Entergy Services, Inc. v. FERC

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United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 17-1251 September Term, 2020 FILED ON: JULY 13, 2021 ENTERGY SERVICES, INC., PETITIONER v. FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT ARKANSAS PUBLIC SERVICE COMMISSION, ET AL., INTERVENORS Consolidated with 18-1009, 18-1010, 20-1023 On Petitions for Review of Orders of the Federal Energy Regulatory Commission Before: TATEL, WILKINS, and RAO, Circuit Judges. JUDGMENT This case was considered on the record from the Federal Energy Regulatory Commission, and on the briefs and oral arguments of the parties. It is ORDERED and ADJUDGED that, in accordance with memorandum issued herein, the petitions for review are DENIED. Pursuant to D.C. Circuit Rule 36, the memorandum will not be published. The Clerk is directed to withhold issuance of the mandate herein until seven days after resolution of any timely petition for rehearing or petition for rehearing en banc. See Fed. R. App. P. 41(b); D.C. Cir. R. 41. Per Curiam 2 FOR THE COURT: Mark J. Langer, Clerk BY: /s/ Daniel J. Reidy Deputy Clerk MEMORANDUM The Federal Energy Regulatory Commission (“FERC”) ordered Entergy Arkansas to pay damages for the misallocation of energy sales made under a now-defunct contract known as the Entergy System Agreement. In this consolidated case, Petitioners Entergy Services, Inc. (“Entergy”), the Louisiana Public Service Commission (“Louisiana”), and the Arkansas Public Service Commission (“Arkansas”) seek review of the orders. Entergy argues that FERC erred by misinterpreting the contract and ordering damages. Louisiana and Arkansas argue that FERC’s methods for calculating and allocating damages were arbitrary and capricious. For the reasons explained below, we deny the petitions. I A Entergy Arkansas is an electric utility and a former member of the Entergy System, a cost- and capacity-sharing arrangement between power companies in Arkansas, Louisiana, Mississippi, and Texas. See Council of New Orleans v. FERC, 692 F.3d 172, 174 (D.C. Cir. 2012). From 1982 to 2016, the companies cooperated as one system under a rate plan approved by FERC. See Ark. Pub. Serv. Comm’n v. FERC, 891 F.3d 377, 379 (D.C. Cir. 2018); see also Entergy Ark., Inc., 153 FERC ¶ 61,347 (2015). Within that system, the companies “share[d] the costs and benefits of power generation and transmission” under the terms of a contract known as the Entergy System Agreement (“System Agreement”), allowing them to equalize the costs and benefits of generating energy. Ark. Pub. Serv. Comm’n, 891 F.3d at 379. The System Agreement contained several provisions distributing various costs and benefits between the companies. See J.A. 172–253. The allocation of energy costs under the System Agreement was principally governed by two provisions. First, section 30.03 provided that “energy from the lowest cost source available . . . shall be allocated . . . (a) first to the loads of the Company having such sources available . . . [and] (b) second to supply the requirements of the other Companies’ Loads (Pool Energy).” J.A. 215–16. Second, section 30.04 stated that “Energy used to supply others will be provided in accordance with rate schedules …

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