Louisiana Public Service Commission v. Federal Energy Regulatory Commission ( 2014 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 18, 2014 Decided December 5, 2014
No. 13-1155
LOUISIANA PUBLIC SERVICE COMMISSION,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
ARKANSAS PUBLIC SERVICE COMMISSION, ET AL.,
INTERVENORS
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
2
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 (D.C. Cir.
2008), it must rationally explain its decision, Towns of Concord,
Norwood, & Wellesley v. FERC, 955 F.2d 67, 76 (D.C. Cir.
1992) (“Town 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.
I.
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,
3
unreasonable, unduly discriminatory or preferential.”1 See also
La. Pub. Serv. Comm’n v. FERC, 184 F.3d 892, 897 (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
1
Section 206(a) requires the reform of “any rate, charge, or
classification, demanded, observed, charged, or collected by any
public utility for any transmission or sale subject to the jurisdiction of
the Commission, or . . . any rule, regulation, practice, or contract
affecting such rate, charge, or classification.” 16 U.S.C. § 824e(a).
4
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 refund
effective date and effective date of the Commission’s
order.
Id. § 824e(c)(2).
LaPSC’s petition for review concerns the last remaining
issue in litigation this court has previously addressed. See
Louisiana I, 184 F.3d 892; La. Pub. Serv. Comm’n v. FERC, 482
F.3d 510 (D.C. Cir. 2007) (“Louisiana II”). In the State of
Louisiana, electricity is supplied to consumers by, among others,
three “Entergy”-branded public utility companies: Entergy
Louisiana, LLC, Entergy Gulf States Louisiana, LLC, and
Entergy New Orleans, Inc. These companies are owned,
alongside several other Entergy operating companies in
neighboring states, by a single holding company, Entergy
Corporation (“Entergy”). Transactions among Entergy operating
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companies are governed by a Commission-approved system
agreement, which enables the operating companies “to act as a
single economic unit.” Louisiana I, 184 F.3d at 894. Under the
agreement, the operating companies share electricity with each
other and allocate costs among themselves with the aim of
“equalizing . . . any imbalance of costs associated with the
construction, ownership and operation of such facilities as are
used for the mutual benefit of all the [c]ompanies.” Id. (quoting
System Agreement § 3.01). This court has explained:
The system agreement allocates capacity (or demand)
costs to each operating company in direct proportion
to the power that it takes when total demand upon the
Entergy system peaks each month. If, at the monthly
system peak, a company takes more energy than it
generates, then it is considered “short” and must
make an equalizing payment to the “long” companies
that have provided the excess capacity. This
arrangement is mutually beneficial because
companies that are long have a ready outlet for their
surplus energy and are thereby compensated for
carrying excess capacity, while companies that are
short enjoy the benefit of a low cost and dependable
way of meeting their energy requirements.
Id. at 894–95.
In March 1995, LaPSC filed a complaint under section
206 “alleging that, due to changed circumstances, the allocation
of capacity costs [under the system agreement] had become
unjust and unreasonable.” Louisiana I, 184 F.3d at 895. In
particular, it objected to the inclusion of “interruptible load”
when calculating an operating company’s capacity charge. See
id. at 895–96. The Commission dismissed the complaint. See
La. Pub. Serv. Comm’n v. Entergy Serv., Inc., 76 F.E.R.C. ¶
6
61,168 (1996), reh’g denied, 80 F.E.R.C. ¶ 61,282 (1997). After
the court remanded for further explanation, see Louisiana I, 184
F.3d at 900, the Commission determined that Entergy’s inclusion
of interruptible load in assessing capacity costs was unjust and
unreasonable. See Opinion No. 468, 106 F.E.R.C. ¶ 61,228, at
PP 60-77 (2004). Entergy was ordered to adjust its rates
beginning April 1, 2004, but the Commission declined to order
refunds for any overcharges incurred during the pendency of the
proceeding because it could not “find, as [it] must under Section
206(c) of the FPA, that the Operating Companies that would pay
refunds as a result of a reallocation of costs would be able to
collect those refunds from their ratepayers.” Id. at P 88.
LaPSC again petitioned for review, and the court again
remanded the case, holding that the Commission had not
adequately explained why it could not make the requisite section
206(c) finding. See Louisiana II, 482 F.3d at 520. On remand,
the Commission eventually concluded that refunds were
unwarranted. But its path to that conclusion was somewhat
circuitous. See Order Denying Rehearing, 142 F.E.R.C.
¶ 61,211, at PP 7–13 (2013).
On remand from Louisiana II, the Commission ordered
refunds, citing the determination by the Administrative Law
Judge (“ALJ”) that the non-Louisiana operating companies
could, in fact, recover surcharges prospectively. Order on
Remand, 120 F.E.R.C. ¶ 61,241 (2007) (“First Order”) (citing
La. Pub. Serv. Comm’n v. Entergy Corp. 96 F.E.R.C. ¶ 63,002,
at 65,023-24 (2001)), reh’g denied, Order Denying Rehearing,
124 F.E.R.C. ¶ 61,275 (2008) (“Second Order”). In August
2010, after Entergy petitioned for review and the Commission
requested a remand, it amended the refund order to provide
further explanation. See Amended Order on Remand, 132
F.E.R.C. ¶ 61,133 (2010) (“Third Order”). “There is no
question,” the Commission acknowledged, “that the Commission
7
has a policy of granting full refunds to correct unjust and
unreasonable rates.” Id. at P 31. It also rejected several
equitable reasons for deviating from the general policy. For one,
the fact that the mis-allocation “was not undertaken in bad faith
does not militate against applying the Commission’s general
refund policy here . . . .” Id. at P 32. For another, because
customer usage patterns were not at issue, the Commission did
“not see the passage of time as affecting the equities one way or
the other.” Id.
Upon rehearing, the Commission reversed itself. See
Order Granting Rehearing in Part and Denying Rehearing in
Part (“Fourth Order”), 135 F.E.R.C. ¶ 61,218 (2011). Although
confirming that section 206(c) did not bar the refunds LaPSC
requested, the Commission declined to order them. Id. at P 2.
“[D]isavow[ing] the distinction” it had “attempted to draw” in
the earlier orders “between the treatment of refunds in rate
design and cost allocation cases,” id. at P 23, the Commission
concluded that the critical consideration was that “the Entergy
system as a whole collected the proper level of revenue.” Id. at
P 24.
In denying further rehearing, the Commission explained
that it had “two lines of precedent on refunds, each dealing with
a different situation.” See Order Denying Rehearing (“Fifth
Order”), 142 F.E.R.C. ¶ 61,211 at P 54 (2013) (quoting Black
Oak Energy, L.L.C., 136 F.E.R.C. ¶ 61,040, at P 25 (2011), reh’g
denied, 139 F.E.R.C. ¶ 61,111 (2012)):
When a case involves a company over-collecting
revenues to which it was not entitled, the
Commission generally holds that the excess revenues
should be refunded to customers. By contrast, in a
case where the company collected the proper level of
revenues, but it is later determined that those
8
revenues should have been allocated differently, the
Commission traditionally has declined to order
refunds.
Id. This case fell into the latter category because the Entergy
system had simply mis-allocated costs and did not over-recover.
See id. at P 61. The Commission also discussed the precedent
underlying its policy. In previous rate design and cost allocation
decisions, it had reasoned that: “refunds would potentially result
in under-recovery”; “a different [cost] allocation would have
resulted in a different decision by consumers or the utility had it
been instituted at the time of the facts at issue, but it is simply
too late to alter the result”; there may be a “detrimental effect
upon an organized market”; the surcharge resulting from refunds
would fall on the current generation of ratepayers who were not
the same ratepayers that received the benefits” (internal
quotation marks omitted); and the “complication and cost of
rerunning markets” may be unjustified. Id. at P 55 & n.127.
Acknowledging that the first factor (the potential for under-
recovery of costs) “is not present,” id. at P 63, the Commission
claimed to follow its “long-standing policy” of denying refunds
in cost allocation cases, id. at P 57 (quoting Occidental Chem.
Corp., 110 F.E.R.C. ¶ 61,378, at P 10 (2005)). The Commission
stated it would, however, “continue to allow for . . . discretion”
in particular cases “to determine whether refunds are
appropriate.” Id. at P 51. In addition, it noted that an equitable
consideration “disfavor[ed]” refunds here: “Entergy cannot
review and revisit past decisions were we to order a refund.” Id.
at P 63. LaPSC petitions for review.
II.
“[W]hen a federal court of appeals reviews an
administrative agency’s choice of remedies to correct a violation
of a law the agency is charged with enforcing, the scope of
9
judicial review is particularly narrow.” La. Pub. Serv. Comm’n
v. FERC, 174 F.3d 218, 224 (D.C. Cir. 1999) (quoting Nat’l
Treasury Emps. Union v. FLRA, 910 F.2d 964, 966–67 (D.C. Cir.
1990)). Thus, this court generally “defer[s] to [the
Commission’s] decisions in remedial matters, respecting that the
difficult problem of balancing competing equities and interests
has been given by Congress to the Commission with full
knowledge that this judgment requires a great deal of discretion.”
Koch Gateway Pipeline Co. v. FERC, 136 F.3d 810, 816 (D.C.
Cir. 1998) (internal quotation marks omitted). The court has
often noted that the breadth of the Commission’s discretion is “at
its zenith” when fashioning remedies. La. Pub. Serv. Comm’n,
174 F.3d at 225 (internal alterations and quotation marks
omitted).
At the same time, “[a]s an administrative agency, [the
Commission] is subject to the constraints of the Administrative
Procedure Act and consequently is forbidden from acting in a
way that is ‘arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.’” Koch Gateway Pipeline
Co., 136 F.3d at 815 (quoting 5 U.S.C. § 706(2)(A)). In the
present context, the Commission must “show that it considered
relevant factors and struck a reasonable accommodation among
them, and that its order granting or denying refunds was
equitable in the circumstances of th[e] litigation.” Town of
Concord, 955 F.2d at 76 (internal quotation marks, alterations,
and citations omitted). To the extent the Commission relies upon
factual findings to support its exercise of discretion, its findings
must be supported by substantial evidence. See La. Pub. Serv.
Comm’n, 174 F.3d at 225.
A.
LaPSC contends that the denial of refunds conflicts with
the core purpose of the Federal Power Act, namely, “the
protection of consumers from excessive rates and charges,”
10
Mun. Light Bds. of Reading & Wakefield v. Fed. Power Comm’n,
450 F.2d 1341, 1348 (D.C. Cir. 1971). The court does assess the
Commission’s remedial decisions in light of the underlying aims
of the FPA and will set aside a remedy that “thwart[s] the core
purposes . . . of the statute.” Town of Concord, 955 F.2d at 75;
see also id. at 74. Yet even assuming the “primary aim” of the
FPA is to “protect[] . . . consumers from excessive rates and
charges,” Municipal Light Bds., 450 F.2d at 1348, there is no
conflict with that purpose here. The FPA did not authorize
refunds in section 206 proceedings until the 1988 amendments
made by the Regulatory Fairness Act. Even then, Congress
barred refunds in holding company cost allocation cases unless
it can be shown that the utility will not suffer an under-recovery.
See 16 U.S.C. § 824e(c). To hold that refunds are mandatory
every time there is an unjust or unreasonable rate would be
contrary to Congress’s use of the permissive “may” in section
206(b), and to this court’s rejection of the argument that the
amendments create a presumption in favor of refunds, see Town
of Concord, 955 F.2d at 76. Section 205 of the FPA declares
unjust and unreasonable rates to be “unlawful,” 16 U.S.C.
§ 824d(a), and section 206 requires the Commission to reform
any such rates, see id. § 824e(a). Whether a party should receive
refunds for past payments of excessive charges is a separate
issue. See Town of Concord, 955 F.2d at 73
Relying on Exxon Co., U.S.A. v. FERC, 182 F.3d 30, 49
(D.C. Cir. 1999), and Public Service Co. of Colorado v. FERC,
91 F.3d 1478, 1490 (D.C. Cir. 1996), LaPSC insists that there is
“a strong equitable presumption” in support of “making parties
whole” through refunds. Its reliance is misplaced. Under Exxon,
the “presumption” urged by LaPSC applies “when the
Commission [has] commit[ted] legal error.” Exxon Co., U.S.A.,
182 F.3d at 49 (internal quotation marks omitted). LaPSC has
not identified an analogous legal error; the Commission’s initial
dismissal of LaPSC’s complaint is not what caused Entergy’s
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rates to become unjust and unreasonable. And Colorado
supports refunds where producers would otherwise keep
unlawful overcharges. See Pub. Serv. Co. of Colorado, 91 F.3d
at 1490. Here, the Commission’s denial was based principally
on the fact that the Entergy system, as a whole, did not retain
unlawful overcharges. “[A]bsent some conflict with the explicit
requirements or core purposes of a statute, [the court] ha[s]
refused to constrain agency discretion by imposing a
presumption in favor of refunds.” Town of Concord, 955 F.2d at
76.
LaPSC also contends that the Commission’s decision to
deny refunds institutes a “policy” that “impermissibly denies
consumers any practical remedy for unjust and unreasonable
rates” “in cases where costs are allocated among a parent’s
subsidiaries.” Pet’r Br. 43. The Commission, however, did not
announce “[t]he elimination of Section 206 as a vehicle to
remedy unlawful rates,” id. at 30, because even under the policy
as described, the Commission would allow refunds where there
is system over-recovery or a filed rate violation.
B.
LaPSC more persuasively contends that the Commission
“did not reasonably explain the departure” from its “general
policy” of ordering refunds when consumers have paid unjust
and unreasonable rates. Id. at 48; cf. Third Order, 132 F.E.R.C.
¶ 61,133, at P 31 & n.62 (citing approval of the refund policy in
Westar Energy, Inc. v. FERC, 568 F.3d 985, 989 (D.C. Cir.
2009)). The Commission can depart from a prior policy or line
of precedent, but it must acknowledge that it is doing so and
provide a reasoned explanation. See FCC v. Fox Television
Stations, Inc., 556 U.S. 502, 515 (2009); Motor Vehicle Mfrs.
Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983).
The Commission’s primary explanation for denying
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LaPSC’s refund request was that a different “general policy”
applied in which refunds are denied in both cost allocation and
rate design cases. Fifth Order, 142 F.E.R.C. ¶ 61,211, at P 57;
see id. at PP 49–75. The Commission stated that it saw no reason
not to follow the “same approach here” because it viewed “the
issues of inclusion or exclusion of interruptible load in allocating
costs as a demand allocation dispute” — “a zero-sum game” for
the Entergy system — “rather than a case of cost over-recovery.”
Id. at P 61. In fact, the Commission’s decisions have relied on
specific factors rather than such a broad policy. For instance, in
cost allocation decisions where the utility over-recovered or
violated the filed rate, the Commission has ordered refunds. See,
e.g., Fifth Order, 142 F.E.R.C. ¶ 61,211, at PP 65, 69, 73 (citing
Nantahala Power & Light Co., 19 F.E.R.C. ¶ 61,152, at 61,280
(1982) (over-recovery)); Blue Ridge Power Agency v.
Appalachian Power Co., 58 F.E.R.C. ¶ 61,193, at 61,603 (1992)
(filed rate violation). Decisions denying refunds have generally
involved the possibility of under-recovery. See, e.g., Black Oak
Energy, LLC, 136 F.E.R.C. ¶ 61,040, at P 28 (2011); Occidental
Chemical Corp., 110 F.E.R.C. 61,378, at P 10 (2005). The
Commission’s citation of American Electric Power Service
Corp., 114 F.E.R.C. ¶ 61,288 (2006) — where, on accepting a
rate filed under FPA § 205, the Commission unsurprisingly did
not award refunds with respect to the lawful rates previously in
effect, id. at P 26 — hardly advances its explanation.
The Commission also relies on Southern Company
Services, Inc., 64 F.E.R.C. ¶ 61,033 (1993), in which, after
finding Southern had not met its burden under FPA § 205 to show
that its proposed cost classification would be just and reasonable,
it denied refunds because there were no “excess revenues to the
Southern System” and past “operational decisions . . . cannot be
undone.” Id. at 61,332. But one decision does not constitute a
“line[] of precedent,” Fifth Order, 142 F.E.R.C. ¶ 61,211, at PP
11, 54 (internal quotation marks omitted), much less offer a
13
comprehensive theory. The Commission has not pointed to such
a theory in Southern Company or any other decisions. The
premise of a “general policy of denial of refunds,” id. at P 57,
suggests a broader rule than the Commission’s decisions
establish. As Commission counsel acknowledged during oral
argument, its previous decisions do not speak directly to the
circumstances of this case. See Oral Arg. Tr. 15–16, 23–24.
Consequently, the Commission’s reliance on its “policy” does not
suffice to explain its decision.
A further problem is that the equitable factors relied on by
the Commission in previous refund denials were largely absent
here. In identifying its “policy,” the Commission pointed to the
following reasons for denying refunds: potential under-recovery
by the utility; consumers’ and utilities’ inability to revisit past
decisions; a “detrimental effect upon an organized market”;
different generations of consumers paying the surcharges and
receiving the past benefits; and the “complication and cost of
rerunning markets.” Fifth Order, 142 F.E.R.C. ¶ 61,211, at P 55
& n.127. The Commission recognized that “the danger of under-
recovery of costs in this case is not present.” Id. at P 63. It made
no mention of any “past decisions” by consumers, see id. at PP
63–64, or of inequities among different generations, or of
detrimental effects on any market.
The Commission identified two considerations as
warranting the denial of refunds in LaPSC’s case: the lack of
over-recovery by Entergy and “the fact that Entergy cannot
review and revisit past decisions were [the Commission] to order
a refund,” id. at P 63. Neither consideration carries the
Commission’s burden of reasoned explanation or ties this case to
the “long-standing policy,” id. at P 57 (quoting Occidental
Chemical Corp., 110 F.E.R.C. ¶ 61,378, at P 10 (2005)). The
Commission did not explain why a lack of over-recovery should
automatically negate refunds. And it neither identified any
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specific “past decisions” that Entergy could not revisit, nor
explained why that fact — presumably true in every refund
decision — was more significant here than in other decisions in
which it orders refunds.
To the extent the Commission maintains that it relied on
all the factors in its cited decisions (except under-recovery, which
it had explicitly rejected), the Fifth Order reveals otherwise. In
paragraph 55 and footnote 127, the Commission listed “equitable
considerations that [it] has examined” when denying refunds in
cost allocation and rate design decisions. See Fifth Order, 142
F.E.R.C. ¶ 61,211. Those considerations explained why the
“policy” existed, not why it applied to this case. Beyond reliance
by Entergy and its lack of over-recovery, the Commission did not
state that any other consideration mentioned in its precedent was
present here.
Although the Commission can “adher[e] to its standard
approach,” Westar Energy, 568 F.3d at 989, it cannot reasonably
apply a policy that is based on factors that it acknowledges are
not present in a given case. Invocation of its “policy” did not
eliminate the need for the Commission to consider the factual
circumstances here: As a result of an unjust and unreasonable
cost allocation, consumers in Louisiana paid their utility
companies too much while consumers in other states paid too
little, and refunds, if ordered, would transfer a subset of the total
overpayment to Entergy’s Louisiana operating companies from
other Entergy operating companies.
C.
The Commission maintains that it did weigh the equities
when it relied on Entergy’s lack of over-recovery and inability to
revisit past decisions. See Fifth Order, 142 F.E.R.C. ¶ 61,211, at
PP 61-64. Yet its analysis fails to provide an adequate
explanation for denying LaPSC’s refund request. The
15
Commission relied on the fact that Entergy did not receive more
revenue than it was entitled to receive in the aggregate, stating
that “the allocation of demand-related reserve costs . . . is a zero-
sum game in which the Entergy System receives no excess
revenues.” Id. at P 61. Intervenor Entergy Services, the agent for
Entergy’s operating companies, maintains that a lack of over-
recovery or filed rate violation is the only factor the Commission
need consider. It suggests that “where, as here, there is no tariff
violation or over recovery by utility shareholders, no ‘wrong’
exists to be rectified with refunds.” Intervenor’s Br. 13. Pointing
to the statement in Town of Concord that refunds are “akin to
restitution,” 955 F.2d at 75, Entergy Services concludes that the
Commission need only order refunds where a utility has been
unjustly enriched. This is not the rationale adopted by the
Commission in denying LaPSC’s refund requests, and the
agency’s “action cannot be upheld merely because findings might
have been made and considerations disclosed which would
justify” the decision. SEC v. Chenery Corp., 318 U.S. 80, 94
(1943) (emphasis added). Entergy Services’ analysis is also
contrary to the Commission’s apparent practice of analyzing
factors beyond over-recovery. The statement in Town of
Concord does little to advance Entergy Services’ suggested
approach inasmuch as that case involved a filed rate violation “of
the most minor, technical sort,” 955 F.2d at 75, where the charges
at issue were recoverable but not through the accounting
mechanism the utility had employed, id. at 69.
The Commission concluded that “an equitable ground
disfavoring refunds” was “the fact that Entergy cannot review
and revisit past decisions were we to order a refund.” Fifth
Order, 142 F.E.R.C. ¶ 61,211, at P 63. It stated that “operational
decisions made while the operating companies’ proposed cost
classification was in effect, and thus made in reliance on that
classification, cannot be undone.” Id. (quoting Southern Co.
Services, Inc., 64 F.E.R.C. ¶ 61,033, at 61,332 (1992)). Yet some
16
amount of reliance is likely to be present every time the
Commission considers ordering refunds. As long as decisions by
consumers and utilities respond to price, it is possible that they
would have altered their consumption or production decisions,
respectively, had they been faced with different price signals.
Because that is always true, “past decisions” in the abstract
cannot be the only factor against refunds. Phrased at that level of
generality, the same factor is present whenever the Commission
does order refunds.
The Commission did not identify any particular decisions
made by Entergy in reliance on the inclusion of interruptible load
in its cost allocation that in some way particularly weakened the
case for refunds. See Fifth Order, 142 F.E.R.C. ¶ 61,211, at PP
63–64. Neither did Entergy Services. See Intervenor’s Br. 18.
During oral argument, Commission counsel mentioned the
decision by Entergy’s subsidiaries “not to shave their peak load,”
which they might have done under a different cost allocation, see
Oral Arg. Tr. 18–19, but this too is a generic possibility of
reliance insufficient to distinguish other decisions in which the
Commission awards refunds based on unjust and unreasonable
rates. Once LaPSC filed its section 206 complaint in 1995,
Entergy was on notice that interruptible load could be ordered
removed from the calculation of peak load. See Exxon Co., 182
F.3d at 49–50; Pub. Serv. Co. of Colorado, 91 F.3d at 1490.
Unrebutted expert evidence of record offered by LaPSC indicated
that refunds between operating companies in the context of
billing errors were routine and not disruptive. See Affidavit of
Stephen J. Baron, ¶¶ 12, 13 (Jan. 19, 2010).
Accordingly, because the line of precedent on which the
Commission relied involved rationales that it concluded were
not present in LaPSC’s case, and because the existence of the
identified equitable factor is unclear and its relevance
inadequately explained, we grant the petition and remand the
17
matter to the Commission. It remains for the Commission on
remand to consider the relevant factors and weigh them against
one another, striking “a reasonable accommodation among
them.” Las Cruces TV Cable v. FCC, 645 F.2d 1041, 1047
(D.C. Cir. 1981); see Town of Concord, 955 F.2d at 76.