# Appendix — Puget Sound Sound Energy Energy, Inc. v. California (No. 09-288) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0965%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 2009 ## Text Supreme Court, U.S. FILED No. __-_ 09-2 8 8 SEP 4- 2009 IN THE OFFICE OF THE CLERK Whiiam K. Suter, Clerk Supreme Court of the Gnited States PUGET SOUND ENERGY, INC., AVISTA CORPORATION, AVISTA ENERGY, INC., CONSTELLATION ENERGY COMMODITIES GROUP, INC., IDACORP ENERGY L.P., MORGAN STANLEY CAPITAL GROUP INC., PORTLAND GENERAL ELECTRIC COMPANY, POWEREX CORP., SEMPRA ENERGY TRADING LLC, SHELL ENERGY NORTH AMERICA (US), L.P., AND 'TRANSCANADA ENERGY LTD., V. Petitioners, PEOPLE OF THE STATE OF CALIFORNIA, ET AL.., Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit APPENDIX TO PETITION FOR A WRIT OF CERTIORARI GARY DD). BACHMAN CHERYL FEIK RYAN HOWARD E. SHAPIRO VAN NESS FELDMAN, P.C. 1050 Thomas Jefferson St., N.W. Seventh Floor Washington, D.C. 20007 (202) 298-1800 Counsel for Puget Sound Energy, Inc., Avista Corporation, and Avista Energy, Inc. September 4, 2009 DAVID C. FREDERICK Counsel of Record ScoTT H. ANGSTREICH KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, ‘igh Pu Fe On 1615 M Street, N.W. Suite 400 Washington, D.C. 20036 (202) 326 7900 Counsel for Powerex Corp. (Additional Counsel Listed Inside) RONALD N. CARROLL FOLEY & LARDNER LLP 3000 K Street, N.W. Sixth Floor Washington, D.C. 20007 (202) 295-4091 Counsel for Constellation Energy Commodities Group, Inc. LAWRENCE G. ACKER BRETT A. SNYDER DEWEY & LEBOEUF LLP 1101 New York Avenue, N.W. Suite i100 Washington, D.C. 20005 {202) 346-8000 Counsel for IDACORP Energy | PAULJ. PANTANO, JR. MICHAEL A. YUFFEE McDERMOTT WILL & EMERY LLP 600 13th Street, N.W. Washington, D.C. 20005 (202) 756-8000 Counsel for Morgan Stanley Capital Group Inc. CHERYL M. FOLEY SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 1440 New York Avenue, N.W Washington, D.C. 20005 (202) 371-7300 Counsel for Portland General Electric Company PAUL W. Fox DEANNA E. KING BRACEWELL & GIULIANI LLP 111 Congress Avenue Suite 2300 Austin, Texas 78701-4061 (512) 472-7800 Counsel for Powerex Corp. MARGARET A. MOORE HOWARD E. SHAPIRO VINCENZO FRANCO VAN NESS FELDMAN, P.C. 1050 ‘Thomas Jefferson St., N.W. Seventh Floor Washington, D.C. 20007 (202) 298-1800 ALAN Z. YUDKOWSKY LUCAS A. MESSENGER STROOCK & STROOCK & LAVAN LLP 2029 Century Park East Suite 1600 Los Angeles, California 90067 (310) 556-5800 Counsel for Sempra Energy Trading LLC JEFFREY D. WATKISS BRACEWELL & GIULIANI I.LP 2000 K Street, N.W. Suite 500 Washington, D.C. 20006-18 (202) 828-5851 Counsel for Shell Energy North America (US), L.P. to KENNETH L. WISEMAN MARK F. SUNDBACK JENNIFER L. SPINA ANDREWS KURTH LLP 1350 I] Street, N.W. Suite 1100 Washington, D.C. 20005 (202) 662-2790 Counsel for TransCanada Energy Ltd. TABLE OF CONTENTS Page Opinion of the United States Court of Appeals for the Ninth Circuit, Port of Seattle, et al. v. FERC, Nos. 03-74139, et al. (Aug. 24, 2007) ............ la Order Establishing Evidentiary Hearing Prcoce- dures, Granting Rehearing in Part, and Deny- ing Rehearing in Part, San Diego Gas & Electric Co. v. Sellers of Energy and Ancillary Service Into Markets Operated by the California Inde- pendent System Operator Corporation and the California Power Exchange, Docket Nos. ELOO- 95-004 et al., 96 FERC § 61,120 (July 25, 2001)....38a Recommendations and Proposed Findings of Fact, Puget Sound Energy, Inc. v. All Jurisdictional Sellers of Energy and/or Capacity at Wholesale Into Electric Energy and/or Capacity Markets in the Pacific Northwest, Including Parties to the Western Systems Power Pool Agreement, Docket Nos. ELO1-10-000 et al... 96 FERC 4| 63,044 CE EG Be oon pa so acnaenssceasauiencsnine ee ee llia Order Granting Rehearing, Denying Request to Withdraw Complaint and Terminating Proceed ing, Puget Sound Energy, Inc. v. All Jurisdic- tional Sellers of Energy and/or Capacity at Whelesale Into Electric Energy and/or Capacity Markets in the Pacific Northwest, Includ:ng Parties to the Western Systems Power Pool Agreement, Docket Nos. ELO1-10-000 et al., 103 FERC 4 61,348 (June 25, 20038) ............ ep SO nee 378a Order Denying Rehearing, Puget Sound Energy, Inc. v. All Jurisdictional Sellers of Energy and/ or Capacity at Wholesale Into Electric Energy and/or Capacity Markets in the Pacific North- west, Including Parties to the Western Systems Power Pool Agreement, Docket No. ELO1-10-011, 105 FERC 9 61,183 (Nov. 10, 20038). ...ccccccicccccccsess AOYa Order Denying Request for Rehearing, Puget Sound Energy, Inc. v. All Jurisdictional Sellers of iinergy and/or Capacity at Wholesale Into Electric Energy and/or Capacity Markets in the Pacijic Northwest. Including Parties to the West- ern Systems Power Pool Agreement, Docket Nos. IXL01-10-000 et al., 106 FERC 4 61,109 (Feb. 9, Order Denying Rehearing of the United States Court of Appeals for the Ninth Circuit, Port of Seattle, et al. v. FERC, Nos. 038-74139, et al. SN MS I 55 5s cascades copays vasyeiueiessasaceavuencsaueuansecas 454a Statutory Provisions Involved: Federal Power Act, 16 U.S.C. §$§ 791a et seg.: © Pe, Fe FB OG vi oviscsiccecsesnsvasececsenss ..455a OE Fie Wie ae Bicker secncessvsarcceviciencds 460a Be a BOR he 2... errr 463a Letter from Supreme Court Clerk regarding grant of extension of time for filing a petition for a writ of certiorari (June 29, 2009)..................ceee 465a la UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 0383-74139 PORT OF SEATTLE, WASHINGTON, Petitioner. IDACORP ENERGY; WILLIAMS POWER COMPANY INC.: CITY OF TACOMA, WASHINGTON; SOUTHERN CALIFORNIA EDISON COMPANY; CONSTELLATION POWER SOURCE INC.; XL PASO MERCHANT ENERGY L.P.; MORGAN STANLEY CAPITAL GROUP, INC.; TRACTEBEL ENERGY MARKETING INC.; BP ENERGY Co., Intervenors, FEDERAL ENERGY REGULATORY COMMISSION, Respondent, M-S-R PUBLIC POWER AGENCY; DUKE ENERGY '“RADING AND MARKETING, LLC; PUGET SOUND ENERGY; CiTy OF LOS ANGELES DEPARTMENT OF WATER AND POWER; SEMPRA ENERGY TRADING CORP.; ENERGY PLUS LLC; NORTHERN CALIFORNIA POWER AGENCY, Intervenors, PORT OF SEATTLE, Applicant-Intervenor. ‘ 2a No. 03-74472 CITY OF SEATTLE, Petitioner. IDACORP ENERGY L.P.; PEOPLE OF THE STATE OF CALIFORNIA; PORT OF SEATTLE; DUKE ENERGY NORTH AMERICA, LLC, DUKE ENERGY ‘TRADING AND MARKETING, LLC (COLLECTIVELY, “DUKE ENERGY’); City OF TACOMA, Intervenors, BENTON COUNTY, FRANKLIN COUNTY, GRANT COUNTY; TRANSCANADA ENERGY; PUBLIC SERVICE COMPANY OF COLORADO; POWEREX CORP.; CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION: ALCOA INC.; COLUMBIA FALLS ALUMINUM COMPANY, LLC; WILLIAMS POWER COMPANY INC.; CALIFORNIA ELECTRICITY OVERSIGHT BOARD; PORTLAND GENERAL ELECTRIC COMPANY; NORTHERN CALIFORNIA POWER AGENCY; EL PASO MERCHANT ENERGY L.P., Intervenors., FEDERAL ENERGY REGULATORY COMMISSION, Respondent, AVISTA CORPORATION; AVISTA ENERGY; THE CITY OF LOS ANGELES DEPARTMENT OF WATER AND POWER; SEMPRA ENERGY; PUGET SOUND ENERGY; PINNACLE WEST COS.; CONSTELLATION ENERGY COMMODITIES GROUP, INC.; BP ENERGY Co.; TRACTEBEL ENERGY MARKETING INC.; M-S-R PUBLIC POWER AGENCY; MODESTO IRRIGATION DISTRiCT (MID); THE CITY OF SANTA CLARA; CITY OF REDDING; CORAL POWER; PPL ENERGYPLUS, LLC; PPL MONTANA, Intervenors. , va No. 0383-74769 CITY OF TACOMA, WASHINGTON, Petttioner, DUKE ENERGY NORTH AMERICA, LLC, DUKE ENERGY TRADING AND MARKETING, LLC (COLLECTIVELY, “DUKE ENERGY”); CALIFORNIA ATTORNEY GENERAL: PORT OF SEATTLE, Intervenors, FEDERAL ENERGY REGULATORY COMMISSION. Respondent, [IDACORP ENERGY L.P.; PINNACLE WEST CAPITAL CORPORATION; NORTHERN CALIFORNIA POWER AGENCY; AVISTA ENERGY INC.; AVISTA CORPORATION; M-S-R PUBLIC POWER AGENCY; PUBLIC SERVICE COMPANY OF COLORADO; CITY OF LOS ANGELES DEPARTMENT OF WATER AND POWER: SEMPRA ENERGY TRADING CoORP.; PUBLIC SERVICE COMPANY OF NEW MeExIco; PPL ENERGYPLUS; PPL MONTANA; CORAL POWER, LLC, Intervenors. 4a No. 04-70110 PUGET SOUND ENERGY, Petitioner, FEDERAL ENERGY REGULATORY COMMISSION. Respondent, DUKE ENERGY NORTH AMERICA, LLC, DUKE ENERGY TRADING AND MARKETING, LLC (COLLECTIVELY, “DUKE ENERGY”); CITY OF TACOMA, WASHINGTON; CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION; PUBLIC SERVICE COMPANY OF COLORADO; SEMPRA ENERGY TRADING CORP.; CITY OF LOS ANGELES DEPARTMENT OF WATER AND POWER; PINNACLE WEST CAPITAL CORPORATION, (PNW); CORAL POWER, LLC; TRANSCANADA ENERGY LTD.; WILLIAMS POWER COMPANY INC.; NORTHERN CALIFORNIA POWER AGENCY (NCPA); PORT OF SEATTLE WASHINGTON; M-S-R PUBLIC POWER AGENCY; THE MODESTO IRRIGATION DISTRICT (“MID”), THE CITY OF SANTA CLARA, CALIFORNIA (“SANTA CLARA”) AND THE CITY OF REDDING, CALIFORNIA (“REDDING”); CALIFORNIA ELECTRICITY OVERSIGHT BOARD; ALCOA INC.; COLUMBIA FALLS ALUMINUM COMPANY, LLC (“CFAC”); MORGAN STANLEY CAPITAL GROUP, INC.; PACIFICCORP: PEOPLE OF THE STATE OF CALIFORNIA, EX REL. BILL LOCKYER, ATTORNEY GENERAL, Applicants-Intervenors. No. 04-7G185 PEOPLE OF THE STATE OF CALIFORNIA: BILL LOCKYER, ATTORNEY GENERAL, Petitioners. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, MORGAN STANLEY CAPITAL GROUP, INC.. Applicant-Intervenor 6a No. 04-70703 PEOPLE OF THE STATE OF CALIFORNIA. Petitioner. CITY OF TACOMA, WASHINGTON: PORT OF SEATTLE, WASHINGTON, Intervenors., IDACORP ENERGY L.P.: CALIFORNIA ELECTRICITY OVERSIGHT BOARD; TRANSCANADA ENERGY LTD.: BENTON, FRANKLIN AND GRANT COUNTY, WASHINGTON PUBLIC UTILITY DISTRICTS; THE CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION; COLUMBIA FALLS ALUMINUM COMPANY, LLC: ALCOA, INC.; PORTLAND GENERAL ELECTRIC COMPANY: BONNEVILLE POWER ADMINISTRATION; POWEREX CORP.; BENTON COUNTY; FRANKLIN COUNTY; GRANT COUNTY, WASHINGTON, Intervenors. FEDERAL ENERGY REGULATORY COMMISSION. Respondent, BP ENERGY COMPANY: CONSTELLATION ENERGY COMMODITIES GROUP, INC.; CITY OF LOS ANGELES DEPARTMENT OF WATER AND POWER; SEMPRA ENERGY TRADING CORP.; PUGET SOUND ENERGY, INC.; AVISTA ENERGY, INC.; CORAL POWER, L.L.C.; NORTHERN CALIFORNIA POWER AGENCY; THE M-S-R PUBLIC POWER AGENCY; MODESTO IRRIGATION DISTRICT (MID): CITY OF SANTA CLARA, CALIFORNIA; CITY OF REDDING, CALIFORNIA; PINNACLE WEST COMPANIES; PUBLIC SERVICE COMPANY OF COLORADO; PPL ENERGYPLUS, LLC: PPL MONTANA, LLC; AVISTA CORPORATION, Intervenors No. 04-71189 CALIFORNIA PUBLIC UTILITIES COMMISSION, Petitioner. FEDERAL ENERGY REGULATORY COMMISSION. Respondent. Argued and Submitted Jan. 8. 2007 Filed Aug. 24, 2007 On Petition for Review otf an Order of the Federal Energy Regulatory Commission. KERC No. Federal Power Act, FERC No. EL-01-10. Before: SIDNEY R. THOMAS, M. MARGARET McKEOWN, and RICHARD R. CLIFTON, Circuit Judges. Opinion by Judge THOMAS: Concurrence by Judge McKEOWN THOMAS, Circuit Judge: This 1s another in a series of cases arising out of the energy crisis that occurred in California and other western states in 2000 and 2001. We are asked to review the decision by the Federal Energy Regula tory Commission (“FERC” or “Commission”) to deny refunds to wholesale buyers of electricity that pur chased energy in the short-term supply market at unusually high prices in the Pacific Northwest. We are also asked to review FIERC’s decision to exclude from any potential refund those transactions involv ing energy purchased in the Pacific Northwest for Ra consumption in California. We conclude that we have jurisdiction over IFERC’s decision to deny refunds, and that FERC abused its discretion in denying potential relief for transactions involving energy that was ultimately consumed in California. We also conclude that in determining whether re- funds were warranted, FERC should have considered new evidence of intentional market manipulation submitted by the parties with FERC’s approval. At this time, we decline to reach all other issues raised by the parties. We grant the petitions for review in part and remand this case to FERC to address the market manipulation evidence, to include the California-consumed energy in its analysis, and to further consider its refund decision in lght of related, intervening opinions of this court. | The California energy crisis serves as the backdrop of this” litigation That crisis has been well. documented, see, e.g., Pub. Utils. Comm'n of State of Cal. v. FERC, 462 F.3d 1027, 1036-44 (9th Cir.2006) (“Pub. Utils. Comm'n”); Bonneville Power Admin. v FERC, 422 F.3d 908, 910-14 (9th Cir.2005) (“BPA”); Cal. ex rel. Lockyer v. FERC, 383 F.3d 1006, 1008-11 (9th Cir.2004) (“Lockyer’), and a full recitation of its history is unnecessary here. In the mid-1990's, the California legislature de- regulated the electricity market, ostensibly to reduce energy prices for consumers. Act of September 23, 1996, 1996 Cal. Legis. Serv. 854 (codified at Cal, Pub. Util.Code §§ 330-398.5). Shortly thereafter, for a variety of reasons related to the deregulation and other market factors, wholesale electricity prices skyrocketed. In May 2000, for instance, average prices in the California short-term supply market, also known as the “spot market,” were twice as high 9a as average prices in May 1999. Pub. Utils. Comm'n, 462 F.3d at 1040. In June 2000, the first in a series of power blackouts occurred in Northern California, potentially as the result of market manipulation. 7d. The effects of this crisis were felt in other areas of the western energy market as well, as “dysfunctions in the spot markcts operated by the [California Indc- pendent System Operator] and California Power Exchange (PX) affected the prices in the Pacific Northwest,” due to the “integrated nature of the Western markets.” Puget Sound Energy, Inc., et al., 103 FERC § 61,348 at 62,366-67 (2003) (“June 25, 2003 Order”). The Pacific Northwest is defined as Idaho, Oregon, and Washington, as well as parts of Montana, Nevada, Utah, and Wyoming. 16 U.S.C. § 839a(14). | Prices in the Pacific Northwest spot market sky- rocketed during the energy crisis. Other factors, such as an extreme reduction in energy supply due to drought, also contributed to the crisis in the Pacific Northwest, a region that relies heavily on water flow through hydroelectric dams to generate electricity. Puget Sound Energy, Inc., et al., 96 FERC 4 63,044 at 65,385 (2001) (“September 24, 2001 ALJ Report’). Unhke the California spot market, which operated through a centralized power exchange using a central clearing price, the Pacific Northwest spot market operated through bilateral contracts negotiated in- dependently between buyers and sellers, without a central clearing price. June 25, 2003 Order, 103 FERC § 61,348 at 62,367. Most of these contracts were entered into under the terms of the Western Systems Power Pool (“WSPP”) Agreement, a stan- dard form contract for electricity sales. September 24, 2001 ALJ Report. 96 FERC {| 63,044 at 65,386. 10a Under the Federal Power Act (“FPA”), all rates charged by a public utility — defined, confusingly, as a nongovernmer .} entity, BPA, 422 F.3d at 917 — must be “just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful,” 16 U.S.C. § 824d(a). Under § 206 of the FPA, FERC has the authority to investi- gate, on its own initiative or at the request of a com- plaining party, whether a particular rate is “just and reasonable.” Pub. Utils. Comm’n, 462 F.3d at 1045. If FERC finds a rate “unjust, unreasonable, unduly discriminatory or preferential,” it must determine a just and reasonable rate and order that rate to be “observed and in force.” 16 U.S.C. § 824e(a) (2004); Pub. Utils. Comm’n, 462 F.3d at 1045. FERC may also order sellers to pay refunds to those who bought energy at the unjust or unreasonable rate. 16 U.S.C. § 824e(b) (2004); Pub. Utils. Comm’n, 462 F.3d at 1045. Such refunds are limited to a fifteen-month period following the “refund effective date,” which is a date FERC establishes that may be no earlier than sixty days after the filing of the complaint or, in the case of a § 206 proceeding instituted by FERC of its own accord, sixty days after FERC publishes notice of its intention to initiate the proceeding. 16 U.S.C. § 824e(b) (2004). FERC may not order any refunds for the period before the filing of the complaint or the sixty-day period immediately following that filing. Id.; Pub. Utils. Comm’n, 462 F.3d at 1045. Pursuant to the FPA, San Diego Gas & Electric (SDG & E”) filed a complaint with FERC regarding the skyrocketing energy prices in California. See BPA, 422 F.3d at 912-13. Shortly thereafter, on October 26, 2000, Puget Sound Energy (“Puget”) — one of the parties now supporting FERC’s decision — filed a complaint with FERC requesting price caps lla for sales of capacity or energy inte Pacific Northwest wholesale power markets. Puget requested a pro- spective price cap equal to the lowest cap established by FERC in the California markets. Puget’s com- plaint alleged that the California and Pacific North- west markets were part of the same _ integrated market of the Western Interconnection, and that market conditions in California influenced market conditions in the Pacific Northwest. The complaint also requested that FERC set a refund effective date, to the extent refunds were necessary, sixty days after the filing of the complaint, or December 25, 2000, the earliest possible refund effective date pursuant to 16 U.S.C. § 824e(b). FERC’s notice of the Puget complaint was published in the Federal Register on November 8, 2000, stating that “[t]he Complaint seeks a refund effective date, to the extent any refund is called for, of sixty days after the filing of the Complaint.” Puget Sound Energy, Inc., et al.; Electric Rate and Corporate Regulation Filings, 65 Fed.Reg. 66,986 (Nov. 8, 2000). On December 15, 2000, shortly after finding that prices in the California spot markets were unjust and unreasonable, Pub. Utils. Comm'n, 462 F.3d at 1041; San Diego Gas & Elec. Co., et al., 93 FERC 4 61,121 at 61,349 (2000), FERC dismissed Puget’s complaint, San Diego Gas & Elec. Co., et al., 928 FERC 4 61,294 at 62,019 (2200) (“December 15, 2000 Order”). Puget filed a timely request for rehearing on January 12. 2001. Or April 26, 2001, in response to the SDG & E complaint, FERC imposed price caps on sales in the California spot markets and instituted a “West-Wide 206 Investigation” into rates in spot markets outside of California, believing that such rates might be un- just and unreasonable. San Diego Gas & Elec. Co., et al., 95 FERC § 61,115 at 61,365 (2001) (“April 26, 12a 2001 Order’). Then, on June 19, 2001, acknowledg- ing that “the California market is integrated with those of other states in the [West],” FERC adopted “a market monitoring and mitigation plan for the [west- ern] spot markets.” San Diego Gas & Elec. Co., et al., 95 FERC 4 61,418 at 62,567-68 (2001) (“June 19, 2001 Order”). The “need for uniform pricing throughout the Western region” made this plan nec- essary. Id. at 62,568. FERC also ordered market participants to engage in settlement discussions, with the goal of settling past accounts. Jd. at 62,570. Three days later, FERC clarified that the settlement proceeding was not hmited to “California-related matters” but could also focus on “setthng past accounts related to sales in the Pacific Northwest.” San Diego Gas & Elec. Co., et al., 95 FERC ¢ 61,425 at 62,583 (2001) (“June 22, 2001 Order’). Also on June 22, 2001, Puget filed a motion to dismiss and a notice that it was withdrawing its complaint, explaining that the June 19, 2001 Order instituting price mitigation in the Pacific Northwest satisfied its complaint. On July 9, 2001, the Port of Seattle and the City of Tacoma filed an answer opposing Puget’s motion, explaining that a dismissal would prejudice other entities in the Facific North- west that relied on Puget’s complaint. On the same day, the City of Seattle and the Attorney General of Washington filed late motions to intervene as well as answers in opposition to Puget’s notice of with- drawal. Although it does not normally grant late interventions, FERC granted the late motions to in- tervene filed by the City of Seattle and the Attorney General of Washington because “over the course of the SDG & E proceeding, [FERC] has expanded the scope of its focus from just California to include the entire Western interconnect and also to implicate 13a wholesale spot market transactions of non-public utilities.” San Diego Gas & Elec. Co., et al., 96 FERC 161,120 at 61,504 (2001) (“July 25, 2001 Order’). The next day, July 26, 2001, the Port of Seattle and the City of Tacoma also filed late motions to inter- vene in the Puget proceeding. FERC granted those motions as well. In its July 25, 2001 Order, FERC noted that there had been little time during the California settlement discussions to address issues raised by the Pacific Northwest parties. Jd. at 61,520. Asa result, FERC directed “all parties to the Puget Sound complaint proceeding to participate in [a separate preliminary evidentiary procecding] and to focus on settling past accounts related to spot market sales in the Pacific Northwest. Interested parties to the SDG & E pro- ceeding may participate at their discretion.” Jd. at 61,520-21. The purpose of the “separate preliminary evidentiary proceeding,” FERC explained, would be to “facilitate development of a factual record on whether there may have been unjust and unreason- able charges for spot market bilateral sales in the Pacific Northwest for the period beginning December 25, 2000 through June 20, 2001.” /d. at 61,520. The preliminary evidentiary proceeding took place from August 1, 2001, to September 17, 2001. The administrative law judge (“ALJ”) expedited the pro- ceeding by lmiting discovery responses to four busi- ness days, prohibiiing depositions, and conducting a three-day hearing in which cross-examination was frequently waived. September 24, 2001 ALJ Report, 96 FERC 4 63,044 at 65,300. The AI.J found that although prices in the Californ's energy markets affected prices in the Pacific Northwest, “this was not the only thing driving up the prices” there. Id. at 65,370. The ALJ also found no evidence of the 14a exercise of market power in the Pacific Northwest, id. at 65,369, and found that the Pacific Northwest spot market “performed as a competitive market” during the relevant period, id. at 65,386. As a result, the ALJ determined that prices were not unjust or unreasonable and that refunds were unwarranted. Id. at 65,3585. Toe ALJ also determined that transac- tions wn the Pae:ic Northwest spot market involving energy that was consumed in California could not be refunded in the Pacitic Northwest proceeding be- cause such transactions were beyond the scope of the Puget complaint. Jd. at 65,331. On May 6, 2002, FERC released on its website documents relating to Enron’s manipulation of the California energy markets. According to the parties seeking refunds, this new evidence also reflected on market manipulation in the Pacific Northwest because some of Enron’s tactics relied on the import and export of electricity to and from California and the Pacific Northwest. The parties seeking refunds also allege that Enron relied on counterpart energy sellers in the Pacific Northwest to carry out its ma- nipulative strategies. In response to this newly-released evidence of Enron’s intentional market manipulation, some of the parties filed motions to reopen the evidentiary record in the Puget complaint. On December 19, 2002, FERC agreed to reopen the evidentiary record, giving the parties until February 28, 2003, to subrnit “additional evidence concerning potential refunds for spot market bilateral sales transactions in the Pacific Northwest for the period January 1, 2000 through June 20, 2001 and proposed new and/or modified findings of fact.” Puget Sound Energy, Inc., et al., 101 FERC 4 61,304 at 62,221 (2002) (“December 19, 2002 Order”). FERC latex extended the deadline for lba submitting additional evidence to March 17, 2003. Puget Sound Energy, Inc., et al., 102 FERC 4 61,163 at 61,444 (2002). After receiving the new evidence and holding oral argument, FERC ruled on the ALJ’s findings. A divided three-commissioner panel agreed with the ALJ, denying the request for refunds for energy purchases in the Pacific Northwest spot market. June 25, 2003 Order, 103 FERC 4 61,348 at 62,367; Puget Sound Energy, Inc., et al., 105 FERC 4 61,183 (2003) (“November 10, 2003 Order’). FERC did not, however, respond to or take into account the new evidence of Enron’s market manipulation submitted with FERC’s approval. FERC also declined to make an explicit finding as to whether spot market prices in the Pacific Northwest were unjust or unreason- able, instead concluding that even if prices were unreasonable, the balance of factors tipped against ordering refunds. June 25, 2003 Order, 103 FERC “ 61,348 at 62,367. ‘These equitable tactors included, inter alia, (1) the presence in the Pacific Norvnawest market of governmental entities not subject to FERC’s jurisdiction and thus not liable for refunds, (2) the unfairness of awarding refunds to parties that imprudently relied on the spot market for their energy needs, (3) the adverse consequences refunds might have on the market, and (4) the time and effort required to calculate refunds in the Pacific North- west bilateral spot market. /d. at 62,367-69. FERC also affirmed the recommendation of the ALJ to exclude from the refund proceeding transactions involving energy that was ultimately consumed in California. November 10, 2003 Order, 105 FERC € 61,183 at 61,964 n. 43; Puget Sound Energy, Inc., et al., 106 FERC 4) 61,109 at 61,368 (2004) (“Febru: ~v 9, 2004 Order’). Commissioner Massey dissent: 16a stating that he would order refunds from the refund effective date, December 25, 2000, through June 20, 2001. June 25, 2003 Order, 103 FERC 4 61,348 at 62,370. In this appeal, governmental entities from the Pacific Northwest — the City of Seattle, the Port of Seattle, and the City of Tacoma, all of which pur- chased, on the whole, more electricity during the energy crisis than they sold — petition for review of FERC’s decision to deny refunds. The State of Cali- fornia, the Public Utilities Commission of California, and the California Electricity Oversight Board (“the California Parties”), petition for review of FERC’s decision to exclude from the refund proceeding transactions involving energy that was ultimately consumed in California, as well as FERC’s decision to deny refunds. These parties will be referred to, collectively, as the “Refund Proponents.” Supporting FERC’s decision to deny refunds are the Bonneville Power Administration, Puget — the public utility that filed the initial complaint in this proceeding but which now opposes refunds — and many other public utility intervenors. These parties will be referred to, collectively, as the “Refund Opponents.” I] We review FERC orders to determine whether they are “arbitrary, capricious, an abuse of discretion, un- supported by substantial evidence, or not in accor- dance with law.” Cal. Dept of Water Res. v. FERC, 341 F.3d 906, 910 (9th Cir.2003). We defer to FERC’s factual findings if those findings are sup- ported by substantial evidence. 16 U.S.C. § 825/(b); Bear Lake Watch, Inc. v. FERC, 324 F.3d 1071, 1076 (9th Cir.2003). Substantial evidence “‘means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Bear Lake l7a Watch, 324 F.3d at 1076 (quoting Kichler v. SEC, 757 I 2d 1066, 1069 (9th Cir.1985)). “‘If the evidence is susceptible of more than one rational interpretation, we must uphold [FERC’s] findings.’” Jd. (quoting Kichler, 757 F.2d at 1069) (alteration in original). We review questions of law de novo. Am. Rivers v. FERC, 201 F.3d 1186, 1194 (9th Cir.1999). FERC’s interpretation of the FPA is reviewed under the analysis established in Chevron U.S.A. Inc. v. Natu- ral es. Def. Council, 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and its progeny, BPA, 422 F.3d at 914. As a threshold matter, we must determine whether we have jurisdiction to review FERC’s decision to deny refunds for energy transactions in the Pacific Northwest. FERC contends that we lack jurisdiction to review its denial of refunds because this decision is committed to agency discretion by law. We lack jurisdiction to review “an agency’s decision not to prosecute or enforce, whether through civil or criminal process.” Heckler v. Chaney, 470 U.S. 821, 831, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985); 5 U.S.C. § 701(a)(2). This is because “an agency decision not to enforce often involves a complicated balancing of a number of factors which are peculiarly within its expertise,’ such as questions about the best use of the agency’s resources. Heckler, 470 U.S. at 831, 105 S.Ct. 1649. The Supreme Court has cautioned, however, that this exception to judicial review is a narrow one, id. at 838, 105 S.Ct. 1649; Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), overruled on other grounds by Califano v. Sanders, 430 U.S. 99. 97 S.Ct. 980, 51 L.Ed.2d 192 (1977), limited to those situations in which there is no meaningful standard against which to judge an agencys decision not to l&a act, Heckler, 470 U.S. at 830, 105 S.Ct. 1649. In those situations, the concern is that courts should not intrude upon an agency's prerogative to pick and choose its priorities, and allocate its resources accordingly, by demanding that an agency prosecute or enforce. Thus, Heckler hmited the presumption of unreview ability to “agency refusals to institute investigative or enforcement proceedings.” Id. at 838, 105 S.Ct. 1649 (emphasis added). When an agency has instituted proceedings, meaningful standards exist to review what the agency has done: “when an agency does act to enforce, that action itself provides a focus for judicial review, inasmuch as the agency must have exercised its power in some manner. The action at least can be reviewed to determine whether the agency exceeded its statutery powers.” /d. at 832, 105 S.Ct. 1649 (emphasis in original). See also MCI Telecomms. Corp. v. FCC, 917 F.2d 30, 41-42 (D.C.Cir.1990) (“It is one thing for the FCC to decline to investigate a tariff in the first place; that decision is entrusted to its unreviewable discretion. It is quite another for it to note the importance of a question concerning a tariff, request and take evidence from the parties, and hold a hearing on the matter... .”). Accordingly, where FERC has made a determination to adjudicate a dispute or take steps towards enforc- ing a violation of the law, the outcome it chooses is subject to judicial review under the standards of review set forth in the Administrative Procedure Act (“APA”). 5 U.S.C. § 706; Cal. Dep't of Water Res., 341 I.3d at 919, That is the case here. FERC has already made a decision to commit resources to an examination of whether refunds are warranted for certain energy transactions in the Pacific Northwest for a period of time in 2000 and 2001. In response to the filing of a 19a complaint, FERC has held hearings and taken evi dence to adjudicate a dispute between the parties as to whether refunds should be awarded, Although the steps FERC has taken do not require FERC to find that refunds are appropriate, FERC’s decision re. garding the propriety of awarding refunds is review- able by this court. Indeed, we regularly exercise judicial review over FERC’s decision to grant or deny refunds, Pub. Utils. Comm'n, 462 F.3d 1027 (review- ing decision to grant refunds); Lockyer, 383 F.3d 1006 (reviewing decision to deny refunds); Consol. Edison Co. of N.Y., Inc. v. FERC, 347 F.3d 964 (D.C.Cir. 2003) (reviewing decision to deny refunds), and we do so here. III We also must decide whether FERC erred in find- ing that Puget’s original complaint, which launched the Pacific Northwest refund proceeding, was not withdrawn as a matter of law in July 2001. If FERC erred and the opinion was withdrawn, the entire Pacific Northwest evidentiary proceeding before the ALi, as well as FERC’s subsequent decision to deny refunds, would be procedurally barred. If, on the other hand, we determine that Puget’s complaint was not withdrawn, we must decide whether the Puget complaint failed to set a refund effective date, which is a statutory requirement for seeking refunds. In other words, Puget and the Refund Opponents ask us to affirm the outcome below on procedural grounds, rather than reach the merits. This we decline to do. ‘A As a threshold matter, we conclude that Puget has standing to assert this challenge, even though it was the prevailing party before the agency. The FPA lim- its judicial review to those parties who have been “aggrieved by an order issued by the Commission.” 20a 16 U.S.C. § 825/(b). In addition, “[l]ike all parties seeking access to the federal courts, [Puget is] held to the constitutional requirement of standing.” Shell Oil Co. v. FERC, 47 F.3d 1186, 1200 (D.C.Cir. 1995). The D.C. Cireuit has held that both aggrievement and standing require “that petitioners establish, at a minimum, ‘injury in fact’ to a protected interest.” Jd (interpreting the similar aggrievement requirement of 28 U.S.C. § 2344). “(Mjere disagreement with an agency's rationale for a substantively favorable decision, even where such disagreement focuses on an interpretation of law to which a party objects, does not constitute the sort of injury necessary for purposes of Article III standing....” Jd. at 1202 (internal quotation marks omitted). The general rule is that a party may not appeal from a decree in its favor. Lindheimer uv. Illinois Bell Tel. Co., 292 U.S. 151, 176, 54 S.Ct. 658, 78 L.Ed. 1182 (1934). There are, however, exceptions to the general rule, one of which we find applicable here. This is the exception for cross-appellants who “might become aggrieved upon reversal on the direct appeal.” Hilton v. Mumaw, 522 F.2d 588, 603 (9th Cir.1975). In such a case, “the risk that Ja cross- appellant] might become aggrieved upon reversal on the direct appeal is sufficient” to confer standing, even when “the final order from which the direct appeal was taken was entirely favorable to cross- appellants.” dd. Puget undoubtedly prevailed before the agency: indeed, it argues that FERC reached the correct result in not granting refunds. Puget has standing, however, because, while not technically bringing a cross-appeal, it essentially finds itself in the position of a cross-appellant who lost a collateral issue below but ultimately prevailed. With the Refund Propo- Mla nents appealing FERC’s denial of refunds, FERC’s collateral refusal to let Puget withdraw its complaint would expose Puget to greater refund lability should we reverse. Accordingly, under Hilton, the risk that Puget “might become aggrieved upon reversal” allows it to bring this appeal B Although it has standing to raise them, Puget’s procedural arguments are unavailing. On June 19, 2001, FERC extended price mitigation beyond Cali- fornia to the rest of the western states, including the Pacific Northwest. June 19, 2001 Order, 95 FERC {61,418 at 62,568. The June 19, 2001 Order also required public utility sellers and buyers to engage in settlement discussions to determine the amount of refunds owed. /d. at 62.570. Three days later, on June 22, 2001, FERC clarified that the settlement discussions should not be limited to California enti- tics but “may also focus on settling past accounts related to sales in the Pacific Northwest.” June 22, 2001 Order, 95 FERC 4 61,425 at 62,583. On the same day, Puget filed a motion to dismiss its com plaint and notice of withdrawal Puget contends that its notice of withdrawal of the complaint upon which the Pacific Northwest refund proceeding is based became effective as a matter of law fifteen days after Puget filed the notice, nullify- ing the entire refund proceeding at issue in this case Puget’s argument is that although some Refund Pro- ponents filed motions in opposition to Puget’s notice, these motions 1n opposition could not have prevented Puyet’s withdrawal from going into effect because the Refund Proponents were not, at that time, parties to the proceeding. Because we must defer to FERC’s interpretation of its own regulation “so long as [the interpretation] is not »lainly erroneous or inconsis 22a tent with the regulation,” Entergy Servs., Inc. v. FERC, 375 F.8d 1204, 1209 (D.C.Cir.2004) (internal quotation marks omitted), we disagree. FERC’s regulations provide that a withdrawal “of any pleading is effective at the end of 15 days from the date of filing ... if no motion in opposition to the notice of withdrawal is filed within that period and the decisional authority does not issue an order disallowing the withdrawal within that period.” 18 C.F.R. § 385.216(b)(1). If, on the other hand, “a motion in opposition to a notice of withdrawal is filed within the 15 day period, the withdrawal is not effec tive until the decisional authority issues an order accepting the withdrawal.” Id. § 385.216(b)(2). Puget contends that although the Refund Proponents opposed Fuget’s notice, this opposition was not effec- tive because another regulation states that motions may be filed only by “a participant or a person who has filed a timely motion to intervene which has not been demied.”! Jd. § 385.212(a)(2). The regulations in turn define “participant” as “any party” or any employee of the Commission. /d. § 385.102(b). A “party” is one who has filed the complaint, is a respondent to the proceeding, or who has effectively intervened. /d. § 385.102(c). The process of inter- vening, not particularly relevant here, 1s laid out at 8 C.F.R. § 385.214. FERC has interpreted 18 C.F.R. § 385.216(b)(1) as placing no limitation on who may oppose a party’s notice ot withdrawal June 25, 2003 Order, 103 \Ithough the lanvuayve permitting “a person who has filed a timely motion to intervene which has not been denied.”i8 C.F.R § 385.212(a)(2) (emphasis added), might apply to someone not yet officially a “participant” or “party,” none of the Refund Pro ponents would fall into this category Secause their motiotis to intervene were filed out of tim: 23a FERC 4 61,348 at 62,365 n. 19. In the alternative, FERC also interpreted the regulations as permitting a non-party to oppose the withdrawal of a complaint by simultaneously filing a motion in opposition to withdrawal as well as a motion to intervene. /d.: November 10, 2003 Order, 105 FERC 4 61,183 at 61,958-59. In that situation, according to FERC, even if FERC did not grant the motion to intervene until a later date, it could have granted the motion to intervene on the day both motions were filed, thus making the non-party an intervening party capable of filing a motion in opposition under 18 C.F.R. § 385.212(a)(2). June 25, 2003 Order, 103 FERC * 61,348 at 62,365 n. 19: November 10, 2003 Order, 105 FERC {4 61,183 at 61.958-59. Accordingly, be- cause the Attorney General of Washington and the City of Seattle filed, on July 9, 2001, simultaneous motions to intervene and motions in opposition to the withdrawal, November 10, 2003 Order, 105 FERC {| 61,183 at 61,958 n. 13, FERC rejected Puget’s ar- sument that its complaint had been withdrawn as a matter of law fifteen days after Puget filed its notice of withdrawal, id. at 61,958-59.” We see no error in FERC’s interpretation of its own regulations. The regulation addressing notices of withdrawal does not explicitly state that opposition to such notices may be made only by formal parties to the proceeding. 18 C.F.R. § 385.216(b)(1). FERC did not err 1n treating the Attorney General of Wash- ington and the City of Seattle as intervenors for pur- « The City of Tacoma and the Port of Seattle did not file their motions to intervene in the Pacific Northwest proceeding until July 26, 2001, nearly three wecks after filing their motions in opposition to the withdrawal. ‘They had, however, intervened in the California refund proceeding at the time they opposed Puget's notice of withdrawal 24a poses of opposing Puget’s notice of withdrawal. We also find support for FERC’s decision in the fact that FERC granted the City of Tacoma and the Port of Seattle party status in the California refund proceed- ing on July 9, 2001. See Domtar Maine Corp. uv. TERC, 347 F.3d 304, 809 (D.C.Cir.2003) (permitting retroactive grant of intervention). Given the extremely close ties between the California proceeding and the Pacific Northwest proceeding, and FERC’s frequent treatment of the two refund proceedings as one and the same, see, e.g., June 22, 2001 Order, 95 FERC §, 61,425 at 62,583 (using the SDG & E heading and clarifying that “all parties to the SDG & E complaint proceeding ... may also focus on settling past accounts related to sales in the Pacific Northwest’), FERC could also have accepted the opposition motions of Tacoma and the Port of Seattle as filed by parties to the proceeding. For these reasons, we hold that the withdrawal of Pugcet’s complaint did not become effec- tive as a matter of law, and FERC may use the com- plaint as a basis for awarding refunds in the Pacific Northwest. C The Refund Opponents supporting Puget further argue the Pacific Northwest proceeding was proce- durally doomed because Puget’s complaint did not request a required “refund effective date,” thus strip- ping FERC of any authority to order refunds for elec- tricity purchases in the Pacific Northwest. We reject this argument as well. Congress has provided that “[w]henever [FERC] institutes a proceeding under this section, [FERC] shall establish a refund effective date.” 16 U.S.C. § 824e(b) (2004). This refund effective date may not be earlher than sixty days after the filing of a complaint or the filing of a notice by FERC that it 25a intends to investigate rates sua sponte.’ Jd. The re- fund effective date is important because any refunds ordered by FERC are limited to the fifteen-month pe- riod following the refund effective date. 7d. Without a refund effective date, the entire Pacific Northwest proceeding would have been moot because FERC would have been powerless to order refunds for the period sought by the Refund Proponents. The Refund Opponents argue that Puget’s com- plaint never requested refunds or the setting of a refund effective date. To the contrary, Puget’s com- plaint clearly stated that “|Puget] requests that any refunds ordered by the Commission reflect the pro- spective nature of the relief sought. If and to the ex- tent any refund is called for in response to {Puget’s| petition, |Puget] respectfully requests that the refund effective date be sct ... sixty (60) days after the date of filang of this Complaint.” In the alternative, the Refund Opponents argue that because FERC dismissed Puget’s complaint on December 15, 2000, December 15, 2000 Order, 93 FERC § 61,294 at 62,019-20, FERC prevented the establishment of a refund effective date even though Puget filed a petition for rehearing on January 12. 2001. In other words, they argue that buyers and sellers in the Pacific Northwest spot market could not have been on notice that December 25, 2000, may serve as the effective date for refunds because the complaint requesting that date was dismissed prior to December 25, 2000. This argument fails for two reasons. First, market participants in the Pacific * Amendments effective August 8, 2005. removed the sixty- day waiting period, permitting the refund effective date to be set as early as the date the complaint is filed or the date the Commission files notice of its investigation. 16 U.S.C. § 824e(b) (2006). 26a Northwest were notified prior to FERC’s dismissal of the complaint that Puget had requested a refund effective date of December 25, 2000. FERC itself created a “Notice of Complaint,” which stated that Puget’s complaint “seeks a refund effective date, to the extent any refund is called for, of sixty days after the filing of the Complaint.” FERC’s notice also ex- plained that “[clopies of this filing were served upon parties to the WSPP, and transmitted electronically to the WSPP for posting on its website (www.wspp. org) and for electronic distribution to all parties to the WSPP Agreement.” In addition, this notice was published in the Federal Register on November 8, 2000. 65 Fed. Reg. 66,986. Second, the FPA does not support the contention of the Refund Opponents. On the one hand, the FPA provides that if FERC does not respond to an apphi- cation for rehearing within thirty days after filing, the application “may be deemed to have been denied.” 16 U.S.C. § 825l/(a) (emphasis added). FERC’s regu- lations make this denial automatic, stating that “lujnless [FERC] acts upon a request for rehearing within 380 days after the request is filed, the request is denied.” 18 C.F.R. § 385.713(f). On the other hand, the statute also states that until the record is filed with the court of appeals, FERC may at any time, with reasonable notice, modify or set aside any finding or order it has made. 16 U.S.C. § 825l/(a). Thus, even if Puget’s rehearing request was denied as a matter of law thirty days after it was filed, this denial did not strip FERC of its ability to change its mind and modify its decision in the June 25, 2003 Order. Moreover, we have already explained that petitions for rehearing keep market participants on notice that an alternative refund effective date, once rejected by 27a FERC, might in the future be made the refund effec- tive date. Pub. Utils. Comm’n, 462 F.3d at 1047 (“Further, some of the California Parties promptly sought rehearing of FERC’s initial determination of the refund effective date in its August 23, 2000 Order. In short, market participants were quickly apprised that the original refund effective date might be subject to revision.”). Here, Puget filed a petition for rehearing challenging FERC’s order dismissing its complaint. Thus, sellers in the Pacific Northwest — who were already on notice of Puget’s complaint requesting a refund effective date — were sufficiently on notice that Puget’s complaint and its attendant refund effective date were still potentially viable be- cause Puget filed a petition for rehearing. Any rell- ance by sellers on the lack of a refund effective date ““prior to the issuance of a final order was at their own risk.” /d. (quoting December 19, 2001 Order, 97 FERC 461,275 at 62,198). Finally, the Refund Opponents argue that FERC was required to set a refund effective date, if at all, before instituting a § 206 refund proceeding. FERC acknowledges in its brief that “[t]he Commission never established an FPA § 206(b) refund effective date for this matter ....” However, the plain lan- guage of the FPA does not place any restriction on when FERC may set the refund effective date. Hertzberg v. Dignity Partners, Inc., 191 F.3d 1076, 1081 (9th Cir.1999) (“Where the meaning of a statute is clear from the text, we need look no further.”). Rather, the statute states that “[wJhenever the Commission institutes a proceeding under this sec- tion, the Commission shall establish a refund effec- tive date.” 16 U.S.C. § 824e(b). The statute man- dates the establishment of an effective date, but it does not mandate when FERC must establish it. To 28a the extent the word “institutes” 1s ambiguous, con- noting both «hat the date shall be established at the time the proceeding begins and that the date shall be established anytime FERC is involved in such a pro- ceeding, we owe deference to FERC’s interpretation of the ambiguous language. Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. FERC made clear its inter- pretation when it announced that the statute would permit FERC to set the refund effective date at De- cember 25, 2000. June 25, 2003 Order, 103 FERC {| 61,348 at 62,366 n. 25. FERC’s interpretation, which would permit it to set the refund effective date at any time, Is consistent with the overall framework of the statute, which in- dicates the primary concern of Congress was to afford notice to market participants of the period of time during which they may be lable for refunds. ‘The sixty-day rule provides notice to the market that if FERC ever decides to order refunds based on a given complaint, those refunds could cover a period begin- ning sixty days after the filing of that complaint, and no earlier. This is a permissible construction of the statute, and is supported by our prior decision re- garding the California proceeding, in which we found that the “key question is whether the SDG & E com- plaint afforded sufficient notice to alert market par- ticipants that sales and purchases might be subject to refund.” Pub. Utils. Comm'n, 462 F.3d at 1046. That opinion made clear that FERC has some discre- tion in setting “‘the earliest refund effective date allowed in order to give maximum protection to con- sumers,” id. (quoting December 19, 2001 Order, 97 FERC 4 61,275 at 62,198), as long as that protection is balanced against fairness to market participants by providing them with the notice necessary to 29a change their practices prior to the date refunds might start to accrue. In sum, we reject the procedural challenges raised by the Refund Opponents and hold that Puget’s com- plaint requested a refund effective date, FERC’s dis- missal of Puget’s complaint did not disturb FERC’s ability to set the refund effective date, and FERC was not required to formally set the refund effective date prior to instituting a § 206 refund proceeding. We also hold that Puget’s complaint was not with- drawn as a matter of law because the Refund Propo- nents timely opposed Puget’s notice of withdrawal. Accordingly, FERC had the authority to order re- funds for transactions in the Pacific Northwest spot market during the permissible time period, although it declined to do so on the merits. IV The California Parties challenge FERC’s decision to exclude from the Pacific Northwest refund pro- ceeding purchases of energy made by the California “nergy Resources Scheduling (““CERS”) division in the Pacific Northwest spot market. CERS, a division of the California Department of Water Resources, began purchasing wholesale power on behalf of Calli- fornia consumers in the California and Pacific North- west spot markets during the energy crisis. See Pub. Utils. Comm'n, 462 F.3d at 1042. FERC ruled that the CERS transactions were outside the scope of the Pacific Northwest refund proceeding because the Puget complaint, on which the proceeding was based, focused on sales of energy “into” the Pacific North- west, whereas purchases made by CERS were actu- ally purchases “into” California, where the energy was consumed. November 10, 2003 Order, 105 FERC 4} 61,183 at 61,964 n. 43. In addition, FERC adopted the ALJ’s finding that the CERS deliveries of energy i tl te —— es 30a took place in California, not in the Pacific Northwest. Id. FERC reaffirmed this decision when it denied the California Parties’ request for rehearing. February 9, 2004 Order, 106 FERC {| 61,109 at 61,368 (“Clearly, Puget’s complaint focus was on transactions into the Pacific Northwest, and as the ALJ explained, the bi- lateral transactions involving CERS were sales into California and not into the Pacific Northwest.”). The February 9, 2004 Order also claimed that the ALJ had found that a witness for CERS testified that deliveries actually occurred in California, not in the Pacific Northwest. Jd. We cannot accept such a constrained reading of the Puget complaint. First, FERC’s factual finding that the energy purchased by CERS was delivered in Call- fornia is not supported by substantial evidence. The ALJ never explicitly found that a CERS witness ad- mitted that the energy deliveries took place in Cali- fornia. The section in which the Al«J discusses the CERS witness is actually a recitation of arguments made by the Refund Opponents. September 24, 2001 AL] Report, 96 FERC 4 63,044 at 65,312. By con- trast, the ALJ’s recommendations focus solely on the scope of the Puget complaint. /d. at 65,331. The ALJ's proposed findings of fact state that deliveries took place in California without mentioning the CERS witness and without clarifying the basis for this proposed finding. Jd. at 65,385-86 (Proposed Findings of Fact 2 and 28). FERC, on the other hand, cites to pages in the transcript of the ALJ evidentiary proceeding where a CERS employee confirmed that physical delivery is taken within the control area of the Los Angeles Department of Water and Power. The record shows, however, that even if physical delivery of the energy took place in Califor- nia, the legal change of ownership of the energy 31a occurred, pursuant to the Confirmation Agreement, at interconnections located within the Pacific North- west. There is no evidence in the record suggesting that the change of ownership occurred in California, rather than in the Pacific Northwest. Furthermore, FERC’s attempt to distinguish be- tween the location where a change of ownership of electricity occurs and the location where that electric- ity physically changes hands is not supported by e1- ther the law or the governing contractual agreements between CERS and energy sellers in the Pacific Northwest. Having established that FERC could not have found, on this record, that the CERS purchases occurred in California, we must determine whether sales to.CERS were outside the scope of the Pacific Northwest refund proceeding even if the legal change of ownership occurred in the Pacific Northwest. In so doing, we are mindful that we owe deference to FERC’s interpretation of the scope of Puget’s com- plaint. Amerada Hess Pipeline Corp. v. FERC, 117 F.3d 596, 604 (D.C.Cir.1997); Burlington N. R.R. Co. v. ICC, 985 F.2d 589, 595 (D.C.Cir.1993). We conclude that FERC’s interpretation of the scope of Puget’s complaint is arbitrary, capricious, and an abuse of discretion. On its face, Puget’s com- plaint provides no indication of an intent to exclude refunds for energy purchased in the Pacific North west spot markct for consumption outside the geo- graphical area. The complaint petitioned FERC to cap prices at which sellers subject to FERC’s jurisdic- tion “may sell capacity or energy into the Pacific Northwest's wholesale power markets. [Puget] seeks an order that prospectively caps the prices for whole- sale sales of energy or capacity into the Pacific Northwest ”" This language indicates that the 32a complaint was concerned with (1) sellers who were (2) selling energy in the Pacific Northwest market. The complaint is silent as to any constraint on the would be consumed. FERC’s interpretation of Puget’s complaint is also inconsistent with its prior interpretation of the com- plaint filed by SUG & E in the California proceeding. That complaint similarly petitioned FERC “for an emergency order capping ... the prices at which sell- ers subject to its jurisdiction may bid energy or ancil- lary services into California’s two large bulk-power markets ....” (Emphasis added.) In contrast to its interpretation of the Puget complaint, FERC did not interpret the California complaint as limiting refunds to entities that purchased energy for ulti- mate consumption in California, and in fact some parties who benefitted from refunds in the California proceeding did not consume the fruits of their pur- chases in Cahfornia. FERC’s interpretation of the California complaint is the better one, and one upon which we relied, and its conflicting interpretation of a similar complaint in a similar refund proceeding renders its subsequent interpretation unworthy of deference. Koch Gateway Pipeline Co. v. FERC, 136 F.3d 810, 815-16 (D.C.Cir.1998) (“[W]here an agency treats similar situations differently without reasoned explanation, its decision will be vacated as arbitrary and capricivuus.”’). Both complaints served to notify all sellers of energy in the respective markets that they may be lable for refunds for sales of energy in those markets, regardless of where the energy would be consumed. In addition, FERC argued in the SDG & E case that the CERS transactions were the subject of other regulatory proceedings. Pub. Utils. Comm'n, 462 38a F.3d at 1064. Other entities pointed to the Pacific Northwest proceeding to argue that the CERS trans- actions were outside the scope of the California pro- ceeding. We accepted these arguments and excluded the CERS transactions from that case. Jd. at 1063 64. It would be inconsistent with our reasoning to exclude the transactions from the California proceed- ing based in substantial part on the existence of this proceeding involving the Pacific Northwest market. and then to exclude the transactions from this pro- ceeding based on the argument that the transactions were conducted in the California market. We therefore conclude that FERC must, on remand, include the CERS transactions when it determines whether refunds are warranted for sales in the Pacific Northwest spot market. V Finally, we must determine whether FERC was required to take into account evidence of market manipulation filed by the parties after the ALJ hear- ing. FERC permitted the Refund Proponents to submit new evidence of market manipulation that emerged after the AlLJ’s evidentiary proceeding. December 19, 2002 Order, 101 FERC 4 61,304 at 62,221 (“We will allow the movants and other parties In this proceeding to conduct additional discovery for the period January 1, 2000 to June 20, 2001.”). The Refund Proponents argued that new evidence had emerged as a result of various investigations into the practices of Enron. /d. at 62,219. See Lockyer, 383 F.3d at 1015 (explaining many of Enron’s manipulat- ive tactics). Despite a great deal of new evidence submitted to FERC in the spring of 2003, however, FERC failed to take any of it into account, relying instead on the Al.J’s factual findings from September 2001, which were made prior to the Enron revela- 34a tions. See June 25, 2003 Order, 103 FERC 4 61,348 at 62,366-70. Regarding the new evidence, FERC’s subsequent order denying rehearing stated merely: “In reaching its decision to terminate the proceeding, the Commission considered the complete record, including the material submitted in the March 2003 filings.” November 10, 2003 Order, 105 FERC *_ 61,183 at 61,960. In order for an agency to avoid making an arbi trary and capricious determination, it must “examine the relevant data and articulate a satisfactory expla- nation for its action including a ‘rational connection between the facts found and the choice made.’” Motor Vehicle Mfrs. Ass'n of U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962)). An agency’s ruling will be deemed arbitrary and capricious where the agency “entirely failed to consider an important aspect of the problem |or] offered an explanation for its decision that runs counter to the evidence before the agency.” ld. See also La. Pub. Serv. Comm'n v. FERC, 184 F.3d 892, 898 (D.C.Cir.1999) (requiring FERC to examine submitted data); Laclede Gas Co. v. FERC, 997 F.2d 936, 948 (D.C.Cir.1993) (requiring FERC to provide adequate explanation). Moreover, an agency must account for evidence in the record that may dispute the agency’s findings. Universal Camera Corp. v. Natl Labor Relations Bd., 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (“The substantiality of evidence must take into account whatever in the record fairly detracts from its weight.”). Given these requirements, FERC’s failure to con- sider or examine the new evidence showing inten- tional market manipulation in California and its 85a potential ties to the Pacific Northwest was arbitrary and capricious. The Refund Proponents argue that the new evidence suggests, among other things, that: sellers of electricity in the Pacific Northwest were involved in schemes to withhold energy and to assist Kknron in creating false congestion; Enron used markets outside of California in order to advance its tactics in California; Enron may have implemented fraudulent schemes outside California markets; and utilities in the Pacific Northwest violated posting requirements in transactions with Enron. Even assuming all of these transactions occurred in the California spot market, the fact that Pacific North- west seilers were apparently involved in Enron’s manipulation indicates that FERC must at least consider the possibility that the Pacific Northwest spot market was not, as the Al.J found, functional and competitive. June 25, 2003 Order, 103 FERC { 61,348 at 62,366-67. FERC’s findings, based on the record established by the ALJ in 2001, “that other factors related to supply and demand fundamentals contributed to the dramatic prices in the region,” id. at 62,367, and that “no evidence of such ‘lawlessness' has been shown with regard to any specific transac- tion in the Pacific Northwest spot market,” Novem- ber 10, 2003 Order, 105 FERC 4 61,183 at 61,966, must be reevaluated in light of this evidence. Moreover, we reject the contention by the Refund Opponents that FERC need not consider the new evidence because FERC already is addressing market manipulation in separate proceedings focusing on misconduct. Not only did FERC fail to rely on this reasoning below, see Laclede Gas Co., 997 F.2d at 945 (FERC order “must stand or fall on the grounds articulated by the agency in that order”) (internal quotation marks omitted), but we have already held 36a that FERC’s’ prosecutorial investigations cannot justify the denial of relief in contested adjudications before the Commission, Pub. Utils. Comm'n, 462 F.3d at 1048-51. Accordingly, we remand to permit FERC to examine this new evidence of market manipula- tion in detail and account for it in any future orders regarding the award or denial of refunds in the Pacific Northwest proceeding. FI3RC may also find it necessary to call for additional fact-finding if the record evidence of market manipulation is not suffi- cient to enable FERC to make a reasoned decision. In view of this remand, we offer no opinion on FERC’s findings based on the record established by the ALJ. Vi At this juncture we find it preferable to reserve judgment on other issues raised by the parties. As such, we decline to reach the merits of FERC’s ulti- mate decision to deny refunds but urge the Commis- sion to further consider its decision, on remand, in light of the related decisions of this court that followed FERC’s final orders in the Pacific Northwest proceeding. PETITION GRANTED IN PART; DENIED IN PART; REMANDED. Each party shall pay its own costs on appeal. McKEOWN, Circuit Judge, concurring: I concur in the opinion and the result, with the exception of the question of whether Puget Sound Energy is an “aggrieved party.” Puget lacks standing because it was granted all the relhef it sought (e., FERC granted price mitigation in the Pacific North- west proceeding), and thus Puget is not “aggrieved” within the meaning of 16 U.S.C. § 825l(b). On this point, | agree with FERC’s position. A party seeking ‘ a appeal must establish, at a minimum, “Injury 1n fact” to a protected interest. Shell Oil Co. v. FERC, 47 F.3d 1186, 1200 (D.C.Cir.1995). Puget has not done SO. 38a FEDERAL ENERGY REGULATORY COMMISSION San Diego Gas & Electric Company (Complainant) v. Sellers of Energy and Ancillary Service Into Markets Operated by the California Independent System Operator Corporation and the California Power Exchange (Respondents), Docket Nos. ELOO- 95-004, ELOO-95-005, ELOO-95-019 and ELOO-95- 031 Investigation of Practices of the California Independ- ent System Operator and the California Power Exchange, Docket Nos. ELO0-98-004, ELOO-98-005, ELOO-98-018 and ELO0-98-030 Puget Sound Energy, Inc. (Complainant) v. All Juris- dictional Sellers of Energy and/or Capacity at Wholesale Into Electric Energy and/or Capacity Markets in the Pacific Northwest, Including Parties to the Western Systems Power Pool] Agree- ment (Respondents), Docket Nos. ELO1-10-000 and ELO1-10-001 Order Establishing Evidentiary Hearing Procedures, Granting Rehearing in Part, and Denying Rehearing in Part (Issued July 25, 2001) Before Commissioners: Curt Hebert, Jr., Chairman: William L. Massey, Linda Breathitt, Pat Wood, III and Nora Mead Brownell. This order establishes the scope of and methodol- ogy for calculating refunds related to transactions 10 the spot markets operated by the California Inde- pendent System Operator Corporation (ISO) and the 39a California Power Exchange Corporation (PX) during the period October 2, 2000 through June 20, 2001. The Commission makes clear that transactions sub- ject to refund are limited to spot transactions in the organized markets operated by the ISO and PX dur- ing the period October 2, 2000, through June 20, 2001, and include sates by public and non-public utilities into these markets. The order also estab-. lhshes an evidentiary hearing proceeding in order to further develop the factual record in Docket No. ELOO-95-031, et al., so that refunds may be calcu- lated. The order grants rehearing in part and denies rehearing in part of limited portions of earlier orders issued in this proceeding. In addition, the Commis- sion establishes another proceeding before an Admin- istrative Law Judge to explore whether there may have been unjust and unreasonable charges for spot market sales in the Pacific Northwest from December 25, 2000 through June 20, 2001, and the calculation of any refunds associated with such charges. Background In an order issued August 23, 2000,' the Commis- sion instituted formal hearing proceedings under Sec- tion 206 of the Federal Power Act (FPA) to investi- gate the justness and reasonableness of the rates for energy and ancillary services of public utility sellers into the ISO and PX spot markets, and also to inves- tigate whether the tariffs, contracts, institutional structures, and bylaws of the ISO and PX were ad- versely affecting the wholesale power markets in California. In instituting an investigation into the reasonableness of the rates charged, however, the | San Diego Gas & Electric Company, et al., 92 FERC 4 61.172 (2000), rehg pending (August 23 Order) 40a Commission denied a request by San Diego Gas and Electric Company (SDG&E) contained in SDG&E’s complaint against all seliers of energy and ancillary services into the ISO and PX markets subject to the Commission's jurisdiction, that the Commission im- pose a $250 price cap for sales into those markets. The Commission denied this request in the August 23 Order, on the grounds that SDG&E had not pro- vided sufficient evidence to support an immediate seller’s price cap.2. The Commission established a refund effective date of 60 days after publication of notice in the Federal Register of the Commission’s intent to institute a proceeding.* The Commission issued an order on November 1, 2000 finding that the “electric market structure and market rules for wholesale sales of electric energy in California were seriously flawed and that these structures and rules, in conjunction with an im- balance of supply and demand in California, have caused, and continue to have the potential to cause, unjust and unreasonable rates for short-term energy . under certain conditions.”* The order noted that, [(w]hile this record does not support findings of spe- cific exercises of market power, and while we are not able to reach definite conclusions about the actions of individual sellers, there is clear evidence that the Cahfornia market structure and rules provide the opportunity for sellers to exercise market power “ “92 FERC at p. 61,606. > Id. at p. 61,608. 41 San Diego Gas & Electric Company, et al., 93 FERC "161,121, at pp. 61,349-50 (2000), reh'g pending (November | Order) 4la when supply is tight, and can result in unjust and unreasonable rates under the FPA.” To deal with these flaws, the November 1 Order proposed remedies intended to reduce over-reliance on spot markets in California, and attempted “to balance, on the one hand, holding overall rates to ievels that approximate competitive market levels for the benefit of consumers, with, on the other hand, inducing sufficient investment in capacity to ensure adequate service for the benefit of consumers.”6 The November 1 Order changed the refund effective date contemplated in the August 23 Order from 60 days after publication of notice in the Federal Register, October 29, 2000, to 60 days after the date of SDG&E’s complaint, October 2, 2000. The order also contained extensive discussion of the Commission's authority to direct refunds, for the periods both before and after the refund effective date, and concluded that the Commission is not authorized by the FPA to order refunds prior to the October 2 refund effective date. Several parties sought rehearing of this aspect of the November 1 Order.’ The Commission adopted many of the proposed remedies presented in the November 1 Order in an order issued December 15, 2000.8 The December 15 ° Id. at p. 61,350. 6 Jd. ’ See, e.g., requests for rehearing of the California Electricity Oversight Board (Oversight Buard), the Public Utilities Com- mission of the State of California (California Commission), PG&E, SoCal Edison, and the City of San Diego. Other deter- minations in the November 1 Order are also pendiny rehearing; these issues will be addressed in a future order. 8 San Diego Gas & Electric Co., et al., 93 FERC 4 61,294 (2000), reh’g pending (December 15 Order). 42a Order reiterated the earher findings that the market structures and rules for wholesale sales of electric energy in California were seriously flawed and that these structures and rules, in conjunction with an imbalance of supply and demand in California, had caused, and continued to have the potential to cause, unjust and unreasonable rates for short-term energy under certain conditions. The Commission, therefore, established a variety of remedies for the California wholesale electric markets, including, in part: (1) eliminating the requirement that the IOUs sell all of their generation into and buy all their energy needs from the PX so as to terminate the overreliance on spot markets; (2) adopting an advisory benchmark for assessing prices of long-term electric supply contracts in order to provide guidance for market participants to evaluate the reasonableness of long- term prices; (3) requiring market participants to preschedule 95 percent of their load prior to real time and penalizing those who do not, so as to eliminate market participants’ chronic underscheduling with the ISO; and (4) requiring an independent governing board for the ISO. As an interim measure, the Commission also estab- lished a $150/MWh breakpoint under which public utility sellers bidding above the breakpoint receive their actual bids, but are subject to monitoring and reporting requirements to ensure that rates remain just and reasonable, including the potential for having to pay refunds for prices charged above the breakpoint. The December 15 Order also required the development of a longer term mitigation plan to replace the interim breakpoint methodology by May 1, 2001. In a separate order, the Commission estab- lished a settlement conference to facilitate forward A3a contracting by California investor owned utilities.’ The Chief Administrative Law Judge convened dis- cussions over five days in December 2000 and Janu- ary 2001. On January 23, 2001, the Director of the Division of Energy Markets in the Office of Markets, Tariffs and Rates convened a technical conference to develop a plan to replace the interim $150/MWh break-point price. Comments and reply comments on how to replace the interim break-point were filed with the Commission. In March 2001, Commission Staff issued a recommendation for prospective market monitoring and mitigation for the real-time electric market, and comments were filed on this proposal. On March 9, 2001, the Commission issued an order addressing above-breakpoint transactions that oc- curred in January.!2 The March 9 Refund Order directed refunds from sellers for transactions occur- ring during Stage 3 Emergencies (when ISO reserves fell below 2.5 percent) above a proxy market clearing price ($273/MWh for that month), or alternatively, required sellers to submit additional cost or other justification for those transactions.'! Parties re- quested rehearing of the March 9 Refund Order on many grounds. Among those were PG&E, SDG&E, and SoCal Edison’s objections to the Commission’s conclusion that it has no authority to order non- % Forward Contracting by California Utilities, 93 FERC §] 61,295 (2000). 10 San Diego Gas & Electric Co., et al., 94 FERC 4 61,245 (2001), reh'g pending (March 9 Refund Order). '! The Director of the Office of Markets, Tariffs and Rates issued notices announcing the proxy market clearing prices for the months of February, March, April, and May 2001 on March 16, April 16, May 14, and June 15, respectively. 44a public utility sellers to make refunds.!? Additionally, numerous parties argued that price mitigation should apply during all hours.! On April 26, 2001, the Commission issued its order adopting a prospective monitoring and mitigation plan for wholesale sales through the organized real- time markets operated by the 1SO.44 The Commis- sion’s plan, in pertinent part, enhanced the I[SO’s ability to coordinate and control planned outages during all hours; required certain sellers to offer the ISO all their available power in real time during all hours; established conditions, including refund liability, on public utility sellers’ market-based rate authority to prevent anti-competitive bidding behav- ior in the real-time ISO markets during all hours; and established a mechanism for price mitigation for all sellers (excluding out-of-state generators) bidding into the ISO’s organized markets for real-time sales during system emergencies. In the April 26 Order, the Commission also established an inquiry into whether a price mitigation plan similar to the one for the California ISO’s organized spot markets should be implemented in the Western Systems Coordinat- ing Council (WSCC) and invited comment on how such a plan should be structured. On June 19, 2001, the Commission expanded the price mitigation plan on rehearing, imposing curbs l2 See March 9 Refund Order, 94 FERC at p. 61,864. 13 See, e.g., Rehearings of California Commission, ISO, SDG&E, City of San Diego, County of San Diego, and PG&E Other determinations in the March 9 Order are also pending rehearing; these issues will be addressed in a future order. - I4 San Diego Gas & Electric Company, et al., 95 FERC * 61,116 (2001), reh'g pending (April 26 Order). Ada not only on California ISO organized spot market sales during all hours, but also constraining prices for bilateral spot market sales throughout the WSCC for the period June 20, 2001 through September 30, 2002.'° The order retained the use of a single price auction and must-offer and marginal cost bidding re- quirements when reserves are below 7 percent in the California ISO spot markets. Under the plan, the ISO market clearing price will also serve as a limit on prices in all other spot market sales in the WSCC during reserve deficiencies in California. Sellers in all spot markets in the WSCC will receive up to the clearing price without further justification. Sellers other than marketers will have the opportunity to justify prices above the market clearing price during reserve deficiency hours. In the June 19 Order, the ISO market clearing price for reserve deficiency hours was also adapted for use in all Western spot markets when reserves are above 7 percent. Prices during non-reserve defi- ciency hours cannot, absent justification, exceed 85 percent of the highest hourly clearing price that was in effect during the most recent Stage 1 reserve defi- ciency period (i.e., when reserves are below 7 percent) called by the ISO. These measures were applied to non-public utility sellers as well as public utilities to the extent they voluntarily sell power in the ISO or other WSCC spot markets or voluntarily use the iSO’s or other Commission-jurisdictional interstate transmission facilities elsewhere in the WSCC. In addition, the Commission announced that it would hold a settlement conference before an admin- lo San Diego Gas & Electric Company, et al.. 95 FERC 4] 61,418 (2001), reh'g pending (June 19 Order) 46a istrative law judge in order to resolve refund issues for past periods, among other things. The Commis- sion’s Chief Judge convened the conference from June 25 through July 9, 2001. Chief Judge’s Report and Recommendation On July 12, 2001, the Chief Judge issued a report detailing his efforts to forge a settlement among the parties.'® He explains that, while a global settlement agreement was not achieved, he believes that the negotiations were constructive. The Report finds that refunds owed to purchasers of electricity “amount to hundreds of millions of dollars, probably more than a billion dollars in aggregate sum,” although not the $8.9 billion claimed by the State of California.!’ The Report mentions offers made by several sellers into the California market totaling $703.6 million, contingent upon reaching a global settlement of all issues. According to the Report, efforts were hampered by incomplete data. The Chief Judge had requested the parties to provide, among other things: (1) the terms and prices of all forward contracts; (2) the amounts that California Department of Water Resources (DWR), the [OUs, and the ISO believe they owe to sellers; and (3) system load figures broken down by component. These data were not made available in their entirety. The Report also notes that the Pacific Northwest Parties did not have data on the amount of refunds duc them nor balances past due from purchasers. For these and other reasons, the Chief Judge was not able to determine the total volume of 16 San Diego Gas & Electric Company, et al., 96 FERC *! 63,007 (2001) (Report). 1% Td., slip op. at 3. A7a the spot market, nor were parties able to agree about the size of the market subject to the June 19 Order. The Report concludes that the differences between what the State and the sellers believe should be refunded raise material issues of fact. Further, the Report states, “|t}he appropriate numbers to calcu- late potential refunds invoive factual disputes.”!5 Thus, the Chief Judge recommends that the Com- mission order a trial-type evidentiary hearing limited to developing a factual record against which to apply a refund methodology. The Chief Judge’s recommended refund methodol- ogy would begin with the price mitigation approach set forth in the June 19 order, with severa! modifica- tions for dealing with past, as opposed to future, transactions. Key differences include: (1) using actual, rather than hypothetical, heat rates; (2) using daily spot gas prices rather than monthly bid-week prices; (3) separating the state’s gas market into northern and southern zones; (4) excluding emission costs from the market clearing price and treating them as an additional expense that may be sub- tracted from refund calculations; and (5) not using the 85 percent price ceiling for non-emergency hours, and instead recalculating cach hour to determine the amount by which actual prices exceeded the mit gated price. The Chief Judge recommends retaining the 10 percent credit adder for sales after January 5, 2001, and not including interest unless the refund amount exceeds payments that are past due to the seller. 15 Jd., slip op. at 5. 48a Docket No. ELO1-10-000 On October 26, 2000, Puget Sound filed a com- plaint in Docket No. ELO1-10-000 petitioning the Commission for an order capping the prices at which sellers subject to Commission jurisdiction, including sellers of energy and capacity under the Western Systems Power Pool Agreement, may sell energy or capacity in the Pacific Northwest's!’ wholesale power markets. Specifically, Puget Sound sought an order that prospectively capped the prices for wholesale sales of energy or capacity into the Pacific Northwest at a level equal to the lowest cap on prices estab- lished, ordered, or permitted by the Commission for wholesale purchases in, or wholesale sales of energy or capacity to or through the markets operated by the ISO or the PX. The December 15 Order declined to implement a region-wide price cap because it found that such a pricing methodology was impracticable given the market structure in the Pacific Northwest and because complainant had not met its burden of proof to justify such an action.“° Puget Sound and others timely sought rehearing of the December 15 Order’s determination not to impose a regional price cap or other mitigation. On June 22, 2001, Puget Sound filed a motion to dismiss its complaint and a notice of withdrawal of its complaint and its subsequent rehearing request. Puget Sound explains that the June 19 Order satis- fies its complaint because it implements price miti 'Y Puget Sound indicated that, as used in its complaint, the term “Pacific Northwest” has the meaniny set forth in the Pacific Northwest Electric Power Planning and Conservation Act, 16 U.S.C. § 839a(14) (1994) “) December 15 Order. 98 FERC at p 62,019 49a gation measures throughout WSCC. Several parties filed answers to the motion. Bonneville Power Ad- ministration (Bonneville) states that the Commission must fully resolve the issues raised in the complaint regardless of whether it grants Puget Sound’s motion, arguing that the focus on spot markets in the June 19 Order is not appropriate outside of California, where utilities rely on forward contracts. The City of Tacoma and Port of Seattle jointly filed an answer opposing the motion on the basis that dismissal would unduly prejudice parties outside of California that relied on the existence of the complaint, and ar- suing that the issues raised in the complaint are an integral part of market issues that the Commission 1s addressing in the SOG&E proceeding. The City of Seattle (Seattle) filed an answer and a motion to intervene out-of-time in Docket No. KLO1-10-000. Seattle contends that, although the June 19 Order satisfied Puget Sound’s complaint, the Commission should keep the proceeding open be cause non-California market participants have paid prices that are unjust and unreasonable, and because retaining the proceeding would permit the Commis- sion greater flexibility in determining the scope and effective date for refunds. The Washington Commission and the Attorney General of Washington state several principles that they believe should guide the Commission's determ}- nation of whether and how to order refunds for and by the utilities in the Pacific Northwest, U.e., that refunds should be symmetrical as to all purchases and sales, and unbiased with respect to acquisition strategies. In addition, the Attorney General of Washington moves to intervene out-of-time. 5Oa On June 22, 2001, unaware of Puget Sound’s mo- tion filed on the same day, the Commission issued an order clarifying the June 19 Order to indicate that parties in the settlement proceeding were not limited to settling only California-related matters, but could also discuss settling past accounts related to sales in the Pacific Northwest. The Chief Judge’s Report stated that there was little time to address the issues raised by the parties in Puget Sound's proceeding and noted that they did not have data on unpaid balances nor on refunds due them. Discussion A. Procedural Matters A number of entities filed late motions to intervene in this proceeding, as described below. On December 28, 2000, the Southern California Water Company (SoCal Water) filed an intervention in Docket No. ELO0-95-000, et al.2!' On January 30, 2001, the New Mexico Regulation Commission (New Mexico Commission) filed a motion to intervene out-of-time in Docket No. ELOO-95-000, et al., raising no substan- tive issues. On February 9, 2001, the Public Utilities Commission of Nevada (Nevada Commission) filed a motion to intervene out-of-time with comments encouraging recognition of the regional scope of the crisis. On April 9, 2001, the American Publhe Power Association (APPA) filed a motion to intervene and request for rehearing of the March 9 Refund Order. On July 12, 2001, the Washington Utilities and Transportation Commission (Washington Commis- sion) filed a motion for clarification of its intervenor status, or, in the alternative, a motion to intervene “! SoCal Water subsequently requested rehearing of the December 15 Order 5la out-of-time in Docket No. ELOO-95-031, et al. Finally, on July 17, 2001, the People of the State of Calhfor- nia, ex rel. Bill Lockyer (Attorney General of Califor- nia) moved to intervene out-of-time in Docket No. ELO0-95-031, et al. In addition, on December 26, 2000, the Oregon Public Utilities Commission (Oregon Commission) filed a late motion to intervene in Docket No. ELOO- 10-000, stating that it had not yet developed a position on Puget Sound’s complaint. On January 16, 2001, the Washington Commission also filed a late motion to intervene in that proceeding with comments in support of Puget Sound’s request for rehearing. The City of Seattle (Seattle) and the Attorney General of Washington filed motions to intervene out-of-time in Docket No. ELO1-10-000 on July 9, 2001. The Commission ordinarily does not permit late interventions after an order has been issued, particu- larly for the purpose of requesting rehearinyg.2° How- ever, over the course of the SDG&E proceeding, the Commission has expanded the scope of its focus from just California to include the entire Western inter- connect and also to implicate wholesale spot market transactions of non-public utilities. We find good cause, therefore, to grant the untimely, unopposed motions to intervene in Docket No. ELOO-95-000 filed by the entities described above.*" Oo See, e.g., Southern Company Services, Inc., 92 FERC *| 61.167 (2000); Consolidated Edison, Inc. and Northeast Utili- tres, 92 FERC 461,014 (2000), order denying reh'g, 94 FERC "61.079 (2001). “3 In the May QF Order, we intended, but inadvertently failed, to grant the timely, unopposed motion to intervene of Carson Cogeneration Company, LP, Mojave Cogeneration Com- o2a These intervenors must accept the record as it had developed as of the date of their intervention, and their participation in this proceeding is limited to the issues that arose after the date each requested to participate in these proceedings. Thus, the request for rehearing of the December 15 Order filed by SoCal Water will be dismissed because it was not a party as of the date that order was issued. Similarly, APPA’s request for rehearing of the March 9 Refund Order will be dismissed because it was not a party as of the date that order was issued. In view of the interest of the Oregon Commission, the Washington Commission, the Attorney General of Washington, and Seattle, and the absence of any undue prejudice or delay, we will grant their un- timely, unopposed motions to intervene. We also clarify that the companies hsted individually in the caption of the March 9 Refund Order are respon- dents, and thus, under Rule 102 of the Commission’s Rules of Practice and Procedure,” are parties in the SDG&E proceeding. B. Scope of Refunds 1. The Commission’s Reiroactive Refund Authority a. Introduction and Summary In the Commission’s November 1 Order, we con- cluded that the FPA and the weight of court prece- dent strongly suggest that refunds prior to October 2, 2000 are impermissible under the circumstances of pany, LP, O.L.S. Energy-Camarillo, O.L.S. Energy-Chino, and PE Berkeley, Inc. (collectively, QF Petitioners) filed in Docket No. EL00-98-000, and the untimely, unopposed motion to inter- vene of Berry Petroleum Company in Docket No. ELOO-95-020. We do so in this order. “4 18C.F.R. § 385.102(c)(2) (2001). 53a this case, which arose in a Section 206 complaint con- text. In the December 15 Order, we addressed pro- spective remedies necessary to correct market dys- functions and to assure just and reasonable rates, but did not address the comments on retroactive re- fund authority. We do so here to clarify our statutory refund authority and the scope of refunds subject to the hearing being ordered below. We have again examined the statute, its legislative history and the case law, and have analyzed the arguments raised on this issue in comments on and requests for rehearing of the November 1 Order. We conclude that FPA Section 206 does not permit the Commission to require refunds of unjust and un- reasonable rates charged prior to a date 60 days after the filing of a complaint or 60 days after the initia- tion of a Commission investigation on its own motion. To order such refunds would contravene explicit refund limitations that Congress put in FPA Section 206. While that refund authority can be expanded in limited circumstances (e.g., where sellers have charged a rate other than the filed rate or where an appellate court has found that the Commission com- mitted legal error), as discussed below, none of those circumstances is present here. Thus, in the specific situation present here, we cannot order refunds of unjust and unreasonable rates charged prior to Octo- ber 2, 2000, the start of the refund effective period.?° Accordingly, we will deny the requests for rehearing of the November 1 Order challenging the order's find- 25 The FPA, with one exception, permits refunds only for a period of 15 months after the refund effective date. The excep- tion is that if a public utility engages in dilatory behavior in a Section 206 proceeding, the Commission can extend the refund period beyond 15 months from the refund effective date. Ada ings about the Commission’s retroactive refund au- thority, t.e., refund authority prior to October 2, 2000.26 b. The Commission's Retroactive Refund Authority Several parties argue that the Commission’s statu- tory duty to protect consumers and its broad legal and equitable authority to do so requires that the Commission remedy unjust and unreasonable rates for the period prior to October 2 by ordering refunds.?2? Other parties agree with the November 1 Order’s conclusion that the Commission has no legal author- ity to grant refunds for overcharges prior to October 2.28 As discussed below, we conclude that the Com- mission lacks the authority to order retroactive re- funds of unjust and unreasonable rates charged prior to October 2. 1. Sections 205 and 206 of the FPA Comments Several parties argue that because Sections 205 and 206 of the FPA require that the Commission ensure just and reasonable rates, the Commission, having found the pre-October 2 rates to be unjust ne “© To the extent parties raise the same arguments on rehear- ing of the December 15 Order, we similarly deny rehearing. “’ E.g.. Comments filed November 22, 2000, by Southern Califoraia Edison Company (SoCal Edison), Pacific Gas and Electric Company (PG&E), SDG&E, City of San Diego, County of San Diego. California Commission, TURN/UCAN, California State Senator Morrow, Oversight Board, California Leyislature, San Diego Association of Governments. “S E.g.. Comments of DOE, Enron, Calpine, Dynegy, PPL EnergyPlus, Rehant, Duke Energy, Williams, IEP, WPTF, Xce! Energy. DOE also comments that Congress should examine whether to amend the FPA to provide the Commission with authority to require retroactive refunds in the future. and unreasonable, is obligated to order refunds for that period. They further argue that the Commission is not prohibited from ordering retroactive refunds of market-based rates. Other parties argue that neither Section 205 nor 206, on its face, grants the Commission authority to order retroactive refunds. Thus, they maintain that the Commission may not order refunds for the pre- October 2 period. Commission Determination A number of parties confuse the just and reason- able standard with the authority to order retroactive refunds of unjust and unreasonable rates. Whether rates are unjust and unreasonable ts a separate issue from whether the Commission is authorized under the statute to order refunds retroactively. Under FPA Section 206, if the Commission finds that rates no longer meet the just and reasonable standard, the Commission has a statutory obligation to fix a new rate or to fix practices “to be thereafter observed.”29 In amending FPA Section 206, Congress did not give the Commission authority to modify unjust and un- reasonable rates retroactively. As discussed in the Appendix to the November 1 Order, when Congress passed the FPA in 1935, it excluded a provision from the original bill that would have authorized the Commission to retroactively order reparations for charges found to be excessive or unreasonable if a complaint were filed within two vears from the date of payment. Courts later concluded that this exclu- sion showed that Congress intended that the Com- mission have authority to only grant relief in a Sec- tion 206 proceeding prospectively from the date of its 29 16 U.S.C. § 824e(a) (1994). 56a order. See, ey., City of Bethany v. FERC, 727 F.2d 1131 (D.C. Cir. 1984), cert. denied, 469 U.S. 917 (1984). As a result, Congress added limited refund author- ity to Section 206 in the Regulatory Fairness Act of 1988 (RFA). S. Rep. No. 491, 100th Cong., 2d Sess. 3-4 (1988), reprinted in 1988 U.S.C.C.A.N. 2685. As amended, FPA Section 206 restricts the Commission’s authority to establish a refund effective date to no earlier than 60 days after the date that a complaint is filed or the Commission initiates an investigation. Therefore, Section 206 does not permit retroactive refund relicf for rates covering periods prior to the filing of a complaint or the initiation of a Commission investigation, even if the Commission determines that such past rates were unjust and unreasonable. ll. The Filed Rate Doctrine and the Rule Against Retroactive Ratemaking Parties urging retroactive refunds make several arguments concerning the filed rate doctrine and its corollary, the rule against retroactive ratemaking. Taken together, the doctrine and its corollary stand for the propositions that a utility may charge only those rates that are on file with and approved by the Commission, and conversely that the Commission may not alter those filed rates retrospectively. The arguments against the application of the doctrine and its corollary can be condensed to the following: the filed rate doctrine does not apply to market-based rates; the Commission’s past market-based rate au- thorizations in California markets constituted legal error; and the rates charged were inconsistent with sellers’ filed rates. According to these parties, the filed rate doctrine does not preclude retroactive refunds in these specific circumstances. (a) Whether the Filed Rated Doctrine Applies to Market-Based Rates Comments Oversight Board and County of San Diego argue that the filed rate doctrine does not apply to market- based rates because the actual rates have not been filed with the Commission, and because prices fluc- tuate with the market. Accordingly, they assert that there is no fixed rate on file on which buyers and sellers could rely, and which would prohibit retroac- tive refunds. County of San Diego contends that several princi- ples underlying the filed rate doctrine and the rule against retroactive ratemaking do not apply to market- based rates and, thus, are not dispositive in this case. Specifically, it contends that: the principle that regu- lated companies can charge only those rates of which the agency is cognizant does not apply to these facts, because the Commission no longer receives prior no- tice of actual market-based rates; the nondiscrimina- tion principle does not apply, because market-based pricing allows utilities to sell at different rates to dif- ferent customers; and the principle of predictability is not applicable, because the market, not a fixed rate or published formula, determines prices. Instead, County of San Diego asserts that another principle underlying the filed rate doctrine — the principle of reasonable expectations — is dispositive. It contends that market participants and the Commission clearly expected that competitive forces would be adequate to restrain prices in the California markets to just and reasonable levels, whereas sellers had no legiti- mate or reasonable expectation of being able to demand unjust and unreasonable prices due to ar absence of competition. ‘Thus, it argues that the reasonable 58a expectations rationale underlying the filed rate doc- trine supports a requirement for refunds in this case.” Commission Determination Under the FPA, Sections 205 and 206 are the statutory foundation for the filed rate doctrine and the rule against retroactive ratemaking. FPA Section 205(c) states: “Under such rules and regulations as the Commission may prescribe, every public utility shall file with the Commission, within such time and in such form as the Commission may designate schedules showing all rates and charges subject to the jurisdiction of the Commission ....” This provi- sion does not distinguish between cost-based and market-based rates. Nor does the provision require that the Commission receive prior notice of market- based rates, as San Diego contends.”! As the Court of Appeals for the District of Colum- bia Circuit recently recognized, “[t]he Commission has held that traditional utilities and power market- ‘O Comments of County of San Diego at 11-13. 31 Contrary to County of San Diego, the rationales underlying the filed rate doctrine apply to market-based rates. First, San Diego is incorrect that Section 205(c) requires prior notice of the actual market-based, numerical rates. In addition, the fact that a market-based tariff or rate schedule is on file instead of a specific, quantified rate is not dispositive, so long as buyers know (or can know by examining the Commission's public files) the type of rates authorized for each seller. The principle of predictability requires that the parties know the type of rate being used, not necessarily the exact numerical rate. When a buver knows market-based rates are being used, the buyer can predict that rates will fluctuate with differing conditions, and can plan accordingly. That is all that is required. Thus, the filed rate doctrine and its corollary, the rule against retroactive ratemaking, apply to market-based rates. 59a ers who engage in market-based rate transactions are required to file quarterly reports summarizing transactions and that these reports satisfy the filing requirements of § 205(c),"32 and the court did not question the Commission’s judgment in this regard. Consequently, the Commission’s current procedures for quarterly filing of market-based transactions sat- isfy the Section 205(c) filing requirements for market- based rates. The market-based rates at issue here were on file with and approved by the Commission. Second, in response to Section 206 complaints and our own investigation, the December 15 Order implemented a number of structural changes to the existing California market mechanisms to eliminate those features that were creating the possibility of unjust and unreasonable rates. ‘The structural changes satisfied our Section 206(a) obligation to determine the just and reasonable provisions to be thereafter in force. We find San Diego’s reasonable expectation princi- ple not to be a tenet of the filed rate doctrine, but merely a restatement of our statutory duty to set just and reasonable rates. San Diego’s effort to enyraft this principle into the filed rate doctrine seeks to evade the distinction, noted above, between our dele- yated authority under Section 206 to find that exist- ing rates are unjust and unreasonable and the statu- tory restriction on refunds in such cases. The filed rate doctrine cannot give us greater refund authority than that allowed in the FPA, and therefore we reject San Diego’s claim that its reasonable expectation 3“ Power Co. of America, L.P. v. FERC, 245 F.3d 839, 846 (D.C. Cir. 2001). 60a rationale supports a requirement for refunds in this case.% To conclude, the filed rate doctrine applies to the market-based rates at issue here, and the statutory limitations on our refund authority prohibit retroac- tive refunds. (b) Legal Error Comments Some parties argue that the Commission’s market- based rate authorizations relied on determinations that the markets were competitive, but that the markets have now been shown not to be competitive. They argue that, by allowing market-based rates in markets that were not workably competitive, the Commission committed legal error, which constitutes a basis for the Commission to order retroactive refunds to correct its mistakes. Commission Determination The parties’ reliance on a “legal error” theory is flawed. First, we disagree that the Commission committed legal error by allowing market-based rates to remain in effect in California. Rather than eliminate market-based rates entirely, as these par- ties seem to advocate, the Commission reasonably sought to correct the flaws that could cause unjust and unreasonable rates in certain conditions. The December 15 Order contained a number of remedial 33° See Towns of Concord, Norwood and Wellesley v. FERC, 955 F.2d 67, 73 (D.C. Cir 1992) (rejecting argument that assumes a “‘right’ ceases to exist unless it is backed up by a remedy, that the Commission's denying refunds equals the Commission’s authorizing the utility to violate the filed rate doctrine .... This is good advocacy but the case cannot be de- cided on any such theory.”). 6la measures designed to correct those flaws. As found by the Ninth Circuit, “FERC’s actions, taken together, appear to be fully consistent with § 206(a).""4 Thus, we disagree that the Commission's approach can be considered to constitute legal error. Second, while we recognize that retroactive refunds can be ordered where a court reverses a non-final Commission decision on the merits,*> the parties have challenged the Commission’s original decisions to grant market-based pricing authority to various applicants. Those orders have, however, become final and non-appealable under FPA Section 313, and thus courts would lack jurisdiction to review those deci- sions. Third, to the extent that the parties are rais- ing questions about the operation of specific sellers’ exercise, of market-based pricing, those cases must proceed-under Section 206, as, in fact, this case docs. In a Section 206 complaint, our refund authority is confined by the statutory language to commence 60 days after the complaint was filed, or October 2, 2000 in the instant case. We do not see how a court could 34 In re: California Power Exchange Corp., 245 F.3d 1110, 1121 (9th Cir. 2001). 3 See United Gas v. Callery Properties, 382 U.S. 223, 229 (1965) (while the Commission has no power to make reparation orders, its power to fix rates being prospective only, it is not so restricted where its order, which never became final, has been overturned by a reviewing court); Reynolds Metals Co. v. FERC, 777 F.2d 760, 763 (D.C. Cir. 1985) (same). See also Tennessee Valley Mun. Gas Assn. v. FPC, 470 F.2d 446, 453 (D.C. Cir 1972) (granting of refunds did not violate anti-reparations language in the statute which was designed to protect estab lished expectations under legally established rate schedules One “cannot claim justifiable reliance or proteectable expecta tions based on |Commission] action which was illegal”). 62a find legal error in our decision to follow the statutory requirement. (c) Whether the Rates Charged Were Inconsistent with a Competitive Market Rate Comments Several parties argue that market-based rates are just and reasonable only if the market is sufficiently efficient and sufficiently free from the ability of mar- ket participants to exercise market power so that actual prices charged in the marketplace approximate the “true” market price, i.e., the price that would obtain in a hypothetically “fully competitive” and eff)- cient market. The parties argue that there was an implied condition in the seller authorizations,*® or that the market power conditions of market-based rate authorizations are analogous to an implied con- tract between seller and buyer,*’ such that if a seller were found, after-the-fact, to have exercised market power, this would be deemed a violation of the seller’s market rate tariffs and subject the seller to retroac- tive refund hability. They contend that the exercise of market power resulted in prices well above what would prevail in a workably competitive market, and, accordingly, prices charged by sellers during the summer of 2000 are contrary to the filed rate authorizations, and refunds should be ordered.*® The parties further argue that the Commission may order retroactive refunds where the rates charged exceed the filed rate or for violations of the % EF og., Comments of PG&E; Rehearing of PG&E ’ Comments of City of San Diego ’ These parties do not define a “fully competitive” or “work ably competitive” market 63a conditions of sellers’ market-based rate authority. In support, they cite cases in which the Commission ordered: disgorgement of profits for a period prior to the initiation of the Commission's complaint as a sanction against a public utility that violated the standards of conduct that were contained in its market-based tariff; refunds for monies illegally re- covered through a fuel adjustment clause; refunds when the utility charges impermissible costs through a filed formula rate; and disgorgement of some reve- nues resulting from a transaction that lacked neces- sary Commission authorization. Other parties assert that the rates charged this summer comport with the filed rate doctrine, that there is no evidence that sellers charged rates that were not in compliance with the tariffs on file, and that sellers. must be able to rely on the finality of filed rates. Commission Determination We agree that the Commission may take retroac- tive action to address circumstances where a seller did not charge the filed rate or violated statutory or regulatory requirements or rules in applicable rate tariffs.4° However, it has not been demonstrated that 39 K.g., Comments of PG&E, Oversight Board, City of San Diego, California Commission, SUG&E, County of San Diego; Rehearings of SDG&E, PG&E, Oversight Board. ' For example, in Washington Water Power Co., 83 FERC | 61,282 (1998), the Commission imposed sanctions for viola tions by Washington Water Power Company (WWP) and its power marketer affiliate Avista Energy, Inc. (Avista), of Avista’s market-based rate order, specifically the affiliate conduct, OASIS and Standards of Conduct requirements. Avista was required to disgorge its profits from the power sale at issue, and Avista’s market-based rate authority was suspended prospec 64a any conditions or limitations of sellers’ market-based rate tariffs have been violated. The conditions hy- pothesized by the parties are not evident from the market-based rate schedules or our orders. ‘Thus, there is no basis for finding that the sellers acted inconsistently with Commission-filed tariffs or with specific requirements in their filed rate authoriza- tions. To the extent the Commission found that changed conditions in California created the oppor- tunity for unjust and unreasonable rates, it remedied those problems prospectively. If it finds that refunds are appropriate, it can order refunds in accordance with the RFA refund effective date. il. Whether Sellers’ Market-Based Rate Authort zations Were Provisional, Making the Rates Being Charged Subject to Retroactive Adjustment Comments The California Commission argues that the Com- mission may order refunds without violating the filed rate doctrine or the corollary rule against retroactive ratemaking if buyers and sellers were on notice that the rates being charged were “provisional,” and might be subject to adjustment in the future. It argues that the Commission's early California elec- tric restructuring orders contained qualifications that indicate that these decisions were provisional, and which warn that the structure and dynamics of the markets and their resulting rates were subject to adjustment or revision. It cites the November 1996 order (authorizing the establishment of the PX and the ISO) as characterizing the Commission's deter- mination as “conditional” and “preliminary.’ See tively for six months with respect to any power sale requiring the use of WWP’s transmission system 65a PG&E, et al., 77 FERC 4 61,204, at p. 61,793 (1996). It also cites the October 1997 order authorizing the PX and the ISO to commence operations, PG&E, et al., 81 FERC 4 61,122, at p. 61,435 (describing such authorization as “interim” and “conditional”); the De- cember 1997 order authorizing the transfer of opera- tional control of jurisdictional facilities, PG&E, et al., 81 FERC 4 62,210, at p. 64,473 (expressly reserving the right to “place further conditions on the transfer for good cause shown”). Thus, according to the Cali- fornia Commission, there was nothing certain on which buyers and sellers could have justifiably relied. Accordingly, there was no predictability as to what rates were being protected by the filed rate doctrine and rule against retroactive ratemaking.1! Oversight Board argues that the controversy over the high prices during the spring and summer of 2000 effectively put sellers on notice that their rates would be challenged, t.e., no reasonable seller would beheve that their rates would go unchallenged. Commission Determination While it 1s correct that the Commission issued con- ditional orders on the restructuring and indicated that future changes might be made, the conditions went to the restructuring and the market rules, which were at that time not entirely finalized and were being implemented in phases. The Commission did not make changes to the individual] sellers’ mar- ket rate authorizations. The individual market-based rate applications were not made subject to a retroac- tive refund obligation when accepted, and the apph- cants had no reasonable expectation of such an obhi- 1l See also Comments of PG&E. SDG&E 66a gation.42 ‘lhe orders give no indication that the Com- mission would consider retroactively changing rates. The conditions in tne authorizations were very ex- plicit, and indicated only that the Commission would revoke market rates if the seller acquired market power, not that it would retroactively change the rates.14° Further, nothing in the restructuring or market rule orders indicates that the Commission was placing such a condition on sales into the ISO or PX. Moreover, the mere existence of uncertainty or expectation of future controversy concerning sellers’ rates would not serve to establish a de facto refund effective date for purposes of retroactive refunds. As discussed above, the establishment of a refund effec- tive period is governed by the statute. As the instant matter arose from a complaint under Section 206, we must look to that provision. Its terms specifically provide that the refund effective date is triggered by the filing of a complaint or the initiation of an inves- tigation by the Commission. Section 206 does not provide for constructive notice. The refund effective date of October 2, 2VU00 is consistent with the statu- tory framework. iv. Section 309 Authority Comments Several parties argue that there is substantial evi- dence that sellers were unjustly enriched by ISO and '“ By comparison, with respect to costs collected through fuel adjustment clauses, acceptance of Commission authority to ad- just such charges after-the-fact 1s a condition of acceptance of the fuel adjustment clause filings 1S keg., Louisville Gas and Electric Company, 62 FERC $61,016, at p. 61,148 n.15 (1993) 67a PX prices above competitive levels because sellers exercised or benefitted from the exercise of market power. They cite the Staff Report and the market monitoring reports prepared by California’s inde- pendent market monitors.44 They argue that the Commission has broad authority under Section 309 of the FPA to restore the status quo and prevent unjust enrichment. In effect, they argue that Section 309 gives the Commission retroactive refund authority for past unjust and unreasonable rates. They cite Niagara Mohawk Power Corp. v. FPC, 379 F.2d 153, 158 (D.C. Cir. 1967) (upholding decision to hackdate a hydro license, and thus require back payments from a licensee who had failed to obtain its license prior to constructing hydro facilities); Mesa Petroleum Co. v. FPC, 441 F.2d 182 (5th Cir. 1971) (requiring a gas supplier to pay a purchaser the difference between what the purchaser would have paid under its contract with the supplier and the amounts it actually had to pay for replacement gas when the supplier abandoned the contract-without Commission approval); and Louisiana Public Serv. Comm’n v. FERC, 174 F.3d 218, 224 n.6 (D.C. Cir. 1999) (“[t]he Commission's authority to order refunds of amounts improperly collected in violation of the filed rate de- rives from FPA § 309.”). These parties urge the Com- mission to use FPA Section 309 to order equitable re- hef that requires sellers to repay buyers the profits it See, e.g., Comments of SoCal Edison, citing the study at- tached as Exh. A to its comments (Paul Joskow and Edward Kahn, “A Quantitative Analysis of Pricing Behavior in Cali- fornia’s Wholesale Electricity Market During Summer 2000” (November 21, 2000)). 68a above competitive levels that the sellers received as a result of the exercise of market power.‘ Oversight Board further asserts that Section 4(i) of the Communications Act is analogous to Section 309 o. the FPA and that a court interpreted Section 4(1) as conferring upon the Federal Communications Commission (FCC) authority to order retroactive refunds, even though Sections 204 and 205 of the Communications Act, which it states are analogous to Sections 205 and 206 of the FPA, do not authorize the FCC to order retroactive refunds. SDG&E argues that the imposition of sanctions by the Commission may provide the only means to rem edy abuses of market power by sellers. It expresses concern that courts may rule that antitrust claims and state law claims alleging injury due to unlaw- fully high prices — even if those prices are shown to have resulted from price-fixing collusion by sellers — would be preempted by the filed rate doctrine. It asserts that the Commission should investigate whether, and which, sellers have engaged in manipu- lative conduct including, but not limited to, the sub- '> Comments of PG&E, SoCal Edison; Rehearings of SDG&E, PG&E. SoCal Edison cites Order No. 637-A, in which the Commission expressly did not make natural gas transportation rates subject to refund because it could rely on its authority to afford relief pursuant to Section 16 of the Natural Gas Act (NGA), which is analogous to Section 309 of the FPA. See Regu- lation of Natural Gas Transmission Services and Regulation of Interstate Natural Gas Transportation Services, FERC Statutes and Regulations, Regulations Preambles July 1996-December YOOO F 31,091 (2000), order on rehg, 91 FERC 4 61,191 (2000), appeal pending sub nom. Process Gas Consumers v. FERC, No. 00-1217 (D.C. Cir. filed May 26, 2000). SoCal Edison argues that the Commission could apply Section 309 similarly in this Case. 69a mission of phantom schedules to create apparent transmission congestion, the export and later re- importation of power to evade PX and ISO price caps, and the aggregation of significant amounts of supply from multiple sources by one scheduling coordinator for composite bidding in the wholesale markets. According to SDG&E, seilers who engage in such market abuse should be sanctioned by disgorgement of profits that resulted from such abuse. Oversight Board argues that the Commission’s fail- ure to address the legal issue of refund authority for the period prior to October 2, 2000 creates uncer- tainty and prevents resolution of the issue on appel- late review. Commission Determination The remedial authority under Section 309% is designed to fill in gaps where the FPA is silent, not to rewrite the explicit Congressional delegations of authority and explicit limitations on that authority. Section 309 and similar provisions “authorize an agency to use means of regulation not spelled out in detail, provided the agency’s action conforms with the purposes and policies of Congress and does not contravene any terms of the Act.” Niagara Mohawk, 379 F.2d at 158. Here, as we have reiterated, Con- gress explicitly delincated the extent of our refund authority under FPA sections 205 and 206. We do not read Section 309 to permit us to go beyond that delegation. 46 FPA Section 309 states in pertinent part: “Che Commission shall have power to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules, and regula tions as it may .ind necessary or appropriate to carry out the provisions of this Act.” 70a Courts interpreting FPA Section 309, and its coun- terpart NGA Section 16, have indicated that “|b]oth sections are of an implementary rather than sub- stantive character.... These sections merely aug- ment existing powers conferred upon the agency by Congress, they do not confer independent authority to act.” New England Power Co. v. FPC, 467 F.2d 425, 430-31 (D.C. Cir. 1972), aff'd, 415 U.S. 345 (1974).47, Contrary to what the parties here seem to suggest, Section 309 is not an independent source of authority that allows the Commission to expand its authority beyond that allowed in its governing stat- utes: The substantive provisions of the [NGA] contem- plate certain procedures, as incident to the func- tions provided. ‘The range of permissible proce- dures must be derived from these sections, sections like Section 4 and 5 of the [NGA], and the functions they describe. Section 16, which uses a broad gen- erality of “necessary and appropriate” that is not rooted in a function, cannot enlarge the choice of permissible procedures beyond those that may fairly be implied from the substantive sections and the functions there defined. Mobil Oil Corp. v. FPC, 483 F.2d 1288, 1257 (D.C. Cir. 1973). The parties here seek not to introduce new procedures under FPA Section 309, but to enlarge the substantive refund limitations in Section 206 by expanding the refund period. If Section 309 cannot be used to enlarge the permissible procedures under 4% Accord, e.g., McCombs v. FERC, 705 F.2d 1177, 1184-85 (10th Cir. 1980); Murphy Ot! Corp. v. FPC, 431 F.2d 805, 810 (8th Cir. 1970). Jla the FPA, as Mobil found, then it surely cannot be used to expand the substantive provisions of the Act. Oversight Board’s reliance on New England Tele phone & Telegraph Co. v. FCC4 is misplaced. Although the Communications Act (“CA”) contains similar provisions to PA Sections 205, 206, and 309, the statutory language differs in several respects as does the underlying regulatory approaches of the two. Acts. The FCC in that case addressed different cir- cumstances from those we face, in particular in that case the FCC used its powers to “prescribe rates of return,” rather than to prescribe overall r [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0965%3A2. Public record. Not legal advice.