Exxon Mobil Corp. v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 14, 2008 Decided July 7, 2009

No. 07-1306

EXXON MOBIL CORPORATION,
PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT

SOUTHERN COMPANY SERVICES, INC., ET AL.,
INTERVENORS

Consolidated with 07-1309, 07-1310, 07-1335, 07-1351

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

Ashley C. Parrish and William R. Mapes Jr. argued the
causes for Generator Petitioners. With them on the briefs was
Neil L. Levy. Marc C. Johnson entered an appearance.

Scott B. Grover argued the cause for Utility Petitioners.
With him on the briefs were S. Chris Still and Kevin A.
McNamee.
 2
Thomas D. Samford IV was on the brief for intervenor
Alabama Public Service Commission in support of Utility
Petitioners.

Samuel Soopper, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. On the brief
were Cynthia A. Marlette, General Counsel, Robert H.
Solomon, Solicitor, and Beth G. Pacella, Senior Attorney.

William R. Mapes Jr., Neil L. Levy, and Ashley C.
Parrish were on the brief for Generator Intervenors.

Joshua Z. Rokach, Erin M. Murphy, S. Chris Still, and
Scott B. Grover were on the brief for Utility Intervenors. Lyle
D. Larson entered an appearance.

Before: SENTELLE, Chief Judge, GRIFFITH, Circuit Judge,
and RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GRIFFITH.

GRIFFITH, Circuit Judge: Here we review the competing
claims of six independent electric power generators and three
public utility companies, each dissatisfied with the manner in
which the Federal Energy Regulatory Commission resolved
an unusual problem involving an application of its
interconnection pricing policies. The Generators filed
complaints with FERC, seeking to recover from several
utilities funds paid to cover the cost to interconnect to the
utilities’ transmission systems. Arguing that these funds were
a loan to improve the utilities’ systems, the Generators sought
a credit against charges for future transmission service. FERC
agreed in part and awarded the Generators a partial refund in
the form of credits. But the amount awarded was not enough,
in the Generators’ view, and they now ask us to review
 3
FERC’s decision. Three of the utility companies that would
be required to issue the transmission credits are also
dissatisfied with the outcome and likewise seek review,
arguing FERC was without authority to award any credits.
Because we find FERC’s decision reasonable, we deny the
Generators’ petitions. We dismiss the Utilities’ petitions
because they lack standing.

I.

We begin with a description of the context in which the
parties’ competing claims arise: a complex web of statutory
provisions, regulations, agency and judicial precedent, and
economic principles that is typical of federal energy law.

Statutory Background

Section 201 of the Federal Power Act (FPA), 16 U.S.C.
§ 824(b) (2006), grants FERC exclusive jurisdiction over the
transmission and sale of electric energy in interstate
commerce. Section 205 requires every public utility to file
with FERC a schedule that includes the rates charged to
customers for the transmission or sale of energy. Id.
§ 824d(c). FERC must ensure the rates are “just and
reasonable.” Id. § 824d(a).

Once approved, there is only one way for FERC to revisit
its determination that a rate is reasonable. Section 206(a) of
the FPA requires FERC, upon its own motion or the filing of
a complaint, to determine whether “any rate, charge, or
classification . . . observed [or] charged . . . by any public
utility for any transmission or sale . . . is unjust, unreasonable,
unduly discriminatory or preferential.” Id. § 824e(a). FERC
must remedy such a rate by “determin[ing] the just and
reasonable rate, charge, [or] classification . . . to be thereafter
 4
observed and in force, and shall fix the same by order.” Id.
FERC may not retroactively alter a filed rate to compensate
for prior over- or underpayments. See Towns of Concord v.
FERC, 955 F.2d 67, 71 & n.2 (D.C. Cir. 1992). A corollary to
this rule against retroactive ratemaking, the filed rate doctrine,
“forbids a regulated entity to charge rates for its services other
than those properly filed with the appropriate federal
regulatory authority.” Ark. La. Gas Co. v. Hall, 453 U.S. 571,
577 (1981). Together, these rules generally limit the relief
FERC may order to prospective remedies. See id. at 578.

The FPA provides a narrow exception to the limitations
imposed by these rules, under which FERC can order the
refund of some past rate payments. Section 206(b) of the FPA
permits FERC, when ordering prospective relief under section
206(a), to order “refunds of any amounts paid” in excess of
the just and reasonable rate during a statutorily defined
period. 16 U.S.C. § 824e(b). Today, this refund period begins
at the latest five months after the filing of a complaint, and
ends fifteen months later. Id. In short, FERC can order a
refund of overcharges paid during a limited time period that
begins after the filing of a complaint.

Interconnection Pricing

In what we have referred to as “the bad old days,”
Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361,
1363 (D.C. Cir. 2004), public utilities owned most of the
nation’s electricity grid and there was little competition within
wholesale electric energy markets, id. In exercising their
monopoly power, these utilities refused independent
electricity generators access to their transmission lines on
competitive terms and conditions. See Transmission Access
Policy Study Group v. FERC, 225 F.3d 677, 681–82 (D.C.
Cir. 2000).
 5

In its landmark Order No. 888, FERC did away with the
old arrangement and sought to establish competitive
wholesale power markets to increase consumer welfare. See
id. at 680–81; see also Promoting Wholesale Competition
Through Open Access Non-discriminatory Transmission
Services by Public Utilities (Order No. 888), 61 Fed. Reg.
21,540 (May 10, 1996). To achieve this goal, Order No. 888
requires that public utilities provide open access to their
transmission lines on nondiscriminatory terms to any
independent entity that generates or purchases electricity.
Transmission Access, 225 F.3d at 681.

To take advantage of open access, generators must be
able to link their plants to the utilities’ transmission systems.
The process of physically connecting a generating plant to a
transmission grid is called “interconnection.” Although Order
No. 888 did not address interconnection, FERC has since
made clear that interconnection is an indispensable
component of open access that must be offered on a
nondiscriminatory basis. See Tenn. Power Co., 90 F.E.R.C.
¶ 61,238, at 61,761–62 (2000).

The rates, terms, and conditions of interconnection are set
forth in “interconnection agreements” between the utility that
owns the transmission system and the interconnecting
generator. These agreements identify the new facilities needed
and what the generator must pay to achieve interconnection.
The parties file their agreements with FERC for its
certification that they are just and reasonable. See Entergy
Servs., Inc. v. FERC, 391 F.3d 1240, 1243 (D.C. Cir. 2004).
The agreement’s rate for interconnection becomes a filed rate
that can only be modified under the section 206 process.
 6
FERC originally evaluated the cost allocations laid out in
interconnection agreements on a case-by-case basis but over
time found this approach inadequate. See Nat’l Ass’n of
Regulatory Util. Comm’rs v. FERC, 475 F.3d 1277, 1279
(D.C. Cir. 2007). In Order No. 2003 and three successive
rehearing orders, FERC standardized the method by which
utilities must set their rates for interconnection. See
Standardization of Generator Interconnection Agreements and
Procedures (Order No. 2003), 68 Fed. Reg. 49,846 (Aug. 19,
2003). The pricing model FERC adopted recognizes that
interconnection requires an initial cost outlay for two types of
facilities. “Interconnection Facilities” are located before the
point of interconnection and allow generators to connect to
the transmission grid. “Network Upgrades” are located on the
grid—that is, “at or beyond” the point of interconnection—
and improve the network for the benefit of all users. See id. at
49,849; see also Nat’l Ass’n, 475 F.3d at 1284–85. The
interconnecting generator pays up front for both sets of
facilities. See Order No. 2003, 68 Fed. Reg. at 49,901;
Entergy, 391 F.3d at 1243.

Placing the full cost of these new facilities on the
generator alone, however, is unreasonable. See Order No.
2003, 68 Fed. Reg. at 49,849. Because Interconnection
Facilities benefit only the interconnecting generator, the
generator properly bears their full cost. See id. at 49,901.
Network Upgrades, by contrast, improve the entire network,
thus their cost must be spread among all users. See id.; see
also Entergy, 391 F.3d at 1243. This distribution is achieved
by assigning the cost of Network Upgrades to the utility
whose network is improved. The utility rolls this cost into its
transmission rates so that all users of the grid pay their fair
share. Because an interconnecting generator pays up front for
Network Upgrades, it would be unfair to make it pay again for
those upgrades through increased transmission rates designed
 7
to spread the cost of the upgrades among all beneficiaries of
the improved service. The utility must therefore grant the
interconnecting generator “transmission service credits” equal
to the total cost of the Network Upgrades. The
interconnecting generator uses its transmission service credits
to offset future transmission charges paid to move power over
the improved grid. See Order No. 2003, 68 Fed. Reg. at
49,849–50; see also Entergy, 391 F.3d at 1243.

In the typical case, assignment of transmission service
credits is straightforward. If a newly created facility is
classified as a Network Upgrade in an interconnection
agreement, the generator receives a credit to apply against its
transmission service charges. As one might expect, this case
is not typical.

Factual Background

The Generators entered into interconnection agreements
with utilities before FERC’s interconnection pricing policies
were settled. These agreements, accepted by FERC between
1999 and 2001, classified facilities located at or beyond the
point of interconnection as Interconnection Facilities rather
than Network Upgrades. The Generators were thus forced to
bear the full cost associated with their construction and
received no corresponding transmission service credits. See,
e.g., ExxonMobil Corp. v. Entergy Servs., Inc. (Exxon Order),
118 F.E.R.C. ¶ 61,032, at 61,171 (2007), reh’g denied (Exxon
Rehearing Order), 119 F.E.R.C. ¶ 61,261 (2007).

After FERC’s interconnection pricing policies were
settled, the Generators filed complaints under section 206 of
the FPA, arguing that the classification of these facilities as
Interconnection Facilities was unjust and unreasonable. The
Generators asked FERC to reclassify the facilities as Network
 8
Upgrades and order the utilities to issue transmission service
credits equal to the amount the Generators paid to fund their
construction.

FERC granted the Generators’ complaints in early 2007.
The Commission had recently addressed a similar
circumstance in Duke Energy Hinds, LLC v. Entergy Services,
Inc. (Duke Hinds II), 102 F.E.R.C. ¶ 61,068 (2003), reh’g
denied (Duke Hinds III), 117 F.E.R.C. ¶ 61,210 (2006), and
applied this precedent to resolve many of the substantive
issues raised by the Generators. In the Duke Hinds
proceedings, FERC found that facilities located at or beyond
the point of interconnection should be classified as Network
Upgrades regardless of how they are characterized in an
interconnection agreement. See id. at 61,172–73. Any
interconnection agreement that improperly classifies a
Network Upgrade must be corrected, and the generator that
paid for the facility is entitled to transmission service credits.
See id. Accordingly, FERC ordered that the Generators’
interconnection agreements be revised and that they receive
transmission service credits for the amount of their Network
Upgrade payments. See, e.g., Tenaska Ala. II Partners, L.P. v.
Ala. Power Co. (Tenaska Order), 118 F.E.R.C. ¶ 61,037, at
61,193–94 (2007), reh’g denied (Tenaska Rehearing Order),
119 F.E.R.C. ¶ 61,315 (2007); Exxon Order, 118 F.E.R.C. at
61,172–73.

So far, so good for the Generators. The catch came with
FERC’s method for calculating the appropriate amount of
transmission service credit owed to the Generators. FERC
concluded that the refund limitations of section 206(b),
together with the filed rate doctrine and the rule against
retroactive ratemaking, prevented it from providing the
Generators with the full credits they would have received had
the facilities been properly classified at the outset. See, e.g.,
 9
Tenaska Order, 118 F.E.R.C. at 61,193; Exxon Order, 118
F.E.R.C. at 61,172–73. The Generators petitioned for
rehearing, arguing that their upfront network payments were
actually loans to the utilities that did not involve a rate or
charge subject to section 206(b). See, e.g., J.A. at 370–71.
FERC disagreed, concluding that the upfront payments were
not loans but rather a “term or condition for interconnection
service that charges the customer and provides an opportunity
for refund.” Exxon Rehearing Order, 119 F.E.R.C. at 62,479.
According to FERC, the Generators’ complaints challenged a
filed rate that could only be revised under section 206. Under
section 206(b), the interconnecting generators could only
receive credits equal to their initial outlay for Network
Upgrades less an amount equal to the transmission service
payments made by the generator outside of the statutorily
defined refund period. See id. at 62,479–80, 62,480 n.39.
FERC could refund overpayments made during the refund
period, but granting the Generators full transmission credits
without subtracting some of their prior rate payments would,
according to FERC, violate the refund limits imposed by
section 206(b). See id. at 62,480 (citing Duke Hinds III, 117
F.E.R.C. at 62,115).

We explain this remedy and the rationale behind it more
fully below. For now, the important point to keep in mind is
that its application to the Generators’ claims wiped out any
prospect many of them had for obtaining a refund of their
upfront network payments. Because the amount most of the
Generators paid for transmission service prior to FERC’s
orders far exceeded their upfront network payments,
deducting these rate payments from the total amount of
transmission credits that might have been awarded left the
Generators with nothing. See Reply Br. of Generator Pet’rs at
2. These consolidated petitions for review followed the
Commission’s orders, and both the Generator and Utility
 10
petitioners challenge FERC’s application of its
interconnection pricing policies.1

II.

We focus first on the Generators’ petitions, which we
have jurisdiction to consider under 16 U.S.C. § 825l(b). The
Generators challenge FERC’s orders on three grounds: (1)
FERC erred by applying section 206(b); (2) FERC departed
from its precedent without adequate explanation; and (3)
FERC failed to resolve the complaints within the time allotted
by section 206. We review these challenges under the
“arbitrary and capricious” standard of the Administrative
Procedure Act. See 5 U.S.C. § 706(2) (2006). Our review is
deferential. We affirm so long as the Commission made a
reasoned decision based upon substantial evidence and the
path of its reasoning is clear. See Sithe/Independence Power
Partners, L.P. v. FERC, 165 F.3d 944, 948 (D.C. Cir. 1999).

A.

We begin with the Generators’ argument that section
206(b) does not apply to their claims.

Section 206(a) provides the only mechanism by which
FERC can revise established rates:

Whenever the Commission . . . shall find that any rate,
charge, or classification . . . observed [or] charged . . .
by any public utility . . . or . . . any rule, regulation,
practice, or contract affecting such rate, charge, or

1
The Generators and Utilities each intervened in the other’s
petitions and Alabama Public Service Commission intervened in
support of the Utilities.
 11
classification is unjust, unreasonable, unduly
discriminatory or preferential, the Commission shall
determine the just and reasonable rate, charge, [or]
classification . . . to be thereafter observed and in
force, and shall fix the same by order.

16 U.S.C. § 824e(a). Section 206(b) provides the relief FERC
may order for amounts paid in excess of the just and
reasonable rate:

[T]he Commission may order refunds of any amounts
paid [during the refund period] in excess of those
which would have been paid under the just and
reasonable rate, charge, [or] classification . . . which
the Commission orders to be thereafter observed and
in force.

Id. § 824e(b). “[R]efunds of any amounts paid” outside of the
refund period are forbidden. See Towns of Concord, 955 F.2d
at 72. Section 206 thus creates a strict remedial scheme with
two potentially conflicting directives. On the one hand, under
section 206(a), FERC cannot allow utilities to charge
transmission rates that are unfair. On the other hand, under
section 206(b), FERC cannot order utilities to give back
money already collected (except for money collected during
the limited refund period).

FERC concluded that the twin demands of this statutory
scheme precluded awarding the Generators a full refund. As
noted, the Commission was faced with a similar set of
circumstances in the Duke Hinds proceedings. In Duke Hinds
III, FERC determined that interconnecting generators must
receive credits equal to their initial outlay for Network
Upgrades less an amount equal to the transmission service
payments made by the generator outside of the statutorily
 12
defined refund period. See 117 F.E.R.C. at 62,115–16. The
rationale behind this remedy is complicated. In simple terms
(or at least as simple as we can put them), the remedy ensures
compliance with section 206 as follows: Hypothetical
transmission credits accrue to interconnecting generators
when they pay for a Network Upgrade. Rate payments made
thereafter are deemed unjust overpayments because they
could have been paid with the credits. The rule against
retroactive ratemaking bars FERC from refunding these
overpayments unless they occurred during the refund period.
To avoid ordering prohibited retroactive relief, FERC reduces
the generators’ hypothetical transmission credits by an
amount equal to their past rate payments made outside of the
refund period. To ensure prospective relief, FERC grants the
generators the remaining “unused” credits, if any, which may
be applied toward the cost of future service. See generally id.
(explaining pricing policy). In ruling on the Generators’
complaints, FERC relied upon this approach and provided the
Generators the same remedy. See, e.g., Exxon Rehearing
Order, 119 F.E.R.C. at 62,480 (“[T]o the extent that
ExxonMobil has not previously taken service for which
transmission credits either did accrue or would have accrued,
ExxonMobil is entitled to receive transmission credits . . . on
a prospective basis from the date of the Commission’s order.”
(citing Duke Hinds III, 117 F.E.R.C. at 62,115)).

Although FERC’s use of hypothetical transmission
credits may seem puzzling at first glance, upon consideration
their use does not make FERC’s orders inherently arbitrary as
the Generators suggest. See Br. of Generator Pet’rs at 25–27.
These credits are simply a tool FERC devised to explain its
calculations and navigate between the Scylla and Charybdis
of section 206—the statute’s twin directives that require
FERC to ensure reasonable rates and prohibit impermissible
refunds. See Duke Hinds III, 117 F.E.R.C. at 62,115–16
 13
(explaining how hypothetical credits are used to “ensure
prospective relief”). The Commission’s reliance on these
credits is therefore an exercise of its remedial authority
intended to ensure the Generators are charged a just and
reasonable rate going forward and made whole within the
limits imposed by the statute. When FERC is fashioning
remedies, we are particularly deferential. See Niagara
Mohawk Power Corp. v. Fed’l Power Comm’n, 379 F.2d 153,
159 (D.C. Cir. 1967) (“[T]he breadth of agency discretion is,
if anything, at zenith when the action assailed relates
primarily . . . to the fashioning of policies, remedies and
sanctions.”).

With this deferential standard of review in mind, we hold
that FERC’s remedy is neither arbitrary nor capricious and is
consistent with FERC’s statutory obligations under section
206. The Generators’ central argument is that FERC relied on
the mistaken premise that they are seeking a refund of past
rates paid for service. The Generators insist that this is not
their challenge, and that the refund limits imposed by section
206(b) are irrelevant to their claims. See Br. of Generator
Pet’rs at 24 (“[T]he Generators do not claim they overpaid for
transmission services that were already rendered.”). Instead,
the Generators contend that their upfront network payments
were actually a loan to the utilities for which they are entitled
to full reimbursement in the form of transmission service
credits. According to the Generators, this credit, which would
merely ensure that they pay a just and reasonable rate in the
future, falls squarely within FERC’s section 206(a) authority
to issue prospective relief.

The Generators wish to have their cake and eat it, too.
They want the benefits of section 206 (transmission credits),
but not on the terms section 206 establishes (refunds restricted
to a narrow time period). Their wish fails for two reasons.
 14
First, as FERC explained, it would stretch the Commission’s
section 206 authority beyond what the language of the statute
allows. The only way FERC can provide the Generators
prospective relief is through the remedial scheme established
by section 206, and FERC lacked the authority to act under
section 206(a) unless the Generators challenged an unjust
“rate, charge, or classification,” or “rule, regulation, practice,
or contract affecting [a] rate, charge, or classification.” 16
U.S.C. § 824e(a); see also Exxon Rehearing Order, 119
F.E.R.C. at 62,479–80, 62,480 n.36 (explaining that “if
section 206 . . . did not apply, there would be no statutory
basis for directing the payment of transmission credits”).
Although the Generators claim they “are not . . . challenging
the Commission’s jurisdiction under section 206(a),” Reply
Br. of Generator Pet’rs at 4–5, they never make clear how
their complaints, which “seek[] the return of loaned funds that
have been unlawfully retained,” Br. of Generator Pet’rs at 28,
fit within the statutory framework. Given the plain language
of section 206(a), we do not see how they do.

FERC, by contrast, reasonably determined that if the
upfront payments were loans, as the Generators assert, the
Commission would have no power to order their
reimbursement. “The Commission can only order the
repayment of unreasonable rates and charges.” Exxon
Rehearing Order, 119 F.E.R.C. at 62,479 n.27. In order to
explain how it has authority over the upfront payments—how
it can direct an interconnecting generator to make them and
order utilities to repay them—FERC characterized the upfront
network payments as “a term or condition for interconnection
service that charges the customer and provides an opportunity
for refund.” Id. at 62,479 & n.27. Characterized as such, the
interconnection agreements and the charges they establish
became the filed rate for interconnection upon their
acceptance by FERC. Id. at 62,479. This conclusion, which
 15
enabled FERC to provide the Generators with prospective
relief, is consistent with the language of the statute and its
directive that utilities not be permitted to charge unreasonable
rates.

The Generators’ claim that they do not challenge their
past rate payments is also flawed. Under section 206(a), a
complainant must challenge an unjust rate or charge collected
in the past if it wishes to have that rate or charge adjusted for
the future. 16 U.S.C. § 824e(a). As we just explained, the
Generators seek relief under section 206(a) but do not identify
the unjust rate they challenge. They concede that their initial
upfront network payments were not unjust. See Br. of
Generator Pet’rs at 24; Reply Br. of Generator Pet’rs at 5. The
only rates left to challenge were the payments for
transmission service taken after the Generators made upfront
network payments. If FERC was to award the Generators any
remedy at all under section 206(a), it could only be for past
overpayments for transmission service. See, e.g., Exxon
Rehearing Order, 119 F.E.R.C. at 62,479–80 (explaining why
the past transmission rates charged to the Generators violate
the Commission’s interconnection pricing policies and the
remedy allowed by section 206). FERC reasonably
determined that the Generators’ complaints were, in reality, a
challenge to their past rate payments, the refund for which is
controlled by section 206(b). And upon finding section 206(b)
applicable, FERC specified an appropriate remedy, ensuring
that the Generators received prospective relief via their
unused credit and were refunded the maximum amount
permitted under the statute. See id.; id. at 62,480 n.37.

The Commission’s reasoning is consistent with the
demands of the statute. We hold that it properly applied
section 206(b) to the Generators’ complaints.
 16
B.

The Generators next claim that FERC’s orders were an
unexplained departure from precedent, citing the rule that “an
agency changing its course must supply 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 FCC v. Fox Television Stations, Inc., No. 07-582, slip
op. at 10–11 (U.S. 2009). The Generators assert that FERC’s
present characterization of the upfront network payments as a
charge for interconnection service conflicts with the
Commission’s earlier description of the payments as a loan
from generators to transmission providers.

In the past, FERC has referred to upfront network
payments as loans. See, e.g., Standardization of Generator
Interconnection Agreements and Procedures (Order No. 2003-
C), 70 Fed. Reg. 37,661, 37,662 (June 30, 2005) (“[W]e
continue to view the Interconnection Customer’s upfront
payment for Network Upgrades as essentially a loan . . . .”).
But FERC used this term only to explain the economic
rationale behind the typical interconnection scenario, in which
cost responsibility for all necessary equipment and facilities is
fixed when the parties enter into their interconnection
agreement. FERC believed the loan analogy made “it easier to
explain the transaction involved.” Exxon Rehearing Order,
119 F.E.R.C. at 62,479.

In the orders on review, FERC explained that the loan
analogy is not useful in the unusual scenario presented by this
case, in which section 206 complainants seek to alter the cost
responsibility established in interconnection agreements
entered into before Order No. 2003. As we have just
explained, FERC reasonably found that if the upfront network
 17
payments were treated as a loan from the customer to the
transmission provider in these circumstances, “the
Commission would have no authority over the loan.” Id. at
62,479 n.27. If FERC was to ensure that the utilities’ future
rates were just and reasonable, it could not use the loan
analogy to describe what is at work here, which is more
accurately described as a contest over a charge that is part of
the filed rate. Only in these terms would there be an
“opportunity for refund,” id. We believe this explanation is
sufficient.2

C.

The Generators’ final argument is that FERC acted
contrary to law when it delayed consideration of their
complaints. Section 206(b) requires FERC to “act as speedily
as possible” upon the “institution of a proceeding under
[section 206].” 16 U.S.C. § 824e(b). The statute does not,
however, set a deadline for action. Rather, it provides that if
FERC does not issue a final decision within 180 days after the
initiation of a proceeding, it must “state the reasons why it has
failed to do so and shall state its best estimate as to when it
reasonably expects to make such decision.” Id.

2
The Generators also argue that the orders on review “have the
perverse effect of undermining [FERC’s] long-standing policies”
and thus FERC should have granted their requested relief. Br. of
Generators Pet’rs at 32–35. Regardless of who has the better view
of how best to advance FERC’s policies, we cannot see how FERC
could have ordered the full refund the Generators seek. As FERC
explained, the orders grant the Generators the maximum relief
allowed under section 206. Exxon Rehearing Order, 119 F.E.R.C.
at 62,480. FERC lacked the authority to do what the Generators
asked.
 18
FERC admits it did not state the reasons for its delay. See
Br. of FERC at 55. Although the Generators attempt to show
they suffered a financial loss as a result of the Commission’s
delay, they do not allege they suffered harm as a result of
FERC’s failure to keep them informed. Because the statute
merely requires that FERC explain its inaction, this is the
harm the Generators must show. Accordingly, we need go no
further in considering this claim. See Air Canada v. Dep’t of
Transp., 148 F.3d 1142, 1156–57 (D.C. Cir. 1998) (stating
that under the Administrative Procedure Act, a court need not
determine whether an agency acted contrary to law if the
party asserting error has not shown it suffered prejudice as a
result).

D.

We conclude our discussion of the Generators’ arguments
by addressing the claims advanced only by generator
ExxonMobil. Exxon presents two arguments not raised by the
other Generators. It first argues that FERC retained authority
under section 205 to order the issuance of transmission credits
equal to its full upfront network payments. In the alternative,
Exxon argues that even if FERC was correct to rely on section
206, it should receive a full refund not limited by any prior
rate payments because of its unique factual circumstances.
But we need not explain these circumstances or analyze
whether Exxon’s arguments have merit because Exxon failed
to raise either argument in the proceedings below. We thus
lack authority to consider them. See 16 U.S.C. § 825l(b). We
note that both claims were raised in another proceeding, see
ExxonMobil Corp. v. Entergy Servs., Inc., 120 F.E.R.C.
¶ 61,051 (2007), reh’g denied, 122 F.E.R.C. ¶ 61,168 (2008),
and may be reviewed by this court in due course.
Accordingly, Exxon’s petition for review is denied.
 19
III.

And now, for the flip side of the coin. The Utility
petitioners are three public utility companies that have
interconnection agreements with the Tenaska generators.3
They argue that FERC violated both the filed rate doctrine
and the rule against retroactive ratemaking by granting those
generators transmission service credits for their upfront
network payments. Because the Utilities lack standing, we do
not reach the merits of their challenge.

Section 313 of the FPA permits any party “aggrieved” by
an order of the Commission to seek rehearing and petition for
judicial review. 16 U.S.C. § 825l. A party can obtain judicial
review “if it can establish both the constitutional and
prudential requirements for standing.” Pub. Util. Dist. No. 1 v.
FERC, 272 F.3d 607, 613 (D.C. Cir. 2001). To establish
constitutional standing, a petitioner must show an actual or
imminent injury in fact, fairly traceable to the challenged
agency action, that will likely be redressed by a favorable
decision. See, e.g., Lujan v. Defenders of Wildlife, 504 U.S.
555, 560–61 (1992).

In their opening brief, the Utilities claimed standing on
the ground that FERC’s orders require them to modify their
interconnection agreements and provide the Tenaska
generators with transmission credits. Br. of Util. Pet’rs at 14–
15. Not so. As the Generators point out, and the Utilities
ultimately conceded in their reply brief and at oral argument,
FERC’s remedy does not actually require the Utilities to issue
transmission credits. See Reply Br. of Util. Pet’rs at 17 n.12;
Oral Arg. Recording at 18:05–:15 (“We did not have to pay

3
Specifically, they are Tenaska Alabama II Partners, L.P., Tenaska
Alabama Partners, L.P., and Tenaska Georgia Partners, L.P.
 20
any refunds.”). FERC decreased its award of credits, initially
set equal to each generator’s upfront network payments, by
the rate payments made by the generator outside of the refund
period. Because those payments exceeded the Tenaska
generators’ upfront network payments, the Utilities are not
obligated to issue any credit whatsoever. See Reply Br. of
Util. Pet’rs at 17 n.12 (“It warrants note that . . . Tenaska had
taken delivery service in excess of any credits that might be
due it well before it filed complaints.”).

In their reply brief, the Utilities suggest a second injury to
support their claim of standing: affirmance of the
Commission’s orders would collaterally estop them from
challenging a similar remedy in the future. We have
previously made clear, however, that a mere interest in
FERC’s legal reasoning and the possibility of a “collateral
estoppel effect” are insufficient to confer a cognizable injury
in fact. Ala. Mun. Distribs. Group v. FERC, 312 F.3d 470,
473–74 (D.C. Cir. 2002); see also Sea-Land Serv., Inc. v.
Dep’t of Transp., 137 F.3d 640, 648 (D.C. Cir. 1998)
(discussing but not resolving whether a potential collateral
estoppel effect can confer standing). “To create standing out
of the preclusive effect that would flow from granting
standing is to create it ex nihilo.” Ala. Mun. Distribs. Group,
312 F.3d at 474.

Finally, at oral argument, the Utilities suggested they
were harmed by FERC’s orders because they were required to
expend resources revising their interconnection agreements
and filing a compliance report with FERC. In the next breath,
however, the Utilities conceded that such costs could not be
reimbursed and therefore are not redressable by a favorable
decision of this court. See Oral Arg. Recording at 22:15–:26;
see also Klamath Water Users Ass’n v. FERC, 534 F.3d 735,
740–41 (D.C. Cir. 2008) (petitioner’s failure to show
 21
redressability required dismissal because “the burden of
establishing redressability falls upon the petitioner”). In any
event, this argument came too late for our consideration. We
will not consider a theory of standing first presented to us at
oral argument. See Transp. Workers Union of Am. v. Transp.
Sec. Admin., 492 F.3d 471, 476–77 (D.C. Cir. 2007) (refusing
to consider claim relating to causation requirement not raised
until oral argument).

IV.

For the foregoing reasons, we deny the Generators’
petitions for review. Because the Utilities lack standing to
challenge FERC’s orders, we dismiss their petitions for want
of jurisdiction.

So ordered.