May it please the court my name is Philip Shabot on behalf of the law firm of McCarthy Swede and Harkway I represent the petitioner in this action north star steel company The panel has been at this for an hour and a half now. It's Getting toward lunch and I hope that you'll allow me therefore to share with you my unbridled enthusiasm and being able to bring to you a federal power act case and hope that you share in that Under the federal power Army we live for this I'm certain that you do Under the federal power act it clearly provides the FERC has exclusive jurisdiction over rates Charged by jurisdictional entities that is non-governmental entities that are engaged in the wholesale sale of electricity in interstate commerce and nothing else Pardon and nothing else it says that's correct. It does indeed It does not have jurisdiction over retail sales Section 206 however says that if upon complaint in your client is a retail customer the client is a retail customer But the complaint is not about a retail rate It is exclusively about wholesale rates charged by jurisdictional entities who are engaged in the sale of Electricity in interstate commerce. It is the wholesale rate that is an issue here and 206 says we did read your brief so we don't understand which argument is What I didn't understand is what is your response to the Carter argument that you know it's a good argument but not one the day you see me accept and That their interpretation of the statute is possible and therefore Bioneers What is what is your answer to that? Well, the answer to that your honor is that the commission has created an exception that is not in the statute It is it has transformed the its lack of jurisdiction under section 824b To limit its authority to give refunds with respect from Jurisdictional entities with respect to jurisdictional rates involved in jurisdictional transactions and that limitation is nowhere contained in the act It is an inference that fork an assertion that fork has made it has You know, maybe you can hear my question And there's you understand about deference to agency interpretation of their own statute, right? Certainly do you know about that and the question is why you know, it was a plausible argument Perhaps why is there a plausible argument as well Because your deference is due in the cases of statutory interpretation if the statute is ambiguous The statute is not ambiguous first authority to give refunds is not ambiguous it has that authority if What is involved can give you refund, right me can give your client a refund It doesn't the statute doesn't say that the statute says Upon complaint by any person With respect to a jurisdictional rate it can give a refund It says she'll be made with interest to those persons who paid the rate or charges which are the subject of the proceeding and your client didn't pay those rates or charges. Oh, yeah, absolutely
. We did your honor. You paid at retail you're challenging the wholesale rates Exactly. We are challenging the wholesale rates and that's the question. The rate or charge which is being which is the subject of the proceeding
. You paid a different you paid a rate a chair based on that but not that rate Because it was passed through to you and then your rate was based on the wholesale rate The that's correct if that's exactly correct the the identifiable wholesale rate Was a distinct identifiable component of the retail rate that we charged But it wasn't the rate that you charged it was a component of the rate that you charged That's correct but it's better off arguing that the wholesale rate should be refunded to AEDPCO and they'll pass it through to you. Well when and when for Made clear that the they were that we apparently they think that we made was to ask for that refund to come directly to us We said fine if that's the case The real you know go ahead and and provide that the refund should go to app code We'll take we'll take that up with app code if you do that But FERC declined to do that. There's what's what's notable FERC would have a FERC would have a concern and there is that if if this were a traditional retail rate In which the wholesale rate was bundled and merged and taken into account in the rate of return and so on and so forth That was subject to the jurisdiction of the state That's a legitimate concern, but that's not the case here. I don't really see a difference because it seems to me as a policy Madam that if they Order a refund for you any retailer can come in and say well look you know The retail price I pay was Partly it's moving by the wholesale rate they always are and you can always make some effort segregating Well in fact it happens to be a little clearer He had the might be in some other case, but it was extremely clear here and right But you see the point it could be the same people could segregate the wholesale price from Out of fact it well typically you can't in a bundled rate and that's the point I'm trying to make here your honor and FERC even allowed it to happen there are two exceptions to the exception that we think they've created first is if we were to have been an intervener a retail customer intervening in a proceeding such as blue heron did in which case we never had to say that we wanted as a result refunds to be paid to us We could have got at the end gotten refunds because that's exactly what happened there blue heron intervened and Refunds were provided directly to blue heron if we had been ambiguous and we hadn't said we want refunds paid directly to us, which is the case of Kruger Kruger files a complaint they have a contract similar to ours But what do they say they say we'd like relief we want a refund effective date and Such other relief to Kruger is maybe appropriate FERC says well, that's ambiguous
. They didn't really come right out and say we want you to give the fund to check to us and FERC never Ordered that in the Kruger case either that case was settled was resolved before the remedy but they provided the Provided an adjudicative hearing which required a determination that the complaint was jurisdiction that it raised jurisdictional issues if we were to if the the the counter of this and the reason that that FERC is the only Entity from which North Star can obtain relief is that if we were to go to the state corporation commission and say look Our retail rate is our excuse me our retail rate is bolstered Because the person who sold energy to apco Abuse market power engaged in illegal transactions and so on and so forth Apco would say so what? The only thing that they're concerned about from the retail perspective is the 14% Adder that apco got and the 1% Adder that any see got the response to the Arizona Corporation Commission would be if you've got a complaint with respect to the wholesale rates that apco paid go to FERC Statutes as you can upon complaint of any person Well now you win a vein in the California proceeding. Yes, we did and that's where the ruling was made that Left you out did you appeal that? That there hasn't been a final decision in the why don't you appeal it because Nothing's what what's happened in the in the California proceeding is that in a very long process If FERC made clear that the only thing that was going to consider in the California proceeding was Transactions that took place in the California ISO and PX market There was no read that there's no reason to appeal that because they simply They said you're not in this case. So once How did you get in the begin with we got in it to begin with because that was not clear at the beginning When FERC first established the San Diego case the California refund case it it also It along the way it expanded the case to include the entire Western interchange All right, so you you're in at that point at that point we're in Later they then say well, we're going to spin some things out here. We're going to devote the California refund proceeding to California ISO PX transactions we're going to Create a separate proceeding for the Pacific Northwest and they may view out it was silent with respect us We were left out why don't you appeal that because We thought that the appropriate way to proceed was to say fine if we're not in this process then let's file a separate complaint and part of the reason that we did that is Because the Pacific Northwest interveners were told you have no case because you didn't file your own complaint And we didn't want to run into that problem and so we filed our own complaint We Went one step further than program we said in view of our contracting which you can specifically identify and trace the wholesale rate We're asking that that should go to us FERC comes back and says aha your retail customer asking for a retail refund therefore 824b Trumps the authority we have an 824 e and we have no longer have jurisdiction to tell a Jurisdictional entity to pay a refund again that limitation is not in the act FERC's interpretation of the act is not supported by any Question goes noon was asking I don't think I heard a satisfactory answer what I I think it's the same question is if you are right why doesn't every The cost to my San Francisco let's say since one San Francisco or every Household in California Have a chance to go and bring a FERC proceeding Saying somewhere upstream One of the people that sold electricity to The utility that I don't know who's here, but we sell in California
. I just for example where I live Why why couldn't everybody in California bring that kind of proceeding well? Where they first they could Under the statute any person can bring the Changes the nature of FERC proceedings considerably every household in the country I mean they're in the business of adjudicating wholesale rates and like and so we leave the states The retail stuff is a very practical reason why they won't and that is Why such retail customers will not and that is because unless they have a Contract such as we had or Kruger had they will never be able to draw the This the specific line of the rate between the wholesale rate approved by FERC and the rate chart the rate paid say say you but If I remember correctly looking my utility bill there's all sorts of stuff on there about whether electricity comes from and what what The charges are for and they have proceedings every so often and say you come and I mean the state Labor trade and I forget who it is since I'll know this is saying of them have a hearing about Change your two of your aids and this is can be traced. It's not so difficult But listen is just like any other commodity and if you if you wanted to bring a lawsuit and Take discovery I bet you could find where every single electron came from that that was used in a Again, you're on right. I believe that under the statute any customer would have that right FERC then has the discretion to deny the relief We believe that the reason they denied the relief here is not because it was was an arbitrary Incompricious basis the the basis is the interpretation of the statute How did the library if they can deny you relief? How can the library to a customer who has a household and You know, let's say double Hills California that says you know, I was I was charged too much because PG&E of California's or whoever is on there bought electricity Everybody was a little bit from Arizona eventually That's another point It's just the way it is. You're something California You Depend on Arizona for the for so so why couldn't we also the Bring that kind of losses because because when crafting a remedy FERC does have the discretion and The problem here is and it could reasonably exercise the discretion We think in that case to say no this shoot this suit should be brought either by this complaint should be brought by an investor Oh, excuse me by the by the retail provider or We'll hear you're complaint, but we'll have the check cut to the retail provider You take it up with your state corporation commission and again, we're perfectly willing to say the first thing in your case Right me didn't they say the first thing in your case? Yeah, I think it's a two things they can this was on two basis
. I know this missed it on your case on the first basis I'm sorry, I forgot the order in which I said it if you refresh my recollection I think what you said is we can Dismiss it because you're not the right person to bring the complaint And that's what they said to you you're not the right person to bring the complaint that if they can do it to the customer in San Francisco, Beverly Hills or you know any a household in California, why can't they do it here? Client and again, I believe that if if if it flat out Did that Under these circumstances where you can trace the whole cell rate that that is an abuse of discretion and again, particularly given the fact That they have allowed an adjudicative proceeding to proceed with respect to an identically similarly excuse me, identically situated customer Who's who's the only thing they did different than us was not say right out front we want to check But I think if you read through the lines that's exactly what they were requesting and that's ultimately exactly what Thank God for flexible mics Good morning, I'm Carol Banta for the Commission With me at council table is Mark Nagel for the interveners and also Jeffrey Jacobiak. I will try to reserve three minutes to See to the interveners to present their argument To pick up on the obvious point The court is right to be concerned that that this could open the door for other retail customers do the same thing I there's no basis in what we have before us to say that these kinds of contracts are uncommon Maybe every house doesn't have them, but maybe among industrial users Industrial customers that's certainly certainly a concern so that the commission focused not on the identity of the customer Even households if you tried how enough you would trade. Oh sure. I don't need to discount that all I'm Whether I He's just a quite a question of reverse engineering the process of sure How I could get out into your house Sure, I was I was we understand your concern, but the other concern one has his how does this company get any redress for manipulation of the wholesale market sure should they have done together Well the commission the commission did address this they the commissions in the rehearing order What's that in the rehearing order the commission said okay? We found that we don't have jurisdiction to give refunds that would be retail refunds But if after North Star suggested in a footnote on rehearing Well, what if you construed our complaint to give the refunds to Arizona electric right and then that requires a second step of however they get their pass-through refunds from Arizona Electric right the commission in on rehearing said well this was raised in passing but We'll address it and and the commission said we would not Exercise our discretion to fashion a remedy because North Star and Arizona electric are both parties to the California refund Okay, but so is there a Remedy for the mayor and in the California proceeding well I think the commission said if there's going to be a remedy, it's appropriate to look for it there It may well is it one well Look for it So into the extent that that North Star thinks that there isn't it didn't challenge that alternative holding to give the commission a chance to say Oh, well, maybe we were wrong and I don't care to you you're representing the commission
. Yes, the commission says well you can look for it here Is there a remedy there? Well, there could have been that they just a missed a chance at your position. I think so I mean I don't know whether they can find I don't know where they So now if they as far as I can see They go wherever they go and are you saying oh no like quite a one in the California proceeding? Well, they are in the California refund proceeding Can you feel the thing that they're exploded from well I'm not sure that the commission in the rehearing order was given that there's no mention that as I recall in the request for Rehearing of North Star's focus on the desert Southwest as opposed to the California markets There had been some references early in the background section of the complaint that North Star was concerned about the desert Southwest but on rehearing I it wasn't flagged for the commission So to the extent that North Star thinks that the commission's alternative holding on rehearing that we would have jurisdiction To give refunds to Arizona electric But we think the appropriate proceeding in which to do that is the existing California refund Okay, if you're answer is I mean the science and your answer is They're not shut out. They're hiring the other proceeding and Fork will give them a hearing there. Is that right? Oh, I don't know that why not your representing the commission It's a it's a five-member body that wasn't asked that question because again Oh, but you came up was on rehearing I mean here you're talking to a court that is concerned about them not having a remedy I ask you do they have a remedy and you answer well Maybe I could think I'm not able to commit the commission to to grant a hearing But what the commission said in its rehearing order was If you're going to get this kind of relief the appropriate place to seek it is in the California refund proceeding to the extent that North Star found that inadequate You don't understand us
. We've already lost out in the California refund proceeding They never came back to the commission and said your alternative holding is mistaken So the commission didn't get a chance to answer your question and I can do my best but I'm not right. I mean that was a They said that the commission said that I'm rehearing didn't they? They did but it was a new holding because it was it wasn't an alternative rationale for why we don't have jurisdiction to give retail refunds It was addressing and they could have filed their hearing over hearing It would be because it wasn't an alternative right now. I think so. Yeah, we believe so So should we reman to the commission for consideration of whether They're limited to the California refund proceeding or whether there is alternative relief Through a refund to echo No, there's ample precedent that under section 313 if you don't seek rehearing of an objection You don't get to raise it on appeal and and the exit I believe we cited the excel case if I'm recalling correctly the DC circuit referred to an issue like this as twice waived Not raised on rehearing before the commission and not raised in the opening brief But I'm not clear
. I understand all your arguments of you kind of set up a stront in here You say you know we're focused on the California refund proceeding That's where they should have sought relief but by the way they couldn't get relief from that anyway We don't know that well, but you you make those arguments that it's a different time Period and they're not really part of that proceeding and that they're not covered by the I don't Believe we said we weren't part of the proceeding The commission anticipated the one objection again because this alternative holding that's that's on page 138 of the excerpts of record was first addressed by the commission on rehearing because it was first raised in a footnote in the rehearing request The commission tried to anticipate what the objection might be they didn't they didn't think of the desert southwest objection They thought of the temporal scope and the fact is that the temporal scope of the California refund proceeding is still in flux In fact, it's not even before the commission is It's a hardy to the California. We are this is Mojave thousands hundreds at Jerega electric and nor star are both parties in the California refund proceeding and Mojave I'm not sure They weren't really brought into the next year if If they for some reason don't get relief in the California proceedings, but Arizona does Presumably as retailers they can go on the state law Whatever rights they have under their state jurisdictional contract or before the state regulator that So the Arizona gets relief in the California proceeding if a zone I like to get to leave That would domino down That would be entirely up to Arizona either the court to the Arizona Corporation Commission that would be on the retail end It would probably be that would be the decision here I'll turn it away if we're just to say if you don't want to pay our spare as on electric Right That's right But is there something that that precludes the commission from Looking at the refund request that goes to Arizona Apart from the California refund proceeding. I mean what No, what is there that says this is the only way you can do that? It doesn't and the commission said We know that the commission's fashioning of remedies is discretionary North star has failed to persuade us to exercise our discretion to fashion remedy in this proceeding The California refund proceeding is the appropriate forum and that's why we cited cases in our brief And this again goes to the concern of maybe other retail customers wanting to bring similar complaints Even if there's not a jurisdictional issue the commission has the ability to to channel Its cases into proceedings as it deems appropriate and the California refund proceeding is Enormous it has I don't know how many parties there are something like 200 appeals before this court So I can only imagine how many parties and it is chosen to Channel related issues into that but under the commission's July 25th order there are serious problems for North star and and ethical to participate in the California refund proceeding on this kind of issue aren't there? I mean they have They didn't buy at auction they bought under a bilateral contract So that's not even the subject of the California refund proceeding. I think that's correct But to the extent they think it should have been other parties uh, who who objected to similar arrangements not being addressed in the California refund proceeding objected there and brought appeals from that proceeding they Didn't just bring a separate complaint and and so the commission Again, this footnote in the hearing order was not a jurisdictional holding it was okay fine If we had jurisdiction if we were talking about refunds to Arizona electric here's how we exercise our discretion And we believe the there's an appropriate form already you're already parties there We're trying to impose some order on all of this by keeping all of these issues In that proceeding and again the the discussion about the temporal scope was the commission anticipating the objection They thought North star might make Not the desert southwest because that hadn't been flagged I guess but but the temporal scope and and again this court has I believe vacated the commission's decision on the temporal scope said Commission to go back farther and as far as I know that's actually still pending on rehearing in front of this court Which is why the commission has not yet revisited that issue you have a yield of sugar time
. I do if the court has no further questions for me Thank you And we thank the court for the opportunity I think there's an electric happy to have another champion I beg your pardon your honor Why isn't Arizona electric happy to have another champion? I don't know that they're not your honor. I do think that I'm sorry Who do you represent? interveners Arizona public service. Oh public service. I see we're which is the state-taglet boy body Know your honor
. It is a it is a supplier Okay, the interveners Were wholesale suppliers? Okay, I get these names confused. I understand your honor and mindful of the colloquy that the court has already had with counsel for the commission and counsel for the petitioners The interveners would just focus very briefly on one or two points to clarify What is it that this petitioner North star steel could have done but did not So that the court can be satisfied that the manner in which the commission has read and applied the federal power act Not only is consistent with the language of the act, but does no violence to North star's opportunity Had it properly chosen to follow the path to pursue this remedy that was Available to it there has been substantial discussion with counsel already about the scope of some of the administrative proceedings at the commission We would respectfully note in addition to the proceeding designated EL 00-95 there is an additional proceeding designated EL 0 1-68 very broad in scope to which Arizona electric power co-op is a party and in which Arizona electric power co-ops entitlement Vel non two refunds Can and will be addressed For this petitioner North star steel the course that it should have followed but from everything discernible in this record It has not done and certainly did not present to the commission in the proceedings below any evidence that it had was having itself intervened in the Administrative proceedings previously discussed and knowledgeable that its seller Arizona electric power co-op was a party to those administrative proceedings North star steel could have but so far as we know did not have proceeded either in Arizona state court or before the Arizona Corporation Commission with a request for declaratory relief To the effect that any refunds that were found to be doing owing to This petitioner's seller that is the Arizona electric power co-op would be then payable over Under North star's contract with the co-op to North star That is a question of state law that is a proceeding they could have followed and it's a and it's a remedial structure That remains true to the federal state division of power that's reflected in It's a way to do that now. I do not know your honor I do not know that the the relevant statute of limitations that would bind North star for those claims If it is too late, however, it is a matter of their own doing because at least as long ago your honor as the year 2001 North star knew that in at least some respects the course of the proceedings That we previously discussed in EL 0095 and EL 01-68 We're moving a pace. It's sought rehearing on July 12th. I'm sorry July 19 2001 of certain orders entered by the commission in those administrative dockets In response to a question previously tendered by Judge Nunean at least from our review of the record No resolutions adverse to North star in these administrative proceedings wherever the subject of efforts to seek judicial review by North star and so ultimately chief judge Kaczynski Our question is if it is too late that is entirely a matter of North star's own doing it's worth remembering and I would conclude with this point unless the panel has additional questions from interveners it is worth remembering that this contract that that North star negotiated and entered into with its seller Arizona Electric Power Co-op allows North star itself to select the whole sale seller for all supplies I believe except the one hour spot market and therefore this is not the position of a retail purchaser who could legitimately claim to have been unenformed about the state of affairs in these markets as the situation unfolded in 2000 and 2001 Thank you May I just very quickly, Your Honor? The Council is for the Respondent is quite correct that You are into a negative time. Won't you be a minute or about? Thank you, Your Honor. The question that these transactions were focused on transactions in the desert Southwest Outside of the Kaiso PX transactions was stated right up front in paragraph 18 of our complaint. There are two CD-ROMs of data which refer to transactions at palace Verde's and other points Outside of California that evidence is clearly in the record and when FERC said Take this through California the California refund proceeding it says in fact the California Reprun proceeding is the appropriate form to determine refunds for transactions in the California ISO and PX markets it does not say for the desert Southwest markets
. I'm sorry July 19 2001 of certain orders entered by the commission in those administrative dockets In response to a question previously tendered by Judge Nunean at least from our review of the record No resolutions adverse to North star in these administrative proceedings wherever the subject of efforts to seek judicial review by North star and so ultimately chief judge Kaczynski Our question is if it is too late that is entirely a matter of North star's own doing it's worth remembering and I would conclude with this point unless the panel has additional questions from interveners it is worth remembering that this contract that that North star negotiated and entered into with its seller Arizona Electric Power Co-op allows North star itself to select the whole sale seller for all supplies I believe except the one hour spot market and therefore this is not the position of a retail purchaser who could legitimately claim to have been unenformed about the state of affairs in these markets as the situation unfolded in 2000 and 2001 Thank you May I just very quickly, Your Honor? The Council is for the Respondent is quite correct that You are into a negative time. Won't you be a minute or about? Thank you, Your Honor. The question that these transactions were focused on transactions in the desert Southwest Outside of the Kaiso PX transactions was stated right up front in paragraph 18 of our complaint. There are two CD-ROMs of data which refer to transactions at palace Verde's and other points Outside of California that evidence is clearly in the record and when FERC said Take this through California the California refund proceeding it says in fact the California Reprun proceeding is the appropriate form to determine refunds for transactions in the California ISO and PX markets it does not say for the desert Southwest markets. So it's not just a question of FERC deciding what playing field that this, that this fight is going to be fought out on. It's basically saying we're not going to allow you to pursue your own complaint and P.S. simply because we're considering refunds in APCO to APCO in California and in fact APCO is not getting refunds in California
. So it's not just a question of FERC deciding what playing field that this, that this fight is going to be fought out on. It's basically saying we're not going to allow you to pursue your own complaint and P.S. simply because we're considering refunds in APCO to APCO in California and in fact APCO is not getting refunds in California. APCO was a seller in California. The California Repruns for Fund Proceeding is giving refunds to Californians based upon sales into the California ISO PX. We are excluded from any relief in that proceeding and I'm saying where is North Star? North Star is in Arizona. Actually it's nowhere now
. APCO was a seller in California. The California Repruns for Fund Proceeding is giving refunds to Californians based upon sales into the California ISO PX. We are excluded from any relief in that proceeding and I'm saying where is North Star? North Star is in Arizona. Actually it's nowhere now. It's out of business because of the because of what happened during the Western Energy Crisis. But it was located in Arizona. The transactions that issue were made outside of California. They were made throughout the WECC outside of California because that California didn't have any power to sell
. It's out of business because of the because of what happened during the Western Energy Crisis. But it was located in Arizona. The transactions that issue were made outside of California. They were made throughout the WECC outside of California because that California didn't have any power to sell. Our sales were being made in the California and contrary to the financial crisis. You didn't raise this to the board, right? Pardon me? You didn't raise this to the board. You didn't find another position for that. No, and there's a reason for that because it didn't change the result
. Our sales were being made in the California and contrary to the financial crisis. You didn't raise this to the board, right? Pardon me? You didn't raise this to the board. You didn't find another position for that. No, and there's a reason for that because it didn't change the result. The result was our complaint was dismissed. It is not a separate finding. We think it's a separate rationale and the case law is quite clear that it is inappropriate to file a motion for rehearing unless the result is different than the previous motion. Otherwise you just keep getting motions for rehearing motions for rehearing motions for rehearing
. The result was our complaint was dismissed. It is not a separate finding. We think it's a separate rationale and the case law is quite clear that it is inappropriate to file a motion for rehearing unless the result is different than the previous motion. Otherwise you just keep getting motions for rehearing motions for rehearing motions for rehearing. The sequence was we said wait a minute, FURT. We think you've misinterpreted the Federal Power Act because there's no limitation in A24 D or E to limit to whom refunds go. They came back and said, well, you know, we think there is your retail customer. They simply reiterated that and then said, you know, you know, do you want a chance to go back and make this argument to the commission? I think a remand would be appropriate for a number of reasons
. The sequence was we said wait a minute, FURT. We think you've misinterpreted the Federal Power Act because there's no limitation in A24 D or E to limit to whom refunds go. They came back and said, well, you know, we think there is your retail customer. They simply reiterated that and then said, you know, you know, do you want a chance to go back and make this argument to the commission? I think a remand would be appropriate for a number of reasons. No, I understand. You want to win. You would rather we enter judgment. Things better than ever
. No, I understand. You want to win. You would rather we enter judgment. Things better than ever. But just listen to my question and ask my question. You ask, do you want to revert? Remand to make this specific argument to the commission, the one that you did not raise in a second position for rehearing because you explained to us your thought it was inappropriate. We believe that the case can be decided on other grounds. However, if the question turns on things wholly relevant to what I asked, and everyone you say that doesn't ask my question, I'm going to help you
. So do you understand my question? If the question turns on that issue then yes, we want to remand for that purpose. Thank you. Okay, so are you, please answer me. We are, there was a last case on the calendar, wasn't it? Long enough. Yep. We are adjourned