[00:00:00] Speaker 00:
It's number 20-1260 et al.

[00:00:02] Speaker 00:
Holy Cross Electric Association Inc.

[00:00:05] Speaker 00:
Doing business as Holy Cross Energy Petitioner versus Federal Energy Regulatory Commission.

[00:00:10] Speaker 00:
Mr. Elliott for the petitioner, Mr. Glover for the respondent.

[00:00:15] Speaker 02:
Good morning council.

[00:00:16] Speaker 02:
Mr. Elliott, please proceed when you're ready.

[00:00:19] Speaker 04:
May it please the court, Randolph Elliott on behalf of Holy Cross.

[00:00:25] Speaker 04:
Perks orders have two flaws, warranting bakehager

[00:00:30] Speaker 04:
and remand.

[00:00:32] Speaker 04:
First, FERC misinterprets the party's agreements.

[00:00:37] Speaker 04:
And second, FERC fails to explain why it has not sanctioned undue discrimination.

[00:00:44] Speaker 04:
Now these issues overlap, but I want to begin by briefly addressing the second one, because I think it will help understand our contractual interpretation arguments as well.

[00:00:55] Speaker 04:
Under the Transmission Integration and Equalization Agreement,

[00:01:01] Speaker 04:
public service company and Holy Cross agreed to the joint use on equal terms and the operation of their transmission facilities as an integrated transmission system with no adverse distinction between the two parties.

[00:01:15] Speaker 04:
Burke held, however, that because public service also uses, I'm sorry, held that public service uses Holy Cross's entire load ratio share of the integrated transmission system

[00:01:29] Speaker 04:
to provide full requirement service to Holy Cross.

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And because of that, all of the low ratio shared capacity is used up and Holy Cross is not entitled to use any of the ITS for any other resources, including the two that are at issue here.

[00:01:51] Speaker 04:
But Bert did not explain how that interpretation comports with the agreements requirement

[00:01:59] Speaker 04:
that the parties have access to the ITS on equal terms and that there be no adverse distinction between the parties.

[00:02:09] Speaker 04:
Because the question here comes down to the fact that public service also uses this agreement and the integrated transmission service to serve its retail loads.

[00:02:21] Speaker 04:
Public service does not use its OATT for retail service under order 888.

[00:02:26] Speaker 04:
It never has.

[00:02:30] Speaker 06:
FERC's orders made no- Mr. Elliott.

[00:02:33] Speaker 06:
Yes.

[00:02:34] Speaker 06:
Sorry to interrupt you, but as I read, if the only thing before us was the power supply agreement and the operating agreement, FERC would be clearly correct, right?

[00:02:51] Speaker 06:
If those were the only two- No.

[00:02:53] Speaker 06:
No?

[00:02:53] Speaker 06:
I mean, the power supply agreement quite clearly says that

[00:02:58] Speaker 06:
economy power is not certain power, right?

[00:03:03] Speaker 04:
The power supply agreement does not say that.

[00:03:05] Speaker 04:
No, section 1.11.

[00:03:07] Speaker 06:
It doesn't say the power supply agreement doesn't allow interruption of economy energy, for example.

[00:03:16] Speaker 06:
It does not say that.

[00:03:17] Speaker 04:
It doesn't say that?

[00:03:20] Speaker 04:
No, no, it doesn't.

[00:03:21] Speaker 04:
That's one of our key points is that both the definition of economy energy in section 1.11

[00:03:28] Speaker 04:
That's at jury appendix 54, I believe.

[00:03:31] Speaker 04:
And the section 5.4, the discussion of economy energy, neither one of them say that all economy energy is non-firm energy by definition.

[00:03:43] Speaker 04:
It's simply not defined that way.

[00:03:45] Speaker 06:
Is it not true that they can interrupt economy energy if they're required to take a generator offline?

[00:03:52] Speaker 04:
That provision is in there, but that's simply to preserve the economic bargain

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that economy energy will not increase.

[00:04:00] Speaker 06:
I do not understand what you just said.

[00:04:03] Speaker 06:
I mean, it's in there, right?

[00:04:05] Speaker 06:
If it's part of the bargain, it's part of the bargain.

[00:04:07] Speaker 06:
They can interrupt holy causes, economy energy, if it would require taking a generator offline, right?

[00:04:19] Speaker 04:
That is true.

[00:04:21] Speaker 04:
So if we were only talking about power supply, that would be true.

[00:04:25] Speaker 06:
Yeah, OK.

[00:04:25] Speaker 06:
So we go back to my original question.

[00:04:28] Speaker 06:
If all we had was a power supply agreement, FERC would be right, correct?

[00:04:32] Speaker 06:
So your argument, as I understand it, is that the key is the transmission agreement, correct?

[00:04:42] Speaker 06:
That's your whole argument, the transition agreement, which entitles you to FERC.

[00:04:47] Speaker 06:
But I have to say, I've read your brief and you focus on section 4.2, but could you just explain to us exactly how 4.2 gives Holy Cross the right to firm service on economy?

[00:05:07] Speaker 06:
Just explain that to us.

[00:05:10] Speaker 04:
4.2.

[00:05:12] Speaker 04:
And this is part of my argument about comparability.

[00:05:15] Speaker 06:
No, no, no, no, no.

[00:05:18] Speaker 06:
Please talk about Section 4.2.

[00:05:20] Speaker 06:
Yes, 4.2.

[00:05:21] Speaker 06:
Focus on in your brief.

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This entitles Holy Cross to load ratio shared use of the capacity of the integrated system.

[00:05:33] Speaker 06:
Explain to me how that gives, you may be right, but just please explain to me

[00:05:39] Speaker 06:
how that gives two questions.

[00:05:41] Speaker 06:
One, how does that give Holy Cross the right to firm service on economy energy?

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And number two, well, just one question at a time.

[00:05:50] Speaker 04:
Why don't you answer that question?

[00:05:55] Speaker 04:
Yes.

[00:05:55] Speaker 04:
4.2 provides for the two parties to have equal access, equal use, that's actually the title of section 4.2, equal use to the integrated transmission system.

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Our position is that public service company does exactly what they are prohibiting Holy Cross from doing.

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They have more resources.

[00:06:18] Speaker 04:
Yes, but it's also the contract interpretation issue.

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And that's the problem.

[00:06:22] Speaker 06:
What exactly are they doing that you can't do?

[00:06:27] Speaker 04:
Yeah, low ratio share under the TIE agreement should not be defined by reference to

[00:06:33] Speaker 04:
the resources used to serve Holy Cross under the power supply agreement.

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That nexus between the two agreements is the linchpin of first order here.

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And that is what is incorrect.

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Public service company, and we provided the only evidence in the form of an affidavit in this case.

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Public service company has far more resources with firm curtailment priority than their low ratio share.

[00:07:02] Speaker 04:
So why can't Holy Cross do the same thing?

[00:07:07] Speaker 04:
FERC never addresses that issue.

[00:07:10] Speaker 04:
That's our discrimination comparability issue, but it's also the linchpin of our contractual issue, a problem with FERC's orders.

[00:07:18] Speaker 04:
That the two agreements, they've mixed apples and oranges, as we said in our reply brief, and that's exactly an inept description.

[00:07:26] Speaker 04:
Holy Cross, I'm sorry, public service company has

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lots of resources, including wind and solar resources that have firm curtailment priority.

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They're not limited in the number of resources they acquire by their low ratio share.

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And that seems to be undisputed fact in the case.

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So why is Holy Cross's low ratio share capped at the level of resources used by

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public service company under the full requirements contract of the power supply agreement.

[00:08:02] Speaker 04:
There's just no logical connection.

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This is arbitrary and capricious because there's no connection between the facts found and the choice made.

[00:08:12] Speaker 06:
Just one more quick question.

[00:08:14] Speaker 06:
FERC says in its order here, paragraph nine of the first order, it says that PS Colorado says that

[00:08:27] Speaker 06:
If it has to provide firm transmission service on economy power, Holy Cross could gain the charges under the supply agreement.

[00:08:44] Speaker 06:
And it says, and shift to other customers, I'm reading from the order, and shift to other customers

[00:08:52] Speaker 06:
transmission costs associated with the transmission upgrades needed to firm up.

[00:08:57] Speaker 06:
As I understand it, what they're saying is that if Holy Cross is allowed, if Holy Cross is entitled to firm service on for economy energy, it won't have to pay the capacity charge.

[00:09:11] Speaker 06:
Is that right?

[00:09:13] Speaker 04:
Well, it does not pay a capacity charge.

[00:09:16] Speaker 04:
It continues to pay the capacity charges under the power supply agreement for this economy energy.

[00:09:21] Speaker 04:
So Holy Cross is, I'm sorry, public service is not out of nickel of capacity.

[00:09:28] Speaker 06:
So Holy Cross does continue to pay the capacity charge for economy service?

[00:09:34] Speaker 04:
Yes, yes.

[00:09:35] Speaker 04:
That's what 5.4 says and Holy Cross is completely on board with that.

[00:09:41] Speaker 04:
They're only displacing energy costs.

[00:09:44] Speaker 06:
What does FERC mean then?

[00:09:46] Speaker 06:
when it says public service can gain the charges under the supply agreement.

[00:09:53] Speaker 06:
What does that mean?

[00:09:55] Speaker 04:
I think they're saying that public service did not contemplate that there could be energy with firm curtailment that could be used to displace the energy charges.

[00:10:08] Speaker 04:
But the agreement provides that.

[00:10:10] Speaker 04:
As we already talked about, it doesn't limit economy energy to non-firm energy.

[00:10:15] Speaker 04:
So Holy Cross bargain for that provision, it's not gaming it.

[00:10:19] Speaker 04:
So the only advantage Holy Cross gets under this is that they get firm energy.

[00:10:24] Speaker 04:
And firm, I don't mean 24 seven, because this is wind and solar resources that we're talking about, but they just get the right to have it delivered when it's available from the wind and solar resources to their load.

[00:10:37] Speaker 04:
That's what they contracted for.

[00:10:40] Speaker 02:
Can I ask one question about the operating agreement and then,

[00:10:44] Speaker 02:
And let's just assume that the operating agreement applies.

[00:10:47] Speaker 02:
I just want to look at the language of it with you.

[00:10:50] Speaker 02:
In paragraph 3.5, there's a sentence that is at issue in the briefing where the parties recognize it may be necessary to curtail economy energy schedules due to emergency operating conditions, including transmissions constraints, or when continued scheduling of economy energy would prevent firm power transactions.

[00:11:09] Speaker 02:
And if you just read that language and don't look at anything else, it's hard for me to come away with any conclusion other than that economy energy doesn't have to be at firm power because this clause specifically contemplates by terms when continued scheduling of economy energy would prevent firm power.

[00:11:28] Speaker 02:
So it just seems to me that if we only look at this clause, it presupposes that economy energy is not necessarily at firm power.

[00:11:38] Speaker 04:
I think this section is agnostic on whether it's firm or non-firm.

[00:11:43] Speaker 04:
It accommodates either.

[00:11:44] Speaker 04:
If it is non-firm, it should be curtailed.

[00:11:47] Speaker 04:
But the language there is, it just says the parties recognize that it may be necessary to curtail.

[00:11:57] Speaker 04:
That's true.

[00:11:58] Speaker 04:
So it may or it may not.

[00:12:00] Speaker 04:
I mean, it doesn't, it's not.

[00:12:04] Speaker 06:
that were firm power, it wouldn't be true.

[00:12:08] Speaker 02:
You just never need to curtail it.

[00:12:09] Speaker 06:
You can't curtail firm power.

[00:12:11] Speaker 06:
So the fact that this says may suggests that it's not firm.

[00:12:15] Speaker 04:
It suggests that not all economy energy is, I would agree with you, not all economy energy is firm.

[00:12:23] Speaker 04:
But then the first position here is that all economy energy is not firm.

[00:12:27] Speaker 04:
And that's not true either.

[00:12:28] Speaker 02:
I don't think so.

[00:12:28] Speaker 02:
I think, I mean, we'll hear from the commission.

[00:12:30] Speaker 02:
But as I understand it, the commission's position doesn't have to be that economy energy is never firm.

[00:12:37] Speaker 02:
It's just that economy energy doesn't have to be firm.

[00:12:41] Speaker 02:
And once that's the case, I think that answers the question that was presented to the commission in the request for a

[00:12:49] Speaker 02:
uh, declaratory is a declaratory relief, declaratory judgment, whatever the commission's terminology is.

[00:12:54] Speaker 02:
But I thought that's the question before it is, doesn't economy energy have to be at farm?

[00:13:01] Speaker 04:
Yeah.

[00:13:01] Speaker 04:
Um, my interpretation of the order, I mean, putting out 59, I believe the declaratory order says they're making no findings whether the wind and solar resources here are firm or non-firm.

[00:13:10] Speaker 04:
It doesn't, they're holding their interpretation doesn't depend on that.

[00:13:15] Speaker 04:
In first brief,

[00:13:17] Speaker 04:
I think says that any resource, firm or non-firm, I mean, any resource, any economy energy resource must be non-firm.

[00:13:30] Speaker 04:
That's first position on brief.

[00:13:32] Speaker 04:
And that's the way I interpreted their orders that.

[00:13:35] Speaker 02:
Well, why don't we, unless my colleagues have further questions for you, you've teed up nicely what your argument is as to what the commission intended.

[00:13:43] Speaker 02:
Why don't we hear from

[00:13:45] Speaker 02:
commission's council, but let me make sure that I don't, that neither of my colleagues have additional questions for you at this time.

[00:13:51] Speaker 02:
No, I don't.

[00:13:53] Speaker 02:
Thank you, Mr. Elliott.

[00:13:55] Speaker 02:
Mr. Glover, we'll hear from you.

[00:14:01] Speaker 01:
Thank you, Chief Judge, may it please the court, I'm Matthew Glover and I represent respondent the Federal Energy Regulatory Commission.

[00:14:08] Speaker 01:
If it's all right with the court I'll start with what you were just discussing as to judge Srinivasan, I think you're accurately describing the commission's position

[00:14:17] Speaker 01:
We did not mean in our brief to suggest anything contrary and I think you did footnote 53 in the declaratory order where the commission explained that it didn't need to make a factual finding regarding the firmness of the purchases from the Hunter and Areba projects that are issued here because it's finding based on the terms of the agreement that have already been discussed including the power supply agreement section 5.4 the operating agreement

[00:14:42] Speaker 01:
Section 3.5, that the transmission of any economy energy may be curtailed for, and you highlighted both the reasons suggesting that it's non-firm, for firm power transactions that's in the operating agreement.

[00:14:55] Speaker 01:
And in both the operating agreement and the power supply agreement, it discussed curtailing it if it were required taking a generating unit offline.

[00:15:02] Speaker 01:
Not to get too technical, but as Judge Tatel stated, firm power and firm transmission is serviced

[00:15:08] Speaker 01:
that can't be interrupted except for a reliability or emergency concern, like constraints on the system.

[00:15:13] Speaker 01:
And if you're curtailing power under either the power supply agreement or the operating agreement, because it would require taking a generating unit offline, that's a cost concern that public service would have.

[00:15:24] Speaker 01:
If there wasn't enough demand that they have to take a generating unit fully offline, there's a lot of cost to doing that.

[00:15:28] Speaker 01:
And so they're allowed to curtail economy.

[00:15:31] Speaker 01:
Judge Taylor, I think I see you asking a question, but I can't hear.

[00:15:34] Speaker 01:
No, no, no, no, my apologies, your honor.

[00:15:37] Speaker 06:
I'm sorry.

[00:15:37] Speaker 01:
No, no, my apologies.

[00:15:40] Speaker 01:
So, if you're curtailing economy energy because otherwise you would be taking a generating unit offline.

[00:15:46] Speaker 01:
That's not a capacity constraint.

[00:15:47] Speaker 01:
That's, that's not an other constraint.

[00:15:49] Speaker 02:
That sounds that may be right.

[00:15:52] Speaker 02:
And I guess intuitively, it sounds potentially right.

[00:15:55] Speaker 02:
But how do we know

[00:15:57] Speaker 02:
that we can close the loop by saying that taking a generating unit offline is not an emergency, because a contrary position could be, well, yeah, even firm power, even firm transmission service can be curtailed in the event of an emergency, and taking a generating unit offline is an emergency.

[00:16:13] Speaker 02:
Now, I know that you think it's not, and it intuitively seems like it probably wouldn't be, but where would I look to make sure that it's not?

[00:16:20] Speaker 01:
I guess, so I would have two points, you're correct that that's not something that we dwelled on or the parties, particularly dwells on in our orders or in their filings, I guess my point was going to be, and you're absolutely correct there could be capacity emergency constraints for what you would need to take a generating unit on or offline.

[00:16:35] Speaker 01:
But the fact that they could say, gee, unless we supply you from this unit if you use economy energy, we're not going to have anyone purchasing from this generating unit so we would need to take it offline.

[00:16:46] Speaker 01:
We're going to curtail your economy energy to keep this unit online because there's costs associated with turning a unit off and on.

[00:16:53] Speaker 01:
And again, I meant to highlight that as a curtailment ability that's in both the power supply agreement and the operating agreement.

[00:17:00] Speaker 01:
The clearest, plainest statement that whatever the status of the supply is, the transmission for an economy energy purchase will not be firm or highest priority transmission is the statement that I believe both Judge Tata and Chief Judge Srinivasan highlighted in the operating agreement that you could curtail an economy energy purchase

[00:17:20] Speaker 01:
if it would provide for firms a firm transaction.

[00:17:24] Speaker 01:
Paragraph 3.5 of the operating agreement.

[00:17:26] Speaker 01:
Absolutely, your honor.

[00:17:27] Speaker 02:
Go ahead, finish the thought and then I have one follow-up question.

[00:17:31] Speaker 01:
No, I was just going to close the loop that the commission said, I think it's paragraph 17 of the reply brief and it set up a number of places.

[00:17:36] Speaker 01:
You can't be that highest priority firm transmission if you could be curtailed for some other firm transmission, firm transaction.

[00:17:43] Speaker 01:
That means you're not highest priority.

[00:17:45] Speaker 02:
Right.

[00:17:46] Speaker 02:
And 3.5 presupposes that economy energy at least doesn't have to be at firm.

[00:17:51] Speaker 02:
And once we know that economy energy doesn't have to be at firm, then the commission's answer to the declaratory relief that it was asked about is, in your view, something that should be sustained.

[00:18:02] Speaker 02:
And I guess as I understand the challenger's argument, it goes something like this.

[00:18:09] Speaker 02:
I don't think they would accept the premise by the way, but I'm just gonna stipulate that the premise should be accepted for the purposes of the question that I'm asking, which is that sure, maybe 3.5 might be seen to say that economy energy doesn't have to be at firm, but there's still this other problem.

[00:18:27] Speaker 02:
And that's this comparability notion that under this comparability notion that's embedded in the agreements, there has to be an equivalent

[00:18:36] Speaker 02:
transmission for both what public service company does on its own right, and for what Holy Cross would do.

[00:18:41] Speaker 02:
And public service has wind transmission that it treats that firm from Rush Creek, I can't remember the exact name.

[00:18:48] Speaker 02:
And by virtue of the comparability component of the agreements, Holy Cross is

[00:18:56] Speaker 02:
similar power has to be treated in the same fashion, which is at firm level.

[00:19:01] Speaker 02:
And as I understand the commission's response to that, it was no, that can't be right because public service company is required to at least be prepared to provide all of Holy Cross's demands at firm.

[00:19:13] Speaker 02:
And therefore anything in excess of that that it gets from a third party can't be at firm.

[00:19:16] Speaker 02:
Now, if I disagree with that part of the commission's rationale, and I'll just say the reason I might disagree with it is that the contract speaks in terms of

[00:19:24] Speaker 02:
the substitute power being the third party power being in lieu of rather than in addition to and which makes it seem like it's a substitute rather than an add on.

[00:19:32] Speaker 02:
So if I thought there was some problem with the commission's rationale on that score, where does that leave me?

[00:19:38] Speaker 01:
So I think I would have two responses.

[00:19:40] Speaker 01:
And the first, I want to directly address your contention in lieu of.

[00:19:44] Speaker 01:
And then second, I'll point the court to the hearing order, excuse me, at 24, which discusses the comparability.

[00:19:52] Speaker 01:
And there's a sort of separate point I'll make.

[00:19:53] Speaker 01:
But let me start with where you just finished, if I might.

[00:19:58] Speaker 01:
The point is that even if you purchase economy energy in lieu of supply from public service, public service has to stand ready.

[00:20:07] Speaker 01:
It needs to hold transmission capacity public service couldn't give away at firm like you give away firm commitments or firm reservations for all of its transmitting lines, including when there's economy energy.

[00:20:20] Speaker 01:
because in the event the economy energy isn't supplied or isn't curtailed, public service needs to constantly, as it plans the transmission system, be making reservations for firm supply from its own resources.

[00:20:31] Speaker 01:
And it needs to hold back its own generating resources because it can be called upon at any time to supply the full requirements demands.

[00:20:38] Speaker 02:
In other words, so if Holy Cross decided, for example, to discontinue the third party economy energy, then it has to be able to draw upon the reservation from public service company right away.

[00:20:47] Speaker 01:
And yeah, and the reservation of both of its own generating capacity and of space on the transmission system to get from its generation to the endpoints of public service.

[00:20:57] Speaker 01:
And this gets a little bit into some peculiarities of the power supply agreement as compared to the operating agreement.

[00:21:05] Speaker 01:
The operating agreement doesn't supply, you know, provisions to designate network resources and a lot of other things that you would see in an open access transmission tariff.

[00:21:13] Speaker 01:
The power supply agreement does have the designation of the Western power preference locations and the points of receipt and points of delivery.

[00:21:20] Speaker 01:
And so the power supply agreement has a lot of these provisions that you would normally see in a transmission open access.

[00:21:28] Speaker 01:
So that's my first point, that they're always having to hold that capacity on the transmission system and of their own generation as well available.

[00:21:36] Speaker 06:
I'm sorry, but is that why, is that your answer to Chief Judge Trina Boston's question about its own

[00:21:43] Speaker 06:
wind and solar power, is that the answer to the discrimination issue?

[00:21:49] Speaker 06:
Because PS Company doesn't have to do that with respect to its own.

[00:21:53] Speaker 01:
As to the discrimination question, let me, sorry.

[00:22:00] Speaker 06:
Yeah, no, go ahead.

[00:22:00] Speaker 06:
I just didn't understand why what you, I understand what you just said.

[00:22:05] Speaker 06:
Okay.

[00:22:05] Speaker 06:
PS Company's obligation

[00:22:07] Speaker 06:
to provide full service to Holy Cross.

[00:22:11] Speaker 06:
But I didn't understand that to be an answer to Chief Judge Srinivasan's question.

[00:22:16] Speaker 01:
My apologies.

[00:22:16] Speaker 01:
I think, again, on the anti-discrimination, the more direct answer is in paragraph 24 of the rehearing order.

[00:22:22] Speaker 01:
And I'll move there.

[00:22:24] Speaker 01:
Sorry, Judge Chittle.

[00:22:25] Speaker 01:
I think I interrupted you.

[00:22:26] Speaker 06:
No, no.

[00:22:26] Speaker 06:
I just said, OK, what's that?

[00:22:28] Speaker 01:
Yes.

[00:22:29] Speaker 01:
In paragraph 24 of the rehearing order, the commission explains that the reason the comparability argument doesn't have merit is because

[00:22:36] Speaker 01:
public service is at all times treating Holy Cross's loads.

[00:22:41] Speaker 01:
When it does this planning, when it sets aside its own generation, when it sets aside transmission capacity, both at firm generation, firm transmission for Holy Cross, it's treating Holy Cross's entire requirements demands, which it could be called upon.

[00:22:55] Speaker 01:
to serve as equivalent to its native load or the same as its own retail customers.

[00:23:00] Speaker 01:
And so it's always treating its possible required demands to serve all of Holy Cross's loads the same as it's treating its own retail loads, just as it was, you know, making firm reservations, et cetera, for its retail loads.

[00:23:12] Speaker 01:
It's standing ready to provide for Holy Cross anything Holy Cross needs.

[00:23:17] Speaker 01:
So I think it was the Rush Creek project was the one that Judge Srinivasan, you know, questioned at all times.

[00:23:24] Speaker 01:
You know, public service is keeping capacity at generating units and including that one and firm transmission space to provide both to its own retail customers and to provide to Holy Cross as part of its.

[00:23:36] Speaker 01:
We use the term native load I realized that it's a little bit technical but.

[00:23:39] Speaker 01:
is equivalent to its retail customers.

[00:23:41] Speaker 01:
When public service is using Holy Cross's load ratio share of the capacity of generation and transmission to plan for providing to public service, it's treating that load ratio share the same as it treats its own retail customers.

[00:23:56] Speaker 03:
You have to go back and answer.

[00:23:59] Speaker 03:
You said you were going to and you haven't really.

[00:24:01] Speaker 03:
I'm curious to hear what you have to say about this.

[00:24:05] Speaker 03:
chief judge referred to in lieu of an addition to, and you saw, I want to address that.

[00:24:10] Speaker 03:
How are you weighing those concepts and where are you applying them?

[00:24:17] Speaker 03:
I want to make sure I have this picture straight in lieu of an addition to, what do you mean by that?

[00:24:23] Speaker 01:
So when the commission, I think he was referencing in lieu of in the ability to purchase economy energy in lieu of purchasing full requirements.

[00:24:31] Speaker 01:
Right.

[00:24:32] Speaker 01:
And so that tells you that,

[00:24:34] Speaker 01:
you're purchasing economy energy rather than using the full requirements of Holy Cross, but Holy Cross has to stand ready to provide, you know, in place of that economy entry.

[00:24:44] Speaker 02:
So the service company has to stand ready.

[00:24:47] Speaker 01:
Sorry.

[00:24:47] Speaker 01:
Yes.

[00:24:48] Speaker 01:
Thank you.

[00:24:48] Speaker 01:
My apologies.

[00:24:49] Speaker 01:
And I know I'm in the red light, but I'll continue answering your question.

[00:24:53] Speaker 03:
In addition to is what I'm really a little bit perplexed on.

[00:24:57] Speaker 03:
I want to make sure I understand what you're saying.

[00:24:59] Speaker 03:
I understood the in lieu of, and they've got to be ready.

[00:25:02] Speaker 03:
to satisfy the full requirements contract, right?

[00:25:06] Speaker 03:
And that could include the economy energy, right?

[00:25:09] Speaker 01:
So they have to stand ready to replace the economy energy at all times.

[00:25:14] Speaker 01:
So I think, I hate to kind of use a numeric example, but for the commission statement that the transmission, if you gave firm transmission for an economy energy purchase, it would be in addition to the load ratio share.

[00:25:26] Speaker 01:
The load ratio share is as defined in section 1.9 and appendix A provision six of the transmission agreement, the proportion of the

[00:25:35] Speaker 01:
Total transmission integrated system that holy crosses demands are making at peak demands over a 12 month thing I don't mean to get into the math, but if you did that math and you know you had some number 10 is what holy crosses load ratio is a percentage, you know 10%.

[00:25:50] Speaker 01:
at all times, public service needs to plan its generation and its integrated transmission system so that it could provide the full 10% or the full whatever the actual amount of power in kilowatt hours would be.

[00:26:06] Speaker 01:
It has to always stand ready to provide that.

[00:26:09] Speaker 01:
So even if you purchase economy energy in lieu of purchasing from public service, public service has to make those advanced reservations.

[00:26:15] Speaker 01:
It has to hold capacity

[00:26:17] Speaker 01:
of its own generation and of the transmission system for Holy Cross's load.

[00:26:22] Speaker 01:
And so if you give them firm for the 10, they would need 10 and public services holding 10 out there, but then they want to replace one with economy energy, public service still has to at all times hold that 10 in its generation and in transmission in the event economy energy were curtailed.

[00:26:41] Speaker 01:
And so that's where the, in addition to would be that one or two that they'd be asking to displace might mean that you're not actually supplying that generation and you're not actually using that capacity on the transmission system, but they're holding it in reserve.

[00:26:54] Speaker 01:
They're holding it ready.

[00:26:55] Speaker 01:
They're holding firm reservations to do that if they need to.

[00:26:59] Speaker 06:
Can I, you just spoke, I was going to ask you about this in excess language too.

[00:27:05] Speaker 06:
And I want to be sure I understand it.

[00:27:08] Speaker 06:
So if,

[00:27:10] Speaker 06:
Let's stick with your 10% limit.

[00:27:18] Speaker 06:
Suppose Holy Cross's load ratio shares 10% of the system, right?

[00:27:24] Speaker 06:
That means to serve its native load, it's using 10% of the integrated system, right?

[00:27:33] Speaker 07:
Yes.

[00:27:34] Speaker 06:
Okay.

[00:27:35] Speaker 06:
Now, let's assume that it gets half that energy from one of these other sources, economy energy.

[00:27:49] Speaker 06:
Why would that be an excess?

[00:27:52] Speaker 06:
Wouldn't that just replace power that it's now getting from the US company?

[00:27:57] Speaker 01:
It's because PS company still has to under the power supply agreement at all times be ready to replace economy energy, right?

[00:28:07] Speaker 01:
It has to make its reservations.

[00:28:09] Speaker 01:
If you imagine.

[00:28:10] Speaker 06:
So let me see if I can say it.

[00:28:12] Speaker 06:
So, so in other words, it has to stand ready at all times to provide firm service for.

[00:28:23] Speaker 06:
If public service were getting all of its power from PS Company, I'm sorry, if Holy Cross were getting 100% of its power from PS Company, PS Company would have to provide it all on a firm basis, right?

[00:28:34] Speaker 01:
Well, yes.

[00:28:37] Speaker 01:
Sorry, I don't mean to get too picky, Your Honor.

[00:28:39] Speaker 01:
The contracts specify that it needs to be on the same service level as PSCO's retail load.

[00:28:45] Speaker 01:
And there's no dispute as a factual matter that PSCO's retail load is given firm service.

[00:28:51] Speaker 01:
So, yes, at all times.

[00:28:53] Speaker 06:
Okay.

[00:28:53] Speaker 06:
So, all right.

[00:28:54] Speaker 06:
Let's just assume, that's right.

[00:28:56] Speaker 06:
It has to provide.

[00:28:57] Speaker 06:
Now, let's assume that they now take

[00:29:00] Speaker 06:
only half their power from PS company.

[00:29:06] Speaker 06:
Explain to me why they're still getting the same amount of power is still flowing over the system.

[00:29:15] Speaker 06:
That hasn't changed.

[00:29:17] Speaker 06:
They just replaced PS company power with economy power.

[00:29:23] Speaker 03:
And they're permissibly doing that.

[00:29:25] Speaker 06:
Which is permissible.

[00:29:26] Speaker 06:
Right.

[00:29:27] Speaker 06:
So how does that

[00:29:30] Speaker 06:
If PS company has to provide firm service for the 50%, why is that in excess of the low-ratio share?

[00:29:45] Speaker 06:
I just don't understand.

[00:29:47] Speaker 01:
Sorry, Your Honor.

[00:29:49] Speaker 01:
So in your example, I think we agree that when they're getting the full 10% from PSCo, PSCo is placing reservations on its generation units

[00:30:00] Speaker 01:
Excuse me, it's generation resources for that 10% load and it's placing reservations on the transmission system for that 10% load.

[00:30:08] Speaker 01:
When purchases from PSCO are displaced or in lieu of with purchases of economy energy, the contracts require PSCO to stand ready to at all times serve the entire requirements demand.

[00:30:20] Speaker 01:
So it's a planning factor that PSCO is planning the transmission system.

[00:30:24] Speaker 01:
and it's planning its generation resources to always be supplying that 10% with firm transmission and firm generation resources.

[00:30:32] Speaker 01:
So it's always holding reservations for that full 10%.

[00:30:35] Speaker 03:
That's not the same as supplying it.

[00:30:37] Speaker 03:
They're in ready.

[00:30:39] Speaker 03:
That's different.

[00:30:40] Speaker 03:
See, the question conceptually is they have an obligation, whatever number we're using, the 10%, they have an obligation.

[00:30:48] Speaker 03:
You're starting with 100% on the basic contract.

[00:30:55] Speaker 03:
requirements contract.

[00:30:57] Speaker 03:
You have to give us 100% if we want, but we can take, say, 10% of that and get it from alternative sources.

[00:31:06] Speaker 03:
You're arguing that with that 10%, we still have to be ready to supply.

[00:31:12] Speaker 03:
The question they're raising is, wait, how does the 10% that we are permissibly going to get from an alternative source, has it

[00:31:22] Speaker 03:
go to a lesser status than it would be if you supplied it.

[00:31:27] Speaker 01:
Yeah.

[00:31:27] Speaker 01:
And in response to that question, I would start by saying the operating agreements, plain text says that economy energy may be curtailed.

[00:31:33] Speaker 01:
And so the operating agreement, sorry.

[00:31:36] Speaker 06:
Well, excuse me, but their whole argument is that the transmission agreement.

[00:31:40] Speaker 05:
Right.

[00:31:41] Speaker 06:
Yeah.

[00:31:42] Speaker 06:
And there's nothing in the FERC opinion that responds to that.

[00:31:46] Speaker 06:
And that's why I was trying to understand

[00:31:48] Speaker 06:
from the Council of the Holy Cross exactly why they thought the transmission agreement changed.

[00:31:53] Speaker 06:
But that's their only argument.

[00:31:55] Speaker 06:
I think he conceded when I asked him the question that if you're just looking at the power supply agreement, that economy

[00:32:04] Speaker 06:
power may be interrupted.

[00:32:07] Speaker 06:
I think he agreed with that.

[00:32:09] Speaker 06:
From their point of view, it's all about the transmission agreement.

[00:32:12] Speaker 01:
Judge Tatel, I would make two responses.

[00:32:14] Speaker 01:
One, I respectfully would disagree that the commission didn't respond to that.

[00:32:18] Speaker 01:
The commission stated that the transmission agreement alone doesn't answer the question.

[00:32:22] Speaker 01:
The question posed is, is Holy Cross entitled to firm transmission service for the Areba and Hunter purchases?

[00:32:28] Speaker 01:
And so the commission's answer was,

[00:32:30] Speaker 01:
we don't see the transmission agreement answering that question.

[00:32:34] Speaker 01:
And so that would include their suggestion that the transmission agreement somehow supersedes these specific provisions of the power supply agreement and the operating agreement.

[00:32:44] Speaker 06:
And I think- What about their argument about section 4.2 of the transmission agreement?

[00:32:50] Speaker 06:
They say that changes us.

[00:32:52] Speaker 06:
It's 4.2 that gives them the right to firm service.

[00:32:57] Speaker 01:
4.2 gives them the right, I guess this goes in and I suppose it sounds like I haven't been explaining our position on the non-discrimination and the native load, but our position is again, even if they're not purchasing the power from public service because they're using economy energy in place of public service, public service has to reserve in its own generation and reserve in the transmission system to provide the full, I think the number we've been using is 10%.

[00:33:24] Speaker 02:
Can I ask the question the following way?

[00:33:27] Speaker 02:
Your argument on this issue is if we take the example that we've been using, let's say the number is at 10%.

[00:33:34] Speaker 02:
And let's say half of that is coming from economy energy.

[00:33:36] Speaker 02:
So that would be five, five of the 10.

[00:33:38] Speaker 02:
Your argument is, yes, it's true that Holy Cross can permissibly take the five from a third party as economy energy.

[00:33:46] Speaker 02:
But nonetheless, public service company still has to reserve the full 10.

[00:33:51] Speaker 02:
So if you give the five at firm that they're getting from a third party, that takes the 10 and makes it a 15.

[00:33:58] Speaker 02:
That's basically your argument.

[00:33:59] Speaker 02:
And I guess the way I want to ask the question is this.

[00:34:03] Speaker 02:
Suppose that I think that under the contracts taken as a whole, particularly 3.5 of the operating agreement plus the provision and the power supply agreement that Judge Tatel has been focusing on,

[00:34:16] Speaker 02:
those are best read to contemplate that economy energy is not always provided at firm priority.

[00:34:25] Speaker 02:
Those provisions indicate that.

[00:34:27] Speaker 02:
And then Holy Cross comes along and says, okay, maybe those provisions

[00:34:33] Speaker 02:
might be seen to say that, but then we've got this other provision, 4.2, that counters that.

[00:34:38] Speaker 02:
And it says, wait a minute, under 4.2, it has to be equivalent and there can't be discrimination.

[00:34:45] Speaker 02:
And under that provision, we're entitled to get firm priority for our economy energy.

[00:34:50] Speaker 02:
And what I'm asking is this, this debate that we've just been having about exactly how to construe that part of the contract 4.2 and the comparability provision slash discrimination, if I think that's at least

[00:35:02] Speaker 02:
unclear.

[00:35:04] Speaker 02:
It's ambiguous.

[00:35:06] Speaker 02:
Then can I say that, well, the other provisions seem quite clearly to say that economy energy doesn't have to be supplied at firm priority.

[00:35:17] Speaker 02:
And then the second argument that Holy Cross has about how you do 4.2, it's at least a jump ball.

[00:35:22] Speaker 02:
I don't know exactly what to do with that.

[00:35:25] Speaker 02:
But I thought what the commission did was at least, you know, seems reasonable, even if I wouldn't have done it in the first instance.

[00:35:31] Speaker 02:
Then can I sustain the commission's order on that rationale?

[00:35:36] Speaker 02:
Making that argument?

[00:35:38] Speaker 01:
Sorry, I think I cut off the last part of your question.

[00:35:40] Speaker 01:
I apologize.

[00:35:41] Speaker 02:
And are you making that argument that we can do it that way?

[00:35:44] Speaker 01:
Yes, absolutely can your honor and I appreciate the question because I didn't anticipate sort of getting into the standard of review or the issue of Chevron deference but they raised it in the reply brief at 28 to 30 and they point to this next era case versus blithe where the commission had said contracts were clear and the court said actually we think there's the ambiguity there.

[00:36:06] Speaker 01:
The transmission agreement was clear on this if anything, you know, as to 4.2, as to the entirety of the transmission agreement, the commission said that it didn't provide an answer, and we cite magic words cases in our brief, but I think you could also go to black slot dictionary for the definition of ambiguous including doubtfulness for uncertainty of meaning as to the question asked of the commission the declaratory order.

[00:36:27] Speaker 01:
Is public service required to provide firm transmission for these transactions.

[00:36:32] Speaker 01:
The if found the transmission agreement was unclear that I would suggest that says it provided a doubtful or uncertain answer, which is to say it's ambiguous and this court has a case called, and I apologize again I didn't.

[00:36:43] Speaker 01:
think the standard of review would be an issue.

[00:36:45] Speaker 01:
So we didn't cite this in our brief, but it's brain tree electric light department versus FERC 667 F third 1284.

[00:36:52] Speaker 01:
There's a passage from 1288 to 89.

[00:36:54] Speaker 01:
It's a 2012 opinion that discusses whether you could apply Chevron in an instance where the commission didn't say that the contracts were ambiguous.

[00:37:04] Speaker 01:
And the court says that

[00:37:05] Speaker 01:
There's no reason to assume that the Commission sees clarity where we do not.

[00:37:09] Speaker 01:
And that is actually the preceding sentence is what I should have read to you first.

[00:37:12] Speaker 01:
As long as the text is ambiguous and the agency does not insist that it is clear, a reasonable interpretation will warrant our deference.

[00:37:19] Speaker 01:
And then the following sentence is there's no reason for us to assume the Commission sees clarity where we do not.

[00:37:24] Speaker 01:
The Commission didn't say the transmission agreement is, you know, absolutely clear as to this question.

[00:37:28] Speaker 01:
It said the transmission agreement didn't answer this question and it gave meaning to the provisions of all three of the agreements as to what they apply.

[00:37:36] Speaker 01:
So I think that would be my direct answer to your question, Your Honor, that both here on appeal when we ask for deference to our interpretation and in the orders when the commission is describing the transmission agreement is not answering the question.

[00:37:47] Speaker 01:
Yes, you know, the commission was not finding 4.2 or any other provision in the transmission agreement to be clearly on point and dispositive of the question presented to it.

[00:37:56] Speaker 03:
Let me ask one other thing, which would surprise me, which means I didn't prepare it well enough.

[00:38:03] Speaker 03:
The chief asked, and I'm sure it's probably right, but is the commission playing out his analysis that five becomes 15?

[00:38:14] Speaker 01:
That's what the in addition to means.

[00:38:16] Speaker 03:
And the reason is that- Because I wasn't hearing you to say it that way.

[00:38:19] Speaker 03:
Because conceptually,

[00:38:22] Speaker 03:
that makes a great difference.

[00:38:23] Speaker 03:
I mean, you were continuing to say they have to make it available.

[00:38:26] Speaker 03:
In my mind, that means nothing more than they have that obligation to hold it available.

[00:38:31] Speaker 03:
If it's called on, it didn't, to me, convert to 5 becomes 15, because it wasn't necessarily being transmitted.

[00:38:40] Speaker 03:
The 5 unused by PCPS is available but not used, so it's still 10.

[00:38:48] Speaker 03:
in my mind but analytically what the chief is saying you're saying is what the commission needs to say.

[00:38:54] Speaker 01:
So I think 15 apologies if I can use the math example and I clearly haven't been particularly clear again if they replace the five that they would get you know they would still be used they would still in real time have 10 moving across the system which is why their load ratio share but if you look at the reservations for firm transmission

[00:39:13] Speaker 01:
PSCO has to hold reservations for the full 10 so that they give the extra five although they're not using that five you're still reserving that to provide firm transmission that's what the commission is transmitting that extra five no but you really you couldn't give someone else a firm reservation for that five no no no that i understand but you're not necessarily using that five in in real transmission terms that's why five becomes 15 is odd to me if you're not using it you're not transmitting but

[00:39:39] Speaker 01:
Well, it's because the transmission system, you take firm reservation.

[00:39:42] Speaker 01:
So at all times, not every firm reservation is being used in full.

[00:39:45] Speaker 01:
And so in a situation in which someone else came forward and said, we want the entirety of the rest of the transmission system.

[00:39:52] Speaker 01:
And we would like firm purchases for that public service would have to say, no, we can't give you that because we have to hold this full 10 for for Holy Cross.

[00:40:01] Speaker 03:
I wasn't seeing that way that, you know, our brilliant chief judge

[00:40:06] Speaker 03:
who likes to play in these arenas with math and all, you know, throws out the exam.

[00:40:11] Speaker 03:
I wasn't hearing it that way.

[00:40:12] Speaker 03:
Analytically, that makes some difference for me.

[00:40:15] Speaker 01:
Yeah, I apologize, Your Honor.

[00:40:16] Speaker 01:
I think that's probably my lack of clarity and explaining capacity reservations as compared to necessarily use.

[00:40:24] Speaker 06:
And just to make sure I haven't.

[00:40:26] Speaker 06:
Let me be sure.

[00:40:27] Speaker 06:
I just want to pursue this because I've been as befuddled as Judge Edwards on this question.

[00:40:34] Speaker 06:
So let's take our

[00:40:37] Speaker 06:
Five, five percent.

[00:40:41] Speaker 06:
Let's assume Holy Cross replaces five percent with economy energy and no one else wants that.

[00:40:53] Speaker 06:
Then there's no problem.

[00:40:57] Speaker 06:
There's no excess, right?

[00:40:58] Speaker 06:
Because the public service company is still

[00:41:05] Speaker 06:
is still committed to no more than Holy Cross's load, correct?

[00:41:13] Speaker 06:
The problem is when someone else wants it, right?

[00:41:17] Speaker 01:
Yes, Your Honor.

[00:41:18] Speaker 06:
And that's where this comes up.

[00:41:19] Speaker 06:
And that's what increases, that's where the in excess language comes in.

[00:41:25] Speaker 06:
Right?

[00:41:26] Speaker 01:
Yes, your honor.

[00:41:28] Speaker 01:
And again, for firm transmission, that's why you have a firm reservation is for those times when everything's subscribed.

[00:41:34] Speaker 01:
I get it.

[00:41:38] Speaker 06:
Second question.

[00:41:39] Speaker 06:
Your answer to the chief judge's question about discrimination is that there is no discrimination because a PS company is obligated on the agreement to meet

[00:41:52] Speaker 06:
the loads of both Holy Cross and its own, and it does that equally.

[00:41:58] Speaker 06:
Is that right?

[00:42:00] Speaker 01:
Yeah, it's obligated under the agreements to meet the loads of Holy Cross in the same way that it meets its own retail load.

[00:42:06] Speaker 01:
Yeah, it's its own retail.

[00:42:08] Speaker 06:
And what about their argument that it provides its firm service on its own renewable energy sources?

[00:42:17] Speaker 01:
That gets into, I guess that gets a little bit far afield from whether they're supplying the equivalent retips.

[00:42:25] Speaker 06:
That's their argument.

[00:42:26] Speaker 06:
That's the argument Holy Cross makes.

[00:42:28] Speaker 01:
And so the commission's response, again,

[00:42:31] Speaker 01:
In the rehearing order at 24 was that we are treating them the same as we're treating their retail load.

[00:42:36] Speaker 01:
And this gets into I guess some technical aspects about designating network resources and things that the operating agreement doesn't address but there's the Commission's position was that Holy Cross when it supplies to public service, it supplies public service.

[00:42:50] Speaker 01:
the same service transmission and generation.

[00:42:53] Speaker 06:
You mean public service.

[00:42:54] Speaker 01:
Yes.

[00:42:55] Speaker 01:
I apologize, Your Honor.

[00:42:56] Speaker 01:
When public service is supplying to Holy Cross, it's supplying to Holy Cross identically to how it supplies to its retail load.

[00:43:03] Speaker 01:
If Holy Cross is getting power from, and now I've completely forgotten the resource that the Chief Judge cited, but from that resource, they're getting it exactly identically to how public services retail customers would get it.

[00:43:17] Speaker 01:
And that the operating agreement and the power supply agreement don't contemplate an open access tariff arrangement where a party comes forward and they designate their own network resources and they do all of these other things.

[00:43:29] Speaker 01:
The operating agreement doesn't have provisions for that sort of designation.

[00:43:33] Speaker 01:
And the power supply agreement says public service will provide to Holy Cross its full requirements if called upon on the same plane that it provides its own retail load.

[00:43:44] Speaker 06:
Okay, I have just one last question.

[00:43:46] Speaker 06:
My very first question to Council for Holy Cross was to ask him what he thought the FERC meant in its first decision when it said that if Holy Cross is entitled to firm service on economy, energy, it can quote gain the system.

[00:44:04] Speaker 06:
What does that mean?

[00:44:06] Speaker 01:
So I believe you were quoting from paragraph nine of the declaratory order and that paragraph is an, so,

[00:44:14] Speaker 01:
As the courts well aware, the commission stylistically in its words describes the various arguments made by the parties.

[00:44:20] Speaker 06:
And that's a paragraph in the background section describing I know that I'm sorry, I'm just asking what, what, what, what, what public service.

[00:44:27] Speaker 01:
Yeah.

[00:44:29] Speaker 01:
Sorry, that was my very slow way of saying here's what public what I understand public services to me, not what the commission means public services meaning that the.

[00:44:38] Speaker 01:
Agreements only contemplate economy energy, the capital economy energy being non-firm.

[00:44:44] Speaker 01:
And so if you can use firm energy and firm transmission for economy energy, you're gaming the system because when we made an agreement to provide you full requirements, we made an agreement that we will provide you full requirements except for certain designated resources, or you could replace us with economy energy

[00:45:01] Speaker 01:
But we, meaning public service, understood that to only allow you to replace them with non-firm energy.

[00:45:07] Speaker 01:
And that's where I think it may have been, Your Honor, it may have been the Chief or Judge Edwards that pointed out that the Holy Cross had a footnote, or sorry, not Holy, the commission has a footnote where we say we didn't, and I think it's 53, but I've sort of lost in my notes at this point.

[00:45:22] Speaker 01:
We didn't take a position on the firmness or non-firmness of the supply.

[00:45:25] Speaker 01:
We understood that there's only one term or one type of capital E economy energy contemplated by the power supply agreement and the operating agreement.

[00:45:34] Speaker 01:
Whether the supply is firm or not, we weren't passing on this gaming the system with firm or non-firm supply.

[00:45:41] Speaker 01:
We were making the determination that no matter what the supply arrangement is, we don't need to know because we know that economy energy can be displaced to allow for a firm power transaction.

[00:45:52] Speaker 01:
or to avoid taking generating an offline.

[00:45:55] Speaker 01:
There's a few other examples, but again, I'm far afield.

[00:45:58] Speaker 01:
I hope that answers your question, but I'm happy to sort of discuss paragraph nine additionally.

[00:46:07] Speaker 06:
No, that's, I guess that's enough.

[00:46:09] Speaker 06:
Thanks.

[00:46:11] Speaker 02:
Yeah.

[00:46:11] Speaker 02:
Okay.

[00:46:11] Speaker 02:
Let me make sure my colleagues don't have additional questions for you, Mr.

[00:46:16] Speaker 02:
Thank you.

[00:46:18] Speaker 02:
Thank you.

[00:46:18] Speaker 02:
We'll hear from Holy Cross Council.

[00:46:20] Speaker 02:
Mr. Alley, we'll give you three minutes since we went substantially over time with Mr. Glover.

[00:46:25] Speaker 04:
I appreciate that.

[00:46:27] Speaker 05:
Let me begin with the last discussion.

[00:46:34] Speaker 04:
Because the way I interpret it, and it is fit note 53, I said 59 in my opening argument, but Mr. Glover is correct.

[00:46:42] Speaker 04:
Fert says we don't need to look at whether these particular resources are economy or firm or non-firm because, and the reason is all economy energy is treated as non-firm.

[00:46:57] Speaker 04:
So I'm confused by that's, the chief judge's question earlier in the response was, isn't Fert just finding that not

[00:47:10] Speaker 04:
as I understood your question, the position was, it didn't just find that it's not required to treat economy energy as firm.

[00:47:24] Speaker 04:
And I think the, as I read paragraph 21 of the hearing order, their holding is, public service is not obligated to treat economy energy, and it's a small e, purchases as firm energy entitled to the highest NERC priority.

[00:47:40] Speaker 04:
So I think they're making a blanket finding that anything that qualifies as economy energy under the power supply agreement is necessarily non-firm.

[00:47:51] Speaker 04:
And that's the point that we've believed the power supply agreement is agnostic about, silent on, and that's why they have to resort to the operating agreement, which- But I don't understand.

[00:48:02] Speaker 02:
Well, you just quoted, and I think this is at page 433 of the adjoint appendix in paragraph 21 of the hearing order,

[00:48:08] Speaker 02:
It closes by saying, and public service company is not obligated to treat economy energy as firm energy.

[00:48:15] Speaker 02:
That's, I think what I was trying to say is that what it's saying is it's not obligated.

[00:48:20] Speaker 02:
That doesn't mean that necessarily mean at least that all economy energy is never at firm.

[00:48:27] Speaker 02:
It's just that public service company is not obligated.

[00:48:30] Speaker 04:
I interpreted the order to mean that they don't need to look at the particular request that Holy Cross has made here because it

[00:48:39] Speaker 04:
doesn't qualify, it doesn't matter.

[00:48:41] Speaker 04:
It's automatically non-firm.

[00:48:43] Speaker 04:
So no economy energy can be firm as far as holding, I believe.

[00:48:49] Speaker 04:
So, and therefore we don't even need to look at the particularities of your resource here.

[00:48:55] Speaker 04:
It plunks no matter what.

[00:48:57] Speaker 04:
And to get that, we focused on the operating agreement section 3.5 and the operating agreement by its terms

[00:49:09] Speaker 04:
is just procedures.

[00:49:11] Speaker 04:
That's the purpose of it.

[00:49:13] Speaker 04:
It says in section 1.2.

[00:49:15] Speaker 04:
Section 3.5 just says it may be necessary, but it doesn't say it's always necessary to confirm.

[00:49:21] Speaker 04:
FERC's interpretation is that all economy energy purchases under the PSA are non-firm.

[00:49:28] Speaker 04:
And they based that on 3.5 here.

[00:49:32] Speaker 04:
This is an unfiled agreement, never filed at FERC.

[00:49:36] Speaker 04:
They use that to interpret the power supply agreement to then interpret the transmission agreement.

[00:49:41] Speaker 04:
I mean, this does sound like hiding an elephant in a mouse hole to me, to look to this unfiled procedural agreement, which doesn't say these are scheduling restrictions.

[00:49:52] Speaker 04:
It just says, these are the procedures we will follow where they apply.

[00:49:57] Speaker 04:
It doesn't purport to define scheduling priorities.

[00:50:01] Speaker 04:
It only primarily procedures to apply to scheduling priorities that exist

[00:50:06] Speaker 04:
outside the operating agreement.

[00:50:08] Speaker 04:
So FERCUS used a complete bootstrap argument here.

[00:50:11] Speaker 04:
The comparability argument, if I could just very quickly, Mr. Glover focused on what I think is paragraph 25 actually of the hearing order.

[00:50:23] Speaker 04:
Paragraph 24 says, we don't even need to look at your anti-discrimination arguments because this isn't a tariff, which is a ridiculous argument.

[00:50:31] Speaker 04:
But paragraph five says,

[00:50:36] Speaker 04:
It's necessarily comparable because we're providing a full requirement service to Holy Cross, and that is by definition the same as retail service.

[00:50:49] Speaker 04:
That's still, and that's what they say, and we've talked about the 5% and the 10% and all that, that still begs the question of how does public service operate with respect to resources like this when serving its retail load?

[00:51:05] Speaker 04:
We provided an affidavit saying they do exactly what we'd like to do.

[00:51:10] Speaker 04:
They treated this firm and it's not capped at their loan ratio share.

[00:51:14] Speaker 04:
They provided no evidence.

[00:51:17] Speaker 04:
FERC cites no evidence.

[00:51:19] Speaker 04:
And so we think this is a complete, it begs the question, the statement that wouldn't necessarily we win and it has to be comparable by definition.

[00:51:29] Speaker 04:
That's not a reason decision-making.

[00:51:30] Speaker 04:
We've talked about complex facts here.

[00:51:33] Speaker 04:
today that are nowhere discussed in the order, since therefore we believe this matter has to, at a minimum, be remanded in the order vacated for want of reason decision making and the lack of substantial evidence.

[00:51:45] Speaker 02:
Let me make sure my colleagues don't have final questions for you, Mr. Elliott.

[00:51:52] Speaker 02:
Thank you.

[00:51:53] Speaker 02:
Thank you for your argument.

[00:51:54] Speaker 02:
Thank you to both counsel for your argument.

[00:51:55] Speaker 04:
Thank you.

[00:51:56] Speaker 04:
Thank you very much.

[00:51:57] Speaker 02:
We'll take this case under submission.

[00:52:00] Speaker 02:
And the court will take a short recess to make sure that we're situated and closed for purposes of the third case.

[00:52:07] Speaker 02:
Thank you, counsel.

[00:52:09] Speaker 00:
This honorable court will now take a break recess.