[00:00:02] Speaker 01:
Case number 16-1111, Old Dominion Electric Corporative Petitioner versus Federal Energy Regulatory Commission.

[00:00:11] Speaker 01:
Ms.

[00:00:11] Speaker 01:
Clare for the petitioner, Ms.

[00:00:13] Speaker 01:
Chu for the respondent.

[00:01:14] Speaker 00:
Good morning.

[00:01:15] Speaker 00:
Good morning, Your Honor.

[00:01:18] Speaker 00:
Adrienne Claire for Petitioner Old Dominion Electric Cooperative, or ODEC.

[00:01:22] Speaker 00:
I've reserved two minutes for rebuttal.

[00:01:25] Speaker 00:
During January of 2014, the region covered by PJM interconnection faced a polar vortex, which PJM itself described as the most challenging it had seen in its 87-year history.

[00:01:38] Speaker 00:
During that period, PJM made a number of emergency calls.

[00:01:41] Speaker 00:
One of those calls, or several of them, occurred for Old Dominion.

[00:01:44] Speaker 00:
which is where PJM contacted Old Dominion and asked it to purchase gas and produce electricity outside of the normal operating procedures.

[00:01:52] Speaker 00:
PJM supported Old Dominion's request for a waiver from the PJM tariff so that ODEC could be made whole because ODEC relied on PJM's assurances that it would be made whole when ODEC purchased gas in order to fuel its generating facilities.

[00:02:06] Speaker 00:
PJM supported that waiver request at FERC and advised FERC against the very confiscatory outcome that has happened in this case.

[00:02:13] Speaker 00:
Unfortunately for Old Dominion, no good deed goes unpunished.

[00:02:16] Speaker 03:
What's confiscatory when the contract itself obligated Old Dominion to, that's a whole point of generation capacity, they obligated them to be, and we're getting paid to be ready when called upon.

[00:02:30] Speaker 00:
Your Honor.

[00:02:30] Speaker 03:
That signal went up and they were supposed to respond.

[00:02:33] Speaker 00:
That's correct.

[00:02:34] Speaker 00:
What you just said, Your Honor, is correct, except that this happened in extraordinary circumstances where during the polar vortex,

[00:02:39] Speaker 00:
Units were supposed to be available and this was in Old Dominion's answer, we said this, it's record document 28.

[00:02:46] Speaker 00:
Units have an obligation, generation capacity resources, have an obligation to be available.

[00:02:50] Speaker 00:
Old Dominion's units were available.

[00:02:52] Speaker 00:
Typically what has to be available is during the day ahead and then real time commitment and dispatch.

[00:02:57] Speaker 03:
Typically, isn't the limits, our limits of a contract obligation what happens typically?

[00:03:02] Speaker 03:
I mean, you're not arguing force majeure here, right?

[00:03:06] Speaker 03:
That this actually displaces the,

[00:03:10] Speaker 03:
factual operation.

[00:03:11] Speaker 00:
That's correct, Your Honor, we're not.

[00:03:12] Speaker 03:
This is just, yeah, there's highs and there's lows and there's ordinary days, but that's part of any long-term contract in

[00:03:21] Speaker 03:
energy markets and elsewhere.

[00:03:22] Speaker 00:
This contract by PJM's own admission, this contract, the tariff obligation for a generation capacity resource did not obligate Old Dominion in having to be available, did not obligate Old Dominion to have to be available after the day ahead closed and then have its units committed, which is when this all occurred.

[00:03:39] Speaker 00:
I would also point out, Your Honor, that that is not the basis of Burke's rejection of the waiver.

[00:03:43] Speaker 03:
Your position was all along that

[00:03:47] Speaker 03:
But there's nothing in the contract that authorizes these payments.

[00:03:50] Speaker 03:
So those are nothing.

[00:03:51] Speaker 03:
Right, what you're seeking here is not, the equitable relief you're seeking here is not something that the contract itself permits.

[00:04:00] Speaker 00:
That's right, Your Honor.

[00:04:00] Speaker 00:
As the Court has recognized, waivers are usually for some exception from what the tariff specifically provides.

[00:04:06] Speaker 00:
That's correct.

[00:04:07] Speaker 00:
However, what we're complaining about today in the error that the Commission made is doing this exact analysis that Your Honor is, whether or not this circumstance

[00:04:16] Speaker 00:
satisfied the waiver criteria.

[00:04:18] Speaker 00:
What the commission did is rejected Old Dominion's waiver request on the basis of the foul rate doctrine and retroactive rate making.

[00:04:24] Speaker 00:
That is the error that we're seeking relief from the court from.

[00:04:27] Speaker 00:
The merits of ODAC's waiver request is exactly what we believe the commission should have looked at, and they failed to do that.

[00:04:33] Speaker 00:
And contrary to their precedent, we had

[00:04:36] Speaker 00:
67 cases that we attached to a petitioner's opening brief.

[00:04:40] Speaker 00:
In three of those cases, only three out of the 67, each of those 67 cases dealt with retroactive waiver requests.

[00:04:46] Speaker 00:
In three of the 67, those were the only ones we could find where the commission did not undertake its waiver analysis.

[00:04:52] Speaker 00:
And those three are the three that dealt with the polar vortex, the Duke case, which you're hearing today, and then a New Jersey Energy Associates case that has not come up for appeal.

[00:05:00] Speaker 00:
In every other case that we could find where there was a retroactive waiver request, and the Commission didn't refute this in its brief, every one of those cases the Commission went through the waiver analysis.

[00:05:10] Speaker 00:
And so the error that the Commission made is departing from that precedent without any reason decision.

[00:05:14] Speaker 00:
In their first order, deny the rehearing, I mean, excuse me, the petition.

[00:05:18] Speaker 04:
Why, excuse me, but why would the Commission have to go through that process if there was in fact a violation of the file rate document?

[00:05:26] Speaker 00:
Your Honor, in other cases where there had been arguments about whether or not there was a violation of the file rate doctrine, such as the California ISO case, the Commission nevertheless went through and made the waiver analysis.

[00:05:38] Speaker 04:
I'd like to address whether or not we have... But, excuse me, if there's a violation of the file rate doctrine, isn't that the end of the analysis?

[00:05:48] Speaker 00:
We don't believe that there was a violation of the File Rape Doctrine.

[00:05:50] Speaker 04:
I understand you don't believe it, but if there was, as the Commission believed here, why would it have to go on and look any further?

[00:05:57] Speaker 04:
Isn't that the end of the case?

[00:05:59] Speaker 04:
We don't believe so, Your Honor, because in the other cases where the Commission... But tell me, though, don't cite other cases.

[00:06:05] Speaker 04:
Just explain to me why I'm wrong logically.

[00:06:09] Speaker 04:
If there is, as Ferck found here, a violation of the File Rape Doctrine, why doesn't that end the matter?

[00:06:16] Speaker 00:
If there was a violation of the file rate doctrine, Your Honor, we agree.

[00:06:19] Speaker 04:
There would no... Okay, so, okay, excellent.

[00:06:21] Speaker 04:
So then the question before us is whether FERC was right, that the waiver would have produced a violation of the file rate doctrine.

[00:06:30] Speaker 04:
That's the question for us.

[00:06:33] Speaker 00:
I would submit, Your Honor, there are two questions.

[00:06:35] Speaker 00:
First, whether or not FERC was right, and I would like to answer that question.

[00:06:38] Speaker 00:
But then also, what we complained of is that the Commission, in similar circumstances, consistently has undergone the waiver analysis in any event.

[00:06:46] Speaker 00:
Turning to the first question.

[00:06:48] Speaker 03:
How many of those cases predated Columbia Gas?

[00:06:52] Speaker 00:
Or Columbia Gas 3, I guess.

[00:06:53] Speaker 00:
I think they post-date.

[00:06:55] Speaker 00:
All of them were after 2002.

[00:06:56] Speaker 00:
I think, Your Honor, I'd have to go back and look at the appendix.

[00:07:00] Speaker 00:
On the issue of notice, and it starts at A16.

[00:07:03] Speaker 00:
I just don't have it here, Your Honor.

[00:07:04] Speaker 00:
I could check if you'd like.

[00:07:06] Speaker 03:
Go ahead with your point.

[00:07:07] Speaker 00:
Thank you.

[00:07:08] Speaker 00:
On the issue of the foul rate doctrine and prior notice, the commission determined that the foul rate doctrine prevented – and the really intractive rate-making – prevented – prohibited the commission from granting ODAC's waiver request.

[00:07:20] Speaker 00:
However, there was sufficient – we believe there was sufficient notice provided in this case for a few reasons.

[00:07:25] Speaker 00:
First, these are market-based rates, not a stated rate like was at issue in the Columbia Gas case, but a market-based rate.

[00:07:35] Speaker 00:
for one of the yes your honor there was a one thousand dollar offer cap and that would have been exceeded correctly it would have your honor except that's not a formula-based rate that's just a flat offer cap the offer cap is a flat offer cap in old dominion circumstances however your honor there was a PJM gave notice on january twenty first of two thousand fourteen to all of its stakeholders and ratepayers i want to ask you about that document this is uh... this is at uh...

[00:08:06] Speaker 04:
Georgia Pennings 137, it says, it says, notice to market participants.

[00:08:13] Speaker 04:
Right?

[00:08:14] Speaker 04:
Who are they?

[00:08:16] Speaker 00:
Market participants would be anyone participating in the PGA markets.

[00:08:19] Speaker 00:
It includes rate payers, generators, transmission providers, sellers of energy, purchasers of energy, and capacity.

[00:08:27] Speaker 04:
Does that include homebuyers, people in their houses?

[00:08:30] Speaker 00:
I'm sorry, Your Honor.

[00:08:31] Speaker 04:
Customers?

[00:08:32] Speaker 04:
Does that include customers, you know, people?

[00:08:34] Speaker 00:
It does include customers, Your Honor, as their market participants.

[00:08:37] Speaker 04:
I don't know if I would even... Explain to me how a notice on their website is sufficient to provide the Columbia Gas required notice to customers.

[00:08:53] Speaker 04:
This wasn't published.

[00:08:54] Speaker 04:
This wasn't filed with Berg.

[00:08:56] Speaker 04:
It was just put on their website, right?

[00:08:58] Speaker 00:
That's right, Your Honor.

[00:08:59] Speaker 04:
How is that sufficient notice for customers?

[00:09:02] Speaker 04:
Are customers supposed to know what's on the PJM website?

[00:09:10] Speaker 00:
Yes, Your Honor.

[00:09:11] Speaker 00:
Old Dominion is a customer under PJM tariff, is a market participant, and pays attention to these very notices.

[00:09:19] Speaker 00:
It's the exact same way that PJM would notice emergency circumstances, such as the polar vortex.

[00:09:25] Speaker 00:
That's the mechanism for parties to understand, including customers, to understand issuances from PJM.

[00:09:30] Speaker 04:
But you mean, who do you mean by customer there?

[00:09:33] Speaker 00:
In this instance, the customers were those who were purchasing energy and capacity in the PJM markets.

[00:09:39] Speaker 00:
And is that a homeowner?

[00:09:40] Speaker 00:
That is not a homeowner, Your Honor.

[00:09:42] Speaker 00:
Load serving it to see such as Old Dominion purchase on behalf of these in-use customers.

[00:09:50] Speaker 00:
Turning back to notice.

[00:09:51] Speaker 03:
I want to get back under your, go ahead and finish your notice point and then I'll come.

[00:09:55] Speaker 00:
Thank you, Your Honor.

[00:09:56] Speaker 00:
The first was that this is a market-based rate, not a stated rate.

[00:09:58] Speaker 03:
Well, that's the one I want to respond to.

[00:10:00] Speaker 00:
Thank you.

[00:10:00] Speaker 03:
So if it's a market-based rate, and your theory is that when it's market rate, that lets people know these things are going to go up and down.

[00:10:10] Speaker 03:
That's right, Your Honor.

[00:10:10] Speaker 03:
And so here we have an unusual up in the rate.

[00:10:15] Speaker 03:
and we're entitled to compensation.

[00:10:17] Speaker 03:
Does that mean if there's an unusual down, you guys are making far more money, everything's a lot cheaper than you ever thought, that you then, customers are entitled to a rebate?

[00:10:27] Speaker 03:
Or is this a one way?

[00:10:29] Speaker 00:
It is not one way, Your Honor.

[00:10:30] Speaker 00:
However, I think that there is... Is there a heaven?

[00:10:32] Speaker 00:
The nose is... Not to my knowledge.

[00:10:34] Speaker 00:
There have been times, Your Honor, I shouldn't say that.

[00:10:36] Speaker 00:
There have been times where I'm sure that rates have been adjusted downward.

[00:10:40] Speaker 00:
There have been tariff waivers.

[00:10:41] Speaker 00:
There have been waivers, some of the 67 cases, and I can't say which one.

[00:10:44] Speaker 00:
There have been waivers where the Commission has noted the effect of a waiver is to cause prices to go down.

[00:10:49] Speaker 00:
It was the California ISO case.

[00:10:51] Speaker 00:
The effect of the waiver that the Commission granted resulted in a price reduction.

[00:10:54] Speaker 00:
That was one of the things that the Commission looked to, to grant in favor of the waiver.

[00:10:59] Speaker 00:
So on the issue of notice, in addition to the fact that this was a market-based and not a stated rate tariff, customers were also put on notice by that January 21st notice issued by PJM.

[00:11:09] Speaker 00:
I would note that that January 21st notice did only speak to above $1,000 offer cap.

[00:11:15] Speaker 00:
It was in advance of Old Dominion's above $1,000 date, because that happened for Old Dominion on January 21st and 22nd.

[00:11:22] Speaker 00:
And then also, the PJM tariff has a provision

[00:11:25] Speaker 00:
that states that PJM is able to take emergency measures in order to preserve reliability.

[00:11:30] Speaker 00:
And that's what PJM did here in the context of the polar vortex.

[00:11:34] Speaker 00:
So for us from Old Dominion.

[00:11:36] Speaker 00:
Who pays?

[00:11:37] Speaker 03:
If you were to win, where does this money come from?

[00:11:40] Speaker 00:
If we win first from PJM, and then ultimately PJM will recover that from its shareholders and rate payers, including Old Dominion incidentally.

[00:11:47] Speaker 03:
And the evidence that those folks had noticed that they were going to have to cough up

[00:11:55] Speaker 03:
I forget, but it's a large amount of money.

[00:11:57] Speaker 03:
It's $14.9 million, Your Honor.

[00:12:00] Speaker 03:
Was the nature of the market rates?

[00:12:05] Speaker 00:
It was the nature of the market rates.

[00:12:07] Speaker 00:
It's all of these.

[00:12:08] Speaker 00:
So it's the market-based rate, the fact that we were in emergency circumstances, and PJM is authorized to take extraordinary measures.

[00:12:13] Speaker 03:
Why isn't the cap

[00:12:15] Speaker 03:
It's a market-based rate that is capped.

[00:12:21] Speaker 03:
So that's an assurance to customers that however it moves, it's never going over this.

[00:12:28] Speaker 03:
And now it's going over this.

[00:12:31] Speaker 00:
For the above $1,000, Your Honor, it is, because on that above $1,000, PJM issued notice saying that it was going to seek a waiver for a cost above $1,000.

[00:12:41] Speaker 03:
Well, to seek, that doesn't mean they've got it.

[00:12:43] Speaker 03:
That doesn't tell me that I'm going to have to pay over $1,000.

[00:12:48] Speaker 00:
We would say, Your Honor, that that gave customers notice.

[00:12:51] Speaker 00:
PJM said that it was going to ask for exactly that.

[00:12:55] Speaker 03:
P.J., I'm subsequently... Is there any case where if someone says I'm going to ask for something, Council's notice that your contractually agreed upon rate is gone as of that day?

[00:13:04] Speaker 00:
No, not that I'm aware of, Your Honor.

[00:13:06] Speaker 00:
Not that I can tell you, but standing here today.

[00:13:11] Speaker 00:
Because we believe there was not a notice violation, however, we don't believe that the Commission was right in ruling against the waiver, summarily dismissing the waiver, excuse me, on the basis of the foul-break doctrine of the rule against retroactive rate-making.

[00:13:22] Speaker 00:
The Commission, in its orders and in its

[00:13:25] Speaker 00:
I apologize, I thought Judge Taylor had a question.

[00:13:29] Speaker 00:
The commission in its orders below and in its briefs here cited a number of cases and said essentially that the cases that Old Dominion has presented where the commission repeatedly undertook the waiver analysis despite arguments against the file rate doctrine retroactive rate making didn't apply here because they were mostly dealing with non-rate terms and conditions.

[00:13:49] Speaker 00:
That's actually a standard that we'd never seen before but in any event doesn't apply even for the cases that the commission cited.

[00:13:55] Speaker 00:
There were three.

[00:13:55] Speaker 00:
There was an American Electric Power case that the Commission said dealt with non-rate terms and conditions.

[00:14:00] Speaker 00:
That actually dealt with waiver of a past period deadline, as Ferb said in its brief, but that deadline dealt with submitting a study for an interconnection which, had the waiver not been granted,

[00:14:10] Speaker 00:
the applicant for the waiver would have had to pay some part of $52 million of network upgrade.

[00:14:15] Speaker 00:
So in our opinion, that's hardly a non-rate term or condition.

[00:14:19] Speaker 00:
Each of the other cases is the same.

[00:14:21] Speaker 00:
The Appalachian Power Company case, same thing.

[00:14:24] Speaker 04:
We have your argument.

[00:14:25] Speaker 04:
We'll give you back time for rebuttal, but thank you very much.

[00:14:37] Speaker 04:
Good morning.

[00:14:38] Speaker 02:
Good morning.

[00:14:39] Speaker 02:
May it please the court, Susanna Chu for FERC.

[00:14:46] Speaker 02:
I'm sorry.

[00:14:47] Speaker 02:
Following up on a question from Judge Padel, the question before the court is whether the commission correctly found the filed great doctrine to apply on the facts of this case.

[00:15:00] Speaker 02:
And as Your Honor Judge Mallette was pointing out,

[00:15:07] Speaker 02:
You can't have notice here on the basis of the PJM tariff.

[00:15:12] Speaker 02:
First, the PJM tariff expressly caps offers at $1,000 per megawatt hour.

[00:15:19] Speaker 02:
So under the tariff as it existed in January 2014, all customers expect that the costs of energy are going to be capped at this rate.

[00:15:29] Speaker 02:
And in addition,

[00:15:32] Speaker 02:
Let me back up a little bit.

[00:15:34] Speaker 02:
The offer cap only relates to about $3 million out of the $15 or so million that Old Dominion is seeking recovery for.

[00:15:42] Speaker 02:
The remainder of the $15 million actually relates to the fuel costs that they incurred to get their plants available and online, but the fuel wasn't actually burned because the generators didn't run.

[00:16:03] Speaker 03:
in order for all the news is happening again that the weather was really unusual how you have this system where generation is supposed to serve a day in advance saying here's what we're ready to offer and I take it okay we think we're gonna need this much stand by happened very regularly that then when the next day comes use some we didn't use others or is it much more reliable if you call and say I'm gonna use your capacity

[00:16:32] Speaker 03:
I can pretty much bank on you using my capacity so I can invest my resources.

[00:16:38] Speaker 02:
Your Honor, I'm not entirely sure, but I will say these were challenging circumstances.

[00:16:46] Speaker 03:
I'm just trying to understand how people think that if

[00:16:49] Speaker 03:
they get notice that, you know, they offer their rate and they say, fine, we're taking you up on it.

[00:16:55] Speaker 03:
Is it always used or is it?

[00:16:57] Speaker 02:
No, not always.

[00:16:58] Speaker 02:
And it's actually contemplated in the tariff.

[00:17:00] Speaker 02:
The tariff contemplates that sometimes PJM will dispatch generation units and then cancel that dispatch or cut it short.

[00:17:09] Speaker 02:
And under the tariff, if that happens,

[00:17:11] Speaker 02:
The gas that the generator purchased to respond to the dispatch instruction, that gas is not recovered.

[00:17:19] Speaker 02:
Those gas costs are not recovered because gas costs are usually

[00:17:24] Speaker 02:
part of the generator's business decisions.

[00:17:28] Speaker 02:
It's a risk that's allocated to them.

[00:17:30] Speaker 02:
And in some cases, it's very beneficial.

[00:17:32] Speaker 02:
They may be able to purchase gas at very low prices in order to run the plants.

[00:17:37] Speaker 02:
And it turns out that the prices in the day ahead energy market are very high.

[00:17:43] Speaker 02:
So it ends up being profitable for them.

[00:17:46] Speaker 02:
So as you were pointing out, Judge Millett, there are highs and there are lows in this market.

[00:17:52] Speaker 02:
and the tariff covers all of these situations, it's important to remember that Old Dominion actually concedes that there is no recovery under the tariff.

[00:18:02] Speaker 02:
So, in order to get recovery, the Court would have to find that there's no filed rate doctrine issue here, and it's permissible for the Commission to go back and retroactively change these rates.

[00:18:16] Speaker 04:
So, Ms.

[00:18:17] Speaker 04:
Chu, could I take you back to the PJM this January 21 statement?

[00:18:25] Speaker 04:
Could you just explain to us why that didn't give adequate notice?

[00:18:31] Speaker 02:
Sure, Your Honor.

[00:18:33] Speaker 02:
Well, first, to clarify, this only relates to the offer cap.

[00:18:36] Speaker 02:
So again, it only relates to $3 million out of the 15.

[00:18:40] Speaker 02:
Relating to market participants... So with respect to the...

[00:18:46] Speaker 04:
non-offer cap.

[00:18:47] Speaker 04:
There was no basis for notice at all.

[00:18:49] Speaker 04:
Is that your point?

[00:18:50] Speaker 02:
Yes, that's right, Your Honor.

[00:18:51] Speaker 04:
Okay, so this is what I see.

[00:18:55] Speaker 04:
Okay, so go ahead with respect to this then.

[00:18:57] Speaker 04:
Why didn't this provide notice?

[00:19:00] Speaker 02:
So this was posted on PJM's website and when you look at this, this is at JA 137 of course, at first it seems to be a reminder to generators in Old Dominion's position that

[00:19:17] Speaker 02:
There are extreme weather conditions going on, but generators still have an obligation to offer into the markets, and they have an obligation to offer in subject to the $1,000 offer cap.

[00:19:32] Speaker 02:
So it was a reminder to everyone that they have to be online, and they have to meet their obligations under the tariff.

[00:19:39] Speaker 02:
And secondly,

[00:19:43] Speaker 02:
this statement goes on to say that PJM will try to make these generators whole.

[00:19:51] Speaker 02:
It's recognizing that this is a situation where gas costs are very high.

[00:19:57] Speaker 02:
And it's possible that generators in Old Dominion's position will lose money.

[00:20:03] Speaker 02:
So PJM is saying that we'll try to make these generators whole.

[00:20:09] Speaker 02:
But this is, of course, no guarantee.

[00:20:13] Speaker 02:
The court's cases under the filed rate doctrine, in the cases where notice has been found, there have been much stronger indications of notice.

[00:20:25] Speaker 02:
There have been decisions by this court or orders by the commission putting potential rate pairs on notice that there may be a retroactive surcharge.

[00:20:37] Speaker 02:
But there's no such circumstance in this case.

[00:20:41] Speaker 03:
When they say, well, it's a market rate, you should have known.

[00:20:44] Speaker 02:
Right, but the market rate cannot provide notice that the rates are going to go up beyond the limitations.

[00:20:53] Speaker 03:
If there weren't a cap here, I know there is, but if you had a situation where there weren't a cap and it was a market rate, would that count as the type of notice of fluctuations that they want here or not?

[00:21:05] Speaker 03:
They say the market rate is sort of part of the notice.

[00:21:08] Speaker 02:
Oh, right.

[00:21:09] Speaker 02:
Well, Your Honor, no.

[00:21:10] Speaker 02:
The answer, I think, is no.

[00:21:12] Speaker 02:
There's an explicit cap here.

[00:21:14] Speaker 03:
No, I said there weren't a cap.

[00:21:16] Speaker 03:
Oh, if there were a cap.

[00:21:17] Speaker 03:
Market rate by itself.

[00:21:18] Speaker 03:
Would a tariff it had just market rates as the term?

[00:21:23] Speaker 03:
Would that qualify as one of those tariff terms that by its nature gives you notice that there's going to be fluctuations even this extreme?

[00:21:35] Speaker 02:
I don't think so, Your Honor, because in addition to the offer cap, there are also highly detailed provisions.

[00:21:42] Speaker 02:
This is, of course, a 3,000-page tariff.

[00:21:45] Speaker 02:
And there are very explicit provisions governing the kinds of costs that generators can recover under all kinds of circumstances.

[00:21:53] Speaker 02:
So, for example, a generator can clear in the day ahead market and receive compensation for that.

[00:21:59] Speaker 02:
a generator can be dispatched after the close of the market and receive compensation if it's dispatched by PJM and actually runs.

[00:22:10] Speaker 02:
And there are some costs that can be recovered if a generator is dispatched, but the dispatch is either canceled or cut short.

[00:22:20] Speaker 02:
But as Ulda Minyak conceives, the specific costs that they are asking for here are

[00:22:26] Speaker 02:
not covered under the tariff.

[00:22:28] Speaker 02:
They're not allowed under the tariff.

[00:22:30] Speaker 02:
So we would have to, after the fact, change the rules to allow the recovery.

[00:22:39] Speaker 02:
So, Your Honors, the Commission here was sensitive to the challenges facing all market participants during this time period, and it did everything in its power to address the market issues that arose.

[00:22:52] Speaker 02:
But in this particular circumstance, where Old Dominion came to the agency five months after the events took place, the Commission

[00:23:01] Speaker 02:
correctly found that its hands were tied and it could not provide the relief.

[00:23:05] Speaker 03:
Commissioner Moller relied on the MISO case.

[00:23:08] Speaker 03:
Can you tell me why Commissioner Moller was wrong?

[00:23:13] Speaker 02:
Yes, Your Honor.

[00:23:14] Speaker 02:
Commissioner Moller was, I believe, troubled by the equities of the circumstance and

[00:23:21] Speaker 02:
as I indicated, the Commission in general was troubled by the equities.

[00:23:25] Speaker 02:
But Commissioner Mueller was talking about the prior notice requirement under the Federal Power Act, which can be waived.

[00:23:36] Speaker 02:
The 60-day statutory notice requirement can be waived by the Commission.

[00:23:42] Speaker 02:
And here he was referring to the

[00:23:48] Speaker 02:
Midwest ISO case involving specific payments.

[00:23:52] Speaker 02:
That case involved an actual agreement between the system operator and the generation owner to provide compensation for a particular kind of program, for participation in a reliability program.

[00:24:07] Speaker 03:
Is that agreement in the tariff?

[00:24:10] Speaker 02:
I believe it was separate from the tariff.

[00:24:12] Speaker 03:
So wouldn't that have violated the

[00:24:19] Speaker 02:
Well, first, Your Honor, I will point out that this case was a 2013 case that predated West Deptford, and certainly the Commission is... Post-8th Columbia Pass 3.

[00:24:30] Speaker 02:
That's right.

[00:24:31] Speaker 02:
That's right.

[00:24:31] Speaker 02:
The Commission is especially sensitive to these issues after West Deptford, which was 2014.

[00:24:39] Speaker 02:
So this Midwest ISO case, the Commission, in its rehearing order,

[00:24:45] Speaker 02:
at paragraph 20, JA 48, actually found that repairs may have had notice in this case.

[00:24:52] Speaker 03:
What was the source of the notice in that case?

[00:24:56] Speaker 02:
It may have been that the tariff provisions in that case, it contemplated rates for this particular kind of reliability service.

[00:25:13] Speaker 02:
In that particular case, I believe the Commission actually determined that the tariff itself

[00:25:20] Speaker 02:
lacked sufficient detail to constitute a filed rate mechanism.

[00:25:24] Speaker 02:
And so separate agreements had to be filed in order to provide the rates that were associated.

[00:25:29] Speaker 03:
This separate agreement had been filed?

[00:25:31] Speaker 02:
Right.

[00:25:32] Speaker 02:
I believe so.

[00:25:33] Speaker 02:
Well, the agreement, I think it may have been filed late.

[00:25:36] Speaker 02:
I'm not sure, Your Honor, when it was filed.

[00:25:39] Speaker 02:
But it was an agreement that was contemplated by the commission in a prior order, I believe.

[00:25:44] Speaker 03:
One last quick thing.

[00:25:45] Speaker 03:
What is the status of FERC's review of this?

[00:25:48] Speaker 03:
Because FERC decided to review this tariff after this event.

[00:25:52] Speaker 03:
Do you know what the status of that is?

[00:25:54] Speaker 02:
Oh, yes, Your Honor.

[00:25:55] Speaker 02:
FERC actually initiated at least two different proceedings or responded to two different proceedings relating to this.

[00:26:04] Speaker 02:
In one of them, I believe PJM has submitted compliance filings in response to the agency's orders.

[00:26:14] Speaker 02:
And I believe there is actually greater supply flexibility now to

[00:26:19] Speaker 02:
to hopefully address the situation in the event it arises.

[00:26:24] Speaker 02:
Hopefully generators will be able to better match their bids.

[00:26:29] Speaker 02:
The agency proceeding is so ongoing, I take it.

[00:26:36] Speaker 02:
It might potentially be ongoing, but PJM has issued changes.

[00:26:42] Speaker 02:
And in addition, I'll also point out that the offer cap actually has been lifted from $1,000 to $2,000 under a commission order in perhaps 2015.

[00:26:57] Speaker 02:
Thank you very much.

[00:27:05] Speaker 00:
Thank you, Your Honor.

[00:27:06] Speaker 00:
Just a few points on rebuttal.

[00:27:08] Speaker 00:
On the issue of notice, there was an exchange with Judge Tatel and I believe also with Judge Millett about notice and which ratepayers got it.

[00:27:17] Speaker 00:
I wanted to just remind, of course, that FERC can't effectively give notice to ratepayers in their individual homes.

[00:27:23] Speaker 00:
FERC's jurisdiction is wholesale, not down to the retail level, and so these notices

[00:27:27] Speaker 00:
posted on the website and filings at FERC are the way that PJM, the wholesale entity, gives notice to the extent of FERC's jurisdiction.

[00:27:35] Speaker 04:
Is it, Miss, you said that this notice that's on the website deals only with the offer cap, which is $3 million of what you're requesting.

[00:27:45] Speaker 04:
Is there any basis for notice with respect to everything else you're requesting?

[00:27:50] Speaker 00:
There is, Your Honor.

[00:27:51] Speaker 00:
Judge Taylor, the points that I made, which were we believe that the market-based rate nature of this tariff

[00:27:57] Speaker 00:
The fact that it's not a stated rate at all, and customers are aware that as demand and availability of resources fluctuate, so too will their prices.

[00:28:06] Speaker 00:
And then we also point to the fact that PJM has tariff provisions that allow it to take emergency measures, appropriate measures, excuse me, in emergency circumstances to preserve reliability.

[00:28:16] Speaker 00:
And then also, as Ms.

[00:28:18] Speaker 00:
Chu said, although our claims, Old Dominion's claim, doesn't fit squarely within these provisions, there are provisions in the PJM tariff

[00:28:25] Speaker 00:
that allow for generators to be made whole beyond and above the market-based rate.

[00:28:29] Speaker 00:
And that's the start-up and no-load costs that were the subject of ODEC's second claim.

[00:28:33] Speaker 00:
There were three categories, the above 1,000, the start-up and no-load, cancel dispatch, and the curtailed dispatch.

[00:28:40] Speaker 00:
And those provisions allow for recovery beyond the market-based rate, although the start-up and no-load costs, which is what Old Dominion sought a waiver of, we didn't fit exactly within start-up and no-load costs and asked to be made whole beyond that.

[00:28:52] Speaker 00:
One other point.

[00:28:54] Speaker 00:
There was a discussion about the MISO case.

[00:28:56] Speaker 00:
And Judge Millett, you asked what was the notice there.

[00:28:58] Speaker 00:
And this is covered in page 21 of our opening brief.

[00:29:02] Speaker 00:
In the MISO case, the tariff provision at issue specifically said that units was called an SSR unit.

[00:29:08] Speaker 00:
But units that were SSR units would qualify as long as they were subject to an executed agreement.

[00:29:13] Speaker 00:
There was not an executed agreement in place.

[00:29:15] Speaker 00:
FERC granted a waiver retroactively back because there wasn't this executed agreement.

[00:29:20] Speaker 00:
So again, FERC consistently in all cases

[00:29:23] Speaker 00:
except for the three, with respect to the polar vortex, made the waiver analysis, found that there was sufficient notice apparently, and still did that four-part analysis, which is what we're asking for here, not whether or not the merits of the waiver – and there were questions about, you know, aren't you obligated to sort of be here anyway?

[00:29:40] Speaker 00:
We believe that we

[00:29:42] Speaker 00:
did more than we had to do and, of course, satisfied our tariff obligations.

[00:29:45] Speaker 00:
But in any event, exactly that exchange is what we should have had with the Commission.

[00:29:49] Speaker 00:
The Commission stopped short by saying that waiver was prohibited by the Fault Rate Doctrine and the Rule Against Fractual Act of Rape Making.

[00:29:56] Speaker 00:
Thank you.

[00:29:57] Speaker 04:
Thank you very much.

[00:29:57] Speaker 04:
The case is submitted.