MPS Merchant Serv. v. FERC, No. 15-73803 (9th Cir. 2016)
Annotate this CasePetitioners seek review of FERC's determination that various energy companies committed tariff violations in California during the summer of 2000. As part of a deregulation program, California created two nonprofit entities: the California Power Exchange Corporation (“CalPX”) and the California Independent System Operator Corporation (“Cal-ISO”). Both entities were subject to FERC jurisdiction, with CalPX operating pursuant to a FERC-approved tariff and wholesale rate schedule. The Cal-ISO tariff comprehensively regulated California’s power markets, and incorporated the Market Monitoring and Information Protocol (“MMIP”), which set forth rules for identifying and protecting against abuses of market power. The court concluded that FERC’s determination that Shell, MPS, and Illinova (“sellers”) violated the Cal-ISO tariff and MMIP during the Summer Period was not arbitrary, capricious, or an abuse of discretion. In this case, FERC reasonably interpreted the Cal-ISO tariff and the MMIP according to the plain text of those documents. Therefore, the court rejected the sellers’ claims that the tariff and MMIP did not proscribe the practices identified by the agency. Furthermore, FERC’s interpretation of the Cal-ISO tariff and the MMIP finds support not only in text, but in policy as well. The court concluded that FERC reasonably interpreted the Cal-ISO tariff and the MMIP to prohibit the practices of False Export, False Load Scheduling and Anomalous Bidding. In addition, the agency reasonably concluded that the tariff and MMIP sufficed to put sellers on notice that such practices were not permitted. The court also concluded that FERC reasonably concluded that the sellers engaged during the Summer Period in the practices deemed tariff violations by the orders on review. Finally, the court concluded that FERC’s Summer Period determinations regarding APX and BP were not arbitrary, capricious, or an abuse of discretion. Accordingly, the court denied the petitions for review in part and dismissed in part.
Court Description: Federal Energy Regulatory Commission. The panel denied in part and dismissed in part consolidated petitions for review brought by various power companies, and held that the Federal Energy Regulatory Commission (“FERC”) did not arbitrarily and capriciously determine that the energy companies committed tariff violations in California during the summer of 2000. As part of deregulating its investor-owned, regulated, vertically integrated electric utility market, California created two non-profit entities: the California Power Exchange Corporation (CalPX) and the California Independent System Operator Corporation (Cal-ISO). Both entities were subject to FERC jurisdiction, with CalPX operating pursuant to a FERC-approved tariff and wholesale rate schedule. The tariff incorporated a protocol, the Market Monitoring and Information Protocol, which set forth rules for identifying and protecting against abuses of market power. The panel held that FERC’s determination – that electric sellers Shell Energy North America, LP, MPS Merchant Services, Inc., and Illinova Corporation violated the Cal-ISO tariff and Market Monitoring and Information Protocol – was not arbitrary, capricious, or an abuse of discretion. Specifically, the panel held that FERC reasonably interpreted the Cal-ISO tariff and Market Monitoring and Information Protocol to prohibit the practices of false export, false load MPS MERCHANT SERVICES V. FERC 9 scheduling, and Types II and III anomalous bidding. The panel further held that FERC reasonably concluded that the sellers engaged during the Summer Period (the period from May 1, 2000, to October 1, 2000) in the practices deemed tariff violations by the orders on review. The panel further held that FERC’s Summer Period determinations regarding APX, Inc., and BP Energy Co. were not arbitrary, capricious, or an abuse of discretion. The panel held that FERC reasonably determined that APX engaged in economic withholding and overscheduling, and therefore violated the Cal-ISO tariff. Finally, the panel held that because FERC’s remedial order is not final, the panel lacked appellate jurisdiction over it.
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