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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 15, 2005 Decided April 15, 2005
No. 04-1111
MICHIGAN PUBLIC POWER AGENCY AND
MICHIGAN SOUTH CENTRAL POWER AGENCY,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC,
INTERVENOR
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Alan I. Robbins argued the cause and filed the briefs for
petitioners.
Robert H. Solomon, Deputy Solicitor, Federal Energy
Regulatory Commission, argued the cause for respondent. With
him on the brief were Cynthia A. Marlette, General Counsel, and
2
Dennis Lane, Solicitor.
Before: SENTELLE, HENDERSON and ROGERS, Circuit
Judges.
Opinion for the Court filed by Circuit Judge ROGERS.
Concurring opinion filed by Circuit Judge HENDERSON.
ROGERS, Circuit Judge: Michigan Public Power Agency
and Michigan South Central Power Agency (collectively
“Michigan Agencies”) petition for review of two orders of the
Federal Energy Regulatory Commission ruling that Michigan
Electric Transmission Company (“METC”) could pass through
to the Michigan Agencies a share of the annual charges that the
Commission had assessed directly to the Midwest Independent
Transmission System Operator, Inc. (“MISO”) and that, in turn,
had been passed through to METC. The Michigan Agencies
contend that the Commission acted beyond its statutory
authority when it approved an amendment to their Transmission
Ownership and Operating Agreements (“Operating
Agreements”) allowing METC to pass through annual charges
to them, and that the Commission failed to engage in reasoned
decisionmaking when, for the first time, it did not distinguish
between the transmission that the Michigan Agencies take
pursuant to their ownership interests and the transmission that
they take as tariff customers. While we find no merit to the
Michigan Agencies’ contention that the Commission lacked
authority to allow the pass-through of annual charges to them,
because the Commission failed to provide an adequate
explanation for its apparent departure from past practice, we
grant the petition for review and remand the case to the
Commission for further explanation.
I.
3
The Commission has a nearly twenty-year history of
assessing annual charges directly to public utilities. As the court
recently noted, the Commission is “[o]bligated by statute to
recoup its costs from industries it regulates.” Midwest Indep.
Transmission Sys. Operator, Inc. v. FERC (“MISO II”), 388
F.3d 903, 905 (D.C. Cir. 2004). In the Omnibus Budget
Reconciliation Act of 1986, Congress required the Commission
to “assess and collect fees and annual charges in any fiscal year
in amounts equal to all of the costs incurred by the Commission
in that fiscal year.” 42 U.S.C. § 7178(a)(1) (2000). According
to the Commission, it “is required to collect not only all its
direct costs but also all its indirect expenses such as hearing
costs and indirect personnel costs.” Revision of Annual Charges
Assessed to Public Utilities, Order No. 641, FERC Stats. &
Regs. ¶ 31,109, at 31,841 n.4, 65 Fed. Reg. 65,757, 65,757
(Nov. 2, 2000). These annual charges, however, may be directly
assessed only to public utilities. See 16 U.S.C. § 824(f) (2000);
18 C.F.R. § 382.201 (2004).
The Commission initially calculated annual charges with
respect to electricity regulation based on both a public utility’s
transmission and wholesale sales in interstate commerce. See
Annual Charges Under the Omnibus Budget Reconciliation Act
of 1986, Order No. 472, FERC Stats. & Regs. ¶ 30,746, 52 Fed.
Reg. 21,263 (June 5, 1987). In 2000, however, the Commission
altered its methodology for calculating annual charges in Order
No. 641 to consider only the transmission of electricity in
interstate commerce by public utilities. See Order No. 641,
FERC Stats. & Regs. ¶ 31,109, 65 Fed. Reg. 65,757 (Nov. 2,
2000) (codified at 18 C.F.R. § 382.201). See generally MISO II,
388 F.3d at 906-08.
The Commission’s methodological shift in calculating
annual charges was motivated in large part by the sweeping
changes in the electricity industry brought about by Order No.
4
888, FERC Stats. & Regs. ¶ 31,036, at 31,654, 61 Fed. Reg.
24,540, 21,551 (May 10, 1996), and related orders that, among
other things, required the functional unbundling of transmission
and generation services, required public utilities’ transmission
facilities to guarantee nondiscriminatory access for all market
participants, and encouraged utilities to place transmission
assets under the control of umbrella entities called “regional
transmission organizations” (“RTOs”) or “independent system
operators” (“ISOs”). See generally MISO II, 388 F.3d at 906;
Midwest ISO Transmission Owners v. FERC (“MISO I”), 373
F.3d 1361, 1363-65 (D.C. Cir. 2004). Regarding the last feature,
the Commission envisioned that an ISO, like MISO, “would
assume operational control — but not ownership — of the
transmission facilities owned by its member utilities, thereby
‘separat[ing] operation of the transmission grid and access to it
from economic interests in generation.’” MISO I, 373 F.3d at
1364 (quoting Order No. 888, FERC Stats. & Regs. ¶ 31,036, at
31,654, 61 Fed. Reg. at 21,551).
Under Order No. 641, the Commission assesses annual
charges to each public utility that provides transmission service.
Order No. 641, FERC Stats. & Regs. ¶ 31,109, at 31,855, 65
Fed. Reg. at 65,758. Specifically, Order No. 641 states:
If an ISO or RTO public utility has taken over from
individual public utilities the function of providing
transmission service and has, accordingly, a tariff or rate
schedule (and thus rates) on file for such service, then it is
the ISO or RTO public utility that will be responsible for
paying annual charges, and it will be assessed annual
charges based on all transmission that it provides pursuant
to its tariff or rate schedule. If an individual public utility
continues to provide transmission service, however, and
still has, accordingly, a tariff or rate schedule (and thus
rates) on file for such service, then that individual public
5
utility will continue to be responsible for paying annual
charges.
Id. (footnotes omitted). The Commission also stated in Order
No. 641 that it would “continue its existing policy that
municipal utility systems . . . will not be required to pay annual
charges.” Id. at 31,485, 65 Fed. Reg. at 65,760.
MISO provides transmission service, see generally MISO
I, 373 F.3d at 1365, and therefore the Commission directly
assesses annual charges to MISO rather than to METC or other
transmission owners in the region that MISO serves. The
transmission owners first report their transmissions in
megawatts to MISO, which converts them to megawatt hours
and reports that figure to the Commission. See Mich. Elec.
Transmission Co., 104 F.E.R.C. ¶ 61,236, at 61,806 n.9. (2003)
(“Initial Order”). The Commission then calculates MISO’s
annual charges based on the proportion of its megawatt hours
compared to all other public utilities operating in interstate
commerce. See Order No. 641, FERC Stats. & Regs. ¶ 31,109,
at 31,841-42, 65 Fed. Reg. at 65,758 (codified at 18 C.F.R. §
382.201(b)). The Commission bills MISO, which, in turn, may
pass through a proportionate share of the annual charges to
various transmission owners, like METC, through its rates. See
id. at 31,855-57, 65 Fed. Reg. at 65,765-67. These transmission
owners, in turn, may pass through the charges to their
customers, regardless of whether the customers are jurisdictional
utilities. See id. at 31,845 n.34, 65 Fed. Reg. at 65,760 n.34. As
Order No. 641 makes clear, and the Commission reiterated here,
while annual charges may not be directly assessed to non-
jurisdictional utilities, like the Michigan Agencies, see id. at
31,845, 65 Fed. Reg. at 65,760; see also 16 U.S.C. § 824(f),
“[a]s transmission customers they may, of course, be charged
rates by the transmission provider that reflect annual charges
assessed to the transmission provider,” Order No. 641, FERC
6
Stats. & Regs. ¶ 31,109, at 31,845 n.34, 65 Fed. Reg. at 65,760
n.34.
The petition for review arises from METC’s June 30, 2003
filing pursuant to 16 U.S.C. § 824d to amend the Operating
Agreements so that, as relevant, it could pass through a share of
the Commission’s annual charges to the Michigan Agencies.
Noting that the Operating Agreements gave it the right to apply
unilaterally to the Commission for an amendment, METC stated
that it sought to recover “its prudently incurred costs associated
with service to the Customers,” which are “municipal power
agencies that purchase transmission service for their members
within the METC pricing zone.” Filing of Mich. Elec.
Transmission Co., Docket No. ER03-1003-00, at 2, 4 (June 30,
2003). METC’s amendment states, in relevant part:
If the Capacity Entitlement of [the Michigan Agencies]
served hereunder is treated under the [MISO] Open Access
Transmission Tariff . . . as [the Michigan Agencies] load
served by the METC system such that the MISO imposes
charges on METC in connection with such entitlement, [the
Michigan Agencies] shall reimburse METC for the full
amount of [their] share of any charges paid by METC for .
. . annual charges assessed to public utilities pursuant to 18
CFR [§] 382.201 imposed on METC in connection with the
[Michigan Agencies’] Capacity Entitlement.
Id. at Exhibit A.
The Michigan Agencies intervened and protested the
amendment on the ground that it would be unlawful to pass
through annual charges to them. They argued that as municipal
agencies, they are not “public utilities” subject to the
Commission’s jurisdiction under 18 C.F.R. § 382.201, and that
as co-owners of the METC transmission system, they have not
7
previously been subject to annual charges, an exemption they
noted is reflected in Order No. 641, FERC Stats. & Regs. ¶
31,109, at 31,845, 65 Fed. Reg. at 65,760. The Commission,
while acknowledging that the Michigan Agencies “acquired an
interest in and use rights over the METC transmission system,”
approved METC’s amendment to the Operating Agreements.
Initial Order, 104 F.E.R.C. ¶ 61,236, at 61,805. It concluded
that “whether [the] Michigan Agencies are considered customers
or co-owners of the METC transmission system, the
Commission’s annual charges may be allocated to them by
METC for service provided by METC.” Id. at 61,806. The
Commission explained that METC could pass through the
annual charges to the Michigan Agencies because “METC is
being assessed these costs based on the Michigan Agencies’
capacity entitlement being transmitted by [MISO] over the
[MISO] transmission system, under the [MISO open access
transmission tariff], within the METC pricing zone.” Id.
Denying rehearing, the Commission acknowledged its “existing
policy” under Order No. 641 exempting municipal systems from
paying annual charges, but reasoned that as “transmission
customers,” municipal utilities “may, of course, be charged rates
by the transmission provider that reflect annual charges assessed
to the transmission provider. . . . ‘How the [annual charge] is
recovered is a matter of the public utility’s ratemaking.’” Mich.
Elec. Transmission Co., 106 F.E.R.C. ¶ 61,064, at 61,206 (2004)
(“Rehearing Order”) (alteration in original) (quoting Midwest
Indep. Transmission Sys. Operator, Inc., 103 F.E.R.C. ¶ 61,048,
at 61,180 n.25 (2003)). This petition followed.
II.
The Michigan Agencies make only a limited challenge to
the pass-through of charges to them. They do not object to the
pass-through of MISO’s administrative costs in Schedule 10 of
its open access transmission tariff. See generally MISO I, 373
F.3d at 1366. Nor do they object to the pass-through of annual
8
charges when they take transmission in excess of their
ownership interests and thus take transmission as METC’s
customers at its “tariff use” rates. They do object, however, to
METC’s pass-through of annual charges for the portion of the
transmission that they take pursuant to their ownership interests.
The Commission is responsible for regulating public
utilities’ rates and charges to ensure that they are just and
reasonable and not unduly discriminatory. 16 U.S.C. §§ 824d,
824e. The court reviews the Commission’s approval of METC’s
amendment to the Operating Agreements to determine whether
the Commission has acted in an arbitrary and capricious manner,
see 5 U.S.C. § 706(2)(A) (2000); MISO I, 373 F.3d at 1368, and
affords particular deference to the Commission’s expertise when
ratemaking is at issue, Ass’n of Oil Pipe Lines v. FERC, 83 F.3d
1424, 1431 (D.C. Cir. 1996). The Commission, however, may
change its policy only if it provides “a reasoned analysis
indicating that prior policies and standards are being deliberately
changed, not casually ignored.” Greater Boston Television
Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir. 1970); see also
Motor Vehicles Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,
463 U.S. 29, 41-42 (1983).
Despite the similarity of the issues involved, the court’s
recent decisions in MISO I and MISO II do not control our
decision here. In MISO I, the court denied a petition for review
of the Commission’s orders that non-jurisdictional utilities could
be charged a share of MISO’s administrative costs. 373 F.3d at
1372. The court reasoned that because the charges passed
through to transmission owners reflected the “administrative
costs of having an ISO,” id. at 1371, those charges should be
shared by all loads — even those not subject to MISO’s open-
access tariff transmission rates, id. at 1369. Here, however, the
issue involves recouping the Commission’s annual costs of
regulating public utilities and not MISO’s costs as an ISO. In
9
MISO II, the court simply held that the petitioner had presented
insufficient evidence of changed circumstances to warrant
ordering a new rulemaking on the methodology for calculating
annual charges, MISO II, 388 F.3d at 911-13, and it did not
involve an application of that methodology.
As a threshold matter, we reject the Michigan Agencies’
contention that, because they are not public utilities, the
Commission acted beyond its statutory authority when it
included the transmission capacity they take pursuant to their
ownership interest when calculating annual charges. Although
the Michigan Agencies are non-jurisdictional municipal utilities
that may not be assessed annual charges directly, see 16 U.S.C.
§ 824(f); 18 C.F.R. § 382.201; Order No. 641, FERC Stats. &
Regs. ¶ 31,109, at 31,855, 65 Fed. Reg. at 65,765, they point to
nothing that would show that there is a jurisdictional bar either
to including that transmission capacity when calculating annual
charges or to passing through a share of those charges to the
Michigan Agencies. The Michigan Agencies make no
contention that they are exempt from such charges because they
operate only in intrastate commerce. They use MISO’s
transmission system when they take transmission pursuant to
their Operating Agreements, see Initial Order, 104 F.E.R.C. ¶
61,236, at 61,806; cf. MISO I, 373 F.3d at 1369, and the
Commission’s annual charges seek to recover its costs of
regulating public utilities, which include MISO and its
transmission system, see Order No. 641, FERC Stats. & Regs. ¶
31,109, at 31,841, 65 Fed. Reg. at 65,757. Because the Michigan
Agencies use a public utility’s transmission system when they
take transmission pursuant to their ownership interests, and the
Commission regulates that system and incurs costs for such
regulation that it seeks to recoup through its annual charges, the
Michigan Agencies fail to show that, by reason of their not being
public utilities, the Commission is not empowered to include
their transmission taken pursuant to their ownership interests
10
when calculating annual charges and to permit a public utility to
pass through a proportionate share of its annual charge to them.
Cf. MISO I, 373 F.3d at 1369.
We are concerned, however, with the Commission’s failure
to explain its apparent departure from past practice. The
Michigan Agencies argued to the Commission that this is the
first time that a public utility has sought to pass through annual
charges to them based on the transmission they take pursuant to
their ownership interests. They contend that including that
transmission when calculating annual charges, and thus making
no distinction between their use as owners and their use as
customers, is an unreasoned departure from the Commission’s
past practice. Although counsel for the Commission suggested
at oral argument that the transmission taken pursuant to the
Michigan Agencies’ ownership interests had always been
included in calculating annual charges and that METC’s
predecessor, Consumers Power Company, had simply failed to
pass through the charges, METC’s submissions to the
Commission refute that characterization. According to METC,
“energy delivered under the Operating Agreements . . . [was]
excluded from the energy used to determine [its predecessor’s]
annual charge assessment each year.” Answer of Mich. Elec.
Transmission Co. at 9. METC claimed that “under the current
reporting regulations, this exclusion has been eliminated.” Id.
The Commission seemingly agreed, for it included that
transmission capacity when calculating MISO’s annual charges
that were passed through to METC. See Initial Order, 104
F.E.R.C. ¶ 61,236, at 61,806 & n.9. But it is unclear from the
Orders on review what justified this result, and nothing in the
record identifies the “reporting regulations” that purportedly
eliminated the exclusion of the Michigan Agencies’ transmission
taken pursuant to their ownership interests.
The Michigan Agencies’ ownership interests come from the
11
Operating Agreements that were executed in the late 1970s and
early 1980s and therefore long pre-date Order No. 888 and the
creation of MISO. The Commission acknowledges that the
Operating Agreements have been grandfathered into MISO’s
open access transmission tariff and are not subject to its rates,
terms, and conditions. See Initial Order, 104 F.E.R.C. ¶ 61,236
at 61,805; see also MISO OATT at § 1.19, cited in Br. of Pet’rs
at 22 n.54. Order No. 641, however, states that annual charges
will be “based on all transmission that [an ISO] provides
pursuant to its tariff or rate schedule.” FERC Stats. & Regs. ¶
31,109 at 31,855 (emphasis added). Yet, so far as the record
before the court reveals, when the Michigan Agencies take
transmission pursuant to their ownership interests, MISO is not
providing transmission service “pursuant to its tariff or rate
schedule” because the grandfathered Operating Agreements are
exempt from that schedule.
Counsel for the Commission stated at oral argument that in
Order No. 641 the Commission sought to avoid double-recovery
by assessing annual charges only on transmission providers, such
as RTOs and ISOs where applicable. See id. at 31,850, 31,852.
Even so, this assertion is nonresponsive to Order No. 641’s
textual limitation on the calculation of a transmission provider’s
annual charges to transmission provided “pursuant to its tariff or
rate schedule.” Id. at 31,855. The Commission does not discuss
this language in the Orders on review. While “language in the
preamble of a regulation is not controlling over the language of
the regulation itself,” Entergy Servs., Inc. v. FERC, 375 F.3d
1204, 1209 (D.C. Cir. 2004) (quoting Wyo. Outdoor Council v.
U.S. Forest Serv., 165 F.3d 43, 53 (D.C. Cir. 1999)) (internal
quotation marks omitted), and the annual charge regulations
provide for calculation of annual charges based on “the sum of
the megawatt-hours of all unbundled transmission . . . and the
megawatt-hours of all bundled wholesale power sales,” 18
C.F.R. § 382.201(c)(1) (emphasis added), the Commission does
12
not rely on its regulation to justify the apparent change in
treatment of the transmission in question.
In any event, in the Orders on review, the Commission
declined to recognize any distinction regarding the assessment of
annual charges when the Michigan Agencies act as co-owners by
taking transmission pursuant to their ownership interests and
when they act as customers by taking transmission in excess of
those interests. In the Initial Order, the Commission stated,
“[W]hether [the] Michigan Agencies are considered customers
or co-owners of the METC transmission system, the
Commission’s annual charges may be allocated to them by
METC for service provided by METC.” 104 F.E.R.C. ¶ 61,236
at 61,806. In its brief to this court, the Commission maintains it
acted reasonably in applying a basic cost causation principle in
approving METC’s cost allocation proposal. It explained that
“[w]hat does matter, for ratemaking purposes, is that METC is
incurring costs (a share of the annual charges assessed to [MISO]
and passed along to METC) that are based on the Michigan
Agencies’ entitlement to capacity on the [MISO] system under
the Operating Agreements.” Br. of Resp’t at 20. But, in Order
No. 641, although the Commission expressly continued its policy
of not directly assessing annual charges to municipal power
utilities, see Order No. 641, FERC Stats. & Regs. ¶ 31,109, at
31,845, 65 Fed. Reg. at 65,760, it stated that public utilities could
pass through the annual charges to municipal utilities that are
“transmission customers,” id. at 31,845 n.34, 65 Fed. Reg. at
65,760 n.34. Thus, contrary to the Commission’s assertions that
the Michigan Agencies’ status as customers or co-owners is
irrelevant, see Initial Order, 104 F.E.R.C. ¶ 61,236 at 61,806,
nothing else appearing, Order No. 641 seems to contemplate the
indirect assessment of annual charges to municipal utilities only
when they are “transmission customers.” If so, the record does
not reveal whether the Michigan Agencies could be considered
“transmission customers” even when they take transmission
13
pursuant to their ownership interests.
Similarly, the Commission failed to address the Michigan
Agencies’ argument that they are not paying a filed tariff rate to
MISO or METC when they take transmission pursuant to their
ownership interests. Rather, the Commission concluded: “How
the [annual charge] is recovered is a matter of the public utility’s
ratemaking. Just as a public utility recovers its other
transmission-related costs in its rates, so a public utility’s annual
charges may be recovered in its rates.” Rehearing Order, 106
F.E.R.C. ¶ 61,064, at 61,206 (quoting Midwest Indep.
Transmission Sys. Operator, Inc., 103 F.E.R.C. ¶ 61,048, at
61,180 n.25) (internal quotation marks omitted). But the
Michigan Agencies argued that, when taking transmission as co-
owners of the METC transmission system, they are not subject
to the ratemaking of METC or MISO. Thus, the discussion
about recovering costs through ratemaking appears not to support
the pass-through of annual charges here.
Counsel for the Commission, at oral argument, focused on
the fact that the amendment to the Operating Agreements
contains conditional language that permits METC to pass
through annual charges to the Michigan Agencies only if METC
received such charges from MISO. This characterization
presupposes that it is proper to include the Michigan Agencies’
transmission taken pursuant to their ownership interests in the
calculations for annual charges. If it is improper under Order
No. 641 to assess annual charges directly to MISO and indirectly
to METC based on that transmission, then this explanation falls
apart. Undoubtedly, METC will incur trapped costs if the annual
charges that are passed through to METC include the Michigan
Agencies’ transmission taken pursuant to their ownership
interests and METC is then unable to pass through those charges
to the Michigan Agencies (or its other customers). But avoidance
of trapped costs and reliance on the maxim that “cost allocation
14
follows cost responsibility,” Br. of Resp’t at 13, are insufficient
reasons to justify the amendment absent a showing that the
transmission that the Michigan Agencies take pursuant to their
ownership interests may be included in the transmission capacity
used to calculate the annual charges.
The Commission may readily be able to explain its
acceptance of METC’s amendment to the Michigan Agencies’
Operating Agreements in light of the concerns we have
identified. It may turn on a simple explanation of what it means
to be a “transmission customer.” Order No. 641, FERC Stats. &
Regs. ¶ 31,109, at 31,845 n.34, 65 Fed. Reg. at 65,760 n.34. Or
the Commission may be able to explain that Order No. 641
authorizes the amendment, and, if so, that the Michigan Agencies
cannot mount a collateral attack on that Order absent unforeseen
circumstances or special factors. See, e.g., Transwestern
Pipeline Co. v. FERC, 988 F.2d 169, 174 (D.C. Cir. 1993). Or
the Commission may be able to explain that it always has
included the transmission taken pursuant to ownership interests
in calculating annual charges such that it did not depart from past
practice. However, because the Orders on review do not address
adequately the legitimacy of the pass-through of the
Commission’s annual charges in light of the Michigan Agencies’
status as co-owners of the METC transmission facilities and as
municipal power utilities, and do not address at all the Michigan
Agencies’ contention that the Commission’s action is a departure
from past practice, the court is not in a position to defer to the
Commission’s expertise.
Accordingly, we grant the petition for review and remand
the case to the Commission for further explanation.
KAREN LECRAFT HENDERSON, Circuit Judge, concurring:
While I agree with the remand to the Commission, I am
apparently more concerned about the threshold jurisdictional
question than my colleagues. I, at least, would like the
Commission to explain how, as the petitioners say, it can do
indirectly what it cannot do directly. Reply Br. of Pet’r at 4–5.
The FERC’s jurisdiction does not extend to “facilities used in
local distribution or only for the transmission of electric energy
in intrastate commerce.” 16 U.S.C. § 824(b)(1). Nor does its
jurisdiction extend to entities that are not “public utilities,” id.
at § 824(e)–(f), which both parties agree the petitioners are not.
The regulation providing for the annual charges authorizes the
imposition of such costs only with respect to “public utilities.”
18 C.F.R. § 382.201(a). In response to the petitioners’ argument
below that their transmission capacity entitlements as non-
jurisdictional owners of part of the METC generation system
should not be included in the calculation of the FERC’s annual
charge, the Commission stated:
[W]hether [petitioners] are considered customers
or co-owners of the METC transmission system,
the Commission’s annual charges may be
allocated to them by METC for service provided
by METC. METC is being assessed these costs
based on the [petitioners] capacity entitlement
being transmitted by the Midwest ISO over the
Midwest ISO transmission system, under the
Midwest ISO OATT, within the METC pricing
zone.
104 F.E.R.C. ¶ 61,236 at 61,806 (2003). This “explanation,” to
me, is less than compelling. It is the FERC’s responsibility to
assert an adequate basis in law for its exercise of jurisdiction.
City of Ft. Morgan v. FERC, 181 F.3d 1155, 1159 (10th Cir.
1999); see also Oklahoma Natural Gas Co. v. FERC, 906 F.2d
708, 709 (D.C. Cir. 1990) (“[W]e do not think the Commission’s
terse explanation of the basis for its exercise of jurisdiction is
adequate to permit judicial review.”). The FERC may be able
2
to rest its jurisdictional claim on the foundation built in Order
No. 888, see 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, 61 Fed. Reg. 21,540 (final
May 10, 1996), on reh’g, Order No. 888-A, 62 Fed. Reg. 12,274
(March 14, 1997), order on reh’g, Order No. 888-B, 81 F.E.R.C.
¶ 61,248 (1997), order on reh’g, Order No. 888-C, 82 F.E.R.C.
¶ 61,046 (1998), or our earlier declaration in Midwest ISO
Transmission Owners v. FERC, 373 F.3d 1361 (D.C. Cir. 2004),
that MISO’s operational authority over transmission loads on the
system “reaches even the bundled and grandfathered loads that
are not subject to MISO’s open-access tariff transmission rates.”
Id. at 1369. In any event, I believe that it is the FERC, rather
than this court, that must first, and adequately, explain the basis
of its jurisdiction.