United States: D.C. Circuit Rejects Seminole Electric Cooperative's Appeal For Additional Refunds

On June 30, 2017, the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") denied a petition by Seminole Electric Cooperative, Inc. ("Seminole") seeking to increase the refund amount FERC ordered Florida Power & Light Company ("FP&L") to pay Seminole for overcharges related to energy imbalance services. Seminole raised two challenges to FERC's refund order: (1) FERC improperly restricted the refund period to twenty-four months, as opposed to the full four and a half year period for which FP&L overcharged Seminole for energy imbalance services; and (2) FERC failed to require that energy imbalance charges be apportioned among the three tiers established in Schedule 4 of FP&L's Tariff.

The D.C. Circuit upheld FERC's order calculating the refund period based on a plain reading of Section 12.0 of the service agreement between FP&L and Seminole, which governs challenges to bills. Section 12.0 states that a "Customer may, in good faith, challenge the correctness of any bill rendered under the Tariff no later than twenty-four (24) months after the date the bill was rendered." The D.C. Circuit found that Section 12.0, on its face, clearly establishes a twenty-four month time bar on bill challenges that functions "something like a statute of limitations." In rendering its opinion, the D.C. Circuit rejected Seminole's argument that the time bar is intended to apply to bill challenges based on clerical or arithmetic errors in bills, rather than tariff violations.

Further, the D.C. Circuit upheld FERC's conclusion that FP&L's Tariff does not require it to apportion Seminole's energy imbalance (i.e., excess usage) charges among the three tiers in Schedule 4 of FP&L's Tariff. Seminole argued that energy imbalance tiers function similarly to income tax brackets, such that only the portion of Seminole's excess usage falling into a specific tier is charged at the marginal rate set forth for that tier. The D.C. Circuit rejected Seminole's arguments on the basis that the United States Internal Revenue Code requires apportionment, whereas the FP&L Tariff is silent on apportionment.

The D.C. Circuit Opinion is available here.

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