[00:00:01] Speaker 00: Case number 15-1450, Seminole Electric Cooperative Inc. [00:00:05] Speaker 00: Petitioner vs. Federal Energy Regulatory Commission. [00:00:09] Speaker 00: Mr. Janaki for petitioner, Mr. Fulton for respondent, Mr. Shepard for intervener. [00:00:51] Speaker 03: Good morning, Your Honors. [00:00:52] Speaker 03: My name is Jeff Janicki, and I represent the petitioner Seminole Electric Cooperative. [00:00:57] Speaker 03: And with me at Council's table is Kimberley Frank. [00:01:00] Speaker 03: If I may, I'd like to reserve three minutes for rebuttal. [00:01:03] Speaker 03: This case presents two issues. [00:01:05] Speaker 03: First, whether FERC-regulated utilities can impose different charges for the same service despite having precisely the same tariff language. [00:01:13] Speaker 03: And second, whether a contract that limits challenges to the correctness of bills imposes a time limit on the refunds arising from tariff violations. [00:01:22] Speaker 03: We submit that the answer to both questions is no. [00:01:25] Speaker 03: As to the first issue, one thing must be made clear from the outset. [00:01:28] Speaker 03: This case is about Burke's decision to allow the utilities it regulates to choose the interpretation that they desire without so much as telling anyone what interpretation they're going to apply. [00:01:38] Speaker 03: This is arbitrary and precarious for multiple reasons, as I will discuss. [00:01:43] Speaker 03: First, by way of background, Schedule IV, the Energy and Balance Provision, was added to the Florida Power and Light Tariff pursuant to Order 890. [00:01:53] Speaker 03: In mandating that provision for all transmission providers, Burke explained that its goals were to one, reduce the potential for undue discrimination, two, increase transparency, three, reduce confusion resulting from the prior lack of consistency, and four, resolve ambiguities. [00:02:10] Speaker 05: And aren't all of those goals met with either interpretation, either apportionment or non-apportionment? [00:02:16] Speaker 03: Well, in fact, FERC expressly said that Order 890 standardized the charges for energy and balance service, not that it just increased consistency as to the general approach to calculating them, but it standardized the charges themselves. [00:02:32] Speaker 03: And so we've, as we detailed in our brief, why, we detailed in our brief. [00:02:37] Speaker 05: Standardizing the charges, does that answer the apportionment and non-apportionment question? [00:02:41] Speaker 05: I mean, it's standardized in terms of the range and the triggers and things of that nature, [00:02:46] Speaker 05: Does that really reach the apportionment, non-apportionment issue? [00:02:49] Speaker 03: Well, we've detailed in our brief why we believe schedule four requires apportionment, particularly in light of Frick's intent to model the provision on the Bonneville power. [00:02:58] Speaker 05: Yeah, but that cuts both ways, because even though they said it was going to be similar to Bonneville, they actually took the key language out. [00:03:07] Speaker 05: So doesn't that actually cut against you? [00:03:10] Speaker 03: Well, if Burke's intent in using similar as opposed to identical language had been to allow contradictory approaches to pricing, then it should have said so. [00:03:22] Speaker 03: Instead, what it said in Order 890 is that it said that Order 890 standardized the charges. [00:03:28] Speaker 03: Again, not just the method of determining them, not just the language that has to be set forth in the tariff, but standardizes the actual charges. [00:03:36] Speaker 03: And so, and again, to the extent there were any doubt about FERC's intent after RUR 890, that doubt was resolved shortly after during the same year in the Louisville gas and electric case, where FERC expressly ruled that apportionment is consistent with pro forma schedule four. [00:03:53] Speaker 05: But did they say that non-apportionment is inconsistent with it? [00:03:57] Speaker 05: They did not. [00:03:58] Speaker 05: Yeah, certainly. [00:03:59] Speaker 03: OK. [00:03:59] Speaker 03: But again, they also said that the charges were standardized. [00:04:02] Speaker 03: When you put one together, standardized charges to us mean a single approach to calculating the charges. [00:04:10] Speaker 03: And they also said that people never said that. [00:04:14] Speaker 03: That's true. [00:04:15] Speaker 03: They did say they standardized the charges, though. [00:04:20] Speaker 03: What's the explanation for why they took out the language? [00:04:23] Speaker 03: You know, I can't get into FERC's head in terms of what it was thinking. [00:04:26] Speaker 03: One possible, I mean, I can't really speculate. [00:04:29] Speaker 03: One possibility is that when Bonneville Power Administration participated in the rulemaking proceeding, they described their own provision without using portion language. [00:04:40] Speaker 03: And it's possible that FERC [00:04:42] Speaker 03: use that sort of paraphrasing and crafting its own provision, because there were other reasons for distinction. [00:04:49] Speaker 03: For example, the Schedule IV does not cover heavy and light load hours, as FPL has pointed out in his brief. [00:04:55] Speaker 03: However, I think it's, again, this is just speculation. [00:04:59] Speaker 03: It may be that they just took Bonneville's summary description of what was going on and used that to craft their own provision. [00:05:06] Speaker 05: You're understanding the point that it's not clear. [00:05:08] Speaker 05: And if it's not clear, if it's ambiguity, we have to defer to FERC. [00:05:12] Speaker 03: But not when FERC said in the rulemaking proceeding that the charges have been standardized. [00:05:19] Speaker 05: It's hard to think more about what that means, standardized charges, whether that gets to apportionment and non-apportionment. [00:05:25] Speaker 05: We'll hear what your opponents have to say. [00:05:26] Speaker 05: What's your strongest argument for that the language of standardized charges addresses the question of apportionment or non-apportionment? [00:05:35] Speaker 03: The strongest argument is that FERC ruled that the language of Schedule IV [00:05:41] Speaker 03: I'm sorry, that apportionment is consistent with schedule four. [00:05:45] Speaker 03: And it also said that there is a standardized charge. [00:05:48] Speaker 03: We don't see how that leaves room for two different interpretations. [00:05:52] Speaker 03: Frankly, we're not aware of any other situation in which FERC has said that individual utilities get to decide how to interpret the language of a standardized tariff provision. [00:06:03] Speaker 03: I mean, that as a general matter defeats the purpose of a standardized tariff provision. [00:06:07] Speaker 03: This really makes the situation much worse in a way, because before, if you wanted to impose different charges, you had to file your proposal with FERC and justify it and allow others to object. [00:06:21] Speaker 03: Now, as I said, you just get to decide, and you don't even have to tell anyone what you're going to do. [00:06:25] Speaker 03: As I said, we're not aware of any other situation in which this has occurred, even if you set aside the standardized charges language of the Order 890 series. [00:06:34] Speaker 03: So in our view, this is not a case in which FERC looked at a provision, determined that it was ambiguous, then exercised its discretion to interpret it one way or another. [00:06:43] Speaker 03: Rather, it's about FERC's decision to allow the utilities that it regulates to choose their own interpretation, which is in direct contravention of the standardization mandate. [00:06:55] Speaker 03: Can we talk with the refund provision for a second? [00:07:01] Speaker 03: Okay, so turning the refund issue, section 12 of the transmission service agreement between Seminole and Florida Power and Light states that challenges to the correctness of bills, correctness of any bill must be made within 24 months after the bill was rendered. [00:07:16] Speaker 03: The intent of this language is to impose a limit on claims arising from billing mistakes and other clerical errors. [00:07:22] Speaker 03: How do we know that? [00:07:23] Speaker 06: It says the customer may in good faith challenge the correctness of any bill rendered under the tariff. [00:07:30] Speaker 06: no later than 24 months after the date the bill was rendered. [00:07:34] Speaker 06: When we say somebody can challenge the correctness of our decision in this case, we don't mean whether we cited correctly under the blue book. [00:07:41] Speaker 06: We mean the merits. [00:07:43] Speaker 06: Why isn't that at least a plausible, a reasonable, not the only but still reasonable reading of the word correctness? [00:07:51] Speaker 03: Sure. [00:07:51] Speaker 03: Well, FERC has, on multiple occasions, recognized the distinction between contract provisions that broadly limit claims, that limit all claims, and those that address billing accuracy only, as we've cited the PowerEx case, for example. [00:08:04] Speaker 03: Are there any where the word correctness was used? [00:08:07] Speaker 03: No, but accuracy and correctness mean the same thing. [00:08:12] Speaker 06: Well, it's possible that they mean the same thing. [00:08:17] Speaker 06: But I know you have a definition from a district court saying it means the same thing, but it doesn't mean it's the only possible meaning. [00:08:24] Speaker 06: And they use the word accuracy and arithmetical accuracy later to suggest that this may be something different that is in the same provision. [00:08:34] Speaker 03: Well, I would submit that if the intent of the parties had been to broadly limit all claims, then they could have used very simple language setting that forth as opposed to using language that says we're dealing with the correctness of bills that are rendered under in accordance with the tariff. [00:08:51] Speaker 03: Let me just pull up an example. [00:08:52] Speaker 06: It doesn't say, again, that first sentence doesn't say and in accordance. [00:08:56] Speaker 06: It says under. [00:08:57] Speaker 03: Correct. [00:08:58] Speaker 06: There's another sentence that uses in accordance. [00:09:01] Speaker 06: which is used with respect to the arithmetical accuracy provision, which might be another indication that the first one means correctness of any bill rendered under the tariff. [00:09:13] Speaker 06: And you can challenge both. [00:09:17] Speaker 06: And then there's a limitation on what happens if you're only challenging the arithmetical accuracy. [00:09:29] Speaker 06: Why doesn't the first sentence just mean, I don't know what it's, what at least reasonably mean, that it means you have to challenge the correctness of the decision under the tariff, just like you would challenge the correctness of our decisions under the Constitution or under the APA. [00:09:47] Speaker 06: If you don't like what we do when you go to the Supreme Court, you would be challenging, you would say our decision is not correct under the APA or not correct under FERC's organic statute. [00:10:00] Speaker 03: Well, first of all, are you asking if we're reading that first sentence outside the context of the rest of the provision? [00:10:06] Speaker 06: No, I want to go, obviously I want to hear it piece by piece. [00:10:08] Speaker 06: One by one. [00:10:09] Speaker 06: Yes, but at least with respect to the first sentence, is it not a plausible reading that means any bill, regardless of what the kind of attack is? [00:10:22] Speaker 03: I don't believe it's plausible in light of the distinctions that FERC has made in the past between provisions that broadly limit claims and those that use more precise wording. [00:10:34] Speaker 03: I was going to point to another provision that, bear with me for a moment here. [00:10:45] Speaker 03: This was actually one of the provisions that FERC cited to as an order supporting what is done here. [00:10:56] Speaker 03: It's the PGM order. [00:10:57] Speaker 03: And if you look at that provision, for example, it says, no claim seeking adjustment in the billing for any service transaction or charge under the tariff may be asserted with respect to a month if more than two years has elapsed since the first date upon which [00:11:10] Speaker 03: that month occurred. [00:11:11] Speaker 03: There's nothing, and then there's a corollary to that to saying that the transmission provider can't make adjustments unless all those, under all the, except under those conditions. [00:11:20] Speaker 03: But there's, it's very, very broad, very straightforward. [00:11:23] Speaker 03: It doesn't have anything about correctness. [00:11:25] Speaker 03: There's nothing about bills rendered under any, in accordance with the tariff. [00:11:31] Speaker 03: It's, the fact that [00:11:33] Speaker 06: It's been shown that you can make these. [00:11:35] Speaker 06: I have to say there's lots of things in these tariffs that people can make a lot more clear. [00:11:39] Speaker 03: I agree. [00:11:40] Speaker 03: I definitely agree with that. [00:11:43] Speaker 03: But I believe that given the precise wording that was chosen for this particular provision, that it's clear that the intent is not to simply broadly limit all claims. [00:11:53] Speaker 03: Otherwise, you basically render all this other wording meaningless. [00:11:57] Speaker 06: So what's the other wording in the [00:11:59] Speaker 06: 12.0 that you would when you said there was additional context which I asked you to hold off for what's the other wording that you sure um Okay, let me just pop the provision. [00:12:08] Speaker 06: Yeah Okay, so [00:12:14] Speaker 06: So I'm page 42. [00:12:15] Speaker 06: Yeah. [00:12:15] Speaker 03: OK. [00:12:16] Speaker 03: So the first thing that you said challenged the correctness of any bill. [00:12:19] Speaker 03: And we said that the use of correctness there is very analogous to the use of the word accuracy, which FERC has held does not go to terror violations. [00:12:29] Speaker 03: It goes to more clerical issues. [00:12:32] Speaker 03: The second is just billing challenge will be in writing. [00:12:35] Speaker 03: The third sentence is the one that FPL and FERC focus on, which standing alone would seem very broad. [00:12:42] Speaker 06: Which one do you focus on? [00:12:44] Speaker 06: That's what I'm asking. [00:12:45] Speaker 03: What helps you? [00:12:46] Speaker 03: Okay, so we focus on the first sentence and the use of the word correctness, and then we focus on the fourth sentence, which specifies what the challenge of a bill rendered under in accordance with the tariff is limited to. [00:12:57] Speaker 03: And it goes to, it then lists the various items that are challengeable that are rendered under an accordance that are then limited by this provision. [00:13:07] Speaker 02: It distinguishes with arithmetical accuracy and the use of correct rate there. [00:13:14] Speaker 02: Yes. [00:13:15] Speaker 02: How does that help you? [00:13:17] Speaker 03: Because in this context where you have a bill that's rendered under and in accordance with the tariff, [00:13:23] Speaker 03: If you're using the term correct rate in that same sentence, it can only be construed as referring to numerical inputs and items of that nature. [00:13:36] Speaker 03: There's no way you can say it broadly limits every claim in which there's a tariff violation, because that would render meaningless the first sentence, which says bills rendered under and in accordance with the tariff. [00:13:48] Speaker 06: That suggests that you think that this [00:13:53] Speaker 06: would preclude any other kind of challenge. [00:13:56] Speaker 06: Why isn't at least a plausible reading that the first sentence means any claim you make has to be within 24 months, and this one being if your claim that the only kind of claim you can make is one [00:14:20] Speaker 06: for arithmetical accuracy if your argument is that it is rendered under and in accordance with the tariff. [00:14:28] Speaker 06: Your argument here is that it's not rendered in accordance with the tariff. [00:14:34] Speaker 06: Correct, yeah. [00:14:34] Speaker 06: So this is only about what happens if it's rendered in accordance with the tariff. [00:14:41] Speaker 06: In that case, you can only make claims about arithmetical accuracy. [00:14:44] Speaker 06: But if your argument is that it's not in accordance with the tariff, this part doesn't limit you, but all claims are limited by the 24-month first sentence. [00:14:56] Speaker 03: In context, the [00:14:58] Speaker 03: This can only be read at review that the words correctness and rendered under importance apply to the entire provision that you can't just take pieces out of context. [00:15:09] Speaker 02: But it doesn't say that in the first sentence, Chief Judge Garland said. [00:15:13] Speaker 02: It says just under. [00:15:15] Speaker 02: Correct. [00:15:16] Speaker 02: I mean, correctness under sounds like it covers a lot of turf. [00:15:25] Speaker 06: Are we right that all you need is a read? [00:15:27] Speaker 06: All that's required to uphold FERC is that their reading be reasonable, right? [00:15:33] Speaker 06: That's correct. [00:15:34] Speaker 06: On this one? [00:15:35] Speaker 06: Okay. [00:15:37] Speaker 06: You want to hold your remaining 12 seconds? [00:15:39] Speaker 00: Okay, yes. [00:15:40] Speaker 00: Thank you. [00:15:53] Speaker 04: Thank you, Your Honors. [00:15:54] Speaker 04: Ross Fulton for the Commission. [00:15:56] Speaker 04: Your Honors, for Seminole to succeed on its complaint here as to the apportionment issue, it has to show that the Commission was wrong and that Schedule IV is in fact clear and unambiguous. [00:16:08] Speaker 05: How was Seminole supposed to know whether it was apportionment or not? [00:16:17] Speaker 04: Your honor, I think that there was, I think that this was an issue where the commission simply did not address apportionment in order 890. [00:16:27] Speaker 04: The commission said if you look at the order and the focus on the principles that was referred to earlier, [00:16:32] Speaker 04: the focus was on creating this tier structure to create an escalating charges and create incentives. [00:16:39] Speaker 05: So you're saying FERC is supporting a reading that it's a surprise that Florida, that Seminole is not going to know until they get the bill? [00:16:51] Speaker 05: This is material, isn't it? [00:16:55] Speaker 05: Whether it's going to be apportionment or non-apportionment. [00:16:58] Speaker 04: It is, Your Honor. [00:16:58] Speaker 05: And they just have to wait to see how it's going to be interpreted by Florida Power. [00:17:07] Speaker 05: Because Seminole doesn't know. [00:17:08] Speaker 05: It's a surprise. [00:17:10] Speaker 04: There was a couple ways that this could have been addressed, as this was in fact a matter of first impression for the commission. [00:17:16] Speaker 04: Seminole could have earlier brought a declaratory action to the commission seeking some type of determination from FERC as to how they were going to interpret this provision earlier. [00:17:27] Speaker 04: Obviously, they're getting monthly invoices, as the commission pointed out, in addressing the refund issue. [00:17:32] Speaker 04: And so if they believe that these charges seem [00:17:35] Speaker 04: far too high for them if they believe that apportionment is the right way to apply, they could have brought in an action either saying that it wasn't just and reasonable, saying that they need a declaratory action regarding how this is being interpreted or the action they brought here. [00:17:50] Speaker 04: But obviously, it wasn't on the commission's burden to bring this case sooner because it's Seminole that's receiving these bills. [00:18:00] Speaker 04: And I should note obviously that the Commission then addressed this issue going forward as it accepted Florida Power and Lights change to apportionment. [00:18:09] Speaker 04: So the only issue really before the Commission is whether the Commission's going to find that Florida Power and Light was violating its tariff for language that was the Commission found silent and ambiguous. [00:18:21] Speaker 06: Can I ask you about [00:18:24] Speaker 06: standard of review. [00:18:25] Speaker 06: So you said, and correctly, that normally we say if the agency's interpretation is reasonable, we'll uphold it. [00:18:33] Speaker 06: But I'm a little confused by what the agency said in this case. [00:18:36] Speaker 06: So at JA-226, in the order [00:18:40] Speaker 06: The agency's conclusion is not that the agency concludes that the reason that the reading is reasonable. [00:18:48] Speaker 06: They appear to be giving an additional level of Chevron-like deference to FPL. [00:18:52] Speaker 06: They say, we conclude that FPL's reading of Schedule IV is not unreasonable. [00:18:58] Speaker 06: So the normal thing is the agency says, this is our reading, and we say, well, OK, it's not unreasonable. [00:19:08] Speaker 06: We don't decide whether it's the best, but it's not unreasonable. [00:19:11] Speaker 06: But normally the agency gives its best reading. [00:19:14] Speaker 06: Is there some provision in the statute that says that the FERC can uphold a utilities reading as long as it's not unreasonable? [00:19:28] Speaker 04: No, Your Honor, I think that this was somewhat implicit in the initial order, but it was clarified upon in reviewing in paragraph 17, which is J 300. [00:19:37] Speaker 04: The commission found that the statute was ambiguous and that it's reasonable reading was that it can support either apportionment or non apportionment. [00:19:49] Speaker 04: And since utilities can choose to use either method within the three tier structure, [00:19:54] Speaker 04: laid out by Order 890, then it was therefore not unreasonable that Florida Power and Light had been applying non-apportionment for the period in question. [00:20:07] Speaker 02: So the best reading of the statute is that it allows apportionment or non-apportionment. [00:20:13] Speaker 02: That's what FARC says. [00:20:15] Speaker 04: The commission didn't say whether it was necessarily the best reading. [00:20:18] Speaker 04: It just said its reasonable interpretation was that it was reasonable to allow either apportionment or non-apportionment. [00:20:27] Speaker 04: And if you look at paragraph 19, the commission provides some reason why it believes it was reasonable here, namely because there could be some regional variation. [00:20:38] Speaker 04: Obviously, one of the goals of 890 is to create incentives for accurate scheduling. [00:20:42] Speaker 04: And so some regions, non-apportionment is going to generally create higher charges. [00:20:48] Speaker 05: How about standardized charges? [00:20:49] Speaker 05: Your opponent says standardized charges addresses the apportionment, non-apportionment issue. [00:20:54] Speaker 05: What's your response to that? [00:20:56] Speaker 04: I think if you look at the language, nowhere in 890 [00:20:59] Speaker 04: does the commission say we're creating a uniform system here, we're creating a system identical to Bonneville? [00:21:05] Speaker 04: It uses words like standardized or increased consistency and the commission did that here with again this three-tier structure and with certain principles that have to be met namely escalating charges and incentives but as the commission noted [00:21:20] Speaker 04: Parties can always file individual variations on their tariff, and the Commission can accept it. [00:21:25] Speaker 04: That's why, for example, in the Louisville gas and electric case, the petitioner cites, the Commission accepted their clarification that we are in fact going to abortion because they thought that the tariff, the former tariff was not clear. [00:21:40] Speaker 04: And so they wanted to provide that clarity to their customers. [00:21:43] Speaker 04: And the commission said there that it was consistent. [00:21:46] Speaker 04: But again, consistent isn't this is the only way we can do it, or this is the only thing we're going to allow. [00:21:51] Speaker 05: So going forward, what's the best practice? [00:21:53] Speaker 05: Do you just have to do something that the party's got to talk about beforehand, or a standardized agreement to nail it down? [00:22:01] Speaker 04: If there continues to be issues, the commission, like a court, can adjudicate matters on a case-by-case basis. [00:22:07] Speaker 04: The commission has now told parties you can use apportionment or non-apportionment. [00:22:12] Speaker 04: If either transmission providers or their customers think that there's some confusion within their region or within their contracts as to which applies, they can come to the commission, again, [00:22:21] Speaker 04: similar to bringing a Section 206 action or a declaratory action seeking clarification or parties can obviously amend or change their terms. [00:22:31] Speaker 05: Do you know anything why the apportionment language from the Bonneville example was [00:22:36] Speaker 05: didn't make it into 890. [00:22:37] Speaker 05: Do you know anything about that? [00:22:39] Speaker 04: I do not your honor and I think that's what the commission was confronting here which is one can speculate perhaps it was conscious perhaps it was unintentional it's hard to know and so the commission again is working on a slate of of true ambiguity as to why that wasn't included and and so it's trying to reach a reasonable interpretation and [00:22:58] Speaker 04: That sort of question of why wasn't included cuts against ultimately what Seminole needs to show, which is that this was clearly unambiguous and requiring apportionment. [00:23:11] Speaker 04: I'll turn to the refund issue quickly. [00:23:15] Speaker 04: As discussed, again, the commission here is looking at [00:23:20] Speaker 04: a provision that is trying to construe reasonably within the context. [00:23:25] Speaker 04: And as Judge Garland's questions indicated, section or sentence one of that provision says you have to challenge the correctness of any bill within 24 months. [00:23:37] Speaker 04: Section three has similar language, or sentence three of that provision has similar language. [00:23:43] Speaker 04: And so when the commission's looking at this and then sentence four says accuracy or the correct rate, the commission's trying to give meaning to each sentence and each provision and found it was a reasonable interpretation to find that the challenge to any bill has to be brought on the correctness within 24 months. [00:24:03] Speaker 04: In addition to that, the commission also has a good bit of equitable discretion over the matter of replies. [00:24:10] Speaker 04: And the commission thought it was reasonable here, given that they believe these, again, these charges were discernible from the monthly bills, which they were attached to someone's complaint to be able to determine whether a greater refund period was appropriate. [00:24:24] Speaker 04: Obviously, the commission can order no refunds at all. [00:24:27] Speaker 04: And so it felt that nearly three years of refunds, in addition to the fact that it was prospectively changing the [00:24:36] Speaker 04: provision to allow apportioning going forward was a reasonable resolution. [00:24:41] Speaker 04: If there are no further questions, I'll see you the rest of my time. [00:24:57] Speaker 01: Okay. [00:24:57] Speaker 01: Good morning. [00:24:58] Speaker 01: May it please the court John Shepard for Florida Power and Light. [00:25:02] Speaker 01: I think probably the best way to address this is to go through some of the questions that Governor's already asked. [00:25:07] Speaker 01: Judge Griffith, you've focused on this question of standardization. [00:25:10] Speaker 01: Clearly, what FERC did not mean to say uniform would use the term uniform. [00:25:14] Speaker 01: It's important to understand that where 890 did significantly advance the ball in terms of creating increased uniformity without compelling uniformity. [00:25:22] Speaker 01: That format over there said to read every schedule for filing that anyone has done and be surprised at the degree of non-uniformity that exists. [00:25:30] Speaker 01: So we look at things like the LVD-NEFACE or VISTA. [00:25:34] Speaker 01: People are coming in to adopt the very approach that Seminole says that it wants, and they are asking for permission to insert language that accomplishes the objective that they have, but it is not in performance schedule four. [00:25:46] Speaker 01: It's just not there. [00:25:47] Speaker 01: Indeed, the higher, the greater than, lesser than dispute, which is the subject of the refund here, that language is not in schedule four, in the performance schedule four, as drafted either. [00:25:58] Speaker 01: The only way that FERC was able to determine that there was a problem on that front was point 634, order 890, and note that, ah, it had a parenthetical saying, whichever is higher. [00:26:08] Speaker 01: Actually, there's three parentheticals each time it reached it. [00:26:10] Speaker 01: So FERC, I think it's fair to say, engages in a searching inquiry to say, all right, what did schedule 4 pro forma say? [00:26:16] Speaker 01: It wasn't really all that clear. [00:26:17] Speaker 01: So they looked at their orders. [00:26:18] Speaker 01: And in one case, ours, with respect to apportionment, they said, we didn't say anything about apportionment. [00:26:23] Speaker 01: With respect to the higher than, lesser than thing, they looked at that one paragraph and said, we did say higher up there. [00:26:29] Speaker 01: So that one, we're going to interpret as a tariff violation, which is why we've already paid them refund. [00:26:33] Speaker 01: And it's important to underscore here that FPL has given Seminole the lion's share of what it wants. [00:26:39] Speaker 01: They filed a complaint. [00:26:40] Speaker 01: We voluntarily moved to change our tariff. [00:26:42] Speaker 01: They asked for refunds. [00:26:43] Speaker 01: We gave them refunds. [00:26:44] Speaker 01: So this is all about a locked-in period based on the terror violation piece. [00:26:50] Speaker 06: You're not suggesting that just because they got part of what they wanted, they can't ask for a wall? [00:26:54] Speaker 01: No, of course they can. [00:26:56] Speaker 01: My point, Your Honor, is that if we're thinking of this in equitable terms, I think that it's fair to say that FPL has bent over backwards to try and [00:27:03] Speaker 01: improve its relationship with Seminole and get these situations fixed. [00:27:07] Speaker 01: They note in their reply brief, for example, that as a result of this case, they've now adopted a dynamic scheduling system with some new equipment, and their imbalance charges have gone down by 50%, both in terms of their frequency and in terms of the size of those. [00:27:21] Speaker 01: So I'd argue that FERC actually achieved what it wanted to achieve through this process, which was to get people to regularize their purchases. [00:27:30] Speaker 01: Judge Garland, you asked a really interesting question about FERC's language. [00:27:35] Speaker 01: That's two compliments. [00:27:36] Speaker 01: First in this case, first in the case before. [00:27:39] Speaker 01: I take it mine wasn't that interesting? [00:27:41] Speaker 01: No, no. [00:27:42] Speaker 01: It's just that what I mean to point out is that no one seems to have anticipated this in the briefing. [00:27:49] Speaker 01: So this is new, and I haven't had an opportunity to discuss it before. [00:27:52] Speaker 01: And it's this. [00:27:54] Speaker 01: Are there situations where FERC defers to a utility's interpretation? [00:27:58] Speaker 01: Because it is awkwardly phrased, as you point out. [00:28:00] Speaker 01: the first time in the first order. [00:28:02] Speaker 01: It's less awkwardly phrased in the rehearing order. [00:28:05] Speaker 01: I think that the important thing for the court to understand about why FERC would answer the question that way is that the complaint says at 11, and FERC cites this and we cite this, the only issue in the case is whether or not FPL violated its tariff. [00:28:21] Speaker 01: And that statement carries a huge amount of weight along with it. [00:28:26] Speaker 01: It's not just a situation where you're going to have to do refunds. [00:28:29] Speaker 01: It's also a situation where if you're committed a tariff violation, you're going to have to look at disgorgement. [00:28:33] Speaker 01: You're going to have to look at potential penalties. [00:28:35] Speaker 01: It is a very big deal when someone comes in and says you have violated your tariff. [00:28:39] Speaker 01: Huge. [00:28:39] Speaker 01: It's why I'm here right now. [00:28:42] Speaker 01: That is the difficult part of this case. [00:28:46] Speaker 01: So when someone comes in and says, FPL, you violated your tariff, I think it is a reasonable response to say, no, we think that FPL's interpretation was reasonable because that carries with it a whole lot of baggage about this idea of a tariff violation. [00:28:59] Speaker 01: That is a stigma that no utility wants to have in any way. [00:29:02] Speaker 06: Is a good faith violation less bad than a [00:29:07] Speaker 06: bad faith violation? [00:29:09] Speaker 06: I mean, do you have all the same? [00:29:11] Speaker 01: Well, it depends. [00:29:12] Speaker 06: Even if these tariffs are hard to read and you did the best you could and that was a reasonable reading, isn't that still a violation? [00:29:19] Speaker 01: It is, which is why, well, [00:29:22] Speaker 01: First of all, the guidelines aren't ready right now, but they have different ones that apply strict scrutiny to and ones that are different. [00:29:29] Speaker 01: If the court wants guidance on this subject, let's look to town of Concord, a similar decision on the subject of refunds. [00:29:35] Speaker 01: That's a situation where there was not a bad faith problem, and the court said, look, they made an error. [00:29:41] Speaker 01: Was there a bad faith problem? [00:29:43] Speaker 01: So that's something which I think is properly committed to FERC's discretion in deciding whether or not to order refunds here entirely for a locked-in period, looking backwards. [00:29:52] Speaker 01: And I think that FERC has properly applied its discretion here. [00:29:58] Speaker 01: Judge Griffith, you were very concerned about this question of notice. [00:30:01] Speaker 01: You said, well, is this something we want to encourage where agencies are going to have an ambiguous provision and then they're going to all of a sudden say, surprise, this is what it really means? [00:30:10] Speaker 01: I just go back to this point. [00:30:13] Speaker 01: This is the first time since 2007 that someone came in and said, [00:30:16] Speaker 01: You know, we're concerned about the way that you've interpreted this provision. [00:30:21] Speaker 01: I do think it's incumbent upon people who have a problem with a bill to raise that. [00:30:25] Speaker 01: If we were having a rent dispute, we would have no trouble trying to say that that's the way that people should view things. [00:30:32] Speaker 05: Is there an agency standard that's developed over the period of time? [00:30:38] Speaker 01: There is not. [00:30:39] Speaker 01: And these are the following reasons why. [00:30:43] Speaker 01: The country's first level of division is you've got the schedule for inside of RTO's situation, which is treated very differently than this kind of situation where the transmission provider is not in RTO. [00:30:55] Speaker 01: So first remove the half of the country that's in RTO's and you get into the more vertically integrated piece. [00:31:00] Speaker 01: Then there is a wide variance in the way that companies deal with this. [00:31:06] Speaker 01: A public service company in Colorado just this October, this past November filed to put in language first to apportion and then to unapportion in a very recent case. [00:31:15] Speaker 01: This is very rarely litigated. [00:31:17] Speaker 01: And there's another important piece of this puzzle as to why it would have gone so long before a decision was made on this, before anyone really ventilated it. [00:31:25] Speaker 01: And it's that in order 890, in fact, in the paragraphs immediately after the ones that the court is most concerned with, FERC says, you know what, if you already have an existing contract for the way that you're dealing with imbalances, we're not going to require uniformity anywhere in the country. [00:31:40] Speaker 01: So just leave your contract exactly as is. [00:31:42] Speaker 01: So all these things working together, if you already have a contract, you don't need to do this. [00:31:47] Speaker 01: If you're in an RTO, that's a whole different game. [00:31:50] Speaker 01: There are very few people that need to deal with this. [00:31:53] Speaker 01: But then we get to the question of invoices, and I just don't think that FERC is wrong in pointing to the invoices and saying there is a column, there's an ultimate column on each of these bills, and it says, here's the percentage. [00:32:06] Speaker 01: That's it. [00:32:07] Speaker 01: Here's the amount, here's the percentage. [00:32:08] Speaker 01: There's no doubt that they were being charged based only on this tier. [00:32:11] Speaker 01: And they've already gotten two years worth of refunds. [00:32:14] Speaker 01: So reaching back to go more refunds and to get the time value of the refunds, that is an entirely disproportionate solution to a question of first impression. [00:32:27] Speaker 01: There was one more question, if you'll indulge me. [00:32:32] Speaker 06: the correct versus accurate piece I think that the court the courts really really fully looked at that but two points about about about the interpretation since we've already looked at it fully and you agree with the way we seem to be looking at it then it's really safest to sit down thank you I learned that myself as a trial lawyers big mistake [00:32:59] Speaker 03: Okay. [00:33:01] Speaker 03: So FERC is correct that this issue was not directly addressed in Order 890. [00:33:07] Speaker 03: FERC did not say apportionment versus non-apportionment. [00:33:11] Speaker 03: And FPL is correct that this issue hasn't been looked at in a while. [00:33:14] Speaker 03: However, [00:33:16] Speaker 03: The Louisville gas and electric case was decided in 2007 and the issue there, in our view, was put directly before FERC. [00:33:23] Speaker 03: Assuming FERC is correct in that it just didn't occur to them before when they were putting together the rulemaking, it was directly put before them in that Louisville gas and electric case. [00:33:33] Speaker 03: And FERC said, [00:33:34] Speaker 03: apportionment is consistent with Quo Forma Schedule IV. [00:33:38] Speaker 03: And it didn't say, oh, and by the way, apportionment would also be consistent. [00:33:43] Speaker 03: If that was not apportionment, it would have also been inconsistent. [00:33:46] Speaker 03: That would have been its responsibility right then and there to have done if that's what [00:33:50] Speaker 03: if that were its intent. [00:33:52] Speaker 03: This idea that somehow the customer has to bring a declaratory action to, and this is the first we've heard of this in this case, to determine whether or not how a proforma tariff language is supposed to be interpreted. [00:34:05] Speaker 03: I've never heard of that in any context. [00:34:08] Speaker 03: When you have a new rulemaking, setting forth a new language, and then all of a sudden the customer later has to come and seek an action to determine what it means. [00:34:16] Speaker 03: The issue of what it meant was put directly before for it in the LG&E case. [00:34:20] Speaker 03: And yes, it's true that different utilities do things differently, but that's the point of going and filing revisions to your tariff. [00:34:31] Speaker 03: This idea that different utilities may have different needs, that's the language that was used in the hearing order, that different transmission providers, quote unquote, may have different needs, and therefore we're gonna let them interpret it how they please. [00:34:46] Speaker 03: We've never seen anything like that before, and FERC haven't pointed anything like that. [00:34:50] Speaker 03: And again, whether you take the standardized charges language at face value to mean that the charges have to be the same or not, there's also just the general proposition that you have standardized tariff language and it generally has to mean the same thing. [00:35:08] Speaker 03: You can't put the burden on customers to guess what it is or to file a declaratory action to determine what the utility's gonna do. [00:35:15] Speaker 03: And finally, one thing I'd point out regarding the refund issue, [00:35:20] Speaker 03: That sentence, the sentence regarding bills rendered under and accordance with, the way Burke interpreted that was to essentially say, these are the only types of challenges you can mean, period. [00:35:32] Speaker 03: And that's an absurd interpretation as far as we're concerned, that it's a blanket limitation on challenges to bills, regardless of timing. [00:35:41] Speaker 03: And that's essentially what their interpretation was. [00:35:44] Speaker 03: not as was presented by the court here. [00:35:47] Speaker 06: So we don't have to accept that part of their interpretation in order to resolve this case. [00:35:55] Speaker 06: The only question in this case is the timing question. [00:35:58] Speaker 03: Yes. [00:35:59] Speaker 03: Well, it's the interpretation of Section 12. [00:36:02] Speaker 03: And their interpretation, in our view, is absurd. [00:36:05] Speaker 03: They still haven't told us what under accordance with means. [00:36:08] Speaker 03: And you've given your idea of what it could mean when you interpret it. [00:36:11] Speaker 03: But that's not what's said in this order. [00:36:14] Speaker 06: I agree that my idea doesn't stand for anything in this point. [00:36:19] Speaker 03: I agree. [00:36:22] Speaker 03: And the bottom line is the customer here was overcharged, whether that was the intent or not. [00:36:27] Speaker 03: It was overcharged, and it is required to have refunds going back to when the tariff violation began. [00:36:33] Speaker 03: FPL's brief repeatedly refers to retroactive refunds. [00:36:37] Speaker 03: But there's nothing retroactive about these refunds whatsoever. [00:36:39] Speaker 03: These are refunds from the date the violation began, not before that. [00:36:44] Speaker 03: And you don't have a situation here where [00:36:50] Speaker 03: You don't have a situation similar to where FERC normally does limit refunds. [00:36:56] Speaker 03: The idea that just because we could have seen the violation earlier means we should be cut off from getting refunds is inconsistent with this court's holding in the Louisiana Public Service Commission case where it said a delay in asserting a claim is not all that weighty of a factor and, quote-unquote, maybe inadequate standing alone. [00:37:14] Speaker 03: Here, that is the only factor that's been cited, is our delay in asserting the claim. [00:37:18] Speaker 03: And the rehearing order, amazingly, completely ignores our abuse of discretion argument. [00:37:24] Speaker 03: We raised several reasons why we believed or failed to appropriately balance the various factors that are relevant in determining whether refunds are appropriate, full refunds are appropriate, and it simply ignored it on rehearing, didn't say a word. [00:37:37] Speaker 03: And so we submit that the orders are clearly arbitrary and capricious and must be remanded. [00:37:42] Speaker 06: We'll take the matter under submission. [00:37:44] Speaker 06: Thank you very much.