                                                                           FILED
                             NOT FOR PUBLICATION
                                                                           AUG 04 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS


                             FOR THE NINTH CIRCUIT


EXELON GENERATION COMPANY,                       No.   15-73836
LLC,
                                                 FERC No. EL00-95-280
              Petitioner,

CALIFORNIA PUBLIC UTILITIES                      MEMORANDUM*
COMMISSION; et al.,

              Intervenors,

 v.

FEDERAL ENERGY REGULATORY
COMMISSION,

              Respondent.


                     On Petition for Review of an Order of the
                     Federal Energy Regulatory Commission

                             Submitted August 1, 2016**
                              San Francisco, California

Before: THOMAS, Chief Judge, and McKEOWN, and CLIFTON, Circuit Judges.


         *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
         **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
         Exelon Generation Company, LLC (“Exelon”), successor in interest to AES

New Energy, Inc., petitions for review of certain orders issued by the Federal

Energy Regulatory Commission (“FERC”). We deny the petition for review.

Because the parties are familiar with the history of the case, we need not recount it

here.1

                                           I

         FERC correctly concluded that the Mobile-Sierra presumption of

reasonability does not apply to Exelon’s forward sale. See generally Morgan

Stanley Capital Grp., Inc. v. Pub. Util. Dist. No. 1, 554 U.S. 527, 532-34 (2008)

(explaining the presumption and its origins in United Gas Pipe Line Co. v. Mobile

Gas Serv. Corp., 350 U.S. 332 (1956) and Fed. Power Comm’n v. Sierra Pac.

Power Co., 350 U.S. 348 (1956)). FERC reasonably interpreted Section 19 of the

Cal-ISO Tariff as a Memphis clause that permitted the California Independent

System Operator Corporation (“Cal-ISO”) unilaterally to seek modifications to

contract rates. See PSEG Energy Res. & Trade LLC v. FERC, 665 F.3d 203, 208

(D.C. Cir. 2011) (establishing “two-step, Chevron-like” review for FERC’s

interpretations of filed tariffs), Cal. ex rel. Harris v. FERC, 809 F.3d 491, 502 n.6


         1
        The panel’s January 20, 2016, order consolidated this and several petitions
for argument. We sever this petition from that group in an order filed concurrently
with this disposition.
                                           2
(9th Cir. 2015) (describing holding in United Gas Pipe Line Co. v. Memphis Light,

Gas & Water Div., 358 U.S. 103, 110-13 (1958), that parties may contract out of

the Mobile-Sierra presumption by specifying in their contracts that a new rate filed

with the Commission would supersede the contract rate).

      Exelon provides no authority for the argument that Cal-ISO could opt out of

the Mobile-Sierra presumption only by “mak[ing] a Section 205 rate filing.” See

Morgan Stanley, 554 U.S. at 534 (“[P]arties c[an] contract out of the Mobile-Sierra

presumption by specifying in their contracts that a new rate filed with the

Commission would supersede the contract rate.”) (emphasis added). Accordingly,

the Mobile-Sierra doctrine does not apply to Exelon’s forward sale. FERC

therefore properly assessed whether that sale’s terms were just and reasonable. See

San Diego Gas & Elec. Co. v. Sellers of Energy, 149 FERC ¶ 61,116 at paras. 216,

230 (Nov. 10, 2014).

                                          II

      Substantial evidence supports FERC’s finding that the terms of Exelon’s

forward sale were unjust and unreasonable. See San Diego Gas & Elec. Co., 149

FERC ¶ 61,116 at paras. 230-36, 16 U.S.C. § 825l(b) (2012). This conclusion

follows from our decision in Pub. Utils. Comm’n of State of Cal. v. FERC, 462

F.3d 1027 (9th Cir. 2006). In that case, we held that FERC reasonably mitigated


                                          3
out-of-market (“OOM”) spot electricity transactions entered by Cal-ISO between

October 2, 2000, and June 20, 2001 (the “Refund Period”). Id. at 1051-53. We

defined “spot” transactions as “sales that are 24 hours or less and that are entered

into the day of or day prior to delivery.” Id. at 1055. We upheld FERC’s

mitigation of such transactions because “there was systemic dysfunction in the

wholesale energy market and . . . during the time that Cal-ISO was making OOM

purchases, it was in an emergency must-buy situation, which gave the sellers even

greater market power[.]” Id. at 1052. Substantial evidence supports FERC’s

conclusion that these conditions prevailed during December 2000. See also id. at

1056-57 (crediting expert testimony establishing that “purposeful[] manipulat[ion]

[of] short-term energy markets . . . [had] forc[ed] Cal-ISO to buy necessary energy

outside of the spot market at higher prices and for longer contract periods”)

(emphasis added).

      Exelon has not distinguished its forward sale from the out-of-market

transactions that we held that FERC reasonably mitigated. Exelon correctly

observes that forward sales shift risk. But Exelon does not explain why the risk

associated with a “forward” sale for 32 hours, beginning three hours after the sale’s

execution, produces a Section 206 result different than the risk associated with a




                                           4
“spot” sale for 24 hours, beginning 24 hours after the sale’s execution. See id. at

1055.

        Moreover, we cannot hold FERC’s Section 206 determination arbitrary or

capricious for failing to recognize that Exelon’s forward sale would “create

stability in power supply costs[.]” See 5 U.S.C. § 706(2)(A) (2012). Exelon’s sale

created no such stability: Cal-ISO agreed to pay Exelon’s costs, which—according

to an Exelon expert and Cal-ISO’s dispute logs—varied over the duration of the

transaction. Indeed, the parties’ “expectation[s] of future prices” in no way

determined the transaction’s terms, see San Diego Gas & Elec. Co. v. Sellers of

Energy, 153 FERC ¶ 61,144 at para. 159 (Nov. 4, 2015), which merely passed

Exelon’s moment-to-moment costs on to Cal-ISO.2 FERC reasonably determined

that Exelon’s forward sale “was very similar to OOM spot transactions . . .

previously mitigated[.]” San Diego Gas & Elec. Co., 149 FERC ¶ 61,116 at para.

230. Therefore, we deny the petition for review.



        PETITION DENIED.




        2
        Exelon has not yet sought this court’s review of FERC’s determinations
regarding the company’s cost offset filing. Accordingly, we reserve the question
whether those determinations were arbitrary and capricious.
                                          5
