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Northern Virginia Electric Cooperative, Inc. v. Federal Energy Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

December 20, 2019

Northern Virginia Electric Cooperative, Inc., Petitioner
v.
Federal Energy Regulatory Commission, Respondent

          Argued November 18, 2019

          On Petitions for Review of Orders of the Federal Energy Regulatory Commission

          Adrienne E. Clair argued the cause for petitioners. With her on the briefs were Rebecca L. Shelton, Alan I. Robbins, and Debra D. Roby.

          Elizabeth E. Rylander, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were Robert H. Solomon, Solicitor, and Lona T. Perry, Deputy Solicitor. Anand Viswanathan, Attorney, entered an appearance.

          Christopher R. Jones argued the cause for intervenor Virginia Electric and Power Company. With him on the brief was Miles H. Kiger.

          Sean T. Beeny, Denise C. Goulet, and Phyllis G. Kimmel were on the brief for intervenor North Carolina Electric Membership Corporation in support of respondent.

          Before: Garland, Chief Judge, Wilkins, Circuit Judge, and Williams, Senior Circuit Judge.

          OPINION

          WILLIAMS, SENIOR CIRCUIT JUDGE

         In the mid to late 2000s, the Virginia Electric and Power Company (known in this case by its trade name, "Dominion") sought to construct three projects to upgrade its electricity transmission grid. The state of Virginia required Dominion to place the new transmission wires underground rather than use cheaper overhead wiring, thereby increasing the cost of the three projects from about $84 million to $233 million in total. Dominion serves customers in both Virginia and North Carolina. This case involves a simple question: How should the cost of undergrounding be allocated among Dominion's customers?

         In a series of proceedings, the Federal Energy Regulatory Commission concluded that Dominion's Virginia customers, but not its North Carolina customers, should bear those costs; the evidence showed that Virginia customers benefited from the undergrounding, while no evidence showed that North Carolina customers benefited. In the Commission's words, this decision represented "a limited exception" to a general principle that all of a utility's customers should share the costs of upgrading the grid. Old Dominion Elec. Coop., 146 FERC 61, 200 ¶ 52 (2014) ("Allocation Order"), reh'g denied, 161 FERC 61, 055 (2017) ("First Order on Rehearing"); see also Old Dominion Elec. Coop., 161 FERC 61, 054 (2016), reh'g denied, 164 FERC 61, 006 (2018) ("Second Order on Rehearing").

         In this petition, Virginia power wholesalers who buy electricity from Dominion challenge the Commission's decision on procedural and substantive grounds. None of them persuades us. We tackle first the procedural theories, then the substantive ones.

         I.

         The petitioners argue: (1) that the Commission did not properly invoke its power under § 206 of the Federal Power Act, 16 U.S.C. § 824e; (2) that the Commission failed to provide adequate notice of its intent to modify Dominion's filed rate; and (3) that the Commission's administrative law judge misinterpreted a Commission order and thereby improperly cabined the scope of an evidentiary hearing.

         1. The claim that a proper § 206 proceeding was missing turns on special rules relating to Commission supervision of formula rates-the sort used by Dominion. The formula rate, filed as a tariff with the Commission, identifies the categories into which Dominion's costs fall. With the formula in place, Dominion files an annual update informing the Commission and its customers of the projected costs for each category in the formula. Unless modified by the Commission, Dominion recovers the costs under the formula rate, ...


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