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Kansas Corporation Commission v. Federal Energy Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

February 6, 2018

Kansas Corporation Commission, Petitioner
Federal Energy Regulatory Commission, Respondent South Central MCN LLC, et al., Intervenors

          Argued November 20, 2017

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

          Jason T. Gray argued the cause for the petitioner. Kathleen L. Mazure was with him on brief.

          Anand R. Viswanathan, Attorney, Federal Energy Regulatory Commission, argued the cause for the respondent. Robert H. Solomon, Solicitor, and Susanna Y. Chu, Attorney, were with him on brief. Lona T. Perry, Attorney, entered an appearance.

          Steven J. Ross argued the cause for the intervenors. Shaun M. Boedicker, Michael F. McBride, William L. Massey, Mark L. Perlis and Kevin F. King were with him on brief

          Before: Henderson and Srinivasan, Circuit Judges, and Ginsburg, Senior Circuit Judge.



         Petitioner Kansas Corporation Commission (KCC), a Kansas regulatory body that oversees Kansas public utilities, asserts that the Federal Energy Regulatory Commission (FERC) acted unlawfully by approving formula rates-which help determine the electric rates charged by public utilities to consumers in FERC jurisdictions-for future public utilities to use in operating electric transmission facilities. KCC argues that FERC cannot determine, as it must under the Federal Power Act, 16 U.S.C. §§ 792 et seq., that the formula rates for such not-yet-existing entities to implement at some point in the future are "just and reasonable, " id. § 824d(a). By that same argument, however, KCC has not suffered an injury in fact sufficient to establish standing. A harm that will not occur unless a series of contingencies occurs at some unknown future time is not concrete, particularized, actual and imminent. Accordingly, we dismiss KCC's petitions for review.

         I. Background

         FERC regulates the rates of public utilities engaged in the wholesale transmission of electric energy in interstate commerce. 16 U.S.C. § 824(a), (e). FERC must ensure, under section 205 of the Federal Power Act, that public utilities' rates are "just and reasonable." Id. § 824d(a) ("All rates and charges made, demanded, or received by any public utility for or in connection with the transmission or sale of electric energy . . . shall be just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful."). To do so, "every public utility shall file with" FERC, "[u]nder such rules and regulations as [FERC] may prescribe . . . and in such form as [FERC] may designate, " "schedules showing all rates and charges for any transmission or sale" of electricity. Id. § 824d(c). Section 206 of the Federal Power Act allows FERC-on its own initiative or upon a third-party complaint- to adjust previously-approved rates if they are no longer just and reasonable. Id. § 824e(a) ("Whenever [FERC], after a hearing held upon its own motion or upon complaint, shall find that any rate . . . is unjust, unreasonable, unduly discriminatory or preferential, [FERC] shall determine that just and reasonable rate . . . and shall fix the same by order.").

         FERC encourages public utilities to participate in regional processes that allocate the costs of new energy transmission facilities on a region-wide basis. See S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41, 49-53 (D.C. Cir. 2014) (providing overview of electric industry). The Southwest Power Pool (SPP) is a FERC-regulated Regional Transmission Organization that currently provides electricity to parts of fourteen states[1] on behalf of member public utilities. The SPP uses a selection process by which incumbent and nonincumbent utilities bid for the right to develop transmission projects within the SPP footprint.

         The SPP recovers transmission rates on behalf of utilities operating transmission facilities in the SPP's region through its FERC-jurisdictional tariff. Part of the SPP's tariff is the facility's formula rate. A formula rate "specifies the cost components that form the basis of the rates a utility charges its customers" in a "fixed, predictable nature, " which allows utilities to recover costs that "fluctuate over time" and prevents them from using "excessive discretion in determining the ultimate amounts charged to customers." Pub. Utils. Comm'n of Cal. v. FERC, 254 F.3d 250, 254 (D.C. Cir. 2001) (internal quotation omitted). KCC's petitions involve two FERC orders approving formula rates for future utilities that may seek to develop transmission facilities in the SPP's region.

         Transource Energy, LLC is a parent company that "serves as the holding company for transmission development-focused subsidiaries" nationwide. Joint Appendix (JA) 25. Transource Energy wanted to develop electric transmission facilities in the SPP's regional footprint. Because of statutory and regulatory differences about "public utility governance and the issuance of securities" among the various states in the SPP, Transource Energy wanted to create state-specific subsidiaries which would then submit state-specific bids for SPP facilities. JA 17. Transource Energy formed Transource Kansas, a wholly owned subsidiary, to compete for Kansas-based transmission projects. Transource Energy also anticipates creating more state-specific subsidiaries in SPP states (e.g., Transource Arkansas) that will be "formally established as legal entities at the time Transource Energy submits its bid to develop a [transmission facility] within the corresponding state in the SPP footprint." JA 25.

         Transource Kansas wanted to get a formula rate approved before it bid for SPP transmission facilities. Without advance approval of the formula rate, it would be unable to competitively bid for two reasons. First, the SPP evaluates bids in part on a transmission facility's charges, which are based in part on the formula rate; without an approved formula rate, Transource Kansas would be at a competitive disadvantage compared with other facilities that did have approved formula rates. Second, a utility has 180 days to bid for a transmission facility but cannot obtain FERC ...

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