A federal court ruled today that the Federal Regulatory Energy Commission failed to adequately consider all evidence before granting a grid operator access to a competitor’s transmission lines.
The U.S. Court of Appeals for the District of Columbia Circuit said FERC’s decision to allow Entergy Corp.’s Arkansas arm to use Southwest Power Pool Inc.’s transmission lines in order to join the Midcontinent Independent System Operator’s network was arbitrary and capricious.
“We find that the commission failed to provide a reasoned explanation for its decision,” wrote Senior Judge Stephen Williams. “It leapt to an interpretation of one item of evidence without explaining its implicit rejection of alternative interpretations.”
The case is rooted in Entergy’s May 2011 announcement that it plans to join MISO’s network.
MISO currently has members in 15 predominantly Midwestern states and a Canadian province. New Orleans-based Entergy, the country’s second-largest nuclear generator, is scheduled to connect its Arkansas arm to the MISO network by the end of the year.
Entergy’s transmission lines are currently connected to both MISO and SPP’s networks. In order to fully absorb Entergy’s electricity – which is based in Arkansas, Mississippi, Louisiana and Texas – MISO proposed transferring some of the electricity over SPP’s lines.
SPP objected and said the proposal violated a joint operating agreement that allowed MISO to use its lines if it was moving electricity from a third party.
Once MISO absorbs Entergy, SPP argued, the utility would no longer be a third party.
FERC, however, ruled in July 2011 that MISO could use SPP’s lines (E&ENews PM, July 5, 2011).
At oral arguments in October, SPP told the three-judge D.C. Circuit panel that FERC did not consider evidence that supported SPP’s interpretation of the joint operating agreement.
FERC “refused to consider any of the evidence of the other point,” said attorney Barry Spector, arguing on SPP’s behalf. “It can’t just consider one party’s evidence and ignore the other party’s” (Greenwire, Oct. 18).
The D.C. Circuit unanimously agreed with that argument today, vacating FERC’s order and sending it back to the commission to reconsider
“Given the episode’s apparent complete consistency with both parties’ competing views, we are at a loss to see why FERC regarded the episode as decisive in favor of MISO,” wrote Williams, a Republican appointee. “Its unexplained leap from neutral evidence to a decision in favor of one side rendered its order arbitrary and capricious.”
Judges Thomas Griffith, another Republican appointee, and David Tatel, a Democratic appointee, joined Williams on the panel.
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