United States Court of Appeals, District of Columbia Circuit
December 2, 2016
Petition for Review of Orders of the Federal Energy
Michael R. Fontham argued the cause for petitioner. With him
on the briefs were Paul L. Zimmering and Noel J. Darce.
T. Perry, Deputy Solicitor, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on the
brief was Robert H. Solomon, Solicitor.
Clifford M. Naeve argued the cause for intervenors supporting
respondent. On the brief were John S. Moot, Matthew W.S.
Estes, Gregory W. Camet, Glen Ortman, Dennis Lane, and Paul
Randolph Hightower. Adrienne E. Clair entered an appearance.
Before: Rogers, Kavanaugh and Wilkins, Circuit Judges.
WILKINS, CIRCUIT JUDGE
case continues a lengthy saga of litigation dealing with the
allocation of production costs among Entergy
Corporation's utility operating companies
("Operating Companies"). During the period relevant
here, Entergy sold electricity,
both wholesale and retail, in Arkansas, Louisiana,
Mississippi, and Texas, through five Operating Companies
under the framework provided by the Entergy System Agreement.
The System Agreement sets forth a rate schedule administered
by the Federal Energy Regulatory Commission
("FERC") that allocates certain costs among the
Operating Companies and seeks to maintain rough equalization
of those costs among them. In Louisiana Public Service
Commission v. FERC ("LPSC"), 522 F.3d
378 (D.C. Cir. 2008), we affirmed FERC's imposition of a
so-called "bandwidth" remedy ("Bandwidth
Remedy" or "Remedy") to address unjust
allocations of production costs among the Operating Companies
and return them to "rough equalization." We
remanded to FERC, however, to address, among other things,
its decision to delay the effective date of the Remedy until
January 2006 when FERC had decided the Remedy was necessary
in June 2005. The Louisiana Public Service Commission
("LPSC") petitions this Court for review of
FERC's decision on remand.
described the relevant background at length in LPSC
and we recount it only briefly here. In Opinion No. 480,
issued on June 1, 2005, FERC determined that cost allocations
under the System Agreement were unjust and unreasonable, and
announced the Bandwidth Remedy to cure the disparities going
forward. See La. Pub. Serv. Comm'n v. Entergy Servs.,
Inc. et al., 111 F.E.R.C. ¶ 61, 311 (2005)
("Op. No. 480"), on reh'g, 113
F.E.R.C. ¶ 61, 282 (2005) ("Op. No.
480-A"). The Remedy provides that when an
Operating Company's production costs deviate more than 11
percent above or below the Entergy System's average on an
annual basis,  the Operating
Companies with the lower costs will make payments
("Bandwidth Payments" or "Payments") to
the ones with higher costs such that their overall costs
return to rough equalization. Op. No. 480, 111 F.E.R.C.
¶ 61, 311, at 62, 372. At the outset, FERC ordered that
the Remedy be implemented prospectively and declared it would
be "effective" in 2006. Id. at 62, 373.
FERC later clarified that the first of any Bandwidth Payments
would be made in 2007, once a full year of 2006 cost data was
available. Op. No. 480-A, 113 F.E.R.C. ¶ 61, 282, at 62,
140. Such data is reported in Entergy's annual Form 1
filed with FERC each April, covering the previous calendar
envisioned the first set of Bandwidth Payments would be
calculated and exchanged as follows: in April 2007, Entergy
would report the production costs of each of the Operating
Companies for the 2006 calendar year in its Form 1. Based on
that data, Entergy would use a formula to determine whether
any Operating Company's production costs exceeded the
established bandwidth. If so, Bandwidth Payments based on
2006 data would be exchanged thereafter, but no later than
December 2007, to eliminate any severe disparities. The
process would repeat the following year, with Entergy
determining in 2008 to what extent Bandwidth Payments should
be exchanged based on 2007 production cost data. Putting
aside certain disputes about the formula used, LPSC
acknowledges that Payments were made in 2007 based on 2006
disparities, and again in 2008 based on 2007 disparities.
LPSC, we held that FERC's "remedial
choice" of the Bandwidth Remedy was a lawful way to
return the Entergy System to rough equalization of its
production costs. 522 F.3d at 391. But we remanded to FERC to
address certain issues with its implementation. Of particular
relevance here, we determined that FERC would need to explain
its decision to delay implementation of the Bandwidth Remedy
to a later date - i.e., making it
"effective" January 1, 2006 with Payments
commencing in 2007 - when it found that as of June 1, 2005,
the cost allocations under the System Agreement were unjust
and unreasonable. See id. at 400.
remand, FERC advanced the "effective date" of the
Bandwidth Remedy from January 1, 2006 up to June 1, 2005, and
ordered that Bandwidth Payments be exchanged based on
production cost disparities that occurred in the June -
December 2005 period. See La. Pub. Serv. Comm'n v.
Entergy Servs., Inc. et al., 137 F.E.R.C. ¶ 61, 047
(2011) ("Order on Remand"); La. Pub. Serv.
Comm'n v. Entergy Servs., Inc. et al., 146 F.E.R.C.
¶ 61, 152 (2014) ("Reh'g Order"). FERC
explained that although the agency initially contemplated
that the Remedy would apply to cost data on an annual basis,
it made an exception for the 7-month period now lodged
between the old and new "effective" dates of the
Remedy - i.e., the period from June 1, 2005 through
December 31, 2005. Reh'g Order, 146 F.E.R.C. ¶ 61,
152, at 61, 624-25. It ordered the Remedy to be applied to
that period. Id. at 61, 625-26.
instant case, LPSC is satisfied with FERC's decision that
the Remedy should begin as of June 1, 2005, but it challenges
the way in which the Remedy has been implemented.
Specifically, LPSC claims that FERC neglected to provide a
remedy for a portion of the post-2005 period and that FERC
engaged in unlawful retroactive ...