## Facts

- Central Maine Power Co. developed the Wyman Unit No. 4 generating project and offered joint ownership to other utilities conditioned on joining the New England Power Pool (NEPOOL).
- Maine Public Service Co. and others became co-owners and entered a 1974 Transmission Agreement providing NEPOOL-rate charges for “pool transmission facility” deliveries and, for non-PTF deliveries, charges at Central Maine’s “applicable rate.”
- Wyman 4 began operating in 1978; all co-owners except Maine Public joined NEPOOL, while Maine Public repeatedly deferred and ultimately never joined.
- Central Maine billed Maine Public for transmission associated with Wyman 4 entitlements at a low filed rate (Rate Schedule No. 54), approximately $1.6866 per kW/year, for about a decade.
- Central Maine filed at FERC an unexecuted Transmission Service Agreement raising Maine Public’s non-NEPOOL transmission charge to about $15.02 per kW/year based on rolled-in, systemwide cost-of-service treatment for an integrated network.
- FERC accepted the filing and approved the rate increase with minor adjustments, rejecting Maine Public’s challenges.

## Issues

1. Whether FERC adequately explained and supported its use of a 120% peak-load capacity margin in allocating transmission system costs to Maine Public.
2. Whether FERC sufficiently addressed claims that the new rate and lack of discounts were unduly discriminatory or preferential compared with treatment of allegedly similarly situated non-pool utilities.
3. Whether FERC’s orders satisfied the Administrative Procedure Act requirement of reasoned decisionmaking supported by the record.

## Decision

- The court granted the petition for review in part and remanded to FERC for further explanation and reconsideration.
- The court held that FERC did not adequately explain why a 120% capacity margin was appropriate for the system and service at issue, relying instead on an unexplained reference to a prior case.
- The court held that FERC’s response to Maine Public’s discrimination arguments was too cursory to satisfy reasoned decisionmaking requirements.
- The court did not categorically invalidate rolled-in pricing or the magnitude of the rate increase, focusing instead on explanatory deficiencies.

## Legal Principles

- Under the APA, an agency must provide a reasoned explanation that connects record facts to its choices; citation to prior orders does not substitute for record-based justification in the case at hand.
- FERC has discretion to choose among permissible ratemaking methodologies, but must explain key inputs and assumptions material to cost allocation and rate outcomes.
- Under the Federal Power Act, FERC must meaningfully address claims that rates or practices are unduly discriminatory or preferential, including by explaining why purported comparators are not similarly situated or why differential treatment is justified.
- When an agency fails to adequately explain critical assumptions or address substantial arguments, remand is appropriate for further reasoning and, if necessary, reconsideration.

## Conclusion

The D.C. Circuit remanded FERC’s approval of a sharply higher transmission rate because the Commission failed to justify a central cost-allocation assumption (a 120% capacity margin) and failed to adequately explain its rejection of discrimination and comparability challenges, as required by reasoned decisionmaking under the APA and nondiscrimination duties under the Federal Power Act.


Maine Pub. Serv. Co. v. FERC, 964 F.2d 5 (D.C. Cir. 1992)