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By Rebecca Kern
July 1 — A federal appeals court dismissed two cases against the Federal Energy Regulatory Commission that dealt with transmission companies' rights to build new transmission projects, finding in one case that such a provision was anti-competitive in nature.
The U.S. Court of Appeals for the District of Columbia Circuit dismissed a petition from Oklahoma Gas and Electric Co., an electric utility company in Oklahoma and Arkansas, and other utility intervenors. The July 1 ruling stripped the incumbent utilities of the ability to assert a right of first refusal to build new transmission facilities in their service areas, ( Okla. Gas and Elec. Co. v. FERC, 2016 BL 212617, D.C. Cir., No. 14-1281, 7/1/16 ).
The petitioners argued that the Mobile-Sierra doctrine protected their right of first refusal, which is a first choice to build new transmission for incumbent utilities in their service area. The doctrine, which was established in a 1956 Supreme Court ruling, requires FERC to presume that rates and terms established by contracts are “just and reasonable” and only permits FERC to overrule this if it concludes a contract could “seriously harm the public interest.”
However, FERC determined that the petitioners' right of first refusal was not protected by the Mobile-Sierra doctrine contained in their regional transmission organization membership agreement.
D.C. Circuit Judge Robert Wilkins agreed with FERC, writing in the opinion, “We hold that the Commission painted with a broader brush than necessary in applying potentially applicable Supreme Court precedent, but we deny the petition nonetheless because nothing in the Mobile-Sierra doctrine requires its extension to the anti-competitive rights of first refusal at issue here.”
In a second July 1 ruling, the court issued a brief, four-page per curiam judgment finding that American Transmission Systems Inc., a transmission facility that is a subsidiary of FirstEnergy Corp., didn't properly argue its right of first refusal provision in its rehearing process with FERC ( American Transmission Sys. Inc. v FERC, D.C. Cir., No. 14-1085, 7/1/16 ).
The court wrote, “The petitioners have preserved no argument that either of their agreements actually contained a right of first refusal for the Mobile-Sierra doctrine to protect. That leaves the court without jurisdiction.”
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