articulate[d] a satisfactory explanation for
its action[,] including a rational connection between the facts
found and the choice made.” FERC v. Elec. Power Supply
Ass’n, 577 U.S. 260, 292 (2016) (quoting Motor Vehicle Mfrs.
Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S.
29, 43 (1983)).

     PG&E identified two concerns in its Answer to the
Complaint. First, the request for secondary-voltage service
might be too far from the necessary infrastructure. Answer to
Complaint at 6. Second, secondary-voltage equipment lacks
unique operating numbers, making it more difficult to service.
Id. at 16. The Commission’s Voltage Orders, however, do not
reference any specific risks to safety or reliability with respect
to San Francisco’s requests. The Commission concluded only
that PG&E is “ultimately responsible for the safety and
reliability of its distribution system” and should have
“discretion to determine what level of service is both
appropriate and available based upon the status and
                                11
configuration of its . . . facilities and the nature and location of
the interconnection request.” Order P 38. For support, the
Commission cites page 6 of PG&E’s Answer without
explanation. Id. P 38 n.82.

     The Commission’s “passing reference to relevant factors,”
such as safety and reliability, “is not sufficient to satisfy the
Commission’s obligation to carry out ‘reasoned’ and
‘principled’ decisionmaking.” Mo. Pub. Serv. Comm’n v.
FERC, 234 F.3d 36, 41 (D.C. Cir. 2000). That is so when the
Commission refers only generally to safety and reliability
without explaining what the risks are, much less examining
PG&E’s claims. A declaration by PG&E engineer Michael
Thibault stated that “interconnection at the secondary voltage
level between utilities is not at all typical and . . . is not ‘Good
Utility Practice,’” and that “secondary interconnections
between utilities create ambiguity and operational and
engineering challenges.” Order P 37 n.79 (citing Answer to
Complaint, Thibault Decl. ¶¶ 11-12). Although this suggests
that providing secondary service to a utility may present
challenges for PG&E, the declaration does not concretely
describe the challenges with respect to San Francisco’s
requests for secondary service.

     Further, the Commission’s conclusion that PG&E should
have discretion to determine which voltage level is most
appropriate is belied by the record to the extent PG&E would
apply a categorical rule. The July 1, 2019 Letter hardly
indicates that PG&E intends to evaluate San Francisco’s
applications on a case-by-case basis. See July 1, 2019 Letter at
3. Although the Commission viewed PG&E’s statement to be
“primarily in reference to specific projects” and that San
Francisco’s concerns about being denied accommodations
were “speculative,” Order P 40 n.90, the Commission cited no
portion of the Letter that limits its relevance to specific projects
                                12
and provided no reason that a “long-term solution” is possible
or probable.

      San Francisco also contends that the Commission was
arbitrary and capricious in concluding that PG&E may deny
secondary-voltage service to San Francisco because the
industry norm for utility-to-utility interconnections is primary
voltage. Here, it contends that the Commission failed to
address the fact that San Francisco interconnects to PG&E at
numerous small points of interconnection, rather than a few
large points as is typical for a utility-to-utility interconnection.
Reply to Answer at 15-16; Request for Rehearing at 30-31.
Neither of the Voltage Orders explain why deference to
industry norms is reasonable in light of San Francisco’s
geographical configuration, which differs from that of other
utilities. See Request for Rehearing at 30-31. Rather, the
Commission applied the industry norm with no explanation
beyond stating that such norms “inform expectations.”
Rehearing Order P 9 n.23. Maybe so. But the Commission
does not explain why San Francisco should have expected to
be bound by an industry norm involving much higher demands
than it has historically required, or why its expectations are a
valid basis for PG&E’s denials of its requests. Again, the
Commission’s passing reference to “ambiguity and operational
or engineering challenges” arising from secondary
interconnections between utilities without further elaboration,
does not provide sufficient justification for its conclusion.
Order P 37 n.79 (citing Answer to Complaint, Thibault Decl.
¶¶ 11-12). Consequently, the Voltage Orders do not satisfy
arbitrary-and-capricious review. See State Farm, 463 U.S. at
43.
                                13
                                3.

     Additionally, San Francisco contends that the Commission
failed to meet its mandate to prevent undue discrimination,
because PG&E offers secondary service to two wholesale
customers, Western and the Pooling Authority, at higher
voltages than 75 kW, and to retail customers at voltages up to
3,000 kW. When faced with a claim of undue discrimination,
the Commission “must reasonably explain how the existing
suppliers and new entrants are not similarly situated and in
what respects the reasons are material.” New Eng. Power
Generators Ass’n v. FERC, 881 F.3d 202, 213 (D.C. Cir. 2018)
(citing Edison Mission Energy, Inc. v. FERC, 394 F.3d 964,
968-69 (D.C. Cir. 2005)).

     The Commission has adequately explained why San
Francisco is not similarly situated to Western and the Pooling
Authority, noting that both of them receive secondary service
under settlement agreements with PG&E, and that the Pooling
Authority is not eligible for Tariff service. Order P 37 & n.79.
Western’s settlement “reflects a bargained-for agreement
between PG&E & Western,” and San Francisco has not shown
that it and its customers are similarly situated to Western and
its customers. Id. P 42. But the Commission’s response to San
Francisco’s claims regarding retail customers was inadequate.
On the other hand, the Commission views “a retail-level
standard . . . [a]s not necessarily congruent with the
requirements of interconnecting wholesale customers such as
San Francisco,” id. P 38, and that San Francisco’s “mere
assertion of [the retail standard’s] relevance is not sufficient to
satisfy San Francisco’s section 206 burden of proof,”
Rehearing Order P 13. Beyond asserting “relevance,” San
Francisco cited instances when its customers began retail
service with PG&E during San Francisco’s wholesale service
negotiations with PG&E. See Complaint, Hale Decl. ¶¶ 25-30.
                               14
The Commission accepted PG&E’s explanation that these San
Francisco customers only took temporary retail construction
power service from PG&E, Order P 40, but this fact confirms
that PG&E can compete with San Francisco through its retail
offerings. The Commission’s conclusion that retail service is
“not necessarily congruent” does not meet its burden of
reasoned decision-making.

                               4.

     San Francisco further contends that the Voltage Orders are
inconsistent with the terms of PG&E’s Tariff, which it
interprets to require PG&E to provide secondary-voltage
service whenever requested, and that PG&E’s contrary practice
violates the filed-rate doctrine. The filed rate objection is more
problematic.

                               a.

     When San Francisco filed its petition, PG&E’s Tariff
stated that PG&E will “provide Distribution Service pursuant
to the applicable terms and conditions contained in this Tariff
and Service Agreement.” Tariff § 1.2. After receiving an
application for service, PG&E must “make a determination of
available distribution capacity.” Tariff § 15.5. Section 13.4 of
the Tariff stated:

               If the Distribution Provider determines that it
               cannot accommodate a Completed Application
               for Distribution Service because of insufficient
               capability on its Transmission System or
               Distribution Facilities, the Distribution Provider
               will use due diligence to expand or modify its
               Distribution System to provide the requested
               Distribution Service, provided the Distribution
                                15
                Customer agrees to compensate the Distribution
                Provider for such costs . . . .

San Francisco thus alleged that because the Tariff defines
“Distribution System” to include the secondary distribution
system, Complaint at 23 (citing Tariff § 11), PG&E must
expand its secondary distribution system to meet any customer
request for secondary-voltage service, pursuant to Tariff
Section 13.4.

       The Commission concluded that “[w]hile the [Tariff] does
not preclude a [Tariff] customer from requesting the level of
service that it wishes to take,” PG&E should retain “discretion
to determine what level of service is both appropriate and
available based upon the status and configuration of its existing
. . . facilities and the nature and location of the interconnection
request.” Order P 38. As a result, “PG&E has not violated the
terms of the [Tariff].” Id. P 35. The court has long held that
the Commission’s interpretation of a tariff receives “Chevron-
like deference.” Consol. Edison Co. of New York v. FERC, 347
F.3d 964, 972 (D.C. Cir. 2003) (internal citations omitted). If
the terms of the tariff are unambiguous, the court need not defer
to the Commission’s interpretation. If the text is ambiguous,
there the court must defer if the Commission’s interpretation is
reasonable. Id. The Tariff then in effect unambiguously
confirms the Commission’s interpretation. Although PG&E
must use due diligence to adjust its system to provide the
“requested Distribution Service,” Tariff § 13.4, “Distribution
Service” is defined as “[t]he transporting of electric power over
and through various PG&E facilities for delivery to a
Distribution Customer.” Tariff § 2.15. The fact that PG&E
must provide wholesale distribution service when requested
does not necessarily imply that it is required to provide the
voltage San Francisco requests.
                               16
                               b.

     On the other hand, San Francisco correctly notes that
PG&E’s practice of requiring primary-voltage service for
demands above 75 kW is not stated in its Tariff and therefore
may violate the filed-rate doctrine. Under that doctrine,
“utilities are forbidden to charge any rate other than the one on
file with the Commission,” West Deptford Energy LLC v.
FERC, 766 F.3d 10, 12 (D.C. Cir. 2014), a prohibition that is
understood to extend to other utility practices that affect rates
and service. See Keyspan-Ravenswood, LLC v. FERC, 474
F.3d 804, 811 (D.C. Cir. 2007). The “rule of reason” requires
“utilities [to] file ‘only those practices that affect rates and
service significantly, that are realistically susceptible of
specification, and that are not so generally understood in any
contractual arrangement as to render recitation superfluous.’”
Id. (quoting City of Cleveland v. FERC, 773 F.2d 1368, 1376
(D.C. Cir. 1985)). Contrary to PG&E’s view, San Francisco did
not waive this argument but, in fact, raised it in requesting
rehearing. See Request for Rehearing at 11-12; see also Reply
to Answer at 8-9. But see PG&E Br. 25 (citing 16 U.S.C. §
825l(b); Allegheny Power v. FERC, 437 F.3d 1215, 1220 (D.C.
Cir. 2006)).

     On rehearing, the Commission stated that the 75 kW
threshold is merely a “guidepost,” Rehearing Order P 10, while
reaffirming its position that PG&E makes case-by-case
determinations of which voltage to provide, Order P 43 & n.96.
Yet, as noted, the record suggests that PG&E intends to apply
a categorical rule going forward. July 1, 2019 Letter at 3;
Answer to Complaint at 30. Even if the 75 kW threshold is a
guidepost, however, that kind of numerical threshold is the type
of requirement that the “rule of reason” requires be stated in the
Tariff, as a numerical threshold is “realistically susceptible of
specification,” Keyspan-Ravenswood, 474 F.3d at 811.
                               17
PG&E’s policy significantly “affect[s] rates and service”
because it affects which voltage level San Francisco may
receive, and different voltages have different rates. Id. It also
cannot be “so generally understood . . . as to render recitation
superfluous,” given PG&E’s secondary-voltage connections
for demands above 75 kW and its provision of secondary-
voltage service to San Francisco prior to the 2015 transition to
Tariff service. Id. Although primary voltage may be the
industry norm for utility-to-utility interconnections, and PG&E
should have discretion to provide secondary voltage on a case-
by-case basis, see Order P 43, the Commission does not explain
why these factors exempt the guidepost from specification in
the Tariff under the “rule of reason.”

    Because the Commission did not adequately explain any
operational or engineering rationale justifying PG&E’s 75 kW
“guidepost” and did not explain why that guidepost did not
need to be in the filed tariff, the court vacates the Voltage
Orders and remands the case to the Commission for further
proceedings consistent with this opinion.

                              III.

    San Francisco’s complaint in No. 20-1084 concerns the
proper interpretation of a section of PG&E’s Tariff on
grandfathering.

                               A.

      Section 14.2 requires customers to demonstrate “bona fide
ownership or control of . . . Intervening Distribution Facilities
. . . except in the case where an Eligible Customer meets the
criteria for grandfathering in 16 USC § 824k(h)(2) [Section
212(h)(2) of the FPA]” (emphasis added). This section was
added as the result of a 2015 Commission-approved settlement
                             18
between PG&E and its Tariff customers. Offer of Settlement,
FERC Docket No. ER13-1188-037, eLibrary No. 20150331-
5502 (Mar. 31, 2015). Although PG&E and San Francisco
agree that PG&E is bound by Section 212(h)(2) of the FPA, 16
U.S.C. § 824k(h)(2), they disagree about its scope.

     On October 9, 2014, San Francisco filed a complaint with
the Commission alleging, among other claims, that PG&E was
improperly denying Tariff service to some of San Francisco’s
delivery points. San Francisco argued that PG&E was required
to serve any San Francisco customer served in 1992, regardless
of whether the customer stayed at the same location.
Complaint at 18-20. PG&E responded that it would serve any
of San Francisco’s locations that it had served in 1992 but
would not serve delivery points of 1992 customers that had
relocated or opened new locations. Answer to Complaint at
35-36 .

    FPA Section 212(h) provides:

              No order issued under this chapter shall be
              conditioned upon or require the transmission of
              electric energy:

              (1) directly to an ultimate consumer, or

              (2) to, or for the benefit of, an entity if such
              electric energy would be sold by such entity
              directly to an ultimate consumer, unless:

              (A) such entity is a . . . State or any political
              subdivision of a State (or an agency, authority,
              or instrumentality of a State or a political
              subdivision) . . . [listing other categories]; and
                               19
               (B) such entity was providing electric service to
               such ultimate consumer on October 24, 1992, or
               would utilize transmission or distribution
               facilities that it owns or controls to deliver all
               such electric energy to such electric consumer.
               (emphasis added)

     On December 23, 2014, PG&E filed with the Commission
a proposed replacement agreement under which PG&E would
provide Tariff service to any San Francisco delivery point that
received service in 1992. Proposed Service Agreement, App.
C. So any delivery point that did not receive service in 1992
but did receive service in 2015 (when the bilateral agreement
would expire) would receive what PG&E calls Tariff-
equivalent service, if the delivery point was a “municipal load,”
id., App. D. PG&E defined “municipal load” as:

              “Municipal Public Purpose End-Use Customers”
              (“Muni Load”) are served at metered Points of
              Delivery providing power to [San Francisco’s]
              governmental departments and agencies, public
              housing tenants, municipal transportation system,
              police stations, fire departments, public schools,
              city parks and public libraries.             Non-
              governmental private persons (other than [San
              Francisco] public housing tenants) and non-
              governmental private corporations are not
              Municipal Public Purpose End-Use Customers.
              Small Unmetered Street Loads served under
              Appendix E [such as streetlights or traffic
              signals] are not Municipal Public Purpose End-
              Use Customers.

Id., App. D § D.1.1. Non-municipal loads served in 2015 but
not in 1992 would receive Tariff-equivalent service if the
                              20
delivery point continues to serve the same end-use customer as
in 2015 and the electricity demand does not exceed 125 percent
of the customer’s average annual demand on June 30, 2015.
Id., App. D §§ D.1.2, D.2.

     An Administrative Law Judge interpreted FPA
Section 212(h)(2)(B) in light of the Commission’s decision in
Suffolk County Electric Agency, 96 FERC ¶ 61,349, at 62,301
(Nov. 15, 2001). There, the Commission concluded that
Section 212(h) grandfathered the “class of customers eligible
to receive service.” Id. The ALJ determined that “the
Commission’s orders and opinions . . . support San Francisco’s
argument that grandfathering applies to the class of customers
that was eligible to receive wholesale distribution service on
October 24, 1992, regardless of where in the City those
customers may be located now or in the future.” Initial
Decision P 135 (internal citations omitted). Therefore, the ALJ
defined the “class” of customers as all “municipal public
purpose load[s].” Id. P 142. He also concluded that he was
“without authority” to define a “municipal public purpose” for
the Commission. Id. P 146.

     In Opinion No. 568, the Commission reversed. 169 FERC
¶ 61,128 at P 67 (Nov. 21, 2019). Distinguishing its FPA
Section 212(h) precedent as involving proceedings seeking an
order of mandatory service under FPA §§ 210 and 211, the
Commission noted that San Francisco filed its complaint under
§ 206 and PG&E filed its proposed replacement agreements
under § 205, id. P 67 n.154. Further, the Commission stated
that it was not “interpreting the scope of section 212(h),” but
instead only interpreting PG&E’s Tariff. Id. Noting that other
provisions of the Tariff referenced “points of delivery,” the
Commission viewed the “points of delivery framework” to
favor PG&E’s interpretation of Section 14.2. Id. PP 69-70. By
contrast, in the Commission’s view, San Francisco’s
                                21
interpretation “would automatically grandfather all San
Francisco customers, thereby negating the point of delivery
framework.” Id. P 69. The Commission also accepted PG&E’s
definition of “municipal load” as “effectively distinguish[ing]
between what is to be considered municipal load . . . and what
is not.” Id. P 72. In denying San Francisco’s petition for
rehearing, the Commission offered a clarification, stating that
PG&E’s interpretation of the Tariff was consistent with Suffolk
County’s “class-based approach” because PG&E was still
providing service to the “class of customer [San Francisco] was
appropriately serving as of October 24, 1992,” but “only for the
universe of delivery points as they existed on June 30, 2015.”
Rehearing Order, 171 FERC ¶ 61,196 at P 28 (June 4, 2020).

     San Francisco petitions for review of Opinion No. 568 and
the Rehearing Order (collectively, the “Grandfathering
Orders”). The Court accords the Commission’s interpretation
of filed tariffs Chevron-like deference. See supra Subsection
II.B.4.a. Although the Court will defer to the Commission’s
interpretation of its own precedent, the Commission must
acknowledge that it is departing from its precedent and provide
a reasoned explanation indicating that prior policies and
standards are being deliberately changed, not casually ignored.
ESI Energy, LLC v. FERC, 892 F.3d 321, 329 (D.C. Cir. 2018).

                                A.

    Section 14.2 of the Tariff provides, by its plain terms, an
exception to the required ownership or control of intervening
Distribution facilities for customers that “meet[] the criteria for
grandfathering in 16 USC § 824k(h)(2).”                 The text
unambiguously indicates that the Tariff incorporates the
requirements of FPA Section 212(h)(2). The parties had agreed
in a Joint Brief to the Commission that they “referenced
Section 212(h) of the FPA to define the requirements and
                               22
boundaries of eligibility for service under PG&E’s [Tariff],”
and that “[t]he intent of [that reference] in the [Tariff] as it
pertains to grandfathering was to ensure that the Commission’s
interpretation of the statute was incorporated into the [Tariff’s]
eligibility rules.” Joint Brief at 2-3 (Sept. 24, 2018). The
Commission, however, expressly disclaimed that it was
“interpreting the scope of [Section] 212(h) or the precedent
thereunder beyond the salient point that they are not applicable
in this [Section 206] proceeding.” Opinion No. 568 P 67 n.154.
Because the Commission based its decision in Opinion No. 568
on requirements other than those in Section 212(h), the court
owes no deference to its interpretation of unambiguous Tariff
text.

     The Commission’s attempts to defend its interpretation are
unpersuasive. First, the Commission states that “the [Tariff]
frames [PG&E’s] distribution service in terms of delivery
points,” and that service should therefore be grandfathered on
a location-by-location basis. Opinion No. 568 P 70 & n.160.
Tariff Section 14.2 itself requires applicants to prove that the
criteria of FPA Section 212(h)(2) are met “for each Point of
Delivery,” and Tariff Section 15.5.1 states that a distribution
provider may reject service on the ground that “it disputes that
the Point of Delivery qualifies.” That the Tariff references
“points of delivery” does not necessarily imply that only
specific points of delivery may be grandfathered, and those
references to “points of delivery” do not change the fact that
the Tariff expressly references the criteria of Section 212(h)(2).

     Second, the Commission views PG&E’s narrow
interpretation of Section 212(h)(2) to employ the class-based
approach used by the Commission in Suffolk County because it
effectively grandfathers “each delivery point it was serving (as
of June 30, 2015), as long as the customer at that delivery point
is a member of the class of customer [San Francisco] was
                              23
appropriately serving as of October 24, 1992.” Rehearing
Order P 28 (quoting PG&E Brief on Exceptions at 13-14). This
is true in the sense that PG&E has proposed to provide Tariff
service or Tariff-equivalent service to all municipal loads it
served in 2015. But this is not the same as ruling those loads
are Tariff-eligible. PG&E’s voluntary accommodations for the
excluded delivery points do not justify the Commission’s
interpretation of the Tariff, and the Commission acknowledged
that applying Suffolk County supports San Francisco’s
approach. Opinion No. 568 P 69.

     Third, the Commission viewed San Francisco’s
interpretation of the grandfathering exception to render Section
14.2 meaningless, “because all customers within the class of
customers taking service on October 24, 1992 would be
grandfathered in perpetuity.” Rehearing Order P 24. Not so.
Under San Francisco’s interpretation, PG&E’s customers must
satisfy the criteria of Section 212(h)(2) to qualify for
grandfathering: be an eligible entity that served end-use
customers as of October 24, 1992. Any end-use customers San
Francisco did not serve in 1992 could not qualify for the
Section 14.2 exception.

     Fourth, as PG&E notes, the court will generally defer to
the Commission’s interpretation of its own precedent. But not
when the Commission “depart[s] from those rulings without
provid[ing] a reasoned analysis indicating that prior policies
and standards are being deliberately changed, not casually
ignored.” ESI Energy, 892 F.3d at 329 (internal quotation
marks and citation omitted). The Commission attempts to
distinguish its precedent on the ground that San Francisco filed
its complaint under FPA § 206 while the cases in Suffolk
County concerned proceedings for mandatory interconnection
under FPA §§ 210 and 211. Opinion No. 568 P 67 n.154. Here,
however, the Commission expressly declined to interpret
                                24
Section 212(h), ignoring the unambiguous terms of the Tariff.
Id. Even interpreting the Grandfathering Orders to create
different interpretations of Section 212(h) for § 210 and 211
proceedings and another for § 205 and 206 proceedings, the
Commission failed to explain why Section 212(h)(2)’s criteria
would have different meanings in those contexts.

                                B.

     San Francisco also contends that the Commission was
arbitrary and capricious in accepting PG&E’s definition of
“municipal load” because it excludes from grandfathering
certain customers that were receiving service in 1992. Under
the Commission’s Section 212(h) precedent, the Tariff’s
grandfathering clause covers “the class of customers eligible to
receive service” on October 24, 1992. Suffolk County, 96
FERC ¶ 61,349, at 62,301 (2001). That is, the Tariff allows
grandfathering of a customer San Francisco served under the
prior interconnection agreement even though that customer
seeks Tariff service at a new delivery point. Therefore, the
court must address whether the Commission’s definition of
“municipal load” excludes customers San Francisco served
prior to the grandfathering date.

     As noted, the Commission accepted PG&E’s definition
because it “effectively distinguishes between what is to be
considered municipal load . . . and what is not,” and that
although PG&E’s definition of “municipal load” differed from
the definition in San Francisco and PG&E’s 1987 bilateral
agreement, “a new contract may well have new terms and
definitions.” Opinion No. 568 P 72; see Rehearing Order PP
33-34. True, but the Commission’s analysis of “municipal
load,” like its interpretation of Section 14.2 of the Tariff, failed
to address the grandfathering criteria of Section 212(h)(2),
much less the Commission’s precedent interpreting it. The
                               25
Commission acknowledged that Suffolk County would require
grandfathering of a customer San Francisco served under the
prior interconnection agreement in 1992 even though that
customer seeks Tariff service at a new delivery point. Opinion
No. 568 P 69. And the Commission expressly accepted
PG&E’s definition to “describe the class of customers that San
Francisco was serving as of October 24, 1992.” Rehearing
Order P. 18. Yet PG&E’s definition would exclude entities
served in 1992, including private parking garages on City
property, tenants at San Francisco International Airport, and
SOMArts, a neighborhood arts program partially funded by the
San Francisco Arts Commission. See Ex. SF-2 at 14, 15; Ex.
SF-6 at 7-11; Ex. PGE-5 at 10. Because the Commission’s
Grandfathering Orders do not acknowledge the conflicts
between PG&E’s definition of “municipal load” and its own
precedent interpreting Section 212(h)(2) criteria, the
Grandfathering Orders are arbitrary and capricious.

     Finally, the court notes that the orders on review present a
troubling pattern of inattentiveness to potential anti-
competitive effects of PG&E’s administration of its open-
access Tariff. More than a century ago, Congress authorized
the Hetch Hetchy System not only to provide San Francisco
with a source of cheap power but also to ensure competition in
its retail power market. Faced with claims that PG&E was
frustrating that competition by treating its own retail service
preferentially and refusing service for customers San Francisco
had served for decades, the Commission fell short of meeting
its “duty” to ensure that rules or practices affecting wholesale
rates are “just and reasonable.” Elec. Power Supply Ass’n, 577
U.S. at 277.

    Accordingly, the court grants San Francisco’s petitions
challenging the Voltage Orders in No. 20-1313 and the
Grandfathering Orders in No. 20-1084, vacates those orders,
                         26
and remands to the Commission for further proceedings
consistent with this opinion.