Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Seminole Electric Cooperative, Inc. v. Federal Energy Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

June 30, 2017

Seminole Electric Cooperative, Inc., Petitioner
v.
Federal Energy Regulatory Commission, Respondent Florida Power & Light Company, Intervenor

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

          Jeffrey K. Janicke argued the cause for petitioner. With him on the briefs were William T. Miller and Kimberly B. Frank. John M. Adragna entered an appearance.

          Ross R. Fulton, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. On the brief were Robert H. Solomon, Solicitor, and Lisa B. Luftig, Attorney.

          John Lee Shepherd, Jr. argued the cause for intervenor. With him on the brief were James P. Danly and Thomas Orvald.

          Before: Garland, Chief Judge, and Griffith and Kavanaugh, Circuit Judges.

          OPINION

          Griffith, Circuit Judge

         The Federal Energy Regulatory Commission determined that Florida Power & Light Company overcharged Seminole Electric Cooperative, Inc. for electricity and ordered a refund. Seminole claims that it was entitled to a larger refund and petitions for review. We deny the petition.

         I

         Seminole transmits electricity to its electrical-cooperative customers by purchasing transmission services from Florida Power. For every hour of the day, Seminole tells Florida Power the amount of electricity it expects its customers to use. When Seminole's customers take more electricity from the transmission system than expected, Florida Power must make up the difference with extra generation. By the same token, when Seminole's customers take less electricity than expected, Florida Power must find ways to deal with the excess generation. Either way, Florida Power incurs extra costs to provide this so-called "energy imbalance service, " which are passed along to Seminole according to a formula set forth in Schedule 4 of the tariff that governs the rates Florida Power may charge.

         Schedule 4, summarized in the following table and reproduced in relevant part below, [1] divides up charges for energy imbalance service into three tiers or "deviation bands:" a tier with a low rate that applies to deviations of up to 1.5% (with a minimum deviation of 2 megawatts); one with a medium rate that applies to deviations greater than 1.5% up to 7.5% (or greater than 2 megawatts up to 10 megawatts); and one with a high rate that applies to deviations above 7.5% (or above 10 megawatts).

Deviation Band

Charge for Electricity

Between 0% and 1.5%, with a minimum of 2 megawatts

100% of incremental cost

Greater than 1.5% up to 7.5%, or greater than 2 megawatts up to 10 megawatts

110% of incremental cost

Above 7.5%, or above 10 megawatts

125% of incremental cost

         Seminole filed a complaint with FERC alleging that Florida Power was violating Schedule 4 in two respects. First, Seminole claimed that Florida Power had been using the wrong measure for four and a half years to determine which tier's rate applies. Specifically, Florida Power would charge Seminole at a certain tier's rate if Seminole's usage crossed either the percentage or the megawatt threshold for that tier, rather than wait for the usage to cross both thresholds before imposing that rate. A simple example illustrates the problem: Suppose usage by Seminole's customers deviated by 2.5% from what was scheduled, but that-in absolute terms-the deviation amounted only to 1.9 megawatts. Florida Power would charge Seminole at the second tier's rate, rather than the first tier's rate, simply because the deviation (i.e, the imbalance) exceeded 1.5%. According to Seminole, that was impermissible because the tariff allowed charges at the second tier's rate only when usage had deviated by more than 1.5% (in relative terms) and more than 2 megawatts (in absolute terms). FERC ultimately agreed with Seminole that Florida Power's practice violated the tariff and that the co-op had been overcharged about $3.18 million-a finding that is not disputed by any party and is not at issue in this case. However, the remedy for that violation is.

         FERC ordered Florida Power to refund the overcharges for a period going back 24 months from when Seminole first complained about them. FERC based its decision to restrict the refund period in this way on a provision of the companies' service agreement, reproduced below, [2] that establishes the process for challenging bills issued pursuant to the tariff. As FERC understood that provision, Seminole was barred from challenging any bill that it waited longer than 24 months to contest. Quite apart from its reading of how the time bar works, FERC argues that it would have exercised its discretion to restrict Seminole's refund anyway on the ground that the co-op should have discovered the overcharges earlier. Seminole challenges FERC's decision to limit the refund period.

         Seminole's complaint to FERC alleged a second way that Florida Power was violating the tariff: Florida Power applied the rate of the highest applicable tier to the entirety of Seminole's imbalance, rather than apply each tier's rate to the portion of the imbalance that fell within each tier. To simplify what may seem at first blush a complicated matter, imagine that Seminole scheduled 100 megawatts of electricity to be delivered, but ended up using 111 megawatts, meaning that its customers used 11% more electricity than it had scheduled on their behalf. In that scenario, Florida Power would charge the highest tier's rate (125% of marginal cost) on all of Seminole's 11% deviation-a practice FERC refers to as non-apportionment.

         Non-apportionment is not allowed under Seminole's reading of the tariff. According to Seminole, in this example Florida Power must charge the first tier's rate (100% of marginal cost) on the first 1.5 percentage points of Seminole's deviation; the second tier's rate (110% of marginal cost) on the portion of Seminole's deviation that is greater than 1.5% up to 7.5%; and the third tier's rate (125% of marginal cost) only on the very last portion of Seminole's deviation, above 7.5% up to 11%. In Seminole's view, charges for energy imbalance service work like the tax code: you pay the highest rate only on that portion of your income that falls into the highest tax bracket, not on all of your income. FERC refers to this ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.