United States Court of Appeals, District of Columbia Circuit
AMEREN SERVICES COMPANY, AS AGENT FOR UNION ELECTRIC COMPANY D/B/A AMEREN MISSOURI, AMEREN ILLINOIS COMPANY D/B/A AMEREN ILLINOIS AND AMEREN TRANSMISSION COMPANY OF ILLINOIS, ET AL., PETITIONERS
FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT MIDCONTINENT INDEPENDENT SYSTEM OPERATOR, INC., ET AL., INTERVENORS
November 8, 2017
Petition for Review of Orders of the Federal Energy
Michael J. Thompson argued the cause for petitioners MISO
Transmission Owners and intervenor Midcontinent Independent
System Operator, Inc. On the joint briefs were Jim Holsclaw,
Matthew R. Dorsett, Christopher D. Supino, Brooksany
Barrowes, and Marcia Hook. Wendy N. Reed and Matthew J.
Binette entered appearances.
Nicholas M. Gladd, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on the
briefs were Robert H. Solomon, Solicitor, and Elizabeth E.
Rylander, Attorney. Beth G. Pacella, Attorney, entered an
Before: Tatel, Griffith and Srinivasan, Circuit Judges.
SRINIVASAN CIRCUIT JUDGE.
2011, the Federal Energy Regulatory Commission issued Order
1000, which aims, among other things, to encourage the
development of "interregional" electricity
transmission projects-projects spanning more than one
geographic region. The interregional component of Order 1000
rested on the belief that certain interregional projects
might meet the needs of transmission providers and customers
more efficiently and effectively than regional projects, but
that prevailing incentives and coordination mechanisms did
not adequately encourage regional transmission providers to
pursue interregional projects.
end, Order 1000 calls for regional providers to jointly
evaluate interregional projects. As part of that process,
providers must adopt cost-allocation methodologies for
dividing up the costs of a joint project. The primary goal of
Order 1000's cost-allocation provisions is to assure that
the relative costs borne by a particular transmission
provider be commensurate with the relative benefits gained by
the provider from the project.
case concerns one transmission provider's proposed
interregional cost-allocation methodology. Midcontinent
Independent System Operator (MISO), an organization that
operates transmission facilities on behalf of providers
across fifteen states in the Midwest, proposed to conduct
cost allocation for interregional projects using what's
called a cost-avoidance method. The share of costs allocated
to MISO under that method corresponds to the benefits to MISO
of its regional projects that would be displaced by the
interregional project. In identifying which regional projects
should be regarded as displaced by an interregional project,
MISO proposed to exclude any project that had already been
approved by the MISO board.
Commission rejected MISO's cost-allocation approach. In
the Commission's view, excluding approved regional
projects from the analysis would result in a failure to
account for the full potential benefits of an interregional
project. The transmission providers that make up MISO filed a
petition for review in this court. We deny the petition.
transmission in the United States is largely managed by
regional transmission organizations (RTOs) and independent
system operators (ISOs). Those entities operate the electric
transmission systems for a geographic region on behalf of the
local utilities (known as transmission providers) in a
region. MISO operates transmission facilities in the
midwestern United States on behalf of more than two dozen
transmission providers, petitioners here.
past several decades, the Federal Energy Regulatory
Commission, acting under its authority to fix just and
reasonable rates under section 206 of the Federal Power Act
has issued orders requiring RTOs and ISOs to adopt practices
meant to encourage competition in the market for electricity.
E.g., Transmission Planning and Cost Allocation
by Transmission Owning and Operating Public Utilities,
Order No. 1000, 136 FERC ¶ 61, 051 at PP 1-5 (2011).
Order 1000, among the most recent of those orders, requires
ISOs and RTOs to consider and evaluate interregional
projects-projects embracing more than one region-and set
certain parameters for allocating the costs of those
interregional projects among providers. Id. The
Commission's aim is to induce the construction of
interregional projects "if such facilities address the
needs of the transmission planning regions more efficiently
or cost-effectively" than regional projects.
Id. at 111.
1000's cost-allocation provisions seek to further that
goal. Establishing both a mechanism and set of principles for
cost allocation, Order 1000 calls for neighboring ISOs and
RTOs to reach agreements on cost allocation for interregional
projects that avoid free rider problems, that improve
transparency with respect to the costs of interregional
projects, and that otherwise align regional and interregional
planning processes. The guiding principle behind Order
1000's cost-allocation provisions is that the costs of
interregional projects should be "allocated in a way
that is roughly commensurate with benefits."
Id. at 178.
court considered a petition for review raising a variety of
challenges to Order 1000. S.C. Pub. Serv. Authority v.
FERC, 762 F.3d 41 (D.C. Cir. 2014) (per ...