United States Court of Appeals, District of Columbia Circuit
Argued September 18, 2014
On Petition for Review of Orders of the Federal Energy Regulatory Commission.
Michael R. Fontham argued the cause for petitioner. With him on the briefs were Paul L. Zimmering, Noel J. Darce, Dana M. Shelton, and Stephen Kebel.
Holly E. Cafer, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were David L. Morenoff, Acting General Counsel, and Robert H. Solomon, Solicitor.
John S. Moot argued the cause for intervenors. With him on the brief were Gerard A. Clark, John L. Shepherd, Jr., Andrea Weinstein, Dennis Lane, Glen L. Ortman, Paul Randolph Hightower, and Chad James Reynolds.
Before: ROGERS and WILKINS, Circuit Judges, and WILLIAMS, Senior Circuit Judge.
Rogers, Circuit Judge :
The Louisiana Public Service Commission (" LaPSC" ) petitions for review of an order of the Federal Energy Regulatory Commission denying refunds to certain Louisiana-based utility companies for payments they made pursuant to a cost classification later found to be " unjust and unreasonable." The Commission failed, LaPSC contends, adequately to explain its reasoning in departing from its " general policy" of ordering refunds when consumers have paid unjust and unreasonable rates. We agree. Although the Commission enjoys broad discretion in fashioning remedies, see, e.g., La. Pub. Serv. Comm'n v. FERC, 522 F.3d 378, 393, 380 U.S.App.D.C. 353 (D.C. Cir. 2008), it must rationally explain its decision, Towns of Concord, Norwood, & Wellesley v. FERC, 955 F.2d 67, 76, 293 U.S.App.D.C. 374 (D.C. Cir. 1992) (" Towns of Concord " ). In denying LaPSC's refund request, the Commission relied on precedent it characterized as a policy to deny refunds in cost allocation cases, yet the precedent on which it relied
is based largely on considerations the Commission did not find applicable. Otherwise the Commission relied on the holding company's inability to " revisit" past decisions, seemingly a universally true circumstance. Accordingly, we grant the petition and remand.
Section 206(a) of the Federal Power Act (" FPA" ), 16 U.S.C. § 824e(a), requires the Commission to reform any public utility wholesale electricity rate that it determines is " unjust, unreasonable, unduly discriminatory or preferential."  See also La. Pub. Serv. Comm'n v. FERC, 184 F.3d 892, 897, 337 U.S.App.D.C. 312 (D.C. Cir. 1999) (" Louisiana I " ). Originally, section 206 allowed a party seeking lower rates to obtain only prospective relief at the conclusion of a FERC rate-reform proceeding -- often several years after the initial filing of the complaint. See S. Rep. No. 100-491, at 3 (1988). By contrast, under section 205 of the FPA, utility companies seeking to raise their rates could receive nearly immediate relief, subject to refund only where the Commission declined to approve the increase. See 16 U.S.C. § 824d. In 1988, Congress enacted the Regulatory Fairness Act, Pub. L. No. 100-473, which amended section 206 to authorize the Commission to order refunds for certain overpayments made during the pendency of a rate-reform proceeding.
Section 206(b), as amended, requires the Commission to set a " refund effective date," which is " no[t] later than 5 months after the filing of [the] complaint." 16 U.S.C. § 824e(b). At the conclusion of the proceeding, " the Commission may order refunds of any amounts paid" during the first 15 months following the refund effective date " in excess of those which would have been paid under the just and reasonable rate . . . which the Commission orders to be thereafter observed and in force." Id. An exception provides that in a rate-reform proceeding
involving two or more electric utility companies of a registered holding company, refunds which might otherwise be payable under subsection (b) of [section 206] shall not be ordered to the extent that such refunds would result from any portion of a Commission order that (1) requires a decrease in system production or transmission costs to be paid by one or more of such electric companies ; and (2) is based upon a determination that the amount of such decrease should be paid through an increase in the costs to be paid by other electric utility companies of such registered holding company [.]
16 U.S.C. § 824e(c) (emphases added). This is subject to a proviso " [t]hat refunds, in whole or in part, may be ordered by the Commission"
if it determines that the registered holding company would not experience any reduction in revenues which results from an inability of an electric utility company of the holding company to recover such increase in costs for the period between the ...