Entergy Louisiana, Inc. v. Louisiana Public Service Commission, 539 U.S. 39, 5 (2003)

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Cite as: 539 U. S. 39 (2003)

Opinion of the Court

that contribute more than their fair share of capacity.1 Those making such payments are known as "short" companies, and those accepting the payments are known as "long" companies. Each operating company's capability is determined monthly, and payments are made on a monthly basis— a long company receives a payment equal to its average cost of generating units multiplied by the number of megawatts the company is long. Because the variables that determine the MSS-1 cost allocation can change monthly, Service Schedule MSS-1 is an automatic adjustment clause under 205(f) of the FPA, 16 U. S. C. 824d(f),2 which exempts it from the FPA's ordinary requirements for tariff changes.

In order to determine whether an operating company is long or short in a given month, one must know how much capacity that operating company is making available to its siblings. The question is not as easy as asking whether the generating facilities are on or off, however, because in the mid-1980's the operating committee initiated the Extended Reserve Shutdown (ERS) program. Responding to systemwide overcapacity, ERS allowed some generating units to be identified as not immediately necessary for capacity needs and effectively mothballed. However, these units could be activated if demand increased, meaning that the capacity they represented was not forever placed out of reach of the operating companies. As a result, ERS units were considered "available" for purposes of calculating MSS-1 cost equalization payments. Counting ERS units as available

1 Where, as here, public utilities share capacity, the allocation of costs of maintaining capacity and generating power constitutes "the sale of electric energy at wholesale in interstate commerce." 16 U. S. C. 824(b)(1).

2 Section 824d(f)(4) provides the definition of "automatic adjustment clause": "a provision of a rate schedule which provides for increases or decreases (or both), without prior hearing, in rates reflecting increases or decreases (or both) in costs incurred by an electric utility. Such term does not include any rate which takes effect subject to refund and subject to a later determination of the appropriate amount of such rate."

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