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Utility Workers Union of America Local 464 and Robert Clark v. Federal Energy Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

July 24, 2018

Utility Workers Union of America Local 464 and Robert Clark, Petitioners
v.
Federal Energy Regulatory Commission, Respondent CPV Towantic, LLC and New England Power Generators Association, Inc., Intervenors

          Argued February 9, 2018

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

          Daniel J. Sponseller argued the cause and filed the briefs for petitioners.

          Ross R. Fulton, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. On the brief were David L. Morenoff, General Counsel, Robert H. Solomon, Solicitor, and Nicholas M. Gladd, Attorney.

          Before: Rogers, Millett and Pillard, Circuit Judges.

          OPINION

          PILLARD CIRCUIT JUDGE

         Petitioners challenge the failure of the Federal Energy Regulatory Commission (FERC or Commission) to account for the effect on electricity prices of the permanent retirement of the Brayton Point Power Station, a coal-fired electric plant in Somerset, Massachusetts. Brayton Point's owners announced the closure just before the New England regional independent system operator ran its eighth annual forward capacity auction (FCA 8)-too late for other wholesale electricity suppliers to participate in the auction and pick up the slack. The resulting constricted supply contributed to a spike in the auction clearing price, to the benefit of the owner's other plants and to the detriment of retail electricity customers. Petitioners and others challenged the closure before the Commission as an attempt to manipulate the results of FCA 8. See 16 U.S.C. § 824v; 18 C.F.R. § 1c.2. After the Commission deadlocked and the FCA 8 auction results took effect by operation of law, consumer advocates sought our review. But, in the absence of final agency action, we lacked jurisdiction to consider that petition. See Public Citizen, Inc. v. FERC, 839 F.3d 1165 (D.C. Cir. 2016).

         Meanwhile, in two later proceedings, petitioners asked FERC to correct for what they assert were effects of Brayton Point's illegal closure on the next two annual forward capacity auctions (FCA 9 and FCA 10). FERC denied the petitions and approved the FCA 9 and FCA 10 results as just and reasonable because "the record [was] devoid of any evidence" that the claimed manipulation in the earlier cycle affected them. ISO New England, Inc., 151 FERC ¶ 61, 226, 2015 WL 3810715, at *5-6 (2015); ISO New England, Inc., 155 FERC ¶ 61, 273, 2016 WL 3439781, at *10-11 (2016). Because no record evidence establishes a causal link between the claimed manipulative closure of Brayton Point and the clearing prices of FCA 9 and FCA 10 that FERC approved, we hold that petitioners lack standing to challenge FERC's acceptance of those results.

         I.

         Petitioners here are the Utility Workers Union of America Local 464 (Union) and its President, Robert Clark. Both Clark and the Union's members are retail electricity customers in New England who claim that high clearing prices for future capacity to generate electricity in FCA 9 and FCA 10 increased the cost of their retail electricity service. They challenge FERC's orders approving the results of those wholesale auctions as just and reasonable under Section 205 of the Federal Power Act (FPA). See 16 U.S.C. § 824d. They contend that FERC's determination was contrary to the FPA, and unsupported by substantial evidence or reasoned decision making in violation of the Administrative Procedure Act. See id.; 5 U.S.C. § 706(2)(A), (E); see also 16 U.S.C. § 825l(b).

         Petitioners stake their injury on what they claim were inflated capacity prices. Wholesale obligations to stand ready to generate electricity during a specified period if needed- contracts for future "capacity"-are locked in by regional forward capacity auctions held more than three years ahead of time. See generally New England Power Generators Ass'n v. FERC, 881 F.3d 202, 205-06 (D.C. Cir. 2018) (describing forward capacity auctions). For example, FCA 8 occurred in February 2014 and determined the capacity supply obligations generators would assume for one year, beginning in June 2017. That three-year lead time exists to "provide for a planning period for new entry and allow potential new capacity to compete in the auctions." Maine Pub. Utils. Comm'n v. FERC, 520 F.3d 464, 469 (D.C. Cir. 2008) (quoting Devon Power, LLC, 115 FERC ¶ 61, 340 at 62, 306 (2006)).

         The rules governing these auctions are complex. See generally ISO-NE Tariff § III.13; Joint App'x (J.A.) 407-41. They provide for simultaneous auctions both for the entire regional system and for various subregions. During the relevant timeframe, the rules allowed a generator to "retire" permanently from the capacity market, excluding it from all future auctions. The rules also included an "administrative pricing" provision that could override auction results if an auction proved insufficiently competitive. In times of "insufficient competition," the Tariff also permitted the Commission to approve higher capacity clearing prices for new entrants to ensure that capacity needs are met. J.A. 38.

         The eighth forward capacity auction for the New England power pool, run in February 2014, yielded much higher prices than had the first seven. See Public Citizen, 839 F.3d at 1168; Markets: Results of the Annual Forward Capacity Auctions, ISO New England, https://iso-ne.com/about/key-stats/markets (last visited July 12, 2018). Market administrators blamed an "abrupt change in the supply-demand balance," caused in large part by a cluster of generators that retired "[w]ell after the deadline for seeking to qualify new resources to participate." Stephen J. Rourke, ISO New England, Inc. Forward Capacity Auction Results Filing, Attachment B at 7-8 (Feb. 28, 2014) (J.A. 35-36). The largest of them, accounting for more than half the retiring capacity, was Brayton Point.

         When the market administrator sought FERC's approval of the FCA 8 results, petitioners and others protested. They contended that Brayton Point's owners withdrew the plant's capacity too late for the market to attract new suppliers, thereby raising the FCA 8 clearing price to inflate payments to the owners' other generators, and that those actions constituted illegal market manipulation. See Mot. to Intervene and Protest of UWUA Local 464 and Robert Clark, In re: ISO-NE Eighth Forward Capacity Auction Results Filing, FERC Dkt. No. ER 14-1409, at 5-8 (Apr. 15, 2014) (UWUA FCA 8 Protest); 16 U.S.C. § 824v; 18 C.F.R. § 1c.2. Petitioners offered evidence to show ...


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