United States Court of Appeals, District of Columbia Circuit
October 24, 2017
Petition for Review of Orders of the Federal Energy
Matthew Allen Fitzgerald argued the cause for petitioners.
With him on the briefs were Noel H. Symons and Katlyn A.
Elizabeth E. Rylander, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on the
brief were Robert H. Solomon, Solicitor, and Susanna Y. Chu,
Jeffrey W. Mayes argued the cause for intervenor PJM
Interconnection, L.L.C., and amicus curiae Independent Market
Monitor for PJM. With him on the brief were Michael J.
Thompson and Paul M. Flynn. Ryan J. Collins entered an
Before: Tatel, Griffith, and Millett, Circuit Judges.
prepare for a bitterly cold day during the January 2014
"polar vortex, " Duke Energy Corporation, a
generator of electricity, purchased exceptionally expensive
natural gas, which it ended up not needing. Claiming that its
regional transmission organization, PJM Interconnection, had
directed it to purchase the gas and that the governing tariff
provided for indemnification, Duke sought reimbursement for
its losses. PJM rejected Duke's claim, as did the Federal
Energy Regulatory Commission (FERC). For the reasons set
forth in this opinion, we deny Duke's petition for
United States electrical grid has been described as "the
most complex machine ever made." Phillip F. Schewe,
The Grid: A Journey Through the Heart of Our Electrified
World 1 (2007). Fortunately, only a few details are
necessary to understand this case.
Interconnection, L.L.C., Intervenor here, a regional
transmission organization, operates the transmission system
spanning all or part of thirteen mid-Atlantic and Midwestern
states. PJM also manages the markets in which electricity is
bought and sold within this territory.
electricity is traded in PJM's "day-ahead
market." Generators offer electricity into that market
by noon each day, including in their offers not only the
price, but also the amount of notice they will need to
provide the electricity. Based on predicted demand, PJM then
derives a market-clearing price for all sales to be made the
next day and, by 4 P.M., notifies generators whether and when
they are scheduled to run. Even if a generator is scheduled
to run, however, PJM may or may not call on it to provide
energy, depending on demand and other variables.
also manages a yearly "capacity market." "The
capacity market is designed to ensure sufficient resources
are available to maintain the reliability of the
system." Duke Energy Corp. v. PJM Interconnection,
L.L.C., 151 FERC ¶ 61, 206, 62, 279 (2015) (Initial
Order). Generators bid into that market to become Generation
Capacity Resources-generators paid to offer all of their
available capacity into the day-ahead market and to operate
if called upon by PJM. As FERC explained while interpreting a
similar tariff, "economic considerations are irrelevant
to determining whether a unit is physically available."
New England Power Generators Association, Inc. v. ISO New
England Inc., 144 FERC ¶ 61, 157, 67, 902-03 (2013)
(internal quotation marks omitted).
Duke Energy Corporation and various other related corporate
entities ("Duke"), are members of the PJM Tariff, a
contract between PJM and the member utilities. Duke operates
the Lee Facility, located 90 miles west of Chicago, which has
eight eighty-megawatt natural-gas-fired combustion turbines.
In 2014, the ...