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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 8, 2004 Decided May 14, 2004
No. 03-1162
CONSUMERS ENERGY COMPANY,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
ONTARIO ENERGY TRADING INTERNATIONAL CORPORATION AND
INDEPENDENT ELECTRICITY MARKET OPERATOR,
INTERVENORS
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Raymond E. McQuillan argued the cause for petitioner.
On the briefs was Deborah A. Moss. Jon R. Robinson
entered an appearance.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Lona T. Perry, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on
the brief were Cynthia A. Marlette, General Counsel, and
Dennis Lane, Solicitor.
Matthew W.S. Estes was on the brief for intervenors.
Howard E. Shapiro and John J. Buchovecky entered appear-
ances.
Before: GINSBURG, Chief Judge, and RANDOLPH and
ROBERTS, Circuit Judges.
Opinion for the Court filed by Circuit Judge ROBERTS.
ROBERTS, Circuit Judge: It was a close thing, but Benedict
Arnold’s bold plan to capture Canada for the Revolution fell
short at the Battle of Quebec in early 1776. As a result, the
Federal Energy Regulatory Commission must now decide
when affiliates of Canadian utilities — utilities not subject to
FERC jurisdiction — may sell power at market-based rates
in the United States. In a purely domestic case, FERC
requires an applicant for market-based rates to show that it
and its affiliates do not have or have adequately mitigated
market power in generation and transmission, and cannot
erect other barriers to entry. An applicant with a transmis-
sion-owning affiliate must show that the affiliate has filed an
open access, non-discriminatory tariff for transmission ser-
vice. See Progress Power Marketing, Inc., 76 FERC ¶ 61,-
155, at 61,919 (1996).
FERC does not presume to tell foreign transmission-
owning utilities what tariffs they must file. If a marketing
affiliate of such a utility wants to sell power at market-based
rates in the United States, however, the utility must offer
transmission service comparable to that required of a utility
in the United States. Just as a domestic transmission-owning
utility must allow competitors of its marketing affiliate to use
its transmission services on a non-discriminatory basis to
compete with the marketing affiliate, so too a foreign trans-
mission-owning utility must allow companies that would com-
pete with its marketing affiliate to use its transmission ser-
vices to reach the United States market and compete on a
3
level playing field with its marketing affiliate. See Energy
Alliance P’ship, 73 FERC ¶ 61,019, at 61,030–31 (1995).
In this case, Ontario Energy Trading International Corpo-
ration (Ontario Energy) sought authority to sell power in the
United States at market-based rates pursuant to Section 205
of the Federal Power Act, 16 U.S.C. § 824d. Ontario Ener-
gy’s application was opposed by Consumers Energy Company
(Consumers), a public utility providing service in Michigan
and potentially facing competition from Ontario Energy
across the border. Consumers argued that the Ontario Inde-
pendent Electricity Market Operator (IMO) was an affiliate of
Ontario Energy and did not offer open access, non-
discriminatory transmission service comparable to that re-
quired of power companies in the United States. Specifically,
Consumers complained that the IMO did not offer transmis-
sion service from point A to point B at all, as a United States
utility would, but instead required companies seeking such
service to sell power into the system at point A and buy it
back out at point B. FERC nonetheless found the IMO
service comparable to that required of companies in the
United States, and granted Ontario Energy the requested
authority to sell power at market-based rates. See Ontario
Energy Trading Int’l Corp., 99 FERC ¶ 61,039 (Initial Or-
der), on reh’g, 100 FERC ¶ 61,345 (2002) (September 2002
Order), on reh’g, 103 FERC ¶ 61,044 (2003) (April 2003
Order). Finding that substantial evidence supports the Com-
mission’s decision and that the decision is otherwise reason-
able, we deny Consumers’ petition for review.
I. Background
In its landmark Order No. 888, FERC required public
utilities subject to its jurisdiction that own, control, or operate
transmission facilities to guarantee non-discriminatory trans-
mission service to all market participants. See Promoting
Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities;
Recovery of Stranded Costs by Public Utilities and Trans-
mitting Utilities, FERC Stats. & Regs. ¶ 31,036, at 31,635–36
4
(1996) (Order No. 888). To ensure non-discriminatory ser-
vice, the Commission required public utilities (1) to functional-
ly unbundle wholesale power services — separating genera-
tion, transmission, and ancillary services, id. at 31,654, and (2)
to file open access, non-discriminatory transmission tariffs, id.
at 31,635. See generally New York v. FERC, 535 U.S. 1, 11
(2002).
Foreign market participants may also obtain transmission
service through a public utility’s open access tariff. Id. at
31,689. Participants with foreign affiliates that own or con-
trol transmission facilities, however, may obtain open access
transmission only if those affiliates comply with tariff reci-
procity requirements. Promoting Wholesale Competition
Through Open Access Non-Discriminatory Transmission
Services by Public Utilities; Recovery of Stranded Costs by
Public Utilities and Transmitting Utilities, Order No. 888-A,
FERC Stats. & Regs. ¶ 31,048, at 30,290 (1997) (Order No.
888-A). Those reciprocity requirements mandate that the
foreign transmission-owning affiliate also provide open access,
non-discriminatory transmission service in the same manner
as a public utility in the United States. Id.
A. Restructuring the Ontario Energy Market
In 1997, Ontario Hydro, a government-owned utility servic-
ing the Province of Ontario, sought a stay of Order No. 888’s
reciprocity requirement. See Promoting Wholesale Competi-
tion Through Open Access Non-discriminatory Transmis-
sion Services by Public Utilities; Recovery of Stranded Costs
by Public Utilities and Transmitting Utilities, 79 FERC
¶ 61,182 (1997). The utility claimed that it would be irrepara-
bly harmed by the requirement because it could not allow
open access into Ontario without the approval of the Provin-
cial Government of Ontario. Id. at 61,866. The Commission
rejected the stay, Promoting Wholesale Competition Through
Open Access Non-discriminatory Transmission Services by
Public Utilities; Recovery of Stranded Costs by Public Utili-
ties and Transmitting Utilities, 79 FERC ¶ 61,367 (1997),
and the Province of Ontario elected to restructure its electric-
5
ity market in order to secure access to that of the United
States.
At that time, the provincial energy market was dominated
by Ontario Hydro, a vertically integrated utility. Ontario
Hydro generated most of the Province’s power, owned and
operated the bulk electricity transmission system, owned and
operated much of the distribution system, sold power at
wholesale rates to municipal utilities in urban areas, regulated
those municipalities’ retail rates, and sold electricity directly
to retail customers in rural and suburban areas. See Initial
Order, 99 FERC at 61,145.
To establish a competitive market, the Ontario Energy
Competition Act of 1998 unbundled the functions of power
generation, power transmission, and control of the bulk power
system. The Act separated those functions and transferred
them to three new entities: (1) Ontario Power Generation,
Inc. (OPG) owns and operates power generation facilities; (2)
Hydro One, Inc. owns and operates the transmission system
and portions of the distribution system; and (3) the IMO
operates the bulk power system and the wholesale electricity
market. Application of Ontario Energy Trading Int’l For
Order Approving Market-Based Tariff, at 3–4 (Ontario Ener-
gy Application). The Provincial Government holds all the
shares of both OPG and Hydro One, appointing the directors
of both. September 2002 Order, 100 FERC at 62,580. Ontar-
io Energy — an electric power marketing company that buys
and sells electricity, but itself owns no power generation or
transmission assets — is a wholly-owned subsidiary of OPG.
The Provincial Government also appoints the directors of the
IMO, a not-for-profit transmission and market operator.
Those directors may be removed only for cause. Id. at
62,581.
The IMO assumed operational control of Hydro One’s
transmission assets, and became responsible for establishing
and operating a provincial electricity market. See Ontario
Energy Application at 7–9. The Act required the IMO to
develop rules to open the market to competition on an open
access, non-discriminatory basis. Id. at 9. The IMO com-
6
plied, promulgating rules that created a bid-based electricity
market in which the cost of electricity is set by market
participants bidding to buy or offering to sell electricity. Id.
Much like a stock exchange, the IMO administers the market,
and is neither a buyer nor seller of electricity except when
required under emergency conditions to maintain system
reliability. See IMO Market Rules, Chapter 1, § 5.3.
The bid-based market administered by the IMO packages
power and transmission together as a single product. See
Brief of Ontario Energy Trading Int’l Corp., Docket No.
ER02-1021-000 (July 31, 2002), at 10–12 (Ontario Energy
FERC Br.). In the United States, most regional transmis-
sion organizations (RTOs) and independent system operators
(ISOs) treat power and transmission as two different prod-
ucts. Indeed, Order No. 888 requires RTOs and ISOs to
allow market participants to reserve transmission capacity on
their systems in advance of power purchases. See Order No.
888 at 31,938–39. In the United States, a power marketer
can purchase the right to transmit power from point A to
point B at a set time for a set price, apart from the purchase
of power itself. Not so in Ontario. Entities wishing to
transmit electricity through and out of Ontario, from point A
to point B, must sell power into the IMO market at point A to
enter the transmission system, and then buy power from the
market at point B to exit the system. Because this distinc-
tion is central to the comparability dispute before us, a more
detailed examination of the IMO market is in order.
B. The IMO Energy Market
The IMO operates a real-time electricity market, establish-
ing a uniform market-clearing price for all electricity bought
or sold within Ontario. That uniform price is calculated
based upon three factors: (1) the market price — matching
bids and offers; (2) the uniform uplift charge; and (3) trans-
mission service charges. See Ontario Energy FERC Br. at
10–12. The uniform uplift charge allocates the costs of
internal congestion management across the market. See id.
7
at 11–12.1 Transmission service charges recoup the costs of
operating the transmission system, and are regulated. Un-
der this system, purchases and sales can be made at any
location on the IMO system at the uniform market-clearing
price without regard to internal transmission limitations.
The IMO market uses the same system to facilitate imports
into and exports out of Ontario. The Ontario transmission
system is connected to adjacent regions’ transmission systems
through external interfaces called interties. Market partici-
pants import power into the Ontario transmission system by
selling electricity into the IMO market at one of the interties,
while those wishing to export power out of the Province do so
by purchasing electricity at an intertie adjacent to the desired
destination. Id. at 12. Congestion may occur at an intertie
when the imports offered or exports sought exceed the trans-
fer capability at that intertie. Unlike the situation with
respect to the internal congestion control system, the IMO
controls congestion at the interties through a market-based
approach.2 At each intertie, the IMO establishes an intertie
zone price (IZP) set at the level at which supply meets
1 Even though transmission service is packaged with the pur-
chase of electricity, the market price takes into account only the
demand for electricity, not the demand for transmission. The
market price, in effect, assumes that the transaction costs of
transmission demand are zero so that purchased electricity can be
transmitted immediately to meet real-time demand — a process
termed the ‘‘unconstrained dispatch solution.’’ The IMO market
actually uses a ‘‘constrained dispatch solution,’’ which allows some
units to transmit immediately while delaying others until transmis-
sion capacity is available. That process generates costs to reim-
burse the delayed units for any difference in price between the
transaction price and the actual price at the later time of transmis-
sion. Those reimbursements are the cost of internal congestion
management, recouped through the uniform uplift charge.
2 The internal congestion approach of scheduling power dis-
patches from generation facilities, see note 1 supra, is not viable
because the IMO cannot require generation facilities outside Ontar-
io to comply with dispatch schedules. Ontario Energy FERC Br.
at 12.
8
demand within the transfer capacity of that intertie. See id.
at 12–13. Put another way, the IZP clears congestion by
prioritizing competing transfers according to price so that the
most desired transfer clears first. See id. at 13.
Say a market participant wishes to export power from New
York into Ontario. That participant must offer to sell the
power into the IMO market. If the market-clearing price in
the IMO is $20, and the quantity of power offered at or below
$20 is equal to or less than the transfer capacity at the New
York-Ontario intertie, then there is no congestion and all
parties offering to sell power into Ontario for $20 or less will
receive the $20 market-clearing price. See id. In the same
scenario, if the quantity of imports offered exceeds the trans-
fer capacity at the intertie, then the IZP would fall below the
market-clearing price to reduce supply into the market — the
IZP falling until enough market participants cease making
offers to sell power into Ontario from New York.
Exporting power out of Ontario is accomplished in a similar
fashion by purchasing power at the market-clearing price at
an intertie adjacent to the desired destination. If the mar-
ket-clearing price is $20 and the demand for exports out of
Ontario at or above that price is equal to or less than the
transfer capacity of that intertie, then the transfer capacity
can accommodate the demand. See id. at 15. If the demand
exceeds the transfer capacity, the IZP rises above $20 to
reduce the demand, increasing until enough purchasers cease
bidding so that the transfer capacity can handle the remain-
ing bids.
A party wishing to wheel power through the Province must
engage in a combined import/export transaction. As ex-
plained, the IMO system packages transmission service with
the purchase of energy, so transmission service alone can be
neither reserved nor obtained in a separate transaction, as it
can in the United States. Market participants wishing to
transmit power, for example, from New York to Michigan
through Ontario must simultaneously sell power into the IMO
market at the New York-Ontario intertie and purchase power
out of the market at the Ontario-Michigan intertie. See id. at
9
16. Using the example above, if there is no congestion at
either intertie, then the wheeler would sell into the system at
the $20 market-clearing price and buy out of the system at
the $20 market-clearing price, resulting in an off-setting
transaction; the only cost would be an export fee. See id. If
there is congestion at either intertie, the cost would be the
export fee plus any difference between the IZP and the
market-clearing price at either intertie. Id.
Market participants can hedge the risk of congestion costs
at interties during wheeling transactions by purchasing some-
thing called financial transmission rights (FTRs). Id. at 17;
see also April 2003 Order, 103 FERC at 61,174. FTRs are
purely financial instruments that entitle the holder to pay-
ments equal to the difference between the Ontario market-
clearing price and an IZP. The IMO maintains a market in
FTRs, periodically auctioning FTRs that span durations of
either one month or one year. Ontario Energy FERC Br. at
17. Each FTR corresponds to a particular intertie; separate
FTRs must be purchased for imports and exports at each
intertie. Id. FTRs effectively guarantee the import or ex-
port of power at the uniform system-wide market-clearing
price, regardless of any IZP.
C. Procedural History
On February 14, 2002, Ontario Energy filed its application
with the Commission under Section 205 of the Federal Power
Act, 16 U.S.C. § 824d, seeking authority to sell energy,
capacity, and ancillary services, and to resell transmission
capacity, at market-based rates. Initial Order, 99 FERC at
61,145. Consumers filed a conditional protest to Ontario
Energy’s application, reserving the right to challenge the
application if the IMO failed to grant a transmission reserva-
tion allowing Consumers to wheel power through Ontario.
Motion to Intervene and Conditional Protest of Consumers
Energy Co. at 2–3. Consumers then went to the IMO and
asked for approval of a ‘‘firm 50 MW transmission reservation
for May 2002’’ to facilitate its procurement of electricity from
New York suppliers and transmission of that power through
Ontario to Michigan. Letter from Consumers to IMO (Mar.
10
6, 2002). The IMO denied the request, explaining that the
IMO system does not provide transmission reservations, but
that instead Consumers could perform an import/export
transaction to wheel power through the Province. Consum-
ers thereupon filed a supplemental protest to Ontario Ener-
gy’s application, claiming that ‘‘Ontario Energy possess[es]
transmission market power by virtue of its affiliation with TTT
the IMO, which is not mitigated by the provision of open-
access transmission service.’’ Supplemental Protest of Con-
sumers Energy Co. at 7.
In the Initial Order, the Commission concluded that Ontar-
io Energy’s application presented ‘‘no transmission market
power concerns,’’ finding that Ontario Energy does not own
or operate transmission facilities and is not an affiliate of any
transmission-owning public utilities. 99 FERC at 61,146–47.
The Commission accordingly granted the application. Id. at
61,147. Consumers sought rehearing, arguing that the IMO
and Ontario Energy were affiliated entities and that the IMO
did not offer open access transmission service on a non-
discriminatory basis comparable to the standards established
in Order No. 888. September 2002 Order, 100 FERC at
62,581 ¶ 12. This time the Commission agreed with Consum-
ers that Ontario Energy and the IMO were affiliated, but
denied the request for rehearing, finding that the ‘‘IMO
provides open access transmission service on a comparable,
non-discriminatory basis’’ in accordance with the principles of
Order No. 888. Id. ¶ 13.
Consumers again requested rehearing. See April 2003
Order, 103 FERC at 61,172. Having prevailed on the affilia-
tion issue, it argued that the IMO’s service was not compara-
ble to transmission service in the United States because the
IMO does not allow the reservation of transmission capacity.
According to Consumers, this inability to reserve transmis-
sion capacity prevents market participants from obtaining a
fixed price for transmission service, creating price uncertainty
for transactions through Ontario. Id. at 61,173. Pointing to
the fact that Ontario Energy could obtain firm transmission
service reservations at a fixed price from utilities in the
United States, Consumers argued that the IMO’s bid-based
11
market failed to satisfy the basic reciprocity requirements of
Order No. 888. See id.
The Commission again denied Consumers’ request for re-
hearing. The Commission noted that ‘‘Consumers concedes
TTT there is no evidence in this case suggesting that the IMO
operates its transmission system on a discriminatory basis,’’
and that the IMO’s governing statute prohibits such discrimi-
nation. Id. at 61,174 ¶ 9. Rejecting Consumers’ claims con-
cerning lack of comparability, the Commission found that
allegations of potential price increases caused by the IMO’s
bid-based system failed to support ‘‘a finding that the design
of the IMO’s transmission system, per se, unduly impedes
Consumers, or any of Ontario Energy’s other competitors,
from reaching United States loads.’’ Id. ¶ 10. To the con-
trary, evidence showed that at least 12 United States-based
power marketers had traded successfully in and out of the
IMO market. Id. The Commission concluded that even
though the IMO market does not offer the type of point-to-
point transmission service required under Order No. 888,
market participants can ‘‘obtain firm point-to-point service
through and out of Ontario at a price that is known in
advance (albeit through a process that involves both the
advance purchase of transmission rights and bidding to buy
and sell energy in the Ontario energy market)’’ — ‘‘pro-
vid[ing] open access transmission on a comparable, non-
discriminatory basis for wheeling through and out of TTT
Ontario.’’ Id. ¶ 13.
Consumers petitioned this court to review the April 2002,
September 2002, and April 2003 orders.
II. Analysis
1. This court reviews the award of market-based rate
authority to determine whether the Commission’s decision
was arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law. Louisiana Energy & Power
Auth. v. FERC, 141 F.3d 364, 366 (D.C. Cir. 1998). The
Commission’s factual findings are conclusive if supported by
substantial evidence. 16 U.S.C. § 825l(b).
12
The Federal Power Act requires that public utilities charge
‘‘just and reasonable’’ rates for the transmission or sale of
electric energy. Id. § 824d(a). In competitive markets,
‘‘FERC may rely upon market-based prices in lieu of cost-of-
service regulation to assure a ‘just and reasonable’ result.’’
Elizabethtown Gas Co. v. FERC, 10 F.3d 866, 870 (D.C. Cir.
1993). ‘‘[T]he Commission approves applications to sell elec-
tric energy at market-based rates only if the seller and its
affiliates do not have, or adequately have mitigated, market
power in the generation and transmission of such energy, and
cannot erect other barriers to entry by potential competi-
tors.’’ Louisiana Energy, 141 F.3d at 365 (footnote omitted);
accord Order No. 888 at 31,656.
‘‘To demonstrate the requisite absence or mitigation of
transmission market power, the Commission normally re-
quires a power marketer to show that a transmission-owning
utility affiliate has on file with the Commission an open access
transmission tariff for the provision of comparable services.’’
TransAlta Enters. Corp., 75 FERC ¶ 61,268, at 61,875 (1996);
accord Order No. 888 at 31,656–57. Order No. 888 mandated
that public utilities file open access transmission tariffs that
‘‘offer[ ] both network, load-based service and point-to-point,
contract-based service,’’ and established a pro forma tariff to
define the ‘‘non-price minimum terms and conditions of non-
discriminatory transmission’’ necessary for compliance. Or-
der No. 888 at 31,636. Under the pro forma tariff, utilities
must offer firm point-to-point transmission service — trans-
mission service ‘‘that is reserved and/or scheduled between
specified [p]oints of [r]eceipt and [d]elivery.’’ Id. at 31,931.
Such transmission service allows market participants to re-
serve transmission capacity to wheel power across different
transmission systems, ‘‘provid[ing] a means for wholesale
power sellers and buyers to obtain transmission services
necessary to compete in, or to reach, competitive markets.’’
Id. at 31,673.
As noted, the Commission does not require foreign utilities
to implement Order No. 888 pro forma tariffs. TransAlta, 75
FERC at 61,875 (‘‘[W]e have no direct authority to require
[u]tilities, over which we do not have jurisdiction, to file an
13
open access tariff.’’). The Commission is instead ‘‘amenable
to a variety of approaches’’ to show the absence or mitigation
of transmission market power by foreign utility affiliates of
power marketers, so long as the power marketer demon-
strates that ‘‘its transmission-owning utility affiliate offers
non-discriminatory access to its transmission system that can
be used by competitors of the power marketer to reach
United States markets.’’ Id. (citing Energy Alliance, 73
FERC at 61,030–31). The Commission considers this ques-
tion on a case-by-case basis. H.Q. Energy Servs. (U.S.) Inc.,
79 FERC ¶ 61,152, at 61,652 (1997).
2. The obvious difference between United States and On-
tario power markets — here, transmission and power can be
marketed separately; there, they must be bought and sold as
a package — provided Consumers with a ready basis for
arguing that the IMO ‘‘does not presently offer transmission
service that is reciprocal or comparable or non-discriminatory
relative to that provided in the United States.’’ Pet. Br. at
18. According to Consumers, the IMO system does not allow
the reservation of firm point-to-point transmission at a defi-
nite price, as required under Order No. 888. The system
instead subjects market participants who wheel power
through Ontario to uncertainty in pricing based upon poten-
tial congestion at interties. That uncertainty allegedly harms
Consumers in transactions involving wheeling energy from
New York to Michigan through Ontario’s transmission sys-
tem — when selling wholesale power in Michigan, any price
advantage gained by Consumers from purchasing wholesale
power in New York could be lost in transmission through
Ontario due to congestion costs at the interties. See id. at 23.
The Commission found, however, that because the IMO
allows market participants to hedge the risk of congestion
costs at interties through the purchase of FTRs, which ‘‘pro-
vide their holders with payments equal to the difference
between the applicable intertie zone price and the system-
wide price,’’ market participants seeking to wheel power
across Ontario are able to obtain a fixed price for a through
and out transaction such as the one at issue in Consumers’
petition — selling power into Ontario at the New York-
14
Ontario intertie and purchasing it back at the Ontario-
Michigan intertie. See April 2003 Order, 103 FERC at
61,174 ¶¶ 12, 13. Utilizing FTRs, market participants may
‘‘obtain firm point-to-point service through and out of Ontario
at a price that is known in advance.’’ Id. ¶ 13. Although the
IMO does not provide point-to-point transmission service in
the manner prescribed by Order No. 888, the Commission
reasonably concluded that the IMO provides comparable
transmission service. And that service is non-discriminatory:
any entity desiring to transmit power from point A to point B
on the IMO system must engage in the same sell-in/buy-out
sort of transaction. Affidavit of Cliff W. Hamal at ¶ 18.
Consumers argues that the Commission disregarded sub-
stantial factual evidence showing that the IMO system fails to
mitigate the generation market power of OPG, the parent of
Ontario Energy. ‘‘OPG’s generation market dominance in
the IMO service area creates the potential for OPG to extract
significant revenues by causing constraints and congestion-
related price differentials at various export [interties].’’ Pet.
Br. at 23–24. Consumers argues that OPG could, for exam-
ple, flood the Ontario-Michigan intertie with export electrici-
ty, purposefully driving up the price to wheel power through
Ontario to Michigan. By thereby increasing the cost of
transmission, OPG could undercut Consumers’ ability to reap
the advantage of transporting cheaper New York power to
Michigan through Ontario. OPG thus could establish a barri-
er to market participants wishing to enter the Michigan
market — or any other market with an adjacent intertie to
Ontario.
The Commission concluded that Consumers’ claims of po-
tential price manipulation are ‘‘speculative, at best,’’ April
2003 Order, 103 FERC at 61,174 n.10, and we agree. In its
second application for rehearing, Consumers merely advanced
bare allegations of potential price increases at the interties:
‘‘Consumers allege[d] that the bid-based market operated by
the IMO may require Consumers to incur higher (unspeci-
fied) costs to reach the Michigan market, in certain (unspeci-
fied) instances when TTT the IMO TTT [must] address a
market constraint on its system,’’ id. ¶ 9. Consumers provid-
15
ed no evidence tying OPG’s market share to increased trans-
mission prices or any episodes of discriminatory conduct. Id.
at n.10.
On the other hand, substantial record evidence undermines
Consumers’ abstract contentions. First, the Commission
found that since May 1, 2002 — the commencement of the
IMO-administered market in Ontario — 12 United States-
based power marketers had traded successfully through and
out of the Ontario transmission system at the Ontario-
Michigan intertie. Id. ¶ 10. Next, even assuming that OPG
could manipulate prices by causing congestion at a particular
intertie and raising the IZP, a market participant could
negate any price impact by purchasing FTRs. Finally, the
Commission found that OPG has no generating market power
outside Ontario. See Initial Order, 99 FERC at 61,146.
OPG thus would be cutting off its nose to spite its face by
congesting an intertie out of Ontario: that would increase the
price to export electricity, making it more difficult for OPG to
compete in the United States, where it would be selling more
expensive electricity without the benefit of market power.
We accordingly conclude that the Commission was reasonable
in finding ‘‘no evidence TTT that Consumers has [been] or will
be impeded from reaching Michigan markets,’’ April 2003
Order, 103 FERC at 61,174 ¶ 10.
Finally, Consumers broadly argues that simply because the
IMO service is different from that required under Order No.
888, it should not have been accepted by FERC: ‘‘Either the
Commission believes its standards of market power mitiga-
tion and open access transmission service are the right stan-
dards, or it doesn’t[;] it should not matter in that context that
the affected entities at issue are Canadian.’’ Pet. Reply Br.
at 10. We think it reasonable for the Commission to acknowl-
edge the reality of an international border in deciding wheth-
er to insist on compliance with the minutiae of its regulatory
requirements; it was certainly open to FERC to decide that a
flexible approach requiring comparability on a case-by-case
basis rather than letter-for-letter compliance across-the-board
better accommodates jurisdictional limits and promotion of
competitive markets for United States loads. See Energy
Alliance, 73 FERC at 61,030 (FERC interest in imposing
16
comparability requirements on foreign affiliates is to promote
competition to serve United States loads).
3. Consumers also argues that the IMO does not provide
comparable service because it fails the particular indepen-
dence requirements set forth in the Commission’s Order No.
2000, 65 Fed. Reg. 809 (Jan. 6, 2000). Our jurisdiction is
limited to objections that have been raised before the Com-
mission in an application for rehearing. See 16 U.S.C.
§ 825l(b) (‘‘No objection to the order of the Commission shall
be considered by the court unless such objection shall have
been urged before the Commission in the application for
rehearing’’). Consumers asserted an independence argument
based on Order No. 2000 to challenge the Commission’s initial
findings on affiliation, not comparability. See Brief of Con-
sumers Energy Co., Docket No. ER02-1021-001 (July 30,
2002), at 5. Consumers won on affiliation; FERC would not
even have proceeded to address comparability in the absence
of such a ruling. Consumers did not separately argue below
that the IMO’s lack of independence affected its ability to
afford comparable transmission service, and such an argu-
ment is distinct from a contention that entities are affiliated
so that the Commission must consider comparability. The
Commission, therefore, never had the opportunity to address
the particular argument that Consumers now attempts to
raise, and we accordingly lack jurisdiction to consider it. See
City of Orrville v. FERC, 147 F.3d 979, 990 (D.C. Cir. 1998).
* * *
The petition for review is denied.