                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

GOLDEN NORTHWEST ALUMINUM,             
INC.,
                         Petitioner,
PUBLIC UTILITY DISTRICT NO. 1 OF
                                             No. 03-73426
                                       
COWLITZ COUNTY,
             Petitioner-Intervenor,           BPA No.
                                           Power Act WP-02
                v.
BONNEVILLE POWER
ADMINISTRATION,
                       Respondent.
                                       

PUBLIC UTILITY DISTRICT NO. 1 OF       
BENTON COUNTY; PUBLIC UTILITY
DISTRICT NO. 1 OF COWLITZ
COUNTY; PUBLIC UTILITY DISTRICT
NO. 1 OF FRANKLIN COUNTY; PUBLIC
UTILITY DISTRICT NO. 2 OF GRANT
COUNTY; PUBLIC UTILITY DISTRICT              No. 03-73707
NO. 1 OF GRAYS HARBOR COUNTY;                BPA No.
PUBLIC UTILITY DISTRICT NO. 1 OF           Power Act WP-02
PEND OREILLE COUNTY; THE CITY
OF SEATTLE, SEATTLE CITY LIGHT
DEPARTMENT (“GENERATING PUBLIC
UTILITIES”), OF COWLITZ COUNTY;
WASHINGTON PUBLIC UTILITY
DISTRICT NO. 1, OF FRANKLIN
                                       


                            4883
4884        GOLDEN NORTHWEST ALUMINUM v. BPA


COUNTY, WASHINGTON; PUBLIC            
UTILITY DISTRICT NO. 2 OF GRANT
COUNTY; WASHINGTON PUBLIC
UTILITY DISTRICT NO. 1 OF PEND
OREILLE COUNTY; WASHINGTON,
THE CITY OF SEATTLE; CITY LIGHT
DEPARTMENT; BLACHLY-LANE
ELECTRIC COOPERATIVE
ASSOCIATION; CENTRAL ELECTRIC
COOPERATIVE; CLEAR WATER POWER
COMPANY, INC.; CONSUMERS POWER,
INC.; COOS-CURRY ELECTRIC COOP.,
INC.; DOUGLAS ELECTRIC
COOPERATIVE; FALL RIVER; RURAL
ELECTRIC COOPERATIVE, INC.; LANE
ELECTRIC COOPERATIVE; LOST RIVER
ELECTRIC COOPERATIVE, INC.;
NORTHERN LIGHTS, INC.; OKANOGAN       
COUNTY ELECTRIC COOPERATIVE;
PACIFIC NORTHWEST GENERATING
COOPERATIVE; RAFT RIVER RURAL
ELECTRIC COOPERATIVE, INC.;
SALMON RIVER ELECTRIC
COOPERATIVE; UMATILLA ELECTRIC
COOPERATIVE ASSOCIATION; AND
WEST OREGON ELECTRIC
COOPERATIVE, INC.,
                       Petitioners,
ALCOA INC.,
                       Intervenor,
                v.
BONNEVILLE POWER
ADMINISTRATION,
                      Respondent.
                                      
           GOLDEN NORTHWEST ALUMINUM v. BPA           4885



CANBY UTILITY BOARD,                  
                        Petitioner,
                                            No. 03-73753
               v.
                                            BPA No.
BONNEVILLE POWER                          Power Act WP-02
ADMINISTRATION,
                       Respondent.
                                      

PUBLIC POWER COUNCIL,                 
                        Petitioner,
               v.
BONNEVILLE POWER                            No. 03-73775
ADMINISTRATION,                             BPA No.
                       Respondent,        Power Act WP-02
PORTLAND GENERAL ELECTRIC
COMPANY,
          Respondent-Intervenor.
                                      
4886        GOLDEN NORTHWEST ALUMINUM v. BPA



BENTON RURAL ELECTRIC                 
ASSOCIATION, THE CITIES OF PORT
ANGELES, ELLENSBURG, AND
MILTON, WASHINGTON, THE
TOWN OF EATONVILLE WASHINGTON,
ALDER MUTUAL LIGHT CO.,
ELMHURST MUTUAL POWER AND
LIGHT CO., LAKEVIEW LIGHT AND
POWER CO., PARKLAND LIGHT AND
WATER CO., PENINSULA LIGHT CO.,
THE PUD NO. 1 OF CLALLAM,
CLARK, KITTITAS, LEWIS, MASON               No. 03-73779
AND SNOHOMISH COUNTIES,                     BPA No.
WASHINGTON, PUD NO. 3 OF                  Power Act WP-02
MASON COUNTY, AND PUD NO. 2
OF PACIFIC COUNTY, WASHINGTON,
                       Petitioners,
                v.
BONNEVILLE POWER
ADMINISTRATION,
                      Respondent,
PORTLAND GENERAL ELECTRIC
COMPANY,
            Respondent-Intervenor.
                                      
            GOLDEN NORTHWEST ALUMINUM v. BPA          4887



PUBLIC UTILITY DISTRICT NO. 1 OF      
GRAYS HARBOR COUNTY
WASHINGTON,
                        Petitioner,         No. 03-73786
                v.                          BPA No.
                                          Power Act WP-02
BONNEVILLE POWER
ADMINISTRATION,
                       Respondent.
                                      

CONFEDERATED TRIBES OF THE            
UMATILLA INDIAN RESERVATION,
AND THE YAKAMA NATION,
                       Petitioner,
                v.
                                            No. 03-73820
BONNEVILLE POWER
ADMINISTRATION; FEDERAL ENERGY
                                            BPA No.
                                          Power Act WP-02
REGULATORY COMMISSION,
                     Respondents,
PORTLAND GENERAL ELECTRIC
COMPANY, (PGE),
           Respondent-Intervenor.
                                      
4888        GOLDEN NORTHWEST ALUMINUM v. BPA



GOLDEN NORTHWEST ALUMINUM,           
INC.,
                     Petitioner,
ALCOA INC.,                                No. 03-74002
                    Intervenor,            BPA No.
                v.                       Power Act WP-02
BONNEVILLE POWER
ADMINISTRATION,
                   Respondent.
                                     

CONFEDERATED TRIBES OF THE           
UMATILLA INDIAN RESERVATION,
                       Petitioner,         No. 03-74651
                v.                         BPA No.
BONNEVILLE POWER                         Power Act WP-02
ADMINISTRATION,
                     Respondent.
                                     
            GOLDEN NORTHWEST ALUMINUM v. BPA           4889



BENTON RURAL ELECTRIC                  
ASSOCIATION, THE CITIES OF PORT
ANGELES, ELLENSBURG, AND
MILTON, WASHINGTON, THE
TOWN OF EATONVILLE WASHINGTON,
ALDER MUTUAL LIGHT CO.,
ELMHURST MUTUAL POWER AND
LIGHT CO., LAKEVIEW LIGHT AND
POWER CO., PARKLAND LIGHT AND
WATER CO., PENINSULA LIGHT CO.,              No. 03-74801
THE PUD NO. 1 OF CLALLAM,
CLARK, KITTITAS, LEWIS,
                                             BPA No.
                                           Power Act WP-02
MASON AND SNOHOMISH COUNTIES,
WASHINGTON, PUD NO. 3 OF
MASON COUNTY, AND PUD NO. 2
OF PACIFIC COUNTY, WASHINGTON,
                        Petitioners,
                v.
BONNEVILLE POWER
ADMINISTRATION,
                      Respondent.
                                       

PUBLIC UTILITY DISTRICT NO. 1 OF       
GRAYS HARBOR COUNTY
WASHINGTON,
                        Petitioner,          No. 04-70286
                v.                           BPA No.
                                           Power Act WP-02
BONNEVILLE POWER
ADMINISTRATION,
                       Respondent.
                                       
4890       GOLDEN NORTHWEST ALUMINUM v. BPA



PUBLIC UTILITY DISTRICT NO. 1 OF   
BENTON COUNTY, PUBLIC UTILITY
DISTRICT NO. 1 OF COWLITZ
COUNTY, PUBLIC UTILITY DISTRICT
NO. 1 OF FRANKLIN COUNTY, PUBLIC
UTILITY DISTRICT NO. 2 OF GRANT
COUNTY, PUBLIC UTILITY DISTRICT
NO. 1 OF GRAYS HARBOR COUNTY,
PUBLIC UTILITY DISTRICT NO. 1 OF
PEND OREILLE COUNTY, THE
CITY OF SEATTLE, SEATTLE CITY
LIGHT DEPARTMENT (“GENERATING
PUBLIC UTILITIES”), OF COWLITZ
COUNTY; WASHINGTON PUBLIC
UTILITY DISTRICT NO. 1; PUBLIC           No. 04-70382
UTILITY DISTRICT NO. 2 OF GRANT
COUNTY WA; PUBLIC UTILITY DIST.,         BPA No.
NO. 1 OF PEND OREILLE COUNTY,          Power Act WP-02
WASHINGTON; THE CITY OF
SEATTLE, CITY LIGHT DEPATMENT;
BLACHLY-LANE ELECTRIC
COOPERATIVE ASSOCIATION; CENTRAL
ELECTRIC, COOPERATIVE; CLEAR
WATER POWER COMPANY, INC.;
CONSUMERS POWER, INC.; COOS-
CURRY ELECTRIC COOP, INC.;
DOUGLAS ELECTRIC COOPERATIVE;
FALL RIVER RURAL ELECTRIC
COOPERATIVE, INC.; LANE ELECTRIC
COOPERATIVE; LOST RIVER ELECTRIC
COOPERATIVE, INC.; NORTHERN
LIGHTS, INC.; OKANOGAN
                                   
            GOLDEN NORTHWEST ALUMINUM v. BPA          4891


COUNTY ELECTRIC COOPERATIVE;          
PACIFIC NORTHWEST GENERATING
COOPERATIVE; RAFT RIVER RURAL
ELECTRIC COOPERATIVE, INC.;
SALMON RIVER ELECTRIC
COOPERATIVE; UMATILLA ELECTRIC
COOPERATIVE ASSOCIATION, AND
WEST OREGON ELECTRIC                  
COOPERATIVE, INC.,
                       Petitioners,
                v.
BONNEVILLE POWER
ADMINISTRATION,
                      Respondent.
                                      

PUBLIC POWER COUNCIL,                 
                        Petitioner,         No. 04-70546
                v.
                                            BPA No.
                                          Power Act WP-02
BONNEVILLE POWER
ADMINISTRATION,                              OPINION
                       Respondent.
                                      
         On Petition for Review of an Order of the
             Bonneville Power Administration

                Argued and Submitted
         November 16, 2005—Seattle, Washington

                     Filed May 3, 2007

    Before: Stephen Reinhardt, William A. Fletcher, and
               Jay S. Bybee, Circuit Judges.
4892    GOLDEN NORTHWEST ALUMINUM v. BPA
       Opinion by Judge William A. Fletcher
            GOLDEN NORTHWEST ALUMINUM v. BPA            4895


                        COUNSEL

Paul M. Murphy, Murphy & Buchal, LLP, Portland, Oregon;
Jay T. Waldron & Raymond S. Kindley, Schwabe Williamson
& Wyatt, Portland, Oregon; R. Erick Johnson, Portland, Ore-
gon; Daniel Seligman, Vancouver, Washington; John H.
Hammond, Jr., Beery Elsner & Hammons, Portland, Oregon;
Gary A. Dahlke & R. Blair Strong, Paine Hamblen Coffin
Brooke & Miller, LLP, Spokane, Washington; Scott G. Seid-
man & Michael M. Morgan, Tonkon Torp, LLP, Portland,
Oregon; Cheryl Chevis, Portland General Electric, Portland,
Oregon; Barton L. Kline, Boise, Idaho; Kirstin S. Dodge, Per-
kins Coie, Bellevue, Washington; Stephen C. Hall, Stoel
Rives, LLP, Portland, Oregon; Wayne W. Harper, Montana
Power Company, Butte, Montana; Nancy P. Baker & Mark R.
Thompson, Public Power Council, Portland, Oregon; Terence
L. Mundorf, Marsh Mundorf Pratt Sullivan & McKenzie,
Millcreek, Washington; Christopher W. Leahy, Fredericks
Pelcyger Hester & White, Louisville, Colorado; Timothy R.
Weaver, Yakima, Washington; Paul M. Murphy, Murphy &
Buchal, LLP, Portland, Oregon; William H. Walters, Miller
Nash, LLP, Portland, Oregon; Frank V. Langfitt, Ater Wynne,
LLP, Portland, Oregon, for the petitioners.

William H. Walters, Miller Nash, LLP, Portland, Oregon;
Kurt R. Casad, Jeffrey K. Handy, Stephen J. Odell & Thomas
4896           GOLDEN NORTHWEST ALUMINUM v. BPA
C. Lee, Office of the United States Attorney, Portland, Ore-
gon; Randy A. Roach, Office of General Counsel - BPA,
Portland, Oregon, for respondent BPA.

Dennis Lane, Beth G. Pacella, Robert H. Solomon, Federal
Energy Regulatory Commission, Washington, D.C., for
Respondent FERC.

Scott G. Seidman & Michael M. Morgan, Tonkon Torp, LLP,
Portland, Oregon, Cheryl Chevis, Portland General Electric
Co., for respondent-intervenor PGE.


                              OPINION

W. FLETCHER, Circuit Judge:

   Petitioners in this consolidated appeal seek review of the
2002-06 wholesale power rates set by the Bonneville Power
Administration (“BPA”) during its WP-02 rate proceeding.
Two sets of petitioners contend that BPA unlawfully inflated
the rates charged to public utilities and cooperatives—BPA’s
“preference” customers. First, the Public Generating Pool and
Pacific Northwest Generating Cooperative argue that BPA
shifted onto its preference customers the costs of supplying
power to its direct-service industrial customers. Second, the
Western Public Agencies Group, Public Power Council, and
Public Utility District No. 1 of Grays Harbor argue that BPA
shifted onto its preference customers the costs of settling its
obligations to its investor-owned utility customers. In addi-
tion, a third group of petitioners, Confederated Tribes of the
Umatilla Indian Reservation and the Yakama Nation, argues
that the WP-02 rates are not sufficient to satisfy BPA’s fish
and wildlife obligations.1
  1
   Petitioner Canby Utility Board raises an issue specific to its contract
with BPA. Canby contends that its contract precluded BPA from imposing
               GOLDEN NORTHWEST ALUMINUM v. BPA                       4897
   We hold that BPA acted lawfully when it allocated to its
preference customers part of the cost of acquiring power to
serve its direct-service industrial customers. However, consis-
tent with our decision in a companion case filed at the same
time as this one, Portland General Electric v. BPA, No. 01-
70003, ___ F.3d ___ (9th Cir. 2007), we hold that BPA acted
contrary to law when it allocated to its preference customers
part of the cost of the settlement BPA reached with its
investor-owned utility customers. We also hold that BPA’s
fish and wildlife cost estimates and, by extension, the rates
based on those estimates, are not supported by substantial evi-
dence.

                            I.   Background

   BPA is a federal agency that markets power generated pri-
marily by federal hydroelectric projects in the Columbia River
basin. BPA’s customers include public utilities, cooperatives,
and federal agencies (collectively “preference customers”);
investor-owned utilities (“IOUs”); and direct-service indus-
trial users (“DSIs”). See Aluminum Co. of Am. (“Alcoa”) v.
Cent. Lincoln Peoples’ Util. Dist., 467 U.S. 380 (1984)
(describing BPA’s customer groups). Other opinions of this
Court chronicle the history of BPA and describe the tangle of
statutes that govern its operations. See, e.g., Portland Gen.
Elec. v. BPA, No. 01-70003, ___ F.3d ___ (9th Cir. 2007);
Pub. Power Council, Inc. v. BPA, 442 F.3d 1204 (9th Cir.
2006); M-S-R Pub. Power Agency v. BPA, 297 F.3d 833 (9th

a rate surcharge pursuant to BPA’s Safety-Net Cost Recovery Adjustment
Clause (SN CRAC). Prior to oral argument, the parties filed a joint motion
in which they agreed that review of Canby’s claim should occur within the
context of a separately consolidated appeal addressing the SN CRAC. The
parties asked us to rule that the claim was not ripe for review in the pres-
ent WP-02 appeal. This Court subsequently decided Canby’s contract
claim in Public Power Council, Inc. v. BPA, 442 F.3d 1204 (9th Cir.
2006). That decision has res judicata effect here. We therefore dismiss
Canby’s petition and deny the parties’ joint motion as moot.
4898         GOLDEN NORTHWEST ALUMINUM v. BPA
Cir. 2002) (as amended); Ass’n of Pub. Agency Customers,
Inc. v. BPA, 126 F.3d 1158 (9th Cir. 1997). We focus here
only on those facts directly relevant to this appeal.

   Pursuant to the Pacific Northwest Electric Power Planning
and Conservation Act (“Northwest Power Act” or “NWPA”),
16 U.S.C. § 839-839h, BPA periodically determines the
wholesale power rates it will charge its customers. Section 7
of the NWPA, 16 U.S.C. § 839e, governs BPA’s ratemaking
activities. Section 7 requires, among other things, that BPA
charge rates sufficient to cover its costs, “including the amort-
ization of the Federal investment in the Federal Columbia
River Power System.” Id. § 839e(a)(1). Section 7 imposes
limits, however, on how much BPA may charge its preference
customers. See id. § 839e(b)(1), (2). When the rate ceiling for
preference customers is triggered, BPA must recover its addi-
tional costs “through supplemental rate charges for all other
power.” See id. § 839e(b)(3).

   In order to establish rates for Fiscal Years 2002-06, BPA
initiated the “2002 Wholesale Power Rate Adjustment Pro-
ceeding” (“WP-02 rate case”) in August 1999. See BPA, 2002
Proposed Wholesale Power Rate Adjustment, Public Hearing,
and Opportunities for Public Review and Comment (“WP-02
Announcement”), 64 Fed. Reg. 44,318 (Aug. 13, 1999). After
conducting hearings and compiling an administrative record,
BPA proposed its WP-02 rates in a Record of Decision issued
on May 10, 2000 (the “Initial ROD”). See BPA, 2002 Final
Power Rate Proposal, Administrator’s Record of Decision
(May 2000). According to BPA, the WP-02 rates represented
the “pricing implementation” of the “Power Subscription
Strategy” that BPA had adopted in 1998. Id.; see also BPA,
Power Subscription Strategy, Administrator’s Record of Deci-
sion (Dec. 1998) (“Subscription ROD”).

   BPA’s proposed rates do not become effective until they
are “confirm[ed] and approv[ed] by the Federal Energy Regu-
latory Commission” (“FERC”). 16 U.S.C. § 839e(a)(2). BPA
             GOLDEN NORTHWEST ALUMINUM v. BPA             4899
therefore submitted its WP-02 rates for FERC approval on
July 6, 2000. Shortly thereafter, the energy market became
unexpectedly volatile, and market prices increased precipi-
tously. In light of those market developments, BPA projected
that demand for its relatively low-cost power would be higher
than it had previously anticipated. In August 2000, BPA
requested that FERC temporarily delay consideration of the
rates proposed in the Initial ROD. BPA then began to consult
with interested parties regarding possible rate adjustments,
including the development of new “Cost Recovery Adjust-
ment Charges” (“CRACs”).

   On December 1, 2000, BPA announced a revised rate pro-
posal and commenced a new, abridged rate proceeding. See
BPA, Proposed Amendments to 2002 Wholesale Power Rate
Adjustment Proposal (“Supplemental Announcement”), 65
Fed. Reg. 75,272 (Dec. 1, 2000). BPA’s strategy was “to
amend [its] risk mitigation tools” through three separate
CRACs, while retaining the base rates it had established in the
Initial ROD. Following a comment period and formal hear-
ings, BPA issued a new Record of Decision on June 20, 2001
(the “Supplemental ROD”). See BPA, 2002 Supplemental
Power Rate Proposal, Administrator’s Final Record of Deci-
sion (June 2001).

   BPA filed its Supplemental ROD rates with FERC on June
29, 2001. Three months later, FERC granted interim approval.
See Order Approving Rates on Interim Basis and Providing
Opportunity for Additional Comments, 96 FERC ¶ 61,630
(Sept. 28, 2001). FERC gave final approval to the proposed
rates on July 21, 2003. See Order Confirming and Approving
Rates on a Final Basis, 104 FERC ¶ 61,093 (July 21, 2003).
The Columbia River Inter-Tribal Fish Commission filed a
petition for rehearing, which FERC denied on October 17,
2003. See Order Denying Rehearing, 105 FERC ¶ 61,068
(Oct. 17, 2003).
4900         GOLDEN NORTHWEST ALUMINUM v. BPA
                       II.   Jurisdiction

   [1] As a preliminary matter, BPA argues that we lack juris-
diction to review petitions filed more than 90 days after
FERC’s July 21, 2003, order approving BPA’s WP-02 rates.
Under section 7 of the Northwest Power Act, judicial chal-
lenges to “final rate determinations” must be brought “within
90 days of the time such action or decision is deemed final.”
16 U.S.C. §§ 839f(e)(1)(G), 839f(e)(5). We have previously
held that rate determinations are not “deemed final” “until
FERC denied the petitioners’ petition for rehearing.” Pacifi-
Corp v. FERC, 795 F.2d 816, 820 (9th Cir. 1986); see also
Wash. Utilities & Transp. Comm’n (WUTC) v. FERC, 26 F.3d
935, 940 (9th Cir. 1994); CP Nat’l Corp. v. BPA, 928 F.2d
905, 911 (9th Cir. 1991) (as amended). Thus, the key date in
this case is not July 21, 2003, but October 17, 2003. Because
petitioners sought review within 90 days of October 17, their
petitions are timely.

   [2] BPA suggests that PacifiCorp and WUTC were wrongly
decided because FERC lacks authority to conduct a rehearing
after approving BPA’s rates. Without suggesting that Pacifi-
Corp and WUTC were wrongly decided, we note that a suffi-
cient response to BPA’s suggestion is that we are required to
follow our previous rulings. See, e.g., Miller v. Gammie, 335
F.3d 889, 899 (9th Cir. 2003) (en banc). In any event, it does
not matter in this case whether we deem BPA’s rate determi-
nation to be final on July 21 or on October 17. Petitioners
filed an initial set of petitions with this Court within 90 days
of FERC’s July 21 order approving BPA’s rates. They then
filed a second set of petitions within 90 days of FERC’s Octo-
ber 17 order denying rehearing. The two sets of petitions were
consolidated for our review. Given that at least one set of peti-
tions is undeniably timely, we have jurisdiction to consider
petitioners’ claims.
              GOLDEN NORTHWEST ALUMINUM v. BPA             4901
      III.   Recovering the Cost of Supplying Power to
                Direct-Service Industrial Users

   The Public Generating Pool and Pacific Northwest Gener-
ating Cooperative petitioners contend that BPA violated the
Northwest Power Act by supplying low-cost power to its DSI
customers at the expense of its preference customers. The
NWPA, which was enacted in 1981, required BPA to enter
“initial long term contract[s]” to sell power to its DSI custom-
ers. See 16 U.S.C. § 839c(d)(1)(B). The idea was to ensure
that DSIs had continued access to low-cost federal power at
a time when BPA’s obligation to serve its preference custom-
ers threatened to preclude BPA from supplying other custom-
ers. BPA was “deemed to have sufficient resources for the
purpose of entering into the initial contracts.” Id.
§ 839c(g)(7). BPA was then authorized to acquire additional
resources necessary “to meet [its] contractual obligations.” Id.
§ 839d(a)(2). BPA’s initial 20-year contracts its DSI custom-
ers expired on September 30, 2001.

   Anticipating the expiration of these contracts, BPA began
in the late 1990s to develop a plan for allocating federal
power among preference and non-preference customers. Dur-
ing this process, which culminated in the Subscription ROD,
BPA concluded that it had authority under the NWPA to enter
successor contracts with its DSI customers but that it was
under no obligation to do so. See id. § 839c(d). Based on that
understanding of the law, BPA agreed in principal to continue
to supply power to its DSI customers. However, BPA decided
to wait until the WP-02 rate proceeding to determine how
much power it would sell to the DSIs and at what price. It set
September 30, 2000, as the deadline for executing new DSI
contracts.

   In the Initial ROD, BPA proposed to sell to the DSIs 1440
aMW of firm power. Of that amount, 990 aMW was to be
priced, pursuant to 16 U.S.C. § 839e(c), at a “cost-based” rate
representing the rate charged to BPA’s preference customers
4902         GOLDEN NORTHWEST ALUMINUM v. BPA
plus a margin. The remaining 450 aMW was to be priced,
pursuant to 16 U.S.C. § 839e(f), at the market rate, which was
higher. The two prices were then combined to establish a sin-
gle average rate for the DSI customers. BPA explained in the
Initial ROD that it adopted this approach in order “to enhance
DSI smelter survivability, but without raising other custom-
ers’ rates.”

   BPA also determined that its existing power generation
capabilities would be inadequate to supply both its DSI and
other customers. BPA estimated in the Initial ROD that it
would need to acquire approximately 1562 aMW of additional
power to meet the needs of these customers. It explained that
it would classify most of this additional power as “Federal
base system” (FBS) replacements. Under the NWPA, FBS
resources include three components: (1) “the Federal Colum-
bia River Power System hydroelectric projects”; (2) “re-
sources acquired by the Administrator under long-term
contracts in force on December 5, 1980”; and (3) “resources
acquired by the Administrator in an amount necessary to
replace reductions in capability of” the first two sources. Id.
§ 839a(10). BPA estimated that declines in the capability of
its primary FBS resources allowed it to purchase up to 2669
aMW of replacement FBS resources—“far more than the
amount of power” it actually planned to acquire.

   Shortly after issuing the Initial ROD, BPA recognized that,
due to changing market conditions, it had significantly under-
estimated the amount of additional power it would need to
purchase in the market. See Supplemental ROD (calculating
that BPA would need to make “system augmentation pur-
chases” of 3305 aMW). BPA briefly suspended execution of
new power sale contracts in August 2000, but lifted that sus-
pension and continued to sign contracts during the fall of
2000. BPA then initiated a supplemental rate proceeding in
order to establish new cost recovery mechanisms.

   During that supplemental proceeding, petitioners argued
that BPA no longer had sufficient FBS resources to serve its
             GOLDEN NORTHWEST ALUMINUM v. BPA              4903
DSI customers. According to petitioners, “Entering contracts
to sell power to the DSIs when BPA has none to sell them is
unlawful. . . . The only way the post-2001 contracts with the
DSIs can be lawfully performed is to require the DSIs to pay
the full costs of service.” In other words, petitioners asserted
that BPA could not allocate to its preference customers any of
the costs of purchasing power at market prices to serve the
DSIs.

   BPA rejected petitioners’ arguments in the Supplemental
ROD. It explained that the Northwest Power Act expressly
grants BPA the authority to “purchase power to replace reduc-
tions in the capability of the FBS and [to] acquire power to
meet its forecasted contractual obligations to all its custom-
ers.” Supplemental ROD. BPA further concluded that “the
FBS is a single resource pool, not a segmented resource to be
divided into separately priced portions that serve any particu-
lar customer class.”

   [3] To the extent petitioners here seek to challenge BPA’s
authority to enter into successor contracts with DSIs, their
claim is barred by res judicata. We previously held in an
unpublished disposition that petitioners’ attempt to contest the
validity of BPA’s power sales to its DSI customers was
untimely. Blachly-Lane Elec. Coop. Ass’n v. U.S. Dep’t of
Energy, 79 Fed. Appx. 975, 977 (9th Cir. 2003). Because
“[p]ower sale contracts are final agency actions,” the 90-day
statute of limitations begins to run from the date such con-
tracts are executed. Id.; see also 16 U.S.C. § 839f(e)(1)(B)
(providing that power sales are final agency actions subject to
judicial review). The petitions in this case were filed some
three years after BPA entered into its new DSI contracts—
long after the prescribed statutory window for judicial review
had expired.

    [4] In Blachly-Lane we also held, however, that petitioners
would be entitled to raise “ratemaking issues” in subsequent
litigation. Blachly-Lane, 79 Fed. Appx. at 977. Specifically,
4904         GOLDEN NORTHWEST ALUMINUM v. BPA
we may consider in this litigation whether it was unlawful for
BPA to charge its preference customers a rate that reflects the
costs of acquiring additional power to serve DSIs. Our analy-
sis takes the existence of BPA’s contractual obligations to its
DSI customers as given; we express no independent view as
to whether, or under what circumstances, section 5(d) of the
NWPA, 16 U.S.C. § 839c(d), permits BPA to contract with its
DSI customers once their initial contracts have expired.

   Our review of BPA’s actions is governed by the Adminis-
trative Procedure Act (“APA”), 5 U.S.C. §§ 701-06. See 16
U.S.C. § 839f(e)(2). “Under the APA, we must uphold BPA’s
actions unless they are ‘arbitrary, capricious, an abuse of dis-
cretion, or otherwise not in accordance with law.’ ” Pub.
Power Council, 442 F.3d at 1209 (quoting 5 U.S.C.
§ 706(2)(A)). In determining whether BPA has acted in accor-
dance with law, we defer to BPA’s reasonable interpretations
of its governing statutes. See, e.g., Nw. Envtl. Def. Ctr. v.
BPA, 117 F.3d 1520, 1530 (9th Cir. 1997). Deference is espe-
cially appropriate “when the agency is responding to unprece-
dented changes in the market resulting from deregulation.”
Ass’n of Pub. Energy Customers, 126 F.3d at 1171. However,
“[r]egardless of how serious the problem an administrative
agency seeks to address, . . . it may not exercise its authority
‘in a manner that is inconsistent with the administrative struc-
ture that Congress enacted into law.’ ” FDA v. Brown & Wil-
liamson Tobacco Corp., 529 U.S. 120, 125 (2000) (quoting
ETSI Pipeline Project v. Missouri, 484 U.S. 495, 517 (1988)).
“ ‘If the intent of Congress is clear, that is the end of the mat-
ter; for the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress.’ ” M-S R Public
Power Agency, 297 F.3d at 841 (quoting Chevron U.S.A., Inc.
v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43
(1984)).

   [5] Our task is to decide whether applicable law clearly pre-
cludes BPA from allocating to its preference customers cer-
tain costs of supplying power to its DSI customers. Under
             GOLDEN NORTHWEST ALUMINUM v. BPA               4905
section 7(b)(1) of the NWPA, rates “for electric power sold
to meet the general requirements of [preference customers]
. . . shall recover the costs of that portion of the Federal base
system resources needed to supply such loads until such sales
exceed the Federal base system resources.” 16 U.S.C.
§ 839e(b)(1). Petitioners construe FBS resources as referring
only to BPA’s “unaugmented” power generation capabilities.
According to petitioners, as long as preference customer loads
do not exceed BPA’s unaugmented FBS resources, section
7(b)(1) requires BPA to charge its preference customers rates
that recover no more than the cost of those resources. BPA,
joined by intervenor Alcoa, counters that it is entitled to
charge preference customers a rate that reflects the total cost
of all FBS resources, including resources acquired to replace
losses in the generation capabilities of BPA’s primary
resources.

   [6] We conclude that BPA’s approach does not contravene
the Northwest Power Act and related provisions. Contrary to
petitioners’ claim, FBS resources are not limited to “unaug-
mented” FBS resources. Rather, the statutory definition of
FBS resources expressly includes “resources acquired by
[BPA] in an amount necessary to replace reductions in capa-
bility of [BPA’s primary resources].” Id. § 839a(10). Section
6 of the NWPA confirms BPA’s authority to acquire “suffi-
cient power . . . to meet [its] contractual obligations.” Id.
§ 839d(a)(2); see also Alcoa, 467 U.S. at 384 (noting that
“[o]nce a contract between BPA and a customer is signed, . . .
the Project Act makes clear that the contract is ‘binding in
accordance with the terms thereof’ ” (quoting 16 U.S.C.
§ 832d(a))). BPA took this language to mean that, once it had
satisfied the needs of its preference customers, it could use
any remaining FBS resources—including FBS replacement
resources—to supply its DSI customers.

  [7] Once FBS replacement resources were acquired, noth-
ing in section 7(b)(1) precluded BPA from considering the
costs of those replacement resources when calculating its
4906         GOLDEN NORTHWEST ALUMINUM v. BPA
preference rate, even though BPA would not have incurred
such costs absent its DSI contracts. If FBS resources include
both primary and replacement resources, and if BPA must
recover “the costs of that portion” of FBS resources needed
supply preference customer loads, then it follows that BPA
may impose rates based on the average cost of FBS resources
as a whole. This result is consistent with Central Lincoln Peo-
ples’ Utility District v. Johnson, 735 F.2d 1101 (9th Cir.
1984), which rejected the premise that preference customers
were entitled “to purchase not just available power, but the
cheapest available power.” Id. at 1125.

   BPA’s approach is not contrary to the general statutory
preference provisions on which petitioners rely. Section 4 of
the Bonneville Project Act, for example, requires that BPA
“shall at all times, in disposing of energy at said project, give
preference and priority to public bodies and cooperatives.” 16
U.S.C. § 832c(a). Similarly, section 5(a) of the NWPA pro-
vides that “[a]ll power sales under this chapter shall be subject
at all times to the preference and priority provisions of the
Bonneville Project Act.” Id. § 839c(a); see also id. § 839g(c).
We have explained that these provisions “protect[ ] the prefer-
ence customers’ access to power supply”; they do not speak
directly to price. See Cent. Lincoln, 735 F.2d at 1125; see also
Alcoa, 467 U.S. at 393 (noting that “the preference system
merely determines the priority of different customers when
the Administrator receives ‘conflicting or competing’ applica-
tions for power”). There is no allegation here that BPA failed
to provide the power necessary “to meet the firm power load”
of its preference customers. 16 U.S.C. § 839c(b)(1).

   BPA is, of course, required to honor its preference custom-
ers’ “right to purchase power at a reasonable price.” Cent.
Lincoln, 735 F.2d at 1125. Petitioners cite to legislative his-
tory for the proposition that the NWPA “protects preference
as to both supply and price” and that preference rates “will be
no higher than they would have been” absent sales to non-
preference customers. H.R. Rep. No. 96-976, pt. 1, at 34, 68
               GOLDEN NORTHWEST ALUMINUM v. BPA                    4907
(1980). We agree that section 7(b) provides price benefits to
preference customers in the form of a “rate ceiling.” Id. at 34.
We also agree that the legislative history contains some indi-
cations that Congress did not intend for preference customers
to bear the costs of acquiring FBS replacement resources. See,
e.g., id. (explaining that “preference customers’ cost of power
from BPA will not exceed the costs they would have paid for
power if . . . [they] were served from available Federal base
system resources” (emphasis added)); H.R. Rep. No. 96-976,
pt. 2, at 36 (1980) (stating that “[t]he lowest rates will be
reserved for the normal loads . . . of preference utilities”).

   [8] BPA’s rate determination, however, accords with the
notion that preference customers enjoy price benefits. After
all, the preference rate will always be lower than even the
lowest possible DSI rate, which consists of the preference rate
plus “the typical margins included by [preference customers]
in their retail industrial rates.” 16 U.S.C. § 839e(c)(2). More-
over, if FBS resources, including replacement resources, are
not sufficient to satisfy BPA’s contractual obligations to its
non preference customers, BPA may not allocate to its prefer-
ence customers the costs of acquiring non-FBS power. BPA
may, however, allocate the cost of FBS resources, including
replacement resources, to both its preference and non-
preference customers. We therefore hold that BPA’s decision
to set a preference rate that reflects the cost of FBS replace-
ment resources was based on a permissible construction of the
NWPA.2
  2
   We also grant BPA’s motion to strike petitioners’ argument regarding
BPA’s failure to adopt a rate surcharge under section 7(b)(3) of the
NWPA, 16 U.S.C. § 839e(b)(3). Petitioners did not preserve this issue for
appeal in their Partial Stipulation and Settlement Agreement, and we
therefore do not consider it here.
4908          GOLDEN NORTHWEST ALUMINUM v. BPA
       IV.   Recovering the Cost of Settling Obligations
                 to Investor-Owned Utilities

   [9] The Western Public Agencies Group, Public Power
Council, and Public Utility District No. 1 of Grays Harbor
petitioners argue that BPA violated the Northwest Power Act
by forcing its preference customers to bear the costs of a
global settlement between BPA and its investor-owned utility
(IOU) customers. In addition to requiring BPA to enter initial
contracts with DSIs, the NWPA also created a mechanism—
the Residential Exchange Program (REP)—to ensure that
IOUs would continue to enjoy access to low-cost power. The
details of the REP are set out in section 5(c) of the NWPA.
See 16 U.S.C. § 839c(c). The program permits IOUs to sell
power to BPA at the IOUs’ “average system cost” and then
purchase, in exchange, an equivalent amount of BPA’s power
at a lower price, which the IOUs may then sell to their resi-
dential customers. Id. § 839c(c)(1). As we explain in our sep-
arate opinion filed today, “[t]he REP essentially acts as a cash
rebate to the IOUs where the IOUs’ power costs exceed those
of the BPA.” Portland Gen. Elec., No. 01-70003, ___ F.3d at
___, slip op. at 4841; see also WUTC, 26 F.3d at 936-37; CP
Nat’l, 928 F.2d at 907.

   [10] The NWPA requires that the IOUs’ exchange benefits
not come at the expense of BPA’s preference customers.
Under section 7(b)(2), preference customer rates must be cal-
culated as if BPA made “no purchases or sales” under the
REP. 16 U.S.C. § 839e(b)(2). Any amounts not charged to
preference customers as a result of section 7(b)(2)’s “rate ceil-
ing test” must instead be “recovered through supplemental
rate charges for all other power sold by [BPA] to all custom-
ers.” 16 U.S.C. § 839e(b)(3). “The practical effect of the rate
ceiling is that once it is reached, qualifying IOUs must then
pay for the costs of the additional benefit they receive,
thereby reducing the overall value of their benefits.” Portland
Gen. Elec., No. 01-70003, ___ F.3d at ___, slip op. at 4842.
             GOLDEN NORTHWEST ALUMINUM v. BPA             4909
   Over time, as the cost of BPA power increased, the value
of the REP benefit declined, and BPA began to consider new
ways to lower the power costs of the IOUs. In its Subscription
ROD, BPA proposed a global settlement with its IOU custom-
ers. BPA explained that it was acting under its general author-
ity to settle claims arising under its contracts. See 16 U.S.C.
§§ 832a(f), 839f(a). The proposed settlement guaranteed the
IOUs a certain amount of power at rates no higher than the
rates charged to preference customers. In exchange, the IOUs
agreed to release BPA from future REP obligations. Portland
Gen. Elec., No. 01-70003, ___ F.3d at ___, slip op. at 4854.
The total cost of the proposed settlement “significantly
exceeded BPA’s own projection of future REP costs.” Id. at
4854.

   Even though section 7 of the NWPA normally ensures that
the costs of the REP are not passed along to BPA’s preference
customers, BPA classified the cost of the REP settlement as
“an ordinary cost of doing business” that could be recovered
through higher rates on all its customers. See id. at 4865; see
also 16 U.S.C. § 839e(g). In setting its WP-02 preference
rates, BPA first determined how much it could charge its pref-
erence customers pursuant to section 7(b)(2)’s rate ceiling. 16
U.S.C. § 839e(b)(2). BPA then adjusted the preference rate
upward in order to recover costs associated with the REP set-
tlement. According to petitioners, this additional step contra-
vened the NWPA’s cost allocation rules. Rather than
including settlement costs in the preference rate, petitioners
explain that BPA should have recovered those costs “through
supplemental rate charges for all other power” pursuant to
section 7(b)(3). Id. § 839e(b)(3).

   [11] In Portland General Electric, we hold today that
“BPA construed and exercised its settlement authority in a
manner that was contrary to the clearly expressed intent of
Congress in the Bonneville Project Act and the NWPA.”
Portland Gen. Elec., No. 01-70003, ___ F.3d at ___, slip op.
at 4860. We explain that BPA’s settlement authority is “sub-
4910         GOLDEN NORTHWEST ALUMINUM v. BPA
ject to the constraints of § 7(b) of the NWPA.” Id. at 4866;
see also id. at 4869 (“[BPA] may enter into REP settlement
contracts with IOUs, but only on terms that will protect the
position of its preference customers, consistent with . . . [sec-
tion] 7(b).”). By burdening its preference customers with part
of the cost of the REP settlement, BPA “ignored its obliga-
tions” under sections 7(b)(2) and (3). Id. at 4880. Our holding
in Portland General Electric is dispositive here: BPA
“plain[ly] violat[ed]” the rule that the rates it charges prefer-
ence customers must be calculated “as if ‘no purchases or
sales . . . were made [under the REP program].’ ” Id. (quoting
16 U.S.C. § 839e(b)(2)(C)).

                 V.   Fish and Wildlife Costs

   Confederated Tribes of the Umatilla Indian Reservation
and the Yakama Nation (“the Tribes”) contend that BPA
underestimated the cost of fish and wildlife programs when it
set its WP-02 rates. According to the Tribes, those rates there-
fore provide insufficient revenue to satisfy BPA’s fish and
wildlife obligations. Unlike the other petitioners, the Tribes
seek review not only of BPA’s rate determination but also of
FERC’s decision to confirm and approve the WP-02 rates.

   Apart from structuring the relationship between BPA and
its customers, one of the primary purposes of the Northwest
Power Act was “to protect, mitigate and enhance the fish and
wildlife, including related spawning grounds and habitat, of
the Columbia River and its tributaries, particularly anadro-
mous fish which are of significant importance to the social
and economic well-being of the Pacific Northwest and the
Nation.” 16 U.S.C. § 839(6). The NWPA requires BPA and
other federal agencies to “exercise [their] responsibilities con-
sistent with the purposes of this chapter and other applicable
laws, to adequately protect, mitigate, and enhance fish and
wildlife . . . in a manner that provides equitable treatment for
such fish and wildlife with the other purposes for which the
system and facilities are managed and operated.” Id.
             GOLDEN NORTHWEST ALUMINUM v. BPA                4911
§ 839b(h)(11)(A)(I); see also Nw. Envtl. Def. Ctr. v. BPA, 477
F.3d 668, 672-76 (9th Cir. 2007); Nw. Res. Info. Ctr., Inc. v.
Nw. Power Planning Council, 35 F.3d 1371, 1377-78 (9th
Cir. 1994); Nat’l Wildlife Fed’n v. FERC, 801 F.2d 1505,
1513-14 (9th Cir. 1986).

   [12] The NWPA requires BPA to take into account its fish
and wildlife obligations when it sets its wholesale power
rates. Rates must be high enough to ensure that BPA will
recover its total costs, including costs associated with “fish
and wildlife measures.” 16 U.S.C. §§ 839e(a), (g). A 1999
amendment to the NWPA further specifies that “rates estab-
lished by [BPA] . . . shall recover costs for protection, mitiga-
tion and enhancement of fish and wildlife . . . not to exceed
such amounts [BPA] forecasts will be expended during the
fiscal year 2002-2006 rate period, while preserving [BPA’s]
ability to establish appropriate reserves and maintain a high
Treasury payment probability for the subsequent rate period.”
Id. § 839e(n). “Treasury payment probability” (“TPP”) refers
to the likelihood that BPA will satisfy its obligation to repay
on schedule “the Federal investment in the Federal Columbia
River Power System.” Id. § 839e(a)(1); see also id. § 839(4).

   Before setting the WP-02 rates, BPA was required to esti-
mate its fish and wildlife costs for the rate period. Prior to the
rate proceeding, BPA conducted a public process that led to
the development in 1998 of the “Fish and Wildlife Funding
Principles” (the “Principles”), which included thirteen alterna-
tives for carrying out BPA’s fish and wildlife obligations.
Each alternative had its own projected cost. Because “final
decisions and approvals on a fish and wildlife recovery strate-
gy” had not been made when the WP-02 proceeding began,
BPA decided to rely on all thirteen alternatives as a way of
“keep[ing] [its] options open.” BPA explained that it would
“treat the alternatives as if each [was] equally likely to occur.”
BPA also expressed its intention to establish rates that would
“yield a very high probability of meeting all post-FY 2001
4912         GOLDEN NORTHWEST ALUMINUM v. BPA
financial obligations” for whatever alternative was ultimately
adopted. WP-02 Announcement, 64 Fed. Reg. at 44,321.

   Having already undertaken extensive consultations during
the development of the Principles, BPA announced that the
WP-02 proceeding would not “in any way revisit the policy
merits or wisdom of the strategy to ‘keep the options open.’ ”
Id. at 44,322. Nor would the rate proceeding consider, among
other things, “the content, merits, or level of costs for the fish
and wildlife recovery strategies reflected in each of the 13
alternatives,” “the decision to include the full range of costs
for all 13 alternatives,” “the TPP goal of 88 percent over the
5-year rate period with a ‘floor’ of 80 percent,” “the assump-
tion that all 13 alternatives are equally likely to occur,” or
“the assumption that BPA’s annual fish and wildlife opera-
tions and maintenance costs have an equal probability of fall-
ing anywhere within the range of $100 million and $179
million.” Id. at 44,322-23. Instead, BPA stated that the WP-02
proceeding would “address implementation of the Principles.”
Id. at 44,322.

   During the initial rate proceeding, the Tribes argued that
giving equal weight to each of the thirteen alternatives, as
opposed to assuming that the more expensive alternatives
were particularly likely to be implemented, was “arbitrary and
unrealistic” and amounted to “willful blindness.” The Tribes
also argued that it was necessary for BPA to update the pro-
jected cost of each alternative based on new information,
including new risk analysis from various fish and wildlife
agencies. According to the Tribes, BPA’s reliance on outdated
projections increased the likelihood that BPA would be
unable to achieve its TPP targets and would fail to accumulate
sufficient financial reserves to meet its post-2006 funding
obligations.

   In the Initial ROD, BPA replied that, “[i]n the absence of
clear science or regional consensus, [BPA] considered it pru-
dent to assume that all options identified in the Principles are
             GOLDEN NORTHWEST ALUMINUM v. BPA             4913
equally likely to occur.” BPA did, however, use a “slightly
broader range” of total expected costs in light of an “updated
market forecast.” At the time the Principles were adopted,
BPA had anticipated annual fish and wildlife costs of $438
million to $721 million; in the Initial ROD, BPA estimated
costs of $430 million to $780 million. BPA explained that it
was reasonable “to update one set of data, the market prices,
with the most recent data . . . and not update other data (on
fish and wildlife costs) where the source of that data is sub-
stantially less authoritative.”

   Controversy over fish and wildlife costs continued during
the supplemental WP-02 proceeding, which BPA undertook
in response to unexpected market volatility. BPA announced
that the supplemental proceeding would “address the prob-
lems created by increased purchaser power costs . . . resulting
from higher prices in a volatile market environment.” Supple-
mental Announcement, 65 Fed. Reg. at 75,275. It would not
“open issues previously determined to be outside the scope of
the first phase of the rate case,” including “the policy merits
or wisdom of the strategy to ‘keep the options open’ or of the
Fish and Wildlife Funding Principles.” Id.

   In the supplemental proceeding, the Tribes again insisted
that BPA had failed to adopt realistic fish and wildlife cost
estimates. In particular, the Tribes pointed to new legal obli-
gations under the Clean Water Act and a new Biological
Opinion issued by the National Marine Fisheries Service
shortly after the initial WP-02 proceeding had concluded. The
Biological Opinion indicated that the cost of habitat and
hatchery restoration would be significantly higher than BPA’s
previous estimates. The Tribes also argued that BPA’s new
cost adjustment mechanisms were flawed because they might
not be triggered until after BPA declared a financial emer-
gency and “operat[ed] the river to the detriment of salmon.”
BPA responded that the thirteen alternatives already “incor-
porate[d] a wide range of fish and wildlife costs” and that it
4914         GOLDEN NORTHWEST ALUMINUM v. BPA
would be able to address “unexpectedly high costs” through
its revised CRACs.

   Before turning to the substance of the Tribes’ claims, we
must decide whether their petition was timely with respect to
FERC. Although the NWPA gives parties ninety days to chal-
lenge a final BPA action, see supra Part II, we have previ-
ously noted that the NWPA “says nothing about our
jurisdiction to review FERC’s decisions confirming or reject-
ing BPA rate determinations.” WUTC, 26 F.3d at 940.
Instead, our jurisdiction to review FERC’s approval and con-
firmation of BPA’s rate determinations is governed by the
Federal Power Act. See id. (citing 16 U.S.C. § 825l(b)).
Unlike the NWPA, the Federal Power Act requires petitioners
to seek judicial review within sixty days after FERC issues an
order granting or denying rehearing. 16 U.S.C. § 825l(b). In
this case, the Tribes filed their petition for review on Decem-
ber 17, 2003—61 days after FERC denied their petition for
rehearing on October 17, 2003. Consequently, while we may
consider the Tribes’ claims against BPA, we have no jurisdic-
tion over their claims against FERC.

    [13] However, our inability to review FERC’s actions is of
little practical consequence. We have emphasized that “the
clear focus of the review provisions [of the NWPA] is on
BPA, not FERC.” CP Nat’l, 928 F.2d at 911. FERC’s review
of BPA’s ratemaking decision is limited to “assuring that
rates are adequate, but not excessive, in relation to cost recov-
ery.” Cent. Lincoln, 735 F.2d at 1110; see also id. at 1114
(“The [NWPA’s] structure reveals Congress’s clear choice to
depart from the previous pattern of FERC review in favor of
a more limited, oversight role.”); 16 U.S.C. § 839e(2) (setting
out the three findings FERC must make before it approves
BPA’s rates). FERC’s final order, which contained only a sin-
gle page of “discussion,” confirmed and approved BPA’s
rates in relation to cost recovery.

   In reviewing the Tribes’ claims against BPA, the NWPA
directs us to consider whether BPA’s rate determination is
             GOLDEN NORTHWEST ALUMINUM v. BPA                4915
supported by “substantial evidence in the rulemaking record.”
16 U.S.C. § 839f(e)(2). As we recently explained, “substantial
evidence is simply ‘more than a mere scintilla. It means such
relevant evidence as a reasonable mind might accept as ade-
quate to support a conclusion.’ ” Pub. Power Council, 442
F.3d at 1209 (quoting Richardson v. Perales, 402 U.S. 389,
401 (1971)). “In addition, we may not approve [a rate deter-
mination] if we determine that it represents BPA action that
is ‘arbitrary, capricious, an abuse of discretion or otherwise
not in accordance with law.’ ” See S. Cal. Edison Co. v. Jura,
909 F.2d 339, 342 (9th Cir. 1990) (quoting 5 U.S.C.
§ 706(2)(A)). That is, we must “assess whether BPA relied on
improper factors, failed to consider an important aspect of the
question, ‘offered an explanation for its decision that runs
counter to the evidence before [it], or [rendered a decision
that] is so implausible that it could not be ascribed to a differ-
ence in view or the product of agency expertise.’ ” Pub.
Power Council, 442 F.3d at 1209 (quoting Motor Vehicle
Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29,
43 (1983)).

   The Tribes’ core complaint is that BPA based its WP-02
rates on an unrealistically low estimate of BPA’s fish and
wildlife costs. According to the Tribes, by understating its
likely costs, BPA created an unacceptable risk that it would
not produce sufficient revenue to cover its costs, repay its
Treasury debt, maintain adequate financial reserves for the
next rate period, and satisfy its fish and wildlife commit-
ments. We agree with the Tribes that BPA’s failure to recal-
culate its fish and wildlife costs in light of the evidence
presented during the initial and supplemental rate proceedings
was arbitrary and capricious and resulted in a rate determina-
tion not supported by substantial evidence.

   We accept that, at the time it initiated the WP-02 rate pro-
ceeding, BPA faced uncertainty regarding its fish and wildlife
costs because no fish and wildlife plan had been adopted. We
also accept that the Fish and Wildlife Funding Principles
4916         GOLDEN NORTHWEST ALUMINUM v. BPA
developed in 1998 provided a useful foundation for the WP-
02 rate case. We do not second guess, for example, BPA’s
decision to set a minimum five-year TPP of 80 percent and a
target five-year TPP of 88 percent. Nor do we question the
propriety of developing the thirteen alternatives.

   The problem is that BPA adhered to the 1998 cost estimates
—and to the assumption that each of the thirteen alternatives
were equally likely to be implemented—long after subsequent
events revealed their significant shortcomings. For example,
during the initial proceeding, the Tribes introduced a May
1999 report authored by staff members of the Environmental
Protection Agency, the Fish and Wildlife Service, and the
National Marine Fisheries Service (the “Staff Report”). As we
have previously explained, fisheries managers and agencies
responsible for managing fish and wildlife possess “unique
experience and expertise,” which requires that their analysis
be given substantial weight. Nw. Resource Info. Ctr., 35 F.3d
at 1388. The Staff Report described some of the “[s]ignificant
new information” that had emerged since the development of
the thirteen alternatives and calculated refined cost estimates
for two alternatives that were “under serious consideration.”
Undisputed testimony from the Tribes also revealed that the
adoption of certain fish and wildlife alternatives—alternatives
particularly likely to satisfy the requirements of the Endan-
gered Species Act (“ESA”)—would cause BPA’s chances of
making its Treasury payments to fall well below 80 percent.

   BPA sought to minimize the significance of this informa-
tion by citing a subsequent letter from a National Marine
Fisheries Service staff member, which stated that Service saw
“no reason to conclude that BPA will not be able to cover its
anticipated costs.” The letter also stated, however, that
“BPA’s financial obligations for fish and wildlife and envi-
ronmental mitigation . . . [were] likely to increase substan-
tially through the next rate period,” and it recommended that
“BPA consider strengthening its proposed contingencies.”
             GOLDEN NORTHWEST ALUMINUM v. BPA               4917
The letter did nothing to undermine the updated cost estimates
included in the Staff Report.

   By the time of the supplemental WP-02 proceeding in late
2000 and early 2001, the difficulties with BPA’s approach
had become even more apparent. At least three new develop-
ments underscored the need for new cost projections. First,
the market volatility of 2000 caused BPA to declare a finan-
cial emergency, which meant it would not meet the operating
requirements of the ESA. These changed market conditions,
which led BPA to revisit its cost adjustment mechanisms,
should have prompted BPA to take a fresh look at fish and
wildlife costs. Second, a district court ruling in February 2001
imposed new Clean Water Act requirements on certain Army
Corps of Engineers dams. See Nat’l Wildlife Fed’n v. U.S.
Army Corps of Engineers, 132 F. Supp. 2d 876 (D. Or. 2001).
Testimony indicated that BPA would bear most of the costs
of complying with that decision. Third, and perhaps most sig-
nificantly, the government issued a Biological Opinion in
December 2000 describing what fish and wildlife actions
would be necessary pursuant to the ESA. Despite signing a
Memorandum of Understanding indicating that it would
implement the Biological Opinion, and despite new projec-
tions from fisheries managers that BPA had underestimated
its fish and wildlife costs by more than $300 million per year,
BPA did not retreat from its prior calculations. (We note that
a federal district court subsequently held that even the Biolog-
ical Opinion failed to set forth adequate measures for salmon
preservation. See Nat’l Wildlife Fed’n v. Nat’l Marine Fish-
eries Serv., 254 F. Supp. 2d 1196, 1212 (D. Or. 2003).)

   [14] Based on the information presented during the initial
and supplemental rate proceedings, it should have been appar-
ent to BPA that its 1998 cost estimates were too low and that
the thirteen alternatives were not, in fact, equally likely to be
implemented. Relying on outdated assumptions did not help
BPA to “keep its options open”; rather, such reliance made it
less likely that BPA would ultimately be able to live up to its
4918         GOLDEN NORTHWEST ALUMINUM v. BPA
statutory obligations and other commitments, including its
commitment in the Principles to maintain sufficient financial
reserves for the post-2006 rate period. Because BPA dis-
counted and ignored crucial facts presented to it, we hold that
BPA’s fish and wildlife cost estimates and, by extension, the
rates set pursuant to those estimates, were not supported by
substantial evidence.

   [15] We also hold that, to the extent BPA simply excluded
information related to fish and wildlife costs, it acted contrary
to law. The NWPA requires that BPA periodically revise its
rates in order to ensure that it recovers its costs. See 16 U.S.C.
§ 839e(a)(1). This requirement presupposes that BPA knows
its costs or, at the very least, that it estimates them “in accor-
dance with sound business principles.” Id. Although we
understand that the WP-02 rate case was not the forum for
making decisions regarding which fish and wildlife alterna-
tive to implement, BPA was nevertheless required to develop
a realistic projection of fish and wildlife costs that accurately
reflected the information available at the time the rates were
set and the cost recovery mechanisms adopted.

    The Tribes separately argue that BPA failed to adhere to its
statutory obligation to “provide[ ] equitable treatment for . . .
fish and wildlife.” 16 U.S.C. § 839b(h)(11)(A)(i). We have
explained that, when making final decisions, BPA must “dem-
onstrate, by means that allow for meaningful review, that it
has treated fish and wildlife equitably.” Nw. Envtl. Def. Ctr.,
117 F.3d at 1534; see also Confederated Tribes of the Uma-
tilla Indian Reservation v. BPA, 342 F.3d 924, 931 (9th Cir.
2003). Because we have already concluded that BPA failed to
adopt rates sufficient to cover its true fish and wildlife costs,
we need not separately address the Tribes’ equitable treatment
argument.

                       VI.    Conclusion

  We reject the arguments of the Public Generating Pool and
Pacific Northwest Generating Cooperative petitioners that
             GOLDEN NORTHWEST ALUMINUM v. BPA              4919
BPA’s treatment of its DSI customers violated the NWPA.
Their petition is denied. We agree with petitioners Western
Public Agencies Group, Public Power Council, and Public
Utility District No. 1 of Grays Harbor that BPA unlawfully
shifted onto its preference customers the costs of its settle-
ment with the IOUs. Their petitions are granted. We agree
with the Tribes that BPA failed to impose rates designed to
recover its true fish and wildlife costs. Their petition is also
granted. We therefore remand to BPA to set rates in accor-
dance with this opinion. All remaining motions are dismissed
as moot.

  Petition No. 03-73753 DISMISSED as moot.

  Petitions Nos. 03-73707 and 04-70382 DENIED.

  Petitions Nos. 03-74801, 03-74651, 04-70286, and 04-
70546 GRANTED and REMANDED; because the foregoing
four petitions are granted and remanded, Petitions Nos. 03-
73775, 03-73779, 03-73786, and 03-73820 are DISMISSED
as moot.
