NRG Power Marketing, LLC v. Maine Pub. Util. Comm'n

PETITIONER: NRG Power Marketing LLC et al.
RESPONDENT: Maine Public Utilities Commission et al.
LOCATION: Maine Public Utilities Commission

DOCKET NO.: 08-674
DECIDED BY: Roberts Court (2009-2010)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 558 US 165 (2010)
GRANTED: Apr 27, 2009
ARGUED: Nov 03, 2009
DECIDED: Jan 13, 2010

ADVOCATES:
Eric D. Miller - Assistant to the Solicitor General, Department of Justice, for respondent FERC in support of the petitioners
Jeffrey A. Lamken - for the petitioners NRG Power Marketing LLC et al.
Richard Blumenthal - for the respondents

Facts of the case

The Maine Public Utilities Commission along with the attorneys general of Connecticut and Massachusetts filed for petitions of review of orders of the Federal Energy Regulatory Commission (FERC). FERC approved a settlement and redesigned New England's "capacity" electricity market, which Maine, Connecticut, and Massachusetts were subject to, even though they were not parties to the settlement. FERC denied their request for rehearing.

On appeal to the U.S. Court of Appeals for the District of Columbia, Maine, Connecticut, and Massachusetts argued that FERC erred in finding that "transition payments" under the settlement should be reviewed under the "public interest" standard as dictated by Mobile-Sierra rather than the "just and reasonable" standard. The District of Columbia Circuit agreed holding that the Mobile-Sierra doctrine should not apply to non-parties to the settlement agreement. It reasoned that the Mobile-Sierra doctrine is premised on the existence of a "voluntary contract" between the parties. Maine, Connecticut, and Massachusetts never entered a voluntary agreement with FERC and therefore the standard was inappropriate.

Question

Does the Mobile-Sierra doctrine's public interest standard apply to non-parties to a FERC settlement?

Media for NRG Power Marketing, LLC v. Maine Pub. Util. Comm'n

Audio Transcription for Oral Argument - November 03, 2009 in NRG Power Marketing, LLC v. Maine Pub. Util. Comm'n

Audio Transcription for Opinion Announcement - January 13, 2010 in NRG Power Marketing, LLC v. Maine Pub. Util. Comm'n

John G. Roberts, Jr.:

In case 08-674 NRG Power marketing versus Main Public Utilities Commission, Justice Ginsburg has the opinion of the Court.

Ruth Bader Ginsburg:

The Mobile-Sierra doctrine named for two over half-century old decisions of this court, concerns superintendents of power rate by the Federal Energy Regulatory Commission.

This case is about the dimensions of that doctrine.

When an electricity rate is set by freely negotiated wholesale energy contracts.

Mobile-Sierra instructs, the commission is to presume that the rate qualifies as just reasonable under the Federal Power Act.

The presumption may be overcome however, if the commission determines that the contract rate seriously harms the public interest.

For many years New England supply of electricity capacity was barely sufficient to meet the region's demand.

The Federal Commission and New England's generators, electricity providers and power customers, made several attempts to address the problem, this case stems from the latest effort to design the solution.

Concerned parties negotiated a comprehensive settlement agreement, their accord, which the commission approved, established rate-setting mechanisms, for sales of energy capacity, and provided that the Mobile-Sierra public interest standards would govern rate changes.

Objectors to the settlement sought review in the DC circuit.

By and large, the Court of Appeals affirmed the commission's order but it agreed with the objectors on the point here at issue.

When the contract rate is challenged by non-cut contacting third parties, the court held, the Mobile-Sierra presumption that the rate is just and reasonable does not apply.

We reverse that determination.

Mobile-Sierra's public interest standard we hold, applies to all challenges, to contract rates whether initiated by contracting parties or non contracting parties.

For this conclusion, we rely heavily on this court's 2008 Morgan Stanley decision, which we announced three months after the Court of Appeals ruling in the instant case.

Morgan Stanley makes it unmistakably clear that Mobile-Sierra's public interest standard is not as the DC Circuit suggested independent of and sometimes at odds with the just-and-reasonable standard, rather the public interest standard defines what it means a rate to satisfy the just-and-reasonable standard in the contract context.

We state three principal reasons for our opinion, first if the commission itself as adjudicator of great challenges must presume that contract rates resulting from fair arms length negotiations are just unreasonable and how can non-contracting parties escape that presumption.

Second, Mobile-Sierra as take account of third-party interest where the doctrine directs the commission to reject the contract rate that seriously harms the consuming public.

Most critically, the DC circuit's confinement of Mobile-Sierra to challenges by contracting parties defeats the doctrine's animating purpose, promotion of the stability of supply arrangements which all agree is essential to the health of the energy industry.

A presumption applicable to contracting parties but inapplicable to all others who might challenge a contract rate could scarcely provide the stability Mobile-Sierra aimed to secure.

Whether the rates at issue qualify as contract rates for Mobile-Sierra purposes, and, if not, whether the commission had discretion to treat them analogously, our question is left open for the DC circuit's consideration on remand.

Justice Stevens has filed a dissenting opinion.