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Case number 22-1018, Advanced Energy Economy et al.

[00:00:04] Speaker 01:
Petitioners versus Federal Energy Regulatory Commission.

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Ms.

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Fidler for the petitioners, Mr. Kennedy for the respondent, Mr. Fitzgerald for the interviewees.

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Morning.

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Ms.

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Fidler?

[00:00:23] Speaker 08:
Am I pronouncing that correctly?

[00:00:25] Speaker 03:
Yes, you are.

[00:00:30] Speaker 03:
Good morning, Your Honors, and may it please the point.

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My name is Danielle Fidler, and I'm here on behalf of Petitioners.

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I'd like to reserve three minutes for rebuttal.

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Because this appeal involves so many claims and proceedings, we'd like to focus today on the three issues central to resolving all of them.

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First, like most agencies, the Federal Energy Regulatory Commission has straightforward rules on how to calculate statutory deadlines that expressly cover the required actions and time periods at issue.

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First, refusal to apply those rules to the request for a hearing of the deadlock order is unlawful and inequitable.

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Second, the court must correct the commission's interpretation of Section 205G of the Federal Power Act to clarify that whether writing for a majority

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or a tie, the duty to provide a reasoned rationale and make findings of facts rests solely with the commissioners and not the court.

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The failure of the commissioners to meet that duty here was arbitrary and capricious.

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Finally, even if the court disagreed with these points, it must still vacate Burke's approval of the Southeast Energy Exchange Markets Transmission Service, which is an unduly discriminatory powerful.

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Burke's findings to the contrary

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abandon its duty to prevent monopoly utilities from using their market power to shut out competitors and overcharge customers.

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Turning to the first point.

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Petitioners' requests for a hearing of the deadlock order were timely filed in accordance with works rules for two reasons.

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First, the utility's requested effective date caused the end of Section 205D required minimum 60-day notice period to fall on a weekend or holiday.

[00:02:12] Speaker 04:
By the way,

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If we agree with you about this, do we have to reach any of the tariff issues?

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Yes, Your Honor, both.

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Why?

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If the agreement's invalid or vacated, why do we have to reach the tariff issue?

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Aren't they all dependent on the agreement?

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They are two separate filings, Your Honor.

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Right.

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Would the tariff filings have occurred but for the agreement?

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It's true, Your Honor, that they are.

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If the same agreement were invalidated,

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That would certainly make it more difficult to have the tariff go into effect.

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But as they are separate orders, both orders have to be addressed.

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Let me make sure I understand.

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If we invalidate or vacate the agreement, send it back, do the tariffs cease to be effective?

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Do the tariffs have any role at that point?

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Well, because the tariffs are still, the tariffs at issue, that is the tariff in effect right now.

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They also have to be, the order for that also has to be invalidated.

[00:03:21] Speaker 08:
But I guess.

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I don't understand that.

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But I guess you're, just see if I can understand your answer to Judge Tatel's question.

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You don't believe that invalidating

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You know, assuming for the sake of argument that we agreed with any of the challenges to the SIEM agreement and in order to make sure you don't believe that that connects to the needs to make sure of the tariff.

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Yes, Your Honor.

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I think that's correct.

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Our petitioners have pointed out these are two separate filings.

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While it would, as a practical matter, be difficult to continue with the tariff if the SIEM agreement itself is going

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has been invalidated as far as the operating tariffs are in effect currently with the commission.

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Both orders have to be invalidated as a practical matter if referred back to the commission.

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They have the authority to do what's necessary and may themselves decide to implicate the tariff order.

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But as far as the procedure stands, both filings are in effect.

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If we agreed with you that the rehearing petition was timely, why shouldn't we remand to FERC to consider the rehearing petition of the merits?

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We've asked that it be vacated and sent back to... No, I understand that's what you've asked for, but why wouldn't the prudent thing to do be to remand for FERC to consider on the merits?

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I mean, we took a similar approach in a case called Dayton Power and Light.

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where the rehearing petition, FERC found it was untimely.

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The court thought it was timely.

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And then we remanded for FERC to consider it on the merits.

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Because that's the whole purpose of rehearing in this scheme, is to let the agency have an opportunity to consider these arguments on the merits in the first instance.

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Correct, Your Honor.

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And I'm sorry.

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Could you just restate your question with regard to that?

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I apologize.

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So I'm saying why, if we agreed with you that the petition was timely, why wouldn't the appropriate remedy be simply to remand, defer, to consider the rehearing arguments on the merits?

[00:05:52] Speaker 03:
Well, two things, Your Honor.

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There are factual errors in the agreement itself that the commission has adopted.

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as part of the rationale, one of them being that the agreement is bilateral.

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And the agreement itself.

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But those things could be considered on rehearing by FERC in the first instance.

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Correct, Your Honor.

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And yes, remand is appropriate for the commission to reconsider the agreement on the merits, Your Honor.

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I would posit that the tariff order has already addressed any of the commission's findings with that regard.

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And that's why, again, we ask that both orders be considered by the court.

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many of the findings regarding the agreement.

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Some of the core principles are before the court in the tariff order, specifically with regard to questions, for example, of whether or not this is an unduly discriminatory power pool.

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So I think just sending the agreement back

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would leave in place or send commission back without direction on those substantive issues, which are properly before the court and are also based on error, Your Honor.

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But if the, sorry, if the, excuse me, if the agreement's invalidated, say why there's a power, an illegal power pool.

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I'm sorry, Your Honor, I didn't hear you.

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Why, if the agreement is invalidating, why is there a power pool, an illegal power pool, missing that?

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Isn't the illegality of the power pool tied up in the agreement?

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It is, Your Honor.

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It's, I guess, at least my understanding of Judge Rao's question was, if one was sending the agreement back for reconsideration by the commission,

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as the first order of business, the concern that petitioners have is that the commission's findings with regard to that question, Your Honor, about whether or not this is a power pool, are before the court now with regard to the tariff order.

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So I think, so petitioners,

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argue that that decision is also arbitrary and capricious.

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And that information needs to be provided to the commission as it considers both the agreement and the tariff.

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And additionally, with regard to the agreement, without further correction from the court regarding how to handle a deadlock order and the requirements of arbitrary and capricious review,

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Given that the commission is once again at four members, that instruction from the court is important to inform the court both of how to handle the review and also that the issues with regard to the substance of whether or not the power pool is unduly discriminatory also need to be provided as they reconsider the matter.

[00:09:05] Speaker 08:
Did I just hear you say that the commission is still at four members?

[00:09:10] Speaker 03:
It is back to four members, Your Honor.

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Are they the same four members that considered the I guess the same agreement in mid 2021, mid 2021?

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They are not.

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Chair Glick is no longer on the commission and Chair Phillips is now.

[00:09:34] Speaker 08:
So getting to the merits.

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Assuming we find that the challenge, the request for rehearing was timely and that we have jurisdiction over the challenge.

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Help me understand the guests with respect to, and let's assume also, just for a second, this question.

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that we agree with how your construct, how we're supposed to review the deadlock.

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Help me understand why there was a failure to respond to the governance and membership structure and independence of scene leadership, some of those other points that you

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So you raised it.

[00:10:45] Speaker 03:
Oh, with regard to the agreement?

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Yes.

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With regard to the agreement, while we discussed this in great detail, I think some of the fundamental issues are that the findings as to whether or not any of these provisions, including governance,

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monitoring and other requirements on the same agreement are permitted, rests on the finding of the supporting commissioners that this is a bilateral agreement.

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But this is not a bilateral agreement.

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At each turn, the elements of the agreement come up in terms of whether or not this is a power pool, whether or not the terms are discriminatory, for example, the enabling agreements not being

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mandatory, basically the unfettered discretion to allow people to participate.

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At each turn, supporting commissioners rely on that this is just an extension of a bilateral market.

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But this is not bilateral.

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And FERC's own fundamental documents reflect that a bilateral agreement is, by definition, two parties that know each other, that set the terms, and set the price.

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This is not that case.

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This is many parties, as they admit, that's across

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and states in two time zones, the bids and offers go through an algorithm that is matching.

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There must be a minimum of three parties every time one bid.

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So by definition, this is a multilateral agreement.

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And so to the extent that the supporting commissioners were relying on the characterization of the agreement as bilateral, that's just erroneous and has to be corrected.

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Furthermore, the supporting commissioners relied on their set up a sort of straw man argument that petitioners were motivated, somehow improperly motivated by seeking an RTO in their objections.

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And that was, A, not factual, but also then the commissioners didn't address a specific language in order 888 in the rules themselves.

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that were contrary to the supporting commissioner's positions.

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That's with regard to the same agreement.

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With regard to the tariff order, let me just pause there, Your Honor.

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Did you want to focus specifically on the agreement at this point or also the tariff order?

[00:13:23] Speaker 08:
Well, if there are no other questions about the agreement from my colleagues,

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I guess if you could say something about the application of the mobile Sierra.

[00:13:40] Speaker 03:
Yes, Your Honor.

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At core, one of the fundamental problems with application of mobile Sierra is, again, Commissioner

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Dan Lee determines that his basis for this is that he specifically proposes that the Mobile Sierra presumption apply to all tariffs.

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He notes that his position goes against precedent and Commissioner Christie again specifically relies on this being a bilateral agreement.

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So Commissioner Christie's view is that it's appropriate to apply a mobile Sierra presumption to a bilateral agreement.

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But obviously, when there's not a bilateral agreement, then that presumption does not automatically apply.

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And what the commission's extensive precedent says is that

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there at the very least has to be a balancing analysis of provisions that are not generally applicable versus those that are more contract provisions.

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In the record in this case, that balancing analysis was never conducted in the first instance.

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So there was no record on which the commissioners could rely to determine that mobile Sierra presumption should be applied.

[00:15:06] Speaker 02:
I do have some questions about jurisdiction under a 24 E G. So so just looking at the plain language of this provision.

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What is it about this statute?

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Just looking at the text, not the legislative history that gives us jurisdiction to review the deadlock order itself.

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That's right.

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I wouldn't read together section 12 of G and section 3 13.

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required deadlock orders to be reviewed on the merits based on the supporting statements.

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And that has to do with when taking 205G1's language, it specifically determines that if the 60-day period under 205D, the notice period expires, then under A, the failure to issue an order accepting or denying the change by the commission shall be considered to be an order issued by the commission.

[00:15:59] Speaker 02:
It shall be considered an order for the purpose of rehearing.

[00:16:03] Speaker 03:
Correct, Your Honor.

[00:16:04] Speaker 03:
And that's because what the court is reviewing is determined upon what is brought up in the requests.

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Sorry, what the court is reviewing on judicial review under 313B is determined by what is brought up by petitioners in 313A.

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So in order to have something to review, the requesting parties have to respond

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to the commission's decision, if there is no order, if you're still just at the record, then what would come before the court is the entire record.

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And there would be no agency decision.

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And that really goes against the construct here that there is a commission order to be reviewed and that there is to be the written statements as part of that record.

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So the way they work together is that

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that statement, the written statements, are what the parties are responding to under 313A and the response for rehearing.

[00:17:08] Speaker 02:
I'm not sure that anything in G changes our case law under public citizen or the two FCC cases that public citizen relies upon.

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I mean, this order takes effect by operation of law.

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which means there isn't any commission decision.

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And the statute says that each commissioner separately is adding to the record their statements.

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But I don't think that changes any of the reasoning of those underlying cases, that there's nothing for us to review.

[00:17:39] Speaker 03:
uh respectfully your honor 205 g was a direct response to the court's uh legislative history says but but what is the text that congress actually enacted doesn't seem to get around the problems in our case law well your honor this the the it's not that there's nothing to review this the language specifically states that

[00:18:06] Speaker 03:
This shall now be considered an order of the commission and direct that order.

[00:18:10] Speaker 02:
Rehearing.

[00:18:12] Speaker 02:
And then the only thing that's judicially reviewable under G is if there is a deadlocked rehearing order.

[00:18:18] Speaker 02:
That becomes judicially reviewable.

[00:18:20] Speaker 02:
But we don't have a deadlocked rehearing order here.

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Here we have a rehearing order that focused on timeliness.

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But Your Honor, it goes on to say, 205G goes on to say in 205G2 that an appeal is pursuant to the subsection, a person seeking rehearing under 825LA, and the commission fails to act on the merits of the rehearing request by that date.

[00:18:46] Speaker 03:
Because the commissioners are divided two against two, such a person may appeal under two.

[00:18:51] Speaker 02:
Yes, but we don't have that circumstance under two.

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That circumstance isn't obtained in this case.

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There wasn't a deadlock.

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decision for the for the for the for the acceptance there there is there was no there was there was a deadlocked initial order but there was not a deadlocked rehearing order which is what to is talking about well in that case if the rehearing was denied by operation of law

[00:19:22] Speaker 02:
But it wasn't denied by operation of law in this case.

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The commission voted 3-1 on rehearing that the rehearing petition was not timely.

[00:19:32] Speaker 03:
I'm sorry, Your Honor.

[00:19:37] Speaker 03:
Yes, but the rationale for that, again, relies on the initial deadlock order.

[00:19:45] Speaker 02:
Where in the statute does it rely on that?

[00:19:48] Speaker 03:
The rationale of the timeliness decision

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I mean, at this point, that's a review of the Thailand order and not of the deadlock order itself.

[00:20:01] Speaker 03:
I mean, that order.

[00:20:05] Speaker 02:
So the deadlock order is not, we don't have jurisdiction over the deadlock order.

[00:20:10] Speaker 02:
Nothing in G gives us jurisdiction over the deadlock order.

[00:20:16] Speaker 03:
Your Honor, well, in that, I mean, we have appealed the denial of the request for hearing on timeliness.

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And at this point, the rationale for review, so if the court has determined that the timeliness order was incorrect, then it's still back at the decision with regard, that's a deadlock order.

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And Your Honor,

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I would argue that that still should be read, especially since it's being sent, if it were to be sent back to the commission, it would still be reviewable under the under 205 G and that guidance should be provided on what the what the commissioner should be a standard review that would apply.

[00:21:07] Speaker 08:
Not sure I understood your response.

[00:21:13] Speaker 08:
I think that

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As I understand Judge Rao's question, it is that, I guess, dovetailing with her earlier question about state and power and light, is that if the, what we have jurisdiction over is the denial of your rehearing, the relief you request in the rehearing, by the rehearing,

[00:21:44] Speaker 08:
And if that rehearing order was erroneous, assuming we agree with you on how to interpret the statute's timing and jurisdictional provisions, then why isn't proper relief to send it back and have them evaluate the rehearing request on the mayor?

[00:22:15] Speaker 08:
and leave it at that.

[00:22:16] Speaker 03:
Well, Your Honors, and I just know that I am out of time.

[00:22:20] Speaker 08:
That's fine.

[00:22:23] Speaker 08:
We'll let you know when you're done.

[00:22:25] Speaker 03:
OK.

[00:22:26] Speaker 03:
Thank you, Your Honor.

[00:22:28] Speaker 03:
Your Honors, that is correct.

[00:22:30] Speaker 03:
Possibly that is the correct relief for the acceptance order.

[00:22:33] Speaker 03:
However, as we've noted, the same issues are involved in the tariff order.

[00:22:38] Speaker 03:
And the tariff order is properly before the court.

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And we have asked for relief of the tariff order.

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And the commission is also already relying on the acceptance orders rationale for further the amended agreement rationale.

[00:22:53] Speaker 03:
So again, Your Honors, I would, a petitioner should posit that the court has before it

[00:22:58] Speaker 03:
the tariff order as well.

[00:22:59] Speaker 03:
And that should not be, that would need to be addressed at the same time.

[00:23:03] Speaker 08:
But it seems like some of the rationale for approving the tariff order was, look, if the same agreement is going to be in place, then in order for it to work properly and to implement it, some of these provisions of the tariff

[00:23:23] Speaker 08:
um have to be effective like the toggle feature and other things and so it seems like um and that explains why you know there was a deadlock on the agreement but three to one on the tariff order because it seems like at that point the consideration of the tariff order was was affected by

[00:23:52] Speaker 08:
fact that a SIEM agreement was.

[00:23:59] Speaker 08:
And so I guess what I'm trying to understand is why wouldn't the best thing to do would be to essentially vacate the tariff and send this back to Burke to properly consider all of the

[00:24:15] Speaker 08:
items that were raised on re-hearing, and then go from there.

[00:24:20] Speaker 08:
If it results in them also, again, approving the same agreement, and that's what it results in.

[00:24:28] Speaker 08:
And if that results in them approving the exact same tariff order, that's what it results in.

[00:24:34] Speaker 08:
And then if need be, then you come back to the support.

[00:24:41] Speaker 03:
Respectfully, Your Honor, the third vote for the tariff was specifically because Chair Blick disagreed with the issue of mobile terror coverage.

[00:24:56] Speaker 03:
But the tariff order specifically deals with the merits of the questions of the

[00:25:06] Speaker 03:
the struggle feature, the enabling agreements, basically the participation elements, and addresses those on the merits very clearly.

[00:25:16] Speaker 03:
There is not a direct reliance in the tariff order and the acceptance order.

[00:25:22] Speaker 03:
There is a similar logic underlying the approval of some of the elements in the tariff order on the same erroneous characterization of the agreement as bilateral.

[00:25:35] Speaker 03:
that the commission very specifically addresses the merits on the terror quarter and addresses them in substance with the understanding that they were separate.

[00:25:48] Speaker 03:
And Commissioner Clements raises these points in her dissent on this.

[00:25:53] Speaker 03:
I would also just remind your honor that

[00:25:55] Speaker 03:
The market is now up, and the injury to petitioners is continuing.

[00:26:01] Speaker 03:
As the market is continuing in a way that's giving monopoly utilities a competitive advantage, that advantage continues while the matter is being reconsidered.

[00:26:13] Speaker 03:
So because the commission has made independent findings on the merits with regard to the tariff order,

[00:26:20] Speaker 03:
It's critically important to address those merits while they're here before the court.

[00:26:25] Speaker 02:
So, Ms.

[00:26:26] Speaker 02:
Fildler, so on your view that these two orders are independent, then it would be fine for us to remand the rehearing order on the deadlock seam agreement, but uphold the tariff order.

[00:26:40] Speaker 02:
I mean, I know that's not the relief you're seeking, but you're suggesting that they are analytically independent.

[00:26:46] Speaker 02:
So the fact that we are remanding the SIEM agreement doesn't mean that we would have to necessarily vacate and remand the tariff agreement.

[00:26:56] Speaker 03:
Procedurally, Your Honor, that is correct.

[00:26:59] Speaker 08:
Thank you.

[00:27:04] Speaker 08:
Your Honors, are there... Any other questions, Judge Tatel?

[00:27:09] Speaker 08:
No.

[00:27:10] Speaker 08:
We'll give you some time.

[00:27:12] Speaker 08:
Thank you.

[00:27:31] Speaker 08:
Mr. Kennedy.

[00:27:33] Speaker 08:
Yes.

[00:27:34] Speaker 08:
Good.

[00:27:35] Speaker 08:
Good morning.

[00:27:41] Speaker 05:
Good morning, Your Honor.

[00:27:42] Speaker 05:
May I please support him, Robert Kennedy, on behalf of the Commission.

[00:27:45] Speaker 05:
I guess I'll take the hint and start with the timing issue.

[00:27:48] Speaker 05:
A unanimous Commission found that petitioners' re-hearing requests were untimely.

[00:27:54] Speaker 05:
And they did so by interpreting the notice period in Section 205D in exactly the way this Court says it should be interpreted in Indiana and Michigan.

[00:28:04] Speaker 05:
That is, as a maximum waiting period that can be imposed on utilities.

[00:28:08] Speaker 05:
And this

[00:28:10] Speaker 05:
flows from the structure of the act.

[00:28:12] Speaker 05:
As the Supreme Court said in Memphis Light, which is discussed in the commission's tariff-free hearing order, except this, and Memphis Light discussed section four of the NGA, the corollary of section 205 of the FDA.

[00:28:26] Speaker 05:
The court said, except as specifically limited by the act, the rate-making authority of utilities is just the same as it is of sellers of

[00:28:37] Speaker 05:
sellers of an unregulated commodity.

[00:28:39] Speaker 05:
Now, one of the specific limitations in the Act is this 60-day notice period.

[00:28:44] Speaker 05:
But because the statute leaves the utility's rate-making authority undisturbed, except as specifically provided, the Supreme Court said that the notice period, that the embargo and rate changes imposed by the Act must be interpreted in a way that allows for the earliest effectuation of rate changes

[00:29:03] Speaker 05:
And that's what the Commission did here when it said 60 days means 60 days.

[00:29:08] Speaker 02:
How is that consistent with Burke's own rule 2007?

[00:29:12] Speaker 05:
Well, I think there's a couple of responses to that, Your Honor.

[00:29:16] Speaker 02:
I mean, you have a long-standing rule.

[00:29:18] Speaker 02:
I mean, some form of this has been in place, my understanding is, since the 40s.

[00:29:24] Speaker 05:
I know the rulemaking for this goes back to 1982.

[00:29:28] Speaker 02:
And the 1982 rule, I believe, is very similar to the same rule that's been in place since, I think, 1947 or 48, something like that.

[00:29:36] Speaker 05:
Correct.

[00:29:37] Speaker 05:
And the commission has consistently taken the position that while that rule can be applied to deadlines for filers, it cannot be applied to the commission's implicit statutory period to act on rate filings

[00:29:53] Speaker 05:
because that would impermissibly extend the burden, the waiting period imposed on utilities by Congress.

[00:30:02] Speaker 05:
And the commission's interpretation sort of tries to effect.

[00:30:05] Speaker 04:
So is the statement in the petitioner's brief that the commission has repeatedly stated, including in the federal register, that this rule applies to this very time period?

[00:30:17] Speaker 05:
Yes, the commission's emergency, yes, and the rulemaking is recorded.

[00:30:22] Speaker 04:
Yes, what?

[00:30:22] Speaker 04:
Yes, it's wrong.

[00:30:24] Speaker 05:
No, yes, the commission has stated.

[00:30:26] Speaker 04:
Yes, it's correct.

[00:30:27] Speaker 05:
In those rule makings that could be applied to their statutory timelines.

[00:30:32] Speaker 05:
But in practice, they were talking about emergency situations in those rule makings.

[00:30:36] Speaker 05:
In practice, the commission's consistent practice has been to act prior to the proposed effective date set by utility when that proposed effective date is on a holiday or a weekend.

[00:30:48] Speaker 05:
To not take advantage of the rule, to not apply the rule,

[00:30:52] Speaker 05:
And the distinction the commission is throwing is basically saying, look, in the Federal Power Act, Congress has imposed on agreed parties the obligation to seek re-hearing within 30 days.

[00:31:05] Speaker 05:
If we're closed on the 30th day, if that happens to be a Sunday, we're going to extend the deadline because that satisfies, that gives effect to the intent of Congress in giving you 30 days to formulate your re-hearing request.

[00:31:17] Speaker 05:
Conversely, the obligation imposed in section

[00:31:20] Speaker 05:
205D.

[00:31:21] Speaker 05:
They're not filing a rate proposal that the Commission gets to vote up and down on, as the Supreme Court noted in the mobile case, the first half of MobileSphere.

[00:31:29] Speaker 05:
These are actual rate changes, and the notice period is just an embargo.

[00:31:35] Speaker 05:
So the Commission is saying, Congress said you have to hold your rate-changing authority on hold for 60 days, and we're going to keep it at 60 days.

[00:31:43] Speaker 05:
We're not going to

[00:31:44] Speaker 05:
take advantage of our regulatory rule to place a burden on new utility greater than what Congress did.

[00:31:50] Speaker 02:
How would a party here know that this is what FERC would do in this context?

[00:31:55] Speaker 02:
I mean, if they were to look at our case law and to look at FERC's own regulations, how would a party be on notice that FERC was going to do what it did?

[00:32:04] Speaker 05:
So, yeah, I want to make two points with respect to reliance.

[00:32:08] Speaker 05:
First, in this case, how would a party know

[00:32:10] Speaker 02:
I mean, because deadlines need to be clear, right?

[00:32:12] Speaker 02:
We need to have a rule so people know what their obligations are.

[00:32:16] Speaker 05:
And it's kind of a dovetail with 825-PG.

[00:32:20] Speaker 05:
The one thing that's clear in 825-PG is that for purposes of rehearing, the commission's failure to act is the order.

[00:32:28] Speaker 05:
And on October 13, the commission issued a notice and said, our failure to act occurred on October 11.

[00:32:38] Speaker 04:
Two days afterwards.

[00:32:40] Speaker 05:
Correct.

[00:32:41] Speaker 04:
So they've lost two days.

[00:32:42] Speaker 05:
That's when the notice went out.

[00:32:44] Speaker 04:
But they've lost two days.

[00:32:46] Speaker 05:
But they were on notice, actual notice.

[00:32:47] Speaker 04:
How were they on notice if they looked at 2007?

[00:32:50] Speaker 05:
Well, first of all, I would like to push back against the suggestion that's been made that they actually did rely on section 207.

[00:32:57] Speaker 05:
Because if you look at the rehearing requests, which are page 1100 and 1118 of the JA, what they sought rehearing of was not the commission's failure to act,

[00:33:07] Speaker 05:
They sought re-hearing of the notice.

[00:33:09] Speaker 05:
They dubbed that the agreeing order or the deadlock order.

[00:33:15] Speaker 05:
In fact, on page 1102, the re-hearing request specifically says, on October 13th, 2021, the commission failed to act within the 60-day period set by section 205.

[00:33:27] Speaker 05:
October 13th is the date of the notice.

[00:33:30] Speaker 05:
You can't reach that date using any

[00:33:34] Speaker 05:
I believe that you said that it does it does for a misread the statute and thought that the green order was the notice when in fact it's the commission's failure to act so I think the notion that there was actually one and that explains why they filed on November 12th because 30 days after October 13th is November 12th.

[00:33:55] Speaker 05:
So the notion that there was actual reliance on Rule 207, I think, is misplaced.

[00:33:59] Speaker 05:
But again, how could a party know there was notice in this case that the failure to act, key, clear trigger for rehearing under Section 824BG occurred on October 11th?

[00:34:12] Speaker 05:
And, you know, just also, how could this?

[00:34:15] Speaker 02:
How could it occur on October 11th, though, which was Columbus Day?

[00:34:18] Speaker 05:
because the statute says utilities have to give at least 60 days notice here.

[00:34:25] Speaker 05:
And here they chose October 12th as their proposed effective date.

[00:34:30] Speaker 05:
This court's decision in national fuel gas, I believe, says if you pick a effective date outside of the 60 day period further, the commission has within that period to act.

[00:34:44] Speaker 05:
So the commission could act.

[00:34:45] Speaker 05:
I'm sorry.

[00:34:46] Speaker 04:
Can I just go back?

[00:34:48] Speaker 04:
To Judge Rouse's very first question, I just don't understand.

[00:34:51] Speaker 04:
Rule 2007, it expressly applies to any time period that is prescribed or allowed by statute or regulation or commission order.

[00:35:06] Speaker 05:
The language of the rule itself, I believe, is any time period.

[00:35:10] Speaker 05:
Yeah.

[00:35:12] Speaker 04:
And we've held, right, in the city of Batavia, that that applies to the 30-day period.

[00:35:17] Speaker 04:
So I just, it seems to me you're making this thing exceptionally complicated when the answer is really quite simple.

[00:35:26] Speaker 04:
It's just the plain language of the rule, 2007.

[00:35:30] Speaker 04:
What am I missing?

[00:35:34] Speaker 05:
Maybe I'm missing your question.

[00:35:37] Speaker 05:
The plain language of the rule applies to, I think it says, any time period.

[00:35:41] Speaker 05:
And the argument is, well, your Section 205D, even though it's worded as a imposition, an embargo of the utility's rate change, that is, in effect, a time period for you to act on a response to a rate filing.

[00:36:03] Speaker 05:
And the commission's position is, if 207 could be applied,

[00:36:07] Speaker 05:
If the language of 207 could be applied in this case, it can't be because that would be overriding and improperly extending the notice obligation imposed on utility.

[00:36:20] Speaker 04:
So shouldn't the commission amend its rule?

[00:36:23] Speaker 05:
Well, I mean, that's a possibility, certainly.

[00:36:27] Speaker 05:
But the point is,

[00:36:28] Speaker 05:
And two, one, there is no evidence in the record of reliance on that rule.

[00:36:33] Speaker 05:
Two, party replaced on notice that this is how we're calculating the date.

[00:36:37] Speaker 05:
And three, if it could be applied to this circumstance, if the language is broad enough to cover it, which admittedly, it says any time period, that would be inappropriate to do it because it would

[00:36:50] Speaker 05:
It would conflict with the 60-day notice period in Section 205D.

[00:36:54] Speaker 05:
So the commission would be without power to extend the sort of embargo on rate changes that Congress imposed under Section 205D.

[00:37:03] Speaker 08:
Even though in every other statute that I'm aware of, the deadline goes by.

[00:37:18] Speaker 08:
It's at all.

[00:37:20] Speaker 05:
Yes, because I think the language of Section 205, the precise language is important.

[00:37:28] Speaker 05:
Yes, implicitly, if the commission wants to act on a rate filing, it needs to do so before the proposed effective date.

[00:37:35] Speaker 05:
But what Section 205 does is impose a notice obligation on the utility that says, you make a rate change, it can't go into effect until there's been 60 days of notice.

[00:37:45] Speaker 05:
So it's really an obligation imposed upon them, a pause on their otherwise undisturbed

[00:37:50] Speaker 05:
I think that's what differentiates it from deadlines you might see in, you know, court proceedings and the like.

[00:37:59] Speaker 02:
Mr. Kennedy, if you could address the question I asked petitioners, which is, I mean, if this court were to find that FERC's re-hearing, you know, that the re-hearing petition was in fact timely, why isn't the appropriate remedy to remand to FERC to consider the re-hearing on the merits?

[00:38:16] Speaker 05:
So I think that is the, as you noted, sort of the standard

[00:38:19] Speaker 05:
procedure.

[00:38:21] Speaker 05:
What makes this case different, among many other things, is the fact that you have before you majority voted orders from the commission that deal with many of the same issues that were raised with respect to the agreement.

[00:38:34] Speaker 05:
So the court has restored the commission's post-rehearing word on a lot of these issues that were raised in both cases.

[00:38:42] Speaker 05:
As a practical matter, you have the commission's position on whether

[00:38:47] Speaker 05:
whether the tariff provisions are just reasonable in the way.

[00:38:50] Speaker 02:
If we were to find that tariff provisions were just and reasonable, assuming that we found that, would there be no reason for remand on the deadlock order rehearing?

[00:39:01] Speaker 02:
Well, would that resolve the issues?

[00:39:02] Speaker 02:
I mean, petitioners suggest that there are analytically different questions in the two orders.

[00:39:07] Speaker 05:
And the commission did carve out, if you look at the tariff order, it deemed some issues as beyond the scope, because they had been resolved.

[00:39:18] Speaker 05:
by virtue of the agreement going into effect by Operation Law.

[00:39:23] Speaker 05:
But I think the others, again, you have the commissions consider judgment on those questions.

[00:39:29] Speaker 05:
So they are analytically distinct in that they were addressed in two different buckets, but it's the precise same arguments that the participation requirements are duly discriminatory.

[00:39:42] Speaker 05:
That's the same analysis, whether they exist in the agreement or condition to making use of the

[00:39:48] Speaker 02:
Can you also say a little bit about why FERC believes that we have jurisdiction over the deadlock order?

[00:39:55] Speaker 02:
I mean, under the plain language of 205 DG.

[00:40:00] Speaker 05:
So I agree with you, Your Honor, that 205 DG.

[00:40:07] Speaker 05:
Anyway, it assumes a world where there's a deadlock.

[00:40:13] Speaker 05:
re-hearing another deadlock, that's, and then it provides judicial review in those circumstances.

[00:40:19] Speaker 05:
I don't think it gets you there here because there is no deadlock, there is no subsequent deadlock with respect to it.

[00:40:27] Speaker 02:
I think the standard of review for whether we, if we had jurisdiction for a deadlock order is very,

[00:40:33] Speaker 02:
And I'm not sure that the statute here gives us any guidance that changes the reasoning of the public citizen case, and as I said, the two FCC cases that preceded that.

[00:40:48] Speaker 05:
So, you know, listening to what you said before, I'll try to confine myself just to the language of the statute.

[00:40:55] Speaker 05:
I think if you look at section...

[00:41:03] Speaker 05:
Section G1A, which talks about deadlock that gets you to rehearing.

[00:41:09] Speaker 05:
Obviously, it references Section A25LA.

[00:41:13] Speaker 05:
In the Allegheny case, this court describes Section A25LA as establishing the precursors to judicial review.

[00:41:22] Speaker 05:
So I think there's some suggestion there that there would be review on merits.

[00:41:26] Speaker 05:
And then if you had a subsequent deadlock on rehearing, again, Section

[00:41:31] Speaker 05:
A-25G2 references an appeal under section A-25LB, which talks about the, which, you know, is a standard provision for judicial review under the Federal Power Act, where the court typically applies the arbitrary

[00:41:49] Speaker 02:
But this statute doesn't really tell us what we would review, which was the concern of this court in those other cases, right?

[00:41:56] Speaker 02:
So I know the commission takes the view that we should just look at.

[00:41:59] Speaker 02:
We should look at the record as a whole on some very deferential standard.

[00:42:05] Speaker 05:
Sorry.

[00:42:05] Speaker 05:
Our position is a little more nuanced than that.

[00:42:09] Speaker 05:
One, what should be reviewed?

[00:42:10] Speaker 05:
I think what differentiates this case from some of the others is you have congressional language deeming the deadlock to be an order.

[00:42:19] Speaker 05:
both for purposes of rehearing and then essentially for judicial review if there's another deadlock.

[00:42:25] Speaker 05:
So I think that takes it, differentiates from the FEC case.

[00:42:32] Speaker 05:
The implicit finding is not just an order, it's an order accepting the rape filing.

[00:42:35] Speaker 05:
So the implicit finding of that order is that the rape filing is just and reasonable.

[00:42:40] Speaker 02:
And our position is- It's not a FERC finding.

[00:42:43] Speaker 02:
It is a congressional judgment that in a deadlocked case,

[00:42:48] Speaker 02:
such rate goes into effect.

[00:42:50] Speaker 02:
So what if Congress were to enact a statute that embodied the SIEM agreement?

[00:42:54] Speaker 02:
It says, we approve the SIEM agreement.

[00:42:57] Speaker 02:
And they enact that into law, signed by the president.

[00:43:00] Speaker 02:
Could this court review that under arbitrary and capricious review?

[00:43:06] Speaker 02:
Could we decide whether Congress had behaved reasonably?

[00:43:09] Speaker 02:
I don't think that's how we review statutes.

[00:43:13] Speaker 05:
No, correct.

[00:43:15] Speaker 05:
But again, obviously, the intent of this was to have the court look at the, obviously, based on the legislative history, the intent was to have the court look at this.

[00:43:28] Speaker 02:
Maybe.

[00:43:28] Speaker 02:
I think the legislative history is a bit murkier than some of the briefings suggest.

[00:43:33] Speaker 05:
Well, in particular, if there's any question that I would direct your attention to, supplemental appendix page

[00:43:40] Speaker 05:
4 and 5 of Representative Kennedy's statement as to this, but I take a point.

[00:43:46] Speaker 05:
As to the standard review, we believe the agency action would be the congressionally-directed acceptance of this, basically saying, you know, if it's 2-2 split, the two who voted in favor, who would have voted in favor of the rate change go to the governing group.

[00:44:04] Speaker 05:
The implicit finding is that it's just and reasonable.

[00:44:07] Speaker 05:
Is there evidence in the record to assess whether that finding is arbitrary and capricious?

[00:44:13] Speaker 05:
And our position is that the commissioner's statements can be guideposts and anchor the court's review.

[00:44:19] Speaker 02:
That's not FERC's position in its third circuit case.

[00:44:21] Speaker 02:
So why is FERC's position different here than in the third circuit?

[00:44:25] Speaker 02:
I mean, are these cases materially distinguishable?

[00:44:27] Speaker 02:
Because it seems that FERC is testing out different theories in different circuits.

[00:44:32] Speaker 05:
Well, we're perfectly candid.

[00:44:34] Speaker 05:
We're trying to work our way through a statute that Congress has drafted in our lap and trying to figure out the best way to apply it.

[00:44:42] Speaker 05:
I believe our positions in both cases are in parallel.

[00:44:47] Speaker 05:
Again, in both cases, we're saying that on the merits review is appropriate.

[00:44:50] Speaker 05:
In both cases, we're saying the agency action for purposes of review is a congressionally directed acceptance.

[00:44:57] Speaker 05:
In both cases, we're saying the arbitrary and capricious

[00:45:00] Speaker 05:
Standard of review is the appropriate standard.

[00:45:03] Speaker 05:
In both cases, we say the commissioner's statements can anchor the court's review where they differ, and I think it's a matter of context.

[00:45:09] Speaker 05:
In the third circuit case, the argument was, court, you can't look at anything.

[00:45:14] Speaker 05:
Similar to the, there's no agency action.

[00:45:16] Speaker 05:
Therefore, the statute requires an automatic remand.

[00:45:20] Speaker 05:
We argued no, and we said, look, these commissioner's statements, they're there for a reason.

[00:45:25] Speaker 05:
Look at what we have.

[00:45:26] Speaker 05:
You can subject them to APA.

[00:45:28] Speaker 05:
you can subject them to APA review and looking at them.

[00:45:31] Speaker 05:
The question here is different, must you?

[00:45:33] Speaker 05:
And our position here is that nothing in the language of Section 824 E.G.

[00:45:39] Speaker 05:
requires or imposes all the requirements of the APA on those commissions.

[00:45:47] Speaker 05:
But the court can look.

[00:45:49] Speaker 04:
I'm sorry, you finish here.

[00:45:51] Speaker 04:
I'm sorry.

[00:45:52] Speaker 04:
Well, let me just pursue your line of questioning here with Judge Rao.

[00:45:57] Speaker 04:
So just take an example.

[00:46:00] Speaker 04:
Actually, it's not an example.

[00:46:01] Speaker 04:
It's this case.

[00:46:02] Speaker 04:
So the two commissioners, the two commissioners relied on record evidence, an expert, that the SIEM agreement would yield what, $40 million worth of benefits or something?

[00:46:18] Speaker 04:
A big number, right?

[00:46:20] Speaker 04:
And there's an affidavit in the record challenging that.

[00:46:24] Speaker 04:
saying the analysis is flawed and a proper cost-benefit analysis would come out the other way.

[00:46:31] Speaker 04:
Now, the two commissioners did not address the rebuttal evidence at all, right?

[00:46:37] Speaker 04:
Didn't say a word about it.

[00:46:39] Speaker 05:
I just want to take one issue with one, well, to immediately answer your question.

[00:46:44] Speaker 04:
Well, let's stick with my question.

[00:46:47] Speaker 04:
It's largely correct, isn't it, what I just said?

[00:46:50] Speaker 05:
They did not mention, I would just say that they, yes, they did note that there were evidence in the record of projected benefits, but they also said the benefits here are obvious, and there's virtually no doubt.

[00:47:00] Speaker 04:
So there was also a quality assessment.

[00:47:02] Speaker 04:
But they didn't, they didn't, I mean, in a classic APA case, that would be, we would vacate that.

[00:47:08] Speaker 04:
That would be a simple administrative law 101.

[00:47:12] Speaker 04:
Well, because because the commission made a decision without considering without explaining explaining why country evidence didn't change.

[00:47:23] Speaker 04:
We would vacate that.

[00:47:25] Speaker 05:
Well, I would say issue that in this case because, A, they noted they took a quality, in addition to noting the projected benefits, they also took a qualitative view.

[00:47:33] Speaker 04:
If you look at the- No, just stick with my point.

[00:47:36] Speaker 04:
Do you agree with me that in a regular APA case, that would be, we would vacate that decision and send it back for failure to consider the full record?

[00:47:47] Speaker 04:
And so my question to you is, what do we do with that?

[00:47:52] Speaker 04:
how do we evaluate that rebuttal evidence, that expert testimony, which said, which challenged the benefits of the SIEM agreement?

[00:48:03] Speaker 04:
Do we just look at it ourselves and say, okay, yeah, we've read them both and we think that the commission could have reasonably relied on the experts that it did.

[00:48:16] Speaker 04:
I mean, how do we do that?

[00:48:17] Speaker 04:
Usually we defer the commission on these things,

[00:48:20] Speaker 04:
I just don't know what we would do with that in this case.

[00:48:24] Speaker 04:
Did you see my point?

[00:48:26] Speaker 05:
I do.

[00:48:26] Speaker 05:
And I'm going to give you the direct answer to your last question.

[00:48:30] Speaker 05:
Yes.

[00:48:31] Speaker 05:
But I do want to back up a bit.

[00:48:32] Speaker 05:
This is not a case where the commission or any of the commissioners looked at a benefits analysis and did a

[00:48:39] Speaker 05:
a metric cost-benefit analysis.

[00:48:41] Speaker 05:
The commission explicitly made this point in tariff orders that they looked generally at the qualitative benefits.

[00:48:47] Speaker 05:
I agree with that.

[00:48:48] Speaker 04:
But your point's well taken.

[00:48:50] Speaker 04:
But I don't think that changes the point, I may.

[00:48:52] Speaker 04:
But you're right about that.

[00:48:53] Speaker 04:
But that doesn't in any way change my concern that the commission relied on a piece of evidence against which there was serious rebuttal evidence, which it didn't consider.

[00:49:06] Speaker 05:
And again, I don't want to fight your hypothetical too much.

[00:49:08] Speaker 04:
That's not the hypothetical.

[00:49:09] Speaker 04:
I think it's this case.

[00:49:11] Speaker 05:
No, I think it is a hypothetical because, again, the commissioners noted projected benefits, but they also found qualitatively, undeniably, this is going to be good news for consumers.

[00:49:22] Speaker 05:
We're bringing people to the market who think they can, rather than generate themselves,

[00:49:27] Speaker 04:
I don't want to pursue this too far, but look, if the commission, let's make it really simple.

[00:49:33] Speaker 04:
If the commission says, if an expert says $40 million worth of benefits, right?

[00:49:39] Speaker 04:
And the commission relies on that.

[00:49:41] Speaker 04:
And there's a rebuttal affidavit which says that's wrong.

[00:49:44] Speaker 04:
It's not 40 million, it's zero.

[00:49:46] Speaker 04:
It doesn't make any difference what else the commission said about the decision, whether it relied on other evidence.

[00:49:55] Speaker 04:
It failed to consider a fundamental piece of evidence that is contrary to what it concluded, right?

[00:50:02] Speaker 05:
So how do you think it should work?

[00:50:05] Speaker 05:
Yes, in that circumstance, yes.

[00:50:10] Speaker 04:
OK, but your point is that that's not this case, right?

[00:50:13] Speaker 05:
Yes, but is that a legitimate objection?

[00:50:16] Speaker 05:
Yes, we would ask that if there's support in the record for not turning your... Not a perversing course based on that evidence.

[00:50:23] Speaker 05:
That would be something for the court to look at.

[00:50:25] Speaker 05:
And I know we're in an uncertain stance here, but I don't think it's that advanced.

[00:50:30] Speaker 04:
It's the first time I've ever seen anything.

[00:50:31] Speaker 05:
Section 706 explicitly says that in conducting arbitrary judicial review, the court can look at the record with specific parts of the record pointed out by the parties.

[00:50:43] Speaker 05:
And just for the record, this is really a characterization.

[00:50:46] Speaker 04:
Let me just change the subject briefly, because we've been talking for a long time.

[00:50:49] Speaker 04:
Could you just state for us, step back and state for us, from the commission's point of view, what exact issues are before us on this project?

[00:51:01] Speaker 04:
What is the exact issue before us?

[00:51:05] Speaker 05:
So whether the

[00:51:08] Speaker 05:
So with respect to the agreement, I think we have to divide it between the agreement and the tariff force.

[00:51:14] Speaker 05:
OK, start with the agreement.

[00:51:16] Speaker 05:
With respect to the agreement, is there support in the record, the record being the commissioner's statements and the record, or a conclusion that acceptance of the agreement was not arbitrary?

[00:51:28] Speaker 04:
What about the timing of this question?

[00:51:30] Speaker 04:
Do we have to decide that first?

[00:51:33] Speaker 05:
Yes.

[00:51:34] Speaker 04:
OK, so what's that?

[00:51:35] Speaker 05:
whether the commission reasonably concluded that it could not use its regulation to extend the statutory notice period section.

[00:51:44] Speaker 04:
Okay, and suppose we think the commission's wrong about that, then what's, then what do we do?

[00:51:49] Speaker 05:
Well again, you know, the standard practice would be a remand, but again, this is not the standard case because you have the commission's post rehearing word.

[00:52:03] Speaker 05:
on a lot of these issues that are common to the two.

[00:52:07] Speaker 04:
Okay, so if we think, so number one, if we think it's timely, then we go on and decide the merits of the challenge to the scene, right?

[00:52:20] Speaker 05:
You think the rehearing of us are timely?

[00:52:24] Speaker 05:
No, then I think the standard practice would be to, like I said, to remand for consideration of the rehearing

[00:52:33] Speaker 04:
Wait, I thought you just said that they're intimately, they're related to each other.

[00:52:37] Speaker 04:
We should decide those questions.

[00:52:39] Speaker 04:
That's why I asked you to give me a summary here.

[00:52:42] Speaker 04:
I thought you were about to explain, clarify this to me.

[00:52:45] Speaker 05:
I apologize, that's what I'm going for.

[00:52:47] Speaker 04:
Okay, try again.

[00:52:47] Speaker 05:
So on the agreement side.

[00:52:49] Speaker 04:
Yeah, let's start with the proposition.

[00:52:51] Speaker 04:
Let's assume we think that the petition was timely.

[00:52:54] Speaker 04:
Now what?

[00:52:55] Speaker 04:
Is that the end of the case?

[00:52:56] Speaker 05:
So we would say no.

[00:52:58] Speaker 04:
We would say what?

[00:53:00] Speaker 05:
We would say no because the

[00:53:03] Speaker 05:
commission because the court has before it missions by working the in the distinct error proceeding and many of the same issues.

[00:53:09] Speaker 04:
OK, so then number to them we would go on and decide the deadlock question in the standard of review right.

[00:53:17] Speaker 05:
No, I think I think what would make most sense in that circumstance is to remain.

[00:53:22] Speaker 05:
To the commission, those questions that were not resolved in that were not spoken to and resolved in the territory.

[00:53:30] Speaker 04:
What would we do with the same agreement?

[00:53:33] Speaker 05:
Well, we would suggest the appropriate court, if the court agrees that the position at their request was timely remanded, we would suggest without a vacator to the commission for consideration of the issues that were not fully addressed in the care proceedings.

[00:53:52] Speaker 05:
And the main one there, I think, probably is the mobile scenario.

[00:53:55] Speaker 04:
What happened to SIEM in your analysis?

[00:53:58] Speaker 04:
Where does that go?

[00:53:59] Speaker 04:
That's what goes back to the commission to consider on the merits?

[00:54:03] Speaker 05:
consider the rehearing request on the merits.

[00:54:05] Speaker 05:
Yes.

[00:54:07] Speaker 05:
As to those issues, we would say, again, the court has before the final resolution, the post-rehearing word from the commission on many of these issues that were raised.

[00:54:17] Speaker 02:
So the same agreement would still stay in effect while we hear it, because it went into effect by operational call.

[00:54:23] Speaker 05:
We think that would be appropriate.

[00:54:26] Speaker 05:
So we think.

[00:54:27] Speaker 05:
But yes, yes.

[00:54:28] Speaker 05:
We think that would be appropriate if the court were inclined to determine that

[00:54:33] Speaker 05:
actually had jurisdiction to consider the claims with respect to the same agreement.

[00:54:39] Speaker 05:
That re-hearing was timely sought.

[00:54:43] Speaker 08:
With respect to the tariff order, explain to me why this isn't a loose power.

[00:54:52] Speaker 08:
Why isn't this a multilateral agreement?

[00:54:55] Speaker 08:
Why isn't it either special or discounted when order

[00:55:03] Speaker 08:
A seems to say that non-pancake rhetoric.

[00:55:13] Speaker 05:
Well, so what the commission explained here is that there's two pieces to the answer.

[00:55:17] Speaker 05:
Is it discounted or is it special?

[00:55:19] Speaker 05:
This is a unique or a new service, so it's not a discount of any existing service.

[00:55:25] Speaker 05:
So then you get to the question of whether it's special.

[00:55:28] Speaker 05:
And the commission interpreted special by looking to order 888, which equated special in the same vein as

[00:55:36] Speaker 05:
favorable, not the alternative interpretation posited by petitioners that should just mean unique.

[00:55:42] Speaker 05:
The commission looked at the language of 888 and said, no, it should be favorable.

[00:55:46] Speaker 05:
Looking at all the characteristics of this new transmission service, the $0 transmission service, it found that on banals, it wasn't favorable.

[00:55:56] Speaker 05:
Yes, it has some favorable characteristics.

[00:55:58] Speaker 05:
Obviously, it eliminates rate of hand-kicking.

[00:56:01] Speaker 05:
But fundamentally, it's the lowest priority

[00:56:03] Speaker 05:
It can't be used to satisfy your liability obligations.

[00:56:06] Speaker 05:
And fundamentally, you can't count it to be there when you need it.

[00:56:10] Speaker 05:
So on balance, it is not a special transmission service.

[00:56:15] Speaker 05:
And I think if you step back and check that analysis with the general rules.

[00:56:19] Speaker 07:
And why didn't they just wreck the order without the regular pancakes?

[00:56:26] Speaker 07:
I'm not sure I understand your answer.

[00:56:28] Speaker 07:
I mean, why was the tariff written the way that it was?

[00:56:32] Speaker 05:
With zero.

[00:56:33] Speaker 05:
with no charge transmission service?

[00:56:36] Speaker 00:
Yeah.

[00:56:37] Speaker 05:
Well, I mean, that's the goal, to take advantage of that unused transmission capacity, to impose no charge on it, to enhance these bilateral transactions between the parties at these sub-hourly rates.

[00:56:54] Speaker 05:
There is no... But one could construct it with the normal transmission, right?

[00:57:02] Speaker 05:
Yes, you could impose transit, but I think one of the reasons behind using this zero charge is that the normal transmission charges could be an impediment to fostering these sub-hourly trades.

[00:57:18] Speaker 05:
People are only coming to the market.

[00:57:20] Speaker 05:
They don't have to.

[00:57:21] Speaker 05:
They're only coming to the market if it makes economic sense.

[00:57:24] Speaker 05:
If they can buy power and get it to them, get it to where they need it, less than they can generate it and transmit it themselves.

[00:57:30] Speaker 05:
So by raising the cost of the transmission on these transactions, you take away the economic benefits and you may discourage them.

[00:57:40] Speaker 05:
So that's why it's written with no charge.

[00:57:44] Speaker 05:
And to kind of look at order 888 and the purpose of open access, you have to care about these loose power pools because you don't want a select group of transmission providers to have preferred terms for themselves.

[00:57:56] Speaker 05:
And that's not the case here because everyone who can participate

[00:58:00] Speaker 05:
in the C market can access this transmission service at no charge.

[00:58:06] Speaker 08:
Not everybody can participate in the C market, including like 65 participants who participate bilaterally, right?

[00:58:15] Speaker 05:
Right.

[00:58:16] Speaker 05:
That's the fundamental complaint that you, that one of the participation requirements is that you be a generator or a sink, demand load, within the footprint of the

[00:58:30] Speaker 05:
of the market, and the Commission found in the majority voted tariff orders, and Commissioner Christie wrote this as well in his statement, that that's just a function, a technological requirement.

[00:58:42] Speaker 04:
Given the short time span in which... But it's a technological requirement developed by C. It's not like some innate technological problem.

[00:58:52] Speaker 04:
It's a technological problem that by its terms results in the exclusion of, what's the number you just used?

[00:58:59] Speaker 04:
65.

[00:59:00] Speaker 05:
And it is outside of C. It's not a problem created by them.

[00:59:06] Speaker 05:
It's a function of the fact that where the market is located.

[00:59:11] Speaker 04:
No, no, no.

[00:59:11] Speaker 04:
It's created by them by having the algorithm do trades at less than 20 minutes, right?

[00:59:21] Speaker 06:
Yes.

[00:59:22] Speaker 04:
So it's a technical

[00:59:27] Speaker 04:
barrier created by scene and there's nothing I've seen that suggests why that was inherently necessary for the scene market to operate.

[00:59:39] Speaker 05:
Well because the whole idea of the scene market is to foster these sub-arrow trades where you can save a little money.

[00:59:47] Speaker 04:
What's the magic of 20 minutes?

[00:59:49] Speaker 04:
What about 25 minutes?

[00:59:51] Speaker 05:
Well, I'm not certain what, it's 15, first of all.

[00:59:54] Speaker 04:
I'm sorry, it's 15, you're right.

[00:59:56] Speaker 05:
I'm not aware of how long it would need to be to, you know, for them to.

[01:00:01] Speaker 04:
Well, without some explanation by that, and all we have is an arbitrary, at least on the record, the 15-minute requirement just seems, what it is is it's exclusive, that's its impact.

[01:00:14] Speaker 05:
Yes, it's a participation requirement.

[01:00:16] Speaker 04:
Let me ask you a question about... Go ahead.

[01:00:20] Speaker 04:
No, I was just going to... I just have one question to follow up on Judge Wilkins' question about Power Pool.

[01:00:27] Speaker 04:
The coalition cites... They cite a provision in Order 888, which gives non-pancake rates as an example of a discount.

[01:00:40] Speaker 04:
It's right in order 888.

[01:00:42] Speaker 04:
And I didn't see, the commission didn't say anything about that.

[01:00:46] Speaker 04:
You didn't say anything about that in your brief.

[01:00:48] Speaker 05:
Well, the commission found that this is not a discounted rate because it's a completely new service.

[01:00:56] Speaker 05:
It can't be a discount of an existing service.

[01:00:59] Speaker 05:
The example on 888 is our firm transmission from A to B.

[01:01:05] Speaker 05:
Normally we'd have pancakes, but for you, we're going to give you transmission service, same.

[01:01:10] Speaker 04:
So your fundamental, your basic point is that it's new, it's not discounted, and that's the end of the analysis.

[01:01:18] Speaker 05:
No, no.

[01:01:19] Speaker 05:
The second part of the analysis, then whether, yes, as to whether it's discounted, that's the end.

[01:01:24] Speaker 05:
Then you consider whether it's a special transmission arrangement.

[01:01:27] Speaker 05:
And the commission, as I explained to Judge Wilkins on balance,

[01:01:33] Speaker 05:
The fact that it was lowest priority meant that it was not favorable.

[01:01:36] Speaker 08:
Did the commission ever say that that's the reason why 888 doesn't apply?

[01:01:44] Speaker 05:
Yeah, the commission construed order 888A, which talked mostly about these list parables.

[01:01:50] Speaker 05:
And just coming back to the point briefly, I know I'm way over time here, the geographic limitations

[01:01:58] Speaker 05:
Commission's role under the Federal Power Act is passive.

[01:02:00] Speaker 05:
It reviews things.

[01:02:01] Speaker 05:
Here, the parties proposed a solution, an interstitial market that was going to benefit consumers.

[01:02:08] Speaker 05:
That is the main goal and its only aim.

[01:02:11] Speaker 05:
The fact that it could have been designed better, maybe they could have picked 25 minutes.

[01:02:18] Speaker 05:
The point was that what they proposed

[01:02:21] Speaker 05:
was just and reasonable.

[01:02:23] Speaker 05:
The fact that there is another solution out there that could have been more just and reasonable in the commission's termination than the fact that now its role is to look at the proposal for it and assess whether that's just and reasonable.

[01:02:36] Speaker 08:
Any other questions?

[01:02:38] Speaker ?:
No.

[01:02:38] Speaker 08:
No.

[01:02:40] Speaker 08:
All right.

[01:02:41] Speaker 08:
Thank you, Mr. Kennedy.

[01:02:43] Speaker 08:
And now we'll hear from intervener for responding to Mr. Fitzgerald.

[01:02:56] Speaker 06:
Thank you, your honor, and may it please the court, Matt Fitzgerald on behalf of the members of SEEM.

[01:03:03] Speaker 06:
SEEM was created to bring millions of dollars in consumer benefit across the southeast region each year.

[01:03:12] Speaker 06:
And it is a, it's important to note that it is a residual market.

[01:03:17] Speaker 06:
It's existed now for several months, and in that time, never on any day has the power transacted through SIEM exceeded about 3% of the power used across this region.

[01:03:30] Speaker 06:
It is interruptible service of the lowest priority, and it works only when there is vacant transmission space available.

[01:03:39] Speaker 06:
Now, there's been some discussion of the cost-benefit analysis in particular by Judge Tatel.

[01:03:47] Speaker 06:
I'd like to say the statements of Christie and Danley at page 64 and 97 of the Joint Appendix say there will be benefits to consumers.

[01:03:57] Speaker 06:
So they're looking at this $40 to $100 million analysis, and they're accepting that.

[01:04:04] Speaker 06:
And additionally, the expert from the coalition on the other side,

[01:04:10] Speaker 06:
There was a suggestion that he found there would be negative benefits or something like that.

[01:04:15] Speaker 06:
But actually, at page 819 of the joint appendix, he said, basically, I can't figure this out, and 40 to 100 million is an upper bound.

[01:04:25] Speaker 06:
So the comparison is, is it really 40 to 100 million, or is that an upper bound?

[01:04:30] Speaker 06:
And it's reasonable for Christie and Danley to have come to the place that there will be obvious benefits to consumers.

[01:04:41] Speaker 06:
As for the multilateral sort of pool and the discounted service point, it's important to point out that even if you think this is a multilateral setup, even if you think it's discounted, there are only two places that that goes.

[01:05:02] Speaker 06:
There are only two reasons that that matters.

[01:05:05] Speaker 06:
One of them is that a joint tariff would be required.

[01:05:09] Speaker 06:
But we got a waiver of the joint tariff requirement at page 147 of the Joint Appendix in the tariff order.

[01:05:16] Speaker 06:
And the other is that it would require open access.

[01:05:19] Speaker 06:
And FERC concluded, again by majority in the tariff order at page 147, that we are open access to the extent of technological feasibility.

[01:05:31] Speaker 04:
And could you just explain that to us?

[01:05:32] Speaker 04:
That would be a big help if you could explain to us the 15 minute thing and why that's essential to this.

[01:05:40] Speaker 04:
Could you just step back and teach us about that?

[01:05:44] Speaker 06:
Okay.

[01:05:46] Speaker 06:
Sure.

[01:05:46] Speaker 06:
The way that the world works in the energy market.

[01:05:50] Speaker 04:
That's a great way to start an answer to the question.

[01:05:54] Speaker 04:
The way the world works.

[01:05:55] Speaker 06:
But it works day and hourly.

[01:05:58] Speaker 06:
So transactions are done in the normal sense hourly.

[01:06:02] Speaker 06:
There are some sub hourly.

[01:06:04] Speaker 06:
They're not common and they're not ordinary regimes for them.

[01:06:08] Speaker 06:
The whole idea of SIEM is to squeeze out a little bit of benefit in a residual sense by allowing these intra-hour 15-minute transactions and by providing free transmission for that.

[01:06:22] Speaker 06:
So in theory, some of that could exist today, but the transactions do not occur because of the pancaking.

[01:06:29] Speaker 06:
It's too, it's uneconomic and it's not logistically possible to do these narrow timeframe

[01:06:35] Speaker 04:
you know to fit it in when oh there's some transmission vacancy we have a bid we have an offer boom there's a deal and the power goes so okay but wouldn't it wouldn't it be even more efficient and a better market if the entities that are outside of the scene territory could get there they participate now right before scene they were they were doing trades wouldn't it be a better market if it were a bigger market including them

[01:07:03] Speaker 06:
Your Honor, yes, and we are expanding SIEM all the time.

[01:07:08] Speaker 06:
We're already going into Florida.

[01:07:09] Speaker 06:
We have new members in Florida.

[01:07:11] Speaker 06:
So when we talk about this geographic limit, I want to be clear.

[01:07:15] Speaker 06:
Anyone who is, any generator or SINK who is connected physically to the transmission system of any of our members, and we're looking, we're expanding, looking for new members can participate.

[01:07:30] Speaker 06:
So when the other side says, oh, there's 65 trading partners excluded, I'd like to say first, that's basically just a citation to an unsupported assertion that they made below.

[01:07:42] Speaker 06:
In other words, we haven't seen a list of these 65 companies.

[01:07:46] Speaker 06:
But even if there were some trading partners under the existing regime excluded, my strong belief is that those are companies inside of neighboring RTOs.

[01:07:59] Speaker 06:
So there's a map at page 12 of the first brief.

[01:08:03] Speaker 06:
It's a map of the scene territory.

[01:08:06] Speaker 06:
But what it doesn't show is the borders of RTOs, which are to the north and to the west.

[01:08:12] Speaker 06:
Companies that are located inside of those RTOs are fundamentally positioned differently.

[01:08:19] Speaker 06:
RTOs don't have this free transmission.

[01:08:22] Speaker 06:
RTOs aren't set up for these 15 minute interstitial things, which is our whole idea here.

[01:08:29] Speaker 06:
And so to deal with them is just a categorical different bucket of fish.

[01:08:35] Speaker 06:
It is beyond what is currently technologically possible.

[01:08:41] Speaker 04:
Now, one final point on... I still don't... Just say one more thing about beyond technologically possible.

[01:08:49] Speaker 04:
Could they adjust somehow their system to accommodate the 15-minute algorithm?

[01:08:58] Speaker 06:
Your Honor, whether they could do that would be up to, I think, not only companies inside of those RTOs, but the central command of those RTOs.

[01:09:07] Speaker 06:
And to be clear, we don't have a categorical opposition to that.

[01:09:12] Speaker 06:
It's a system we've created for the companies who are similarly situated, which doesn't, at present, go into those boundaries.

[01:09:20] Speaker 06:
It's just a different, whole categorical different issue

[01:09:24] Speaker 06:
to take this idea into an RTL versus not.

[01:09:27] Speaker 02:
All right, thank you.

[01:09:29] Speaker 02:
Mr. Fitzgerald, interveners don't challenge standing here for the petitioners, is that correct?

[01:09:37] Speaker 06:
We don't, Your Honor, not in our brief, that's right.

[01:09:39] Speaker 02:
Do you accept that all of the petitioners here have standing?

[01:09:44] Speaker 06:
I don't think it matters if all of them have standing, if any of them do.

[01:09:49] Speaker 02:
Do you think there are some candidates that are

[01:09:52] Speaker 02:
more likely to have standing than others, some entities?

[01:09:56] Speaker 06:
Yes, probably.

[01:09:56] Speaker 06:
That's true.

[01:09:57] Speaker 06:
Yes, definitely.

[01:09:59] Speaker 06:
But I think it's important to note that there aren't any individual companies.

[01:10:06] Speaker 06:
When I look at the list of who's in the coalition, it seems like there are associations which are often made up of renewable energy producers.

[01:10:17] Speaker 06:
And I want to be clear that a renewable energy producer, that's a generator.

[01:10:21] Speaker 06:
who is physically connected to the transmission system of any of our members is welcome to join.

[01:10:28] Speaker 06:
And once they join, they are subject to the exact same rules as any member.

[01:10:34] Speaker 06:
There is no disadvantage in the operation of this market or the rules as applied to any participant versus any.

[01:10:42] Speaker 08:
But don't the utilities have veto power to keep them from becoming members or participants?

[01:10:50] Speaker 06:
No, Your Honor.

[01:10:51] Speaker 06:
That's the allegation that's been made, and I don't think it makes sense.

[01:10:54] Speaker 06:
There is a committee that is made up of members, and the members, keep in mind, include the federal government, the Tennessee Valley Authority.

[01:11:02] Speaker 06:
It includes electric co-ops, which are just consumer-owned entities, and local and state governments.

[01:11:09] Speaker 06:
So I don't believe there is any power for who are the bad guys in their view, which is the big investor and utilities to keep anyone out.

[01:11:20] Speaker 08:
I'm sorry, what is the voting requirement for you or who accept the new member?

[01:11:26] Speaker 06:
So there is a committee which is made up of the members, and all that they do, my understanding is, except when a new member satisfies the criteria, which is just being plugged into a member system, making enabling agreements, which is agreements to sell power, which is what they all ought to be out there doing anyway, with at least three of us, and they sign agreeing to follow the rules of the system, then they come in.

[01:11:54] Speaker 06:
I don't believe anyone has been turned away.

[01:11:56] Speaker 06:
And we have been adding numbers, but.

[01:12:03] Speaker 08:
They don't have to.

[01:12:08] Speaker 08:
Members don't have to sign the enabling.

[01:12:13] Speaker 06:
Correct, so the enabling agreements are all bilateral agreements one on one.

[01:12:19] Speaker 06:
Companies agree to deal with each other, and they have terms like credit terms.

[01:12:25] Speaker 06:
One company agrees to deal with another company, they make an enabling agreement.

[01:12:29] Speaker 06:
If you have three, you need three enabling agreements at least, and to have at least three entities toggled on in order to bid or offer into the market once you're in.

[01:12:39] Speaker 06:
But the enabling agreements are just an ordinary feature of any bilateral market, which is the companies can deal with who they choose to deal with,

[01:12:48] Speaker 06:
And they're particularly important for us here because of TVA, which is subject to a completely Byzantine series of regulations about who it can sell power to and deal with, which comes straight from Congress.

[01:13:03] Speaker 06:
TVA, right at the core of our area, connects members to other members.

[01:13:09] Speaker 06:
It's important that we have a system that can bring them in.

[01:13:12] Speaker 06:
And a lot of what we've done here is to accommodate the TVA in that way.

[01:13:17] Speaker 04:
Can I ask, I'm gonna ask you the same question I asked Mr. Kennedy.

[01:13:22] Speaker 04:
So would you just tell us, you know, give us a decision tree.

[01:13:26] Speaker 04:
What issue do we, what issues do we have to decide in in what order?

[01:13:31] Speaker 04:
So, Your Honor, and there's- From your perspective.

[01:13:35] Speaker 04:
I'm sorry?

[01:13:35] Speaker 04:
From your perspective.

[01:13:37] Speaker 04:
What are the issues this court has to decide?

[01:13:39] Speaker 04:
Do we start with timing, right?

[01:13:42] Speaker 04:
You start with timing.

[01:13:43] Speaker 04:
Okay.

[01:13:44] Speaker 04:
And suppose we think the petition,

[01:13:47] Speaker 06:
Okay, if you think that the petition is timely, then you are in a place where you are positioned to review the thing that led to the Seymour, the deadlock, if you will.

[01:14:00] Speaker 06:
So when you're positioned to review the deadlock, you have procedural options there.

[01:14:05] Speaker 06:
Perhaps you're not loving any of the procedural options.

[01:14:09] Speaker 06:
But what you do have there, and what's unusual and unique and helpful to you, is the tariff order.

[01:14:15] Speaker 06:
Because the tariff order,

[01:14:17] Speaker 06:
is a majority order of the commission, and it specifically entertains, analyzes, and rejects every argument that petitioners are still making in this case, except Mobile Sierra.

[01:14:31] Speaker 06:
So the tariff order solves the procedural reviews.

[01:14:35] Speaker 06:
You review the tariff order.

[01:14:36] Speaker 04:
So in other words, even if we thought that the deadlock order by itself would be a problem,

[01:14:45] Speaker 04:
or would create a tricky standard of review issue that's solved by the existence of the Terraform, right?

[01:14:51] Speaker 04:
Yes.

[01:14:51] Speaker 04:
Except for Mobile Sierra.

[01:14:52] Speaker 04:
So what do we do with that?

[01:14:53] Speaker 06:
Okay, so here's the thing about Mobile Sierra.

[01:14:56] Speaker 06:
The arguments that petitioners are actually making on appeal against Mobile Sierra are very broad, but Mobile Sierra has been cut back vastly since it was originally accepted by Operation of Law.

[01:15:09] Speaker 06:
There are only about 20 provisions left that are subject to Mobile Sierra in the agreement, and they are internal governance issues, which are not of the sort that could plausibly hurt the public.

[01:15:23] Speaker 06:
So for instance, what's still subject to Mobile Sierra, it's things like how the members divvy up costs among each other, how they deal with dispute resolution among each other, protections of the status of non-jurisdictional, non-FERP jurisdictional members,

[01:15:39] Speaker 06:
So the way you deal with Mobile Sierra is there is no place in the petitioner's briefs where they haul out any specific provision still subject to Mobile Sierra and say how that poses a great danger to the public and should not possibly be within FERC's discretion to do.

[01:16:01] Speaker 02:
It seems, um, both the commission and the petitioners view the two orders, the same agreement order, the deadlock order and the tariff order is analytically state.

[01:16:13] Speaker 02:
But you seem to be suggesting that our review of the tariff order, but inform our review of the deadlock order.

[01:16:22] Speaker 02:
Definitely.

[01:16:23] Speaker 06:
And I think.

[01:16:24] Speaker 06:
I think we're talking past each other a little bit because, in some sense, they could be analytically distinct.

[01:16:31] Speaker 06:
So, in other words, I think it's because petitioners' arguments here are all really attacks on the same agreement that they've lured together.

[01:16:42] Speaker 06:
even if, let's say, the deadlock or appeal were untimely.

[01:16:47] Speaker 06:
So, you're setting aside the deadlock order.

[01:16:49] Speaker 06:
You're just looking at the tariff order.

[01:16:51] Speaker 06:
Petitioners could appeal the tariff order standing alone if they said the tariff order does not faithfully implement the SIEM agreement.

[01:16:59] Speaker 06:
That would be a standalone way.

[01:17:01] Speaker 06:
That's really what the tariff order is doing.

[01:17:03] Speaker 06:
It's accepting changes to the tariffs to implement SIEM.

[01:17:07] Speaker 06:
But because what petitioners have chosen to do is attack the SIEM agreement, all their arguments, even the ones that say they're against the tariffs order, are problems with the SIEM agreement.

[01:17:19] Speaker 06:
That's what brings them together, and that's why—and I think this is supposition, but I think the commissioners may have been trying to help this court when in the tariffs order they realized, well, they're

[01:17:31] Speaker 06:
Once you set aside Mobile Sierra, there are a majority of us who disagree with everything petitioners say about the SIEM agreement.

[01:17:39] Speaker 06:
And so they wrote it all down and put it in order for you.

[01:17:42] Speaker 06:
And so the connection between the two is based on the fact that all of petitioners' arguments are really about the SIEM agreement.

[01:17:50] Speaker 06:
So that's how it helped.

[01:17:52] Speaker 06:
If you come to a place where you are reviewing whatever created the SIEM agreement, which I agree is an act of Congress and not an act of FERC, but if for some reason you need to review the deadlock, the tariff order helps you, and that's why.

[01:18:05] Speaker 08:
How is that consistent with GENERY?

[01:18:09] Speaker 06:
It's consistent with GENERY because it's not an act of FERC that accepted the deadlock order.

[01:18:15] Speaker 06:
It's not an agency action finding or conclusion.

[01:18:18] Speaker 06:
And so it would be impossible for the agency ever to provide you an adequate rationale as an agency in the event of a deadlock.

[01:18:29] Speaker 06:
And I think it's important to note, too, that FERC has done everything here that the law requires of FERC.

[01:18:39] Speaker 06:
And frankly so, we as the entities trying to propose a new rate.

[01:18:44] Speaker 06:
Normally when you entertain

[01:18:48] Speaker 06:
reversal or remand, if something FERC is done, you identify it's done something wrong or something it's failed to do that it's obligated to do.

[01:18:56] Speaker 06:
But there's nothing like that in this case.

[01:18:59] Speaker 06:
The law says, I mean, clearly the commissioners are entitled to vote however they feel and what they think.

[01:19:06] Speaker 06:
The law says when you do that, you each write a statement.

[01:19:08] Speaker 06:
It's obvious they've each written a statement.

[01:19:10] Speaker 06:
Baby's written a statement that clearly grapples with issues and considers it.

[01:19:14] Speaker 06:
We think the statements are good.

[01:19:16] Speaker 06:
But regardless of what you think, they're obviously good faith statements addressing the substance.

[01:19:22] Speaker 06:
And so FERC has done everything that it's supposed to do.

[01:19:25] Speaker 06:
There may be nothing to remand in this case.

[01:19:29] Speaker 08:
I don't understand your legal position in that you say, well, maybe

[01:19:37] Speaker 08:
Maybe it's the commission's brief that words, but you say that the commission statements are starting point for review, review the whole record.

[01:19:47] Speaker 08:
And so if the statements you find don't really respond to all the arguments made by the petitioners, it doesn't matter.

[01:19:58] Speaker 08:
We're supposed to be as long as we can find evidence in the record to support

[01:20:06] Speaker 08:
and any reasonable commissioner could include, could have voted to approve this, then that's what we should be doing.

[01:20:21] Speaker 08:
Cite me a case for in support of doing performing arts.

[01:20:29] Speaker 06:
The closest thing to a case in support of that are probably the FEC cases, where it is clear that this court does and can look into the record beyond the statements of individual commissioners in those cases.

[01:20:45] Speaker 06:
I think that's mentioned in the Southwestern Code.

[01:20:50] Speaker 04:
Aren't those cases in which the statements are joint?

[01:20:54] Speaker 06:
I believe in those cases they are joint statements.

[01:20:57] Speaker 04:
Whereas here they're not.

[01:20:59] Speaker 06:
Here they're not.

[01:21:00] Speaker 04:
Does that make a difference?

[01:21:04] Speaker 06:
I don't think as a matter of law that it makes a difference.

[01:21:08] Speaker 06:
I think when commissioners have gotten together in a joint statement, then perhaps you can squint and call that and review that thing like an order slightly more reasonably.

[01:21:18] Speaker 06:
But I don't think it actually solves the problem.

[01:21:22] Speaker 06:
No.

[01:21:26] Speaker 06:
So just one final point on the big picture Order 888.

[01:21:30] Speaker 06:
A lot of petitioners' arguments center around supposed problems with Order 888.

[01:21:39] Speaker 06:
But here's the thing.

[01:21:41] Speaker 06:
Order 888 goes back to 1996.

[01:21:43] Speaker 06:
The point of it was that FERC did not want utilities favoring their own expensive generation over cheaper alternatives.

[01:21:54] Speaker 06:
Well, SIEM exists and is created specifically to facilitate bringing cheaper power to consumers.

[01:22:02] Speaker 06:
That's what it does.

[01:22:03] Speaker 08:
The other part of it is it didn't want them favoring or disfavoring competitors by restricting access to transmission.

[01:22:15] Speaker 08:
That's just as important.

[01:22:18] Speaker 06:
Yes, and the finding of FERC

[01:22:19] Speaker 06:
which is again in the tariff order at page 144 and 145, is that we are open access to the extent of technological feasibility.

[01:22:30] Speaker 06:
These borders that they complain about are categorically different in terms of what the technology allows.

[01:22:37] Speaker 06:
We find a way to save consumers millions of dollars by inventing this system that functions to this extent.

[01:22:44] Speaker 06:
And again, we're open to expansion and expanding all the time.

[01:22:49] Speaker 08:
Any other questions, Judge Rao?

[01:22:51] Speaker 08:
Judge Tatel?

[01:22:52] Speaker 08:
No.

[01:22:52] Speaker 08:
Thank you.

[01:22:53] Speaker 08:
Thank you.

[01:22:53] Speaker 08:
Thank you.

[01:22:59] Speaker 08:
All right.

[01:23:00] Speaker 08:
Council for Petitioners, Ms.

[01:23:02] Speaker 08:
Fidler, we'll give you four minutes.

[01:23:10] Speaker 03:
Thank you, Your Honors.

[01:23:13] Speaker 03:
I just want to note that

[01:23:20] Speaker 03:
With regard to timeliness in 205G, just a couple of quick points, because I think the merits here are really the most important aspect of why this should be reviewed on the tariff order.

[01:23:37] Speaker 03:
And that is because, just as a procedural note, if this goes back solely to look at the same agreement, because the commission is back to a 2-2 split, it's very likely that there will be another deadlock

[01:23:48] Speaker 03:
back here in the meantime, that could come back here for review.

[01:23:52] Speaker 03:
And in the meantime, the injury that is happening now continues.

[01:23:59] Speaker 03:
And that gets to the merits here with regard to assertions that SIEM is not a power pool.

[01:24:08] Speaker 03:
Order 888A explicitly states that a loose pool is a multilateral agreement

[01:24:14] Speaker 03:
that explicitly or implicitly contains discounted or special transmission.

[01:24:19] Speaker 03:
And the Council for the Agency has stated that this isn't special or discounted because there are some terms that aren't fully favorable.

[01:24:29] Speaker 03:
But everybody has seen at some point a special offer today only.

[01:24:33] Speaker 03:
But you can get a discount even if every element isn't particularly perfect.

[01:24:39] Speaker 03:
And there's nothing in Order 888

[01:24:42] Speaker 03:
excluding non-firm service from that.

[01:24:44] Speaker 03:
The point is that it's not a discount because it's a new service.

[01:24:48] Speaker 03:
Is that wrong?

[01:24:49] Speaker 03:
That is wrong, Your Honor.

[01:24:51] Speaker 03:
Explicitly, non-firm service is covered under 888A, 1213 states agreements restricting non-firm transmissions.

[01:24:58] Speaker 04:
But this is a different non-firm service.

[01:25:01] Speaker 04:
Right.

[01:25:02] Speaker 04:
That sets your point.

[01:25:02] Speaker 04:
It's a different non-firm service.

[01:25:06] Speaker 04:
It's a discount because it's just new.

[01:25:09] Speaker 04:
It's different.

[01:25:10] Speaker 03:
But there's no language in Order 88 stating that it doesn't apply to a new service.

[01:25:18] Speaker 03:
And if there were, then any new service would be excluded from Order 88's purview by simply saying, well, this isn't a discount of the existing service.

[01:25:29] Speaker 03:
This is a new service offered at a discount.

[01:25:32] Speaker 03:
It's obviously favorable.

[01:25:35] Speaker 03:
It doesn't have to be both discounted and special.

[01:25:38] Speaker 04:
I can understand how it's a discount to... You may be right.

[01:25:45] Speaker 04:
I just don't get why it's a discount if it's new.

[01:25:49] Speaker 04:
You can't... It's just that it's discounted from the door.

[01:25:54] Speaker 04:
If I buy a different product and that product is discounted,

[01:26:03] Speaker 04:
Is that a discount?

[01:26:04] Speaker 04:
Isn't it just me buying a new service?

[01:26:07] Speaker 04:
Your honor.

[01:26:09] Speaker 04:
Discounted to who?

[01:26:11] Speaker 03:
Anyway, go ahead.

[01:26:12] Speaker 03:
No, Your Honor, and I want to understand your question.

[01:26:15] Speaker 03:
I think it's also important to recognize that it need only be special or discounted.

[01:26:22] Speaker 03:
And in this case, the special service is the fact that it's distinguishable from the norm.

[01:26:27] Speaker 03:
It's a different kind of service.

[01:26:29] Speaker 03:
And in this case, it's also a new service.

[01:26:32] Speaker 03:
So it doesn't have to be both special and discounted, although...

[01:26:36] Speaker 03:
The language that non-pancake rates are specifically considered a discount.

[01:26:43] Speaker 02:
Special does suggest there's something beneficial to it.

[01:26:46] Speaker 02:
I mean, here we're just talking about a residual product.

[01:26:49] Speaker 02:
It's not some entirely new thing.

[01:26:51] Speaker 02:
It's just some residual energy production that is being sold at a zero cost or being provided at zero cost.

[01:27:01] Speaker 03:
Sure, but it's a service that's still of benefit to the users.

[01:27:06] Speaker 03:
I mean, that is residual is not a basis for non-application of order 888, which explicitly does cover non-firm service.

[01:27:18] Speaker 03:
So there's no...

[01:27:20] Speaker 03:
This is still a favorable product.

[01:27:24] Speaker 03:
And obviously, the commission and the utilities said as much repeatedly that this would offer benefits.

[01:27:30] Speaker 03:
So it doesn't make sense to say that it's both offering all these benefits and then say that it isn't beneficial, which is one of the inherently contradictory statements here.

[01:27:45] Speaker 03:
It's important to address the preferred terms about everyone being able to participate.

[01:27:49] Speaker 03:
That's factually incorrect.

[01:27:51] Speaker 03:
It's not just a geographic exclusion.

[01:27:53] Speaker 03:
Within the footprint,

[01:27:54] Speaker 03:
certain types of entities who are not a source or a sink.

[01:27:58] Speaker 03:
And we have testimony from in the standing affidavits that they're producers who have distributed energy resources and demand response services within the footprint do not qualify as a source or sink.

[01:28:11] Speaker 03:
So even though they can participate in the bilateral market, they can't participate in this one.

[01:28:16] Speaker 03:
And then with regard to the independent power producers who are there, the fact that the agreement

[01:28:25] Speaker 03:
has all of these elements, the enabling agreements, the participant agreements, and then the use of the constraints and the toggle, those are all discretionary.

[01:28:37] Speaker 03:
Other short-term balancing type or explicitly balancing agreements have mandatory participant agreements and mandatory enabling agreements.

[01:28:48] Speaker 03:
And that would have been done here

[01:28:50] Speaker 03:
And it isn't and that is really the crux of part of the reason that petitioners expert was unable to put the bounds on like what what the downside of this could be is because.

[01:29:01] Speaker 03:
Market power could be exercised through these various terms that are unfettered.

[01:29:06] Speaker 03:
So the extent to which the harm would go would be unknowable because that information is not made available.

[01:29:13] Speaker 02:
Now the agreement's been in place for several months.

[01:29:16] Speaker 02:
So what harm has resulted?

[01:29:20] Speaker 03:
Well, your honor, obviously that's outside of the record.

[01:29:23] Speaker 03:
But as far as we know, first of all, we know that there are no independent power producers who have joined SIEM as had been predicted.

[01:29:33] Speaker 03:
And second of all, we know that the trades at this point are limited, therefore, between the big utilities.

[01:29:39] Speaker 03:
So the folks who are getting the benefits are the large utilities that were the focus of Order 888 to begin with.

[01:29:45] Speaker 03:
And this wasn't supposed to be, this is not about intent.

[01:29:49] Speaker 03:
Order 888 isn't about the extent of harm.

[01:29:52] Speaker 03:
That case-by-case analysis of what's the harm here and what's the harm here, that was the purpose of Order 888, where the Commission had found that as profit-maximizing firms, monopoly utilities would have and will continue to exercise their market power in order to maintain

[01:30:10] Speaker 03:
and increase market share, and thus deny their wholesale customers access to competitively priced electric generation, and that these unduly discriminatory practices will deny consumers the substantial benefits of lower electricity prices.

[01:30:25] Speaker 03:
That comes from order 888.

[01:30:27] Speaker 03:
That comes from this court's holding and transmission access policy study group, and recently in Excel Energy Services and the ACP versus FERC.

[01:30:38] Speaker 03:
These cases all reiterate that this is fundamental economics.

[01:30:42] Speaker 03:
This isn't how much harm is happening here or the intent of the parties here.

[01:30:48] Speaker 03:
This is why we have order 888 and why the provisions are not expressed and to be applied on their face and not on the case by case analysis.

[01:31:01] Speaker 08:
One question here before you sit down is what's your

[01:31:06] Speaker 08:
response to the argument that we can look at the tariff order to help us review the deadline?

[01:31:16] Speaker 03:
Well, Your Honor, I think one of the guiding factors is looking at Kansas City's EFIRC and the cities of Batavia.

[01:31:23] Speaker 03:
It's normal for a big market to have several orders.

[01:31:28] Speaker 03:
There are going to be several filings that effectuate putting a market into place.

[01:31:36] Speaker 03:
that in both the cities of Batavia and Kansas before, the court decided the merits of the second order, even though it did imply terms that had been decided in the earlier matters.

[01:31:52] Speaker 03:
And I think, as I said, because the commission is once again at a 2-2 and like.

[01:31:57] Speaker 03:
Well, so wait, excuse me.

[01:31:58] Speaker 04:
So you agree with Mr. Fitzgerald that we

[01:32:01] Speaker 04:
We don't need to struggle with this issue about what to do with the deadlock order and how to review it because we have the whole record.

[01:32:11] Speaker 04:
We have the commission's decision on the tariff.

[01:32:13] Speaker 08:
Absolutely, Your Honor.

[01:32:15] Speaker 04:
So you agree with that?

[01:32:17] Speaker 04:
Okay.

[01:32:18] Speaker 08:
Let me clarify.

[01:32:22] Speaker 08:
You're saying that it is appropriate for us to see

[01:32:29] Speaker 08:
to look at the justifications in favor of the terror to see whether the deadlock was sufficiently explained for a reason.

[01:32:46] Speaker 03:
Yes, Your Honor.

[01:32:47] Speaker 03:
And as I understand that, I think that's everybody's position in terms of what's both true.

[01:32:56] Speaker 03:
All right.

[01:32:56] Speaker 08:
Any other questions?

[01:32:59] Speaker 08:
Thank you.

[01:32:59] Speaker 08:
We'll take the matter under advice.