New York State Public Service Commission v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 20, 2024 Decided June 14, 2024
No. 23-1192
NEW YORK STATE PUBLIC SERVICE COMMISSION ,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION ,
RESPONDENT
CITY OF NEW YORK , ET AL .,
I NTERVENORS
Consolidated with 23-1259, 23-1286
On Petitions for Review of Orders of the
Federal Energy Regulatory Commission
Jeffrey A. Schwarz argued the cause for petitioner. With
him on the briefs were Scott H. Strauss, Amber L. Martin Stone,
and John J. Sipos.
Lona T. Perry, Deputy Solicitor, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on the
brief were Matthew R. Christiansen, General Counsel, and
Robert H. Solomon, Solicitor. Scott R. Ediger, Attorney
Advisor, entered an appearance.

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Paul W. Hughes argued the cause for intervenor in support
of respondent. With him on the brief were David B. Johnson,
David G. Tewksbury, and Andrew A. Lyons-Berg.
Before: SRINIVASAN , Chief Judge, CHILDS , Circuit Judge,
and RANDOLPH , Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
RANDOLPH .
Dissenting opinion filed by Circuit Judge CHILDS .
RANDOLPH , Senior Circuit Judge: This is a case about the
use of forecasts in the highly regulated electric energy industry.
In proposing rates for electricity-generating entities, predictions
must be made, by the utilities and by their regulators. If the
Federal Energy Regulatory Commission approves the rates
proposed, those rates will apply until altered. See Maislin
Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 127–29
(1990); Nantahala Power & Light Co. v. Thornburg, 476 U.S.
953, 962–63 (1986).
I.
New York Independent System Operator, Inc. is a non-
profit entity that operates New York’s electric grid and oversees
the state’s wholesale electricity markets. The System Operator
also administers capacity market auctions, at which electricity
providers bid for the right to supply electric energy to utilities in
the future, if necessary. We described the workings of these
auctions in TC Ravenswood, LLC v. FERC, 741 F.3d 112,
114–15 (D.C. Cir. 2013), and Electricity Consumers Resource
Council v. FERC, 407 F.3d 1232, 1234–35 (D.C. Cir. 2005).

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What matters here is that the market price of capacity at the
auctions depends in large part on the System Operator’s estimate
of the annual net cost of operating a hypothetical gas-fired
“peaking plant” in New York State, known as the “cost of new
entry.” (A peaking plant is a plant that runs only during times
of peak demand.) The System Operator derives the cost of new
entry by estimating the lifetime cost of a new peaking plant,
dividing that by the number of years of the plant’s projected
economic lifespan, and then subtracting the plant’s expected
annual revenues.
The plant’s expected commercial lifespan, which the
System Operator dubs an “amortization period,” is key in this
case. This metric reflects the number of years over which an
investor in a new plant would expect to recover the costs of
developing the plant, along with a reasonable return on that
investment. Under the System Operator’s formula, a shorter
expected lifespan increases the annual cost of new entry
(because the cost of the plant must be recouped over fewer
years) and thus raises the price of capacity at auction.
The System Operator must regularly submit its rate
schedule (a tariff) to FERC for approval. See 16 U.S.C.
§ 824d(c). FERC previously approved the System Operator’s
rate design tying the price of capacity to the annualized cost of
a peaking plant. See Elec. Consumers Res. Council, 407 F.3d at
1235–39. The System Operator’s rate schedule also obliges it
to submit to FERC an updated estimate of the cost of new entry
every four years. See New York Independent System Operator
Market Administration and Control Area Services Tariff
§ 5.14.1.2.2 (2024), https://perma.cc/2QQB-34MC.
In late 2020, the System Operator filed its proposed rates
for the 2021–2025 period. In its submission, it shortened the
amortization period from the twenty years it had used in prior

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filings to seventeen years. The System Operator justified the
change by pointing to the recently enacted New York Climate
Leadership and Community Protection Act, 2019 N.Y. Sess.
Laws ch. 106.
The N.Y. Climate Act, passed in 2019, proclaims that “by
the year [2040] . . . the statewide electrical demand system will
be zero emissions.” N.Y. Pub. Serv. Law § 66-p(2). The Act
entrusts implementation of that goal to the petitioner here—the
New York Public Service Commission, a state agency that
oversees, among other things, the production and distribution of
retail gas and electricity in New York. Id. § 5(1)(b). By June
30, 2021, the Public Service Commission was to “establish a
program to require that” New York achieve the zero-emissions
target. Id. § 66-p(2). Put otherwise, the Act directs the
Commission to promulgate regulations so that by 2040 the
production of electricity in New York results in zero carbon
emissions.
The N.Y. Climate Act also gives the Public Service
Commission some flexibility in implementing the “zero
emissions” mandate. The Commission may “modify” regulated
entities’ “obligations” or the Act’s emissions “targets” if needed
to preserve “safe and adequate electric service.” Id. It can also
“temporarily suspend or modify” regulatory obligations if it
finds that the regulations “impede[] the provision of safe and
adequate electric service,” are “likely to impair existing
obligations and agreements,” or are causing a “significant
increase in arrears or service disconnections.” Id. § 66-p(4).
The System Operator asserted that the N.Y. Climate Act’s
zero-emissions target required decreasing the amortization
period. In making this decision, the System Operator claimed
that it was not speculating about whether all existing New York
fossil-fuel generators would cease operating by 2040, or whether

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any new technologies or not-yet-extant Commission regulations
would enable fossil-fired plants to continue in some form after
2039. The System Operator instead predicted that achieving
zero emissions—however that occurs—“will require evolution
of [New York’s] resource mix” away from fossil fuels. It thus
proposed to use an estimated plant commercial lifespan of
seventeen years, the average duration between the beginning of
each year in the 2021–2025 period covered by the submission
and the N.Y. Climate Act’s January 1, 2040 zero-emission
deadline.
FERC rejected the System Operator’s submission with
respect to the proposed amortization period. N.Y. Indep. Sys.
Operator, Inc., 175 FERC ¶ 61,012 (2021). It deemed the
justification for a seventeen-year commercial lifespan
“speculative” given that (1) the N.Y. Climate Act did not
expressly require fossil-fuel electricity generators to retire by
2040 and (2) the Act allowed the Public Service Commission to
modify the Act’s requirements to permit fossil-fuel generators
to remain operational beyond that date. Id. at P 161. To FERC,
the System Operator’s “assumption that all fossil-fueled
resources will cease operation in 2040” lacked support in the
Act. Id. The Public Service Commission, FERC emphasized,
had not yet promulgated any regulations to implement the N.Y.
Climate Act’s 2040 deadline.
Independent Power Producers of New York, Inc., a trade
association of electricity generators, sought judicial review of
FERC’s rejection. We granted their petition in an unpublished
judgment, holding that FERC failed to sufficiently explain its
reasons for rejecting the System Operator’s proposal. Indep.
Power Producers of N.Y., Inc. v. FERC, No. 21-1166, 2022 WL
3210362, at *2–3 (D.C. Cir. Aug. 9, 2022) (per curiam). We
observed that FERC’s duty in the proceeding was to determine
whether the System Operator had shown that its predicted plant

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commercial lifespan reflected “a reasonable estimate of the
number of years that an investor would expect a gas-fired plant
built in New York between 2021 and 2025 to remain
commercially viable.” Id. at *2.
We faulted FERC for putting weight on the Public Service
Commission’s discretion under the Act to alter the law’s
requirements and emissions target, since FERC’s precedents
require it to base rates on “currently effective laws and
regulations,” rather than on “speculati[on] about laws and
regulations in the future.” Id. at *2 (citing N.Y. Indep. Sys.
Operator, Inc., 146 FERC ¶ 61,043, at P 74 (2014)). We also
found error in FERC’s failure to explain “why [the System
Operator’s] reading of the [Climate] Act . . . fell outside the
zone of reasonableness” afforded to public utilities under the
Federal Power Act. Id. at *3. Despite rejecting FERC’s
analysis, we “express[ed] no view” on whether FERC could
reach the same decision with a more detailed explanation. Id.
On remand, FERC again rejected the System Operator’s
analysis as “speculative” because the N.Y. Climate Act did not
“[o]n its face” require the retirement of all fossil fuel generators
by 2040, and because the Public Service Commission had not
issued rules mandating that result. N.Y. Indep. Sys. Operator,
Inc., 181 FERC ¶ 61,227, at P 26 (2022). FERC concluded that
there was no reason to think that the Public Service Commission
would “act in a specific way”—namely, require all fossil-fuel
generators to shutter—rather than pursuing “other possibilities”
such as modifying the emissions target. Id. at PP 27, 30.
Independent Power Producers sought rehearing before
FERC, see 18 C.F.R. § 385.713, which granted its request. This
time, FERC approved the System Operator’s submission. N.Y.
Indep. Sys. Operator, Inc., 183 FERC ¶ 61,130 (2023).

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FERC upheld the seventeen-year amortization period as
“one reasonable way” to account for the N.Y. Climate
Act—even though the zero-emissions target reasonably could be
achieved in “more than one way” that might not require retiring
all fossil-fueled resources. Id. at P 34. FERC noted that the
System Operator had cited “multiple risk factors,” including
uncertainty around the feasibility of technologies to reduce
emissions from fossil-fired generators and a lack of instructions
on how entities could comply with the target. Id. at PP 35–36.
Those challenges made it reasonable to “avoid speculating about
future technological [or regulatory] development[s]” and instead
to interpret the N.Y. Climate Act to create “significant pressure”
on peaking plants to retire by 2040. Id. Because the projected
plant commercial lifespan was just and reasonable, FERC held,
so were “the rates that result[ed]” from it. Id. at P 37.
The Public Service Commission sought (re-)rehearing
before FERC, which was denied. N.Y. Indep. Sys. Operator,
Inc., 185 FERC ¶ 61,010 (2023). FERC reaffirmed its stance
that seventeen years was a reasonable view of “the period of
time that the developer of a hypothetical peaking plant in New
York State would reasonably expect to have to recover the costs
from its investment, given the zero-emission requirement in the
[N.Y. Climate Act].” Id. at P 39. The Public Service
Commission now petitions for judicial review in this court.
II.
Under Section 205 of the Federal Power Act, FERC reviews
rate schedules filed by public utilities and must approve the rates
if the utility demonstrates that they are “just and reasonable.”1
16 U.S.C. § 824d(a), (e); TransCanada Power Mktg. Ltd. v.
1 FERC can also withhold approval if the rates are unduly
discriminatory. 16 U.S.C. § 824d(b). That is not at issue here.

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FERC, 811 F.3d 1, 4 (D.C. Cir. 2015). “[T]here is not a single
‘just and reasonable rate’” but rather a “zone of reasonableness,”
bounded “on one end by investor interest and [on] the other by
the public interest against excessive rates.” Me. Pub. Utils.
Comm’n v. FERC, 520 F.3d 464, 471 (D.C. Cir. 2008) (per
curiam) (citations omitted), rev’d in part on other grounds sub
nom. NRG Power Mktg., LLC v. Me. Pub. Utils. Comm’n, 558
U.S. 165 (2010); accord Fed. Power Comm’n v. Conway Corp.,
426 U.S. 271, 278 (1976).
FERC has construed its Section 205 authority as “limited to
an inquiry into whether the [proposed] rates . . . are reasonable,”
without regard to whether the rates are “more or less reasonable”
than other possible rate designs. City of Bethany v. FERC, 727
F.2d 1131, 1136 (D.C. Cir. 1984). We have described FERC’s
role under Section 205 as “essentially passive and reactive”; so
long as a utility’s rates fit within the zone of reasonableness,
FERC is obligated to approve them. Atl. City Elec. Co. v.
FERC, 295 F.3d 1, 9–10 (D.C. Cir. 2002) (quoting City of
Winnfield v. FERC, 744 F.2d 871, 876 (D.C. Cir. 1984) (Scalia,
J.)).
Because FERC approved the System Operator’s proposal,
the question presented in this case is whether FERC reasonably
concluded that the seventeen-year amortization period fell
within the zone of reasonableness. In resolving this question,
we do not write on a clean slate. Our prior judgment vacating
FERC’s original decision held that the System Operator needed
to show that it had chosen a “reasonable estimate” of how long
an investor would expect a new gas-fired plant to remain
“commercially viable.” Indep. Power Producers, 2022 WL
3210362, at *2. We also instructed FERC not to reject the
System Operator’s submission unless it could “explain why [the
System Operator’s] contrary reading of the [N.Y. Climate]

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Act . . . fell outside the zone of reasonableness.” Id. at *3 (citing
City of Bethany, 727 F.2d at 1136).
FERC’s ultimate decision to approve the shortened
amortization period satisfied those directives. To be sure,
FERC’s change of heart a mere five months after its initial
decision on remand is eyebrow-raising, and we usually view
such “flip-flops” in an agency’s position with some skepticism.
Bigelow v. Dep’t of Def., 217 F.3d 875, 878 (D.C. Cir. 2000)
(quoting Akzo Nobel Salt, Inc. v. FMSHRC, 212 F.3d 1301, 1305
(D.C. Cir. 2000)). In this case, though, the decision on
rehearing rightfully focused on whether the System Operator’s
position “reflect[ed] a reasonable interpretation of the [N.Y.
Climate Act].” N.Y. Indep. Sys. Operator, 183 FERC ¶ 61,130,
at P 34. FERC then appropriately concluded that the proposal
fell within the zone of reasonableness.
All that the N.Y. Climate Act requires on its face, as
relevant here, is a “statewide electrical demand system” of “zero
emissions” by 2040. N.Y. Pub. Serv. Law § 66-p(2). As FERC
observed, that open-ended language gives no indication whether
each plant must generate zero emissions, or whether zero net
statewide emissions will suffice (such that renewable resources
can effectively cancel out the emissions of fossil fuels). The Act
also says nothing about whether fossil-fired plants will have to
stop their emissions by shutting down, or whether technological
modifications will enable them to stay open while eliminating
emissions. The Act’s silence on these and other questions
means that “zero emissions,” without more, admits of no single,
definitive meaning.
Our prior judgment highlighted the Public Service
Commission’s “regulatory inaction” in failing so far to give
meaning to, or alter, the Act’s mandate. Indep. Power
Producers, 2022 WL 3210362, at *2. We warned against

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relying on “speculation that . . . New York State regulators will
act at some point in the future.” Id. (quoting N.Y. Indep. Sys.
Operator, 146 FERC ¶ 61,043, at P 74). FERC acted
consistently with that reasoning in upholding the System
Operator’s decision to focus on the Act’s default setting (i.e.,
zero emissions by 2040), and not on “speculat[ion] . . . on how
the [Public Service] Commission may or may not implement the
zero-emission target.” N.Y. Indep. Sys. Operator, 183 FERC
¶ 61,130, at P 34 & n.97.
The Act provides no clarity about how exactly New York
is to achieve the emissions target. One readily apparent way—if
not the only conceivable way—to reach zero emissions is to shut
down all energy generators that produce emissions. And even
if some plants will need to stay in operation beyond 2039 to
preserve electric grid reliability, no rules or express statutory
language currently create a framework enabling them to do so.
There is also, as FERC put it, a “significant factual dispute” over
the feasibility of technologies that could allow plants to convert
to the use of non-carbon-emitting fuels and thus stay operative.
Id. at P 35. Under any view of the Act, then, it seems quite
possible that emissions-producing gas-fired plants will
experience, at minimum, significant pressure to retire by 2040.
It makes sense that a rational investor could evaluate all the
legal and technological uncertainties and predict that a new
fossil-fueled plant would not “remain commercially viable” past
2039. Indep. Power Producers, 2022 WL 3210362, at *2.
Under the terms of our judgment, FERC was therefore obligated
to, and rightly did, accept the System Operator’s adoption of that
reasonable “reading of the Act.”2 Id. at *3.
2 The Public Service Commission was not a party to the first
round of litigation in this court. But FERC was a party and as such
had a duty to comply with our judgment. See Process Gas Consumers

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The Public Service Commission points to the judgment’s
favorable citation to FERC’s anti-speculation precedents, see id.
at *2, to assert that our judgment did not authorize making
assumptions—even reasonable ones—about how the N.Y.
Climate Act would operate. Because the Commission might
implement the Act in any number of ways, its argument goes,
assuming that it will choose one particular approach (banning all
fossil-fired plants) amounts to improper speculation.
But that is not what the System Operator did here. FERC’s
precedents prohibit speculating about future laws and
regulations. See N.Y. Indep. Sys. Operator, Inc., 158 FERC
¶ 61,028, at P 61 (2017); N.Y. Indep. Sys. Operator, 146 FERC
¶ 61,043, at P 74. Gazing into a crystal ball to predict how
regulators will act, however, is a far cry from considering how
rational private markets will assess current laws’ probable future
effects. In fact, FERC in one of those precedents upheld the
System Operator’s prior decision to lower the amortization
period from thirty to twenty years based on “risks in investing”
borne from “tighten[ing]” environmental standards. N.Y. Indep.
Sys. Operator, 146 FERC ¶ 61,043, at P 117.
FERC rate-setting proceedings inherently require public
utilities to make predictions about the future. We have
recognized that estimations—even “[l]ong-range estimates”—
“are an integral feature of ratemaking.” Town of Norwood v.
FERC, 53 F.3d 377, 380 (D.C. Cir. 1995); accord, e.g.,
KeySpan-Ravenswood, LLC v. FERC, 348 F.3d 1053, 1059
(D.C. Cir. 2003); Sw. Pub. Serv. Co. v. FERC, 952 F.2d 555,
556 (D.C. Cir. 1992). The System Operator’s rate schedule, for
instance, ties rates for each coming four-year period to an
“estimat[e]” of “the ‘cost of new entry’ for a hypothetical new
Grp. v. FERC, 292 F.3d 831, 836–40 (D.C. Cir. 2002); Mobil Oil
Corp. v. EPA, 871 F.2d 149, 150 n.1 (D.C. Cir. 1989).

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peaker plant,” based on several predicted metrics. TC
Ravenswood, 741 F.3d at 115. As FERC put it, “the very nature
of [the System Operator]’s task . . . requires [it] to make a
variety of forward-looking assumptions.” N.Y. Indep. Sys.
Operator, 185 FERC ¶ 61,010, at P 43. Some reliance on
reasoned estimation of future conditions—in other words, on
speculation—is built into the project of setting rates.
Here, the System Operator had to design its rates in the face
of a law that mandates “zero emissions” by 2040 and amid
uncertainty about whether or how that aim might be achieved.
The System Operator had reason to believe that the “risks in
investing” in gas-fired plants had grown because of the N.Y.
Climate Act. N.Y. Indep. Sys. Operator, 146 FERC ¶ 61,043, at
P 117. And it was reasonable for it to conclude that investors in
a new fossil-fired plant could expect that the plant would face
“significant pressure” to retire by 2040, after which they would
no longer be able to make returns on their investments. N.Y.
Indep. Sys. Operator, 183 FERC ¶ 61,130, at P 36.
The Public Service Commission’s contrary view in effect
relies on the same error of which it accuses the System Operator.
The Commission favors leaving the amortization period
unchanged because it could implement the N.Y. Climate Act in
a way that keeps some gas-fired plants operative. To the extent
that any approach to setting rates here would have required some
degree of guesswork, Section 205 of the Federal Power Act (and
our prior judgment) required FERC to resolve the matter in
favor of the System Operator’s reasonable prediction. See Atl.
City Elec. Co., 295 F.3d at 9–10.
The Public Service Commission also suggests that the
uncertainty should have led the System Operator to ignore
entirely the N.Y. Climate Act until the Act’s regulatory program
is set up. That may well have been a reasonable approach, as

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FERC recognized, but it does not render what the System
Operator did unreasonable. The precise means by which New
York will achieve zero emissions are not yet in place, but both
the goal and the deadline are—unless and until the Commission
steps in to change them. Investors tend to act on whatever
information is publicly available to them at the time. Cf.
Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258, 272
(2014). So it was rational for FERC to credit the System
Operator’s view that investors could adjust their expectations of
the likely lifetime of a new peaking plant in response to the
Act’s dramatic zero-emissions command, even if it remains
unclear how exactly the Act will be implemented.3
It is ironic that the Public Service Commission objects so
strenuously to the System Operator’s interpretation of the N.Y.
Climate Act. That Act vests in the Commission alone the power
to “establish a program” to achieve the zero-emissions target,
N.Y. Pub. Serv. Law § 66-p(2), yet the Commission has not
issued so much as a proposed rule implementing the Act.4
3 Under the Public Service Commission’s logic, it would be
premature to account for the N.Y. Climate Act even after the initial
implementing regulations are issued. Commission members serve six-
year terms. N.Y. Pub. Serv. Law § 4(3). So new commissioners will
be appointed prior to 2040 and could enact new rules altering what
gas-fired plants need to do to reach zero emissions. As a result, the
rules are not truly settled until 2040. Yet it seems highly
probable—and, at minimum, it would be reasonable to predict—that
investors will adjust their expectations well ahead of 2040 in response
to changes in the regulatory landscape and energy markets.
4 The N.Y. Climate Act required the Commission to enact a
program by mid-2021. N.Y. Pub. Serv. Law § 66-p(2). The
Commission initiated that process only in May 2023 and thus far has
been soliciting public comments on how it should proceed. See
Matter Master: 15-01168/15-E-0302, Dep’t of Pub. Serv.,

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III.
The Public Service Commission makes one other attack on
FERC’s decision: it claims that FERC failed to justify the
increased costs to consumers that would result from shortening
the amortization period. By the Public Service Commission’s
estimate, the System Operator’s change will impose upwards of
$100 million of additional annual costs on consumers.
FERC admittedly did not do much to address the cost
impact of the change. It noted simply that the cost increases
were a natural consequence of a projected plant commercial
lifespan that FERC had found to be just and reasonable, since
the System Operator’s rate schedule sets an inverse relationship
between the amortization period and the ultimate rates.
Once again, this court’s precedents compel upholding
FERC’s decision. Section 205 is designed to “enabl[e] [a public
utility] to increase its rates” so long as it stays within the zone
of reasonableness. City of Winnfield, 744 F.2d at 875. To that
end, FERC “restricts itself to evaluating the confined proposal”
without regard to any other options. Advanced Energy Mgmt.
All. v. FERC, 860 F.3d 656, 662 (D.C. Cir. 2017). FERC must
accept any proposed rates that are just and reasonable—even if
the current rates might already be reasonable or if other optional
rate designs might be “more or less reasonable” than the utility’s
selected rate schedule. City of Bethany, 727 F.2d at 1136; City
of Winnfield, 744 F.2d at 874–75.
https://perma.cc/NCQ5-QA46 (last visited June 5, 2024). The Act
contemplated that, by July 2024, the program would have been in
place long enough to warrant a “comprehensive review” of its
progress. N.Y. Pub. Serv. Law § 66-p(3).

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Similarly, because Section 205 is “intended for the benefit
of the utility” as it seeks to raise rates, the utility need not
“prove the continued reasonableness of . . . unchanged attributes
of its rate structure.” City of Winnfield, 744 F.2d at 875, 877.
Only “those portions of its filing that represent [a] departure
from the status quo”—here, the reduced projected commercial
lifespan—are subject to review. Id. at 877 (quoting Pub. Serv.
Comm’n of N.Y. v. FERC, 642 F.2d 1335, 1345 (D.C. Cir.
1980)).
As FERC acknowledges, the Public Service Commission
can file a separate complaint to argue that the existing rate
design is producing rates that are not just and reasonable. 16
U.S.C. § 824e; see, e.g., N. Va. Elec. Coop. v. FERC, 945 F.3d
1201, 1204 (D.C. Cir. 2019) (citing Delmarva Power & Light
Co., 160 FERC ¶ 61,102, at P 19 (2017)); Pub. Utils. Comm’n
of Cal. v. FERC, 254 F.3d 250, 257–58 (D.C. Cir. 2001). In the
Section 205 proceeding, however, FERC properly did not
reexamine the overall rate design and its cost implications once
it had approved the new predicted plant lifespan.
* * *
The Public Service Commission’s petitions for review are
therefore denied.
So ordered.

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CHILDS, Circuit Judge, dissenting: The key to this case is
that the N.Y. Climate Act does not impose a single requirement
on fossil-fired plants—much less require them to shut down.
While the Act sets an emissions target for the state of zero
emissions by 2040, its only relevant requirement is for the N.Y.
Public Service Commission to someday promulgate
regulations to reach that target. If power plants continue to
operate past 2040, they will not violate any provision of the
Act, and if they shut down, it will not be because any provision
of the Act required them to do so. Thus, the Act does not
“create ‘significant pressure’ on peaking plants to retire by
2040,” Op. 7, or “require[] . . . a ‘statewide electrical demand
system’ of ‘zero emissions’ by 2040,” Op. 9. Future
regulations implementing it may do those things—if and when
they are ever promulgated—but the Act itself does not.1
The distinction between what is required by the Act and
what may be required by its future implementing regulations is
crucial: No one disputes that the System Operator may justify
its proposed amortization period based on what the Act
requires, but an amortization period based on what future
implementing regulations may require is difficult to square
with FERC’s anti-speculation precedent.
That precedent “required [the System Operator] to take
into account currently effective laws and regulations and avoid
speculating about laws and regulations in the future.” Indep.
Power Producers of N.Y., Inc. v. FERC, 2022 WL 3210362,
1 There is considerable uncertainty about when, if ever, those
regulations will be promulgated given the Commission’s failure to
comply with the statutorily mandated schedule for promulgating
them, see Op. 14 n.4, and the Act’s caveat that regulations need not
be promulgated on schedule if they will “impede[] the provision of
safe and adequate electric service,” “impair existing obligations and
agreements,” or cause a “significant increase in arrears or service
disconnections.” N.Y. PUB. SERV. LAW § 66-p(4).

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2
at *2 (D.C. Cir. Aug. 9, 2022) (“IPPNY”) (internal quotation
marks omitted). In Texas Gas Transmission, LLC, for
example, FERC rejected Texas Gas’ proposed alterations to the
definition of force majeure in its tariff as overly speculative.
141 FERC ¶ 61,223 (2012) at PP 13-27. Texas Gas tried to
justify the alterations based on a proposed rulemaking by the
Pipeline and Hazardous Materials Safety Administration
(“PHMSA”) that would implement requirements in the
Pipeline Safety, Regulatory Certainty and Job Creation Act of
2011. Id. at PP 13-14. It argued that the proposed regulations
would likely culminate in final regulations implementing that
statutory provision. Id. at P 20. But FERC rejected that
argument because “the nature and timing of any new safety
requirements PHMSA may adopt pursuant to the 2011 Act or
ongoing PHMSA rulemakings [wa]s too speculative.” Id.
at P 27. More recently, in Tennessee Gas Pipeline Co., L.L.C.,
FERC held that the N.Y. Climate Act did not undermine a
finding of public necessity because “while the Act includes
targets and goals [for emissions reductions], it does not
prescribe any method or means for meeting these goals.” 181
FERC ¶ 61,051 at P 16 (2022). Yet, in the face of this
precedent, FERC approved the System Operator’s proposed
amortization period based on the System Operator’s prediction
that the N.Y. Climate Act’s implementing regulations will
require fossil-fired plants to shut down. N.Y. Indep. Sys.
Operator, Inc., 183 FERC ¶ 61,130 at PP 31-37 (2023).
The majority attempts to justify FERC’s decision in two
ways, but neither succeeds.
First, the majority tries to evade the difficulty of
reconciling FERC’s precedent by collapsing the distinction
between what the N.Y. Climate Act and its implementing
regulations require. For example, the majority describes the
Act as “proclaim[ing] that ‘by the year [2040] . . . the statewide

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3
electrical demand system will be zero emissions,’” Op. 4
(quoting N.Y. PUB. SERV. LAW § 66-p(2)), when in fact the Act
instructs the Commission to “establish a program to require
that by the year [2040] . . . the statewide electrical demand
system will be zero emissions.” N.Y. PUB. SERV.
LAW § 66 p(2) (emphasis added). According to the majority,
“the N.Y. Climate Act requires . . . a statewide electrical
demand system of zero emissions by 2040,” leaving
uncertainty only as to how plants must carry out that mandate:
“whether fossil-fired plants will have to stop their emissions by
shutting down, or whether technological modifications will
enable them to stay open while eliminating emissions.” Op. 9;
see also Op. 12 (“Here, the System Operator had to design its
rates in the face of a law that mandates ‘zero emissions’ by
2040 and amid uncertainty about whether or how that aim
might be achieved.”). By characterizing FERC’s speculation
as relating only to how plants will meet emissions
requirements, however, the majority leaps over FERC’s
speculation about if and when implementing regulations
imposing emissions requirements will ever be promulgated.
Second, the majority attempts to reconcile FERC’s
precedent, and in doing so risks rendering that precedent
meaningless. As the majority reads it, FERC’s anti-speculation
precedent does not prevent the System Operator from justifying
its proposed amortization period by “considering how rational
private markets will assess current laws’ probable future
effects,” it merely prevents the System Operator and FERC
from trying to “predict how regulators will act” by “[g]azing
into a crystal ball.” Op. 11. Under this reading, it is difficult
to see how any prediction would ever be too speculative;
speculation about “probable future effects” can always be
recharacterized as a prediction based on “current laws” or other
current circumstances (barring cases of true magic). I have not
seen any caselaw to suggest that speculation about future

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regulations would be more reasonable when based on current
law as opposed to other current circumstances. And if
predictions about “probable future effects”—such as the
probable future regulations implementing the N.Y. Climate
Act—are valid as long as they are based on current laws or
circumstances, then FERC’s anti-speculation precedent will
essentially always be satisfied. Thus, the majority’s reading of
FERC’s precedent does not distinguish this case from FERC’s
other anti-speculation cases. See, e.g., Texas Gas
Transmission, LLC, 141 FERC ¶ 61,223; Tennessee Gas
Pipeline Co., L.L.C., 181 FERC ¶ 61,051. Nor can it
distinguish this case from IPPNY’s holding prohibiting FERC
to speculate that the N.Y. Climate Act’s provision allowing for
state emissions targets to be altered would have the probable
future effect of those targets being altered. See IPPNY, 2022
WL 3210362, at *2.
Oddly, the majority’s citation to N.Y. Indep. Sys. Operator,
Inc. suggests that the majority itself does not believe that
FERC’s anti-speculation precedent has teeth. See Op. 11
(noting that “FERC . . . upheld the System Operator’s prior
decision to lower the amortization period . . . based on ‘risks in
investing’ borne from ‘tighten[ing]’ environmental
standards”). The majority does not, however, explain how its
view of N.Y. Indep. Sys. Operator, Inc. is consistent with
FERC’s later statement in that same decision that it would not
consider “potential upcoming state and federal regulations”
that “the U.S. Environmental Protection Agency [wa]s
currently considering amending,” id. at P 65, because it “cannot
base [its finding] on speculation that the [Environmental
Protection Agency] or New York State regulators will act at
some point in the future,” id. at P 74. If anything, N.Y. Indep.
Sys. Operator, Inc. highlights FERC’s inconsistent application
of its anti-speculation precedent.

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5
Because the Public Service Commission identifies
unexplained inconsistencies between FERC’s precedent and its
decision in this case, I would remand to FERC to reconsider
the case consistent with its precedent or explain why deviating
from that precedent is justified. Thus, I respectfully dissent.

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