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MISO Transmission Owners v. Federal Energy Regulatory Commission

United States Court of Appeals, Sixth Circuit

June 21, 2017

MISO Transmission Owners, Petitioner,
v.
Federal Energy Regulatory Commission, Respondent, Midcontinent Independent System Operator, Inc., Intervenor, Duke Energy Ohio, Inc. and Duke Energy Kentucky, Inc.; FirstEnergy Service Company, Intervenors.

         On Petition for Review of Orders of the Federal Energy Regulatory Commission. Nos. ER12-715-001; ER12-715-003; ER12-715-004.

         ON BRIEF:

          Michael J. Thompson, Wendy N. Reed, Patrick L. Morand, WRIGHT & TALISMAN, P.C., Washington, D.C., for Petitioners.

          Carol J. Banta, FEDERAL ENERGY REGULATORY COMMISSION, Washington, D.C., for Respondent.

          Noel Symons, MCGUIRE WOODS LLP, Washington, D.C., Matthew Allen Fitzgerald, MCGUIRE WOODS LLP, Richmond, Virginia, for Duke Intervenors.

          Morgan E. Parke, Stacey Burbure, Karen Anita Sealy, FIRSTENERGY CORPORATION, Akron, Ohio, John Lee Shepherd, Jr., Timothy T. Mastrogiacomo, James P. Daly, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Washington, D.C., for Intervenor FirstEnergy.

          Before: KEITH, BATCHELDER, and SUTTON, Circuit Judges.

          OPINION

          SUTTON, Circuit Judge.

         Midcontinent Independent System Operator, Inc., is a nonprofit association of utilities that manages electrical transmission facilities on behalf of its members. Under its well-earned acronym, MISO approves infrastructure projects and allocates the costs among its member utilities in order to maintain the electrical grid and increase its capacity. Duke Energy and American Transmission Systems own utilities in Ohio and Kentucky, and they withdrew from MISO in 2011. At stake is whether the utilities must pay for projects that MISO approved after they announced their departure but before they left. The Federal Energy Regulatory Commission ruled in favor of the utilities. Because the Commission correctly interpreted the terms of MISO's Tariff, we deny the petition for review of its order.

         I.

         MISO is a regional "association[] of utilities that own electrical transmission lines interconnected to form a regional grid and that agree to delegate operational control of the grid to the association." Ill. Commerce Comm'n v. FERC, 721 F.3d 764, 769 (7th Cir. 2013). It oversees the electrical grid in all or part of fifteen states in the Midwest and South, including Michigan and Kentucky, as well as the Canadian province of Manitoba. Id. at 769-70. Beginning in 2006, the Federal Energy Regulatory Commission approved changes to MISO's Tariff that enabled it to authorize network expansion projects and divide the costs among the member utilities. See Pub. Serv. Comm'n of Wis. v. FERC, 545 F.3d 1058, 1059 (D.C. Cir. 2008). The Tariff initially had just two project categories: Baseline Reliability Projects and Market Efficiency Projects.

         In July 2009, American Transmission Systems gave notice that it planned to withdraw from MISO and integrate its Ohio facilities with PJM Interconnection, a neighboring transmission organization. Duke Energy's Ohio and Kentucky utilities followed suit in May 2010. Under the Tariff, a utility cannot withdraw from MISO any earlier than the last day of the year following the year it gives notice. Art. Five, § 1, App'x 635.

         Two months after Duke announced its intention to withdraw, MISO proposed a new category of more expensive expansion projects-Multi-Value Projects-most of which would carry wind power to urban markets. Ill. Commerce Comm'n, 721 F.3d at 771. The Commission approved this revision to the Tariff. Midwest Indep. Transmission Sys. Operator, Inc., 133 FERC ¶ 61, 221 (2010). In August 2010, MISO authorized the first Multi-Value Project.

         American Transmission withdrew from MISO in May 2011 before it approved any more Multi-Value Projects. But in early December 2011, just weeks before Duke's scheduled departure, MISO approved a portfolio of sixteen projects, estimated to cost billions of dollars in total. MISO proposed adding a provision to the Tariff, given the harmless-sounding label of Schedule 39, which ...


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