Nextera Energy Resources, LLC and Nextera Energy Seabrook, LLC v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 6, 2024 Decided October 4, 2024
No. 23-1094
NEXTERA ENERGY RESOURCES, LLC AND NEXTERA ENERGY
SEABROOK, LLC,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
AVANGRID, INC. AND NECEC TRANSMISSION LLC,
INTERVENORS
Consolidated with No. 23-1215
On Petitions for Review of Orders of the
Federal Energy Regulatory Commission
John N. Estes III argued the cause for petitioners. With
him on the briefs were Matthew E. Price, Arjun Ramamurti,
and Anand Viswanathan.
Robert M. Kennedy, Senior Attorney, Federal Energy
Regulatory Commission, argued the cause for respondent.

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With him on the brief were Matthew R. Christiansen, General
Counsel, and Robert H. Solomon, Solicitor.
Eric J. Konopka argued the cause for intervenors NECEC
Transmission LLC and Avangrid, Inc. in support of
respondent. With him on the brief were Richard P. Bress,
David L. Schwartz, and James B. Blackburn IV.
Before: MILLETT, KATSAS, and RAO, Circuit Judges.
Opinion for the Court filed by Circuit Judge KATSAS.
Dissenting opinion filed by Circuit Judge RAO.
KATSAS, Circuit Judge: The Federal Energy Regulatory
Commission may regulate the transmission, but not the
generation, of electricity. In this case, FERC required a
generator to upgrade its circuit breaker so that another power
source could safely connect to the regional transmission grid.
The Commission ordered the new power source to compensate
the generator for the direct costs of the upgrade, but not for its
indirect costs. We hold that the agency had statutory authority
to require the upgrade, correctly interpreted the governing tariff
and contract to require the upgrade, and permissibly denied
compensation for its indirect costs.
I
A
Supplying electricity to consumers requires three principal
kinds of facilities—generators produce the electricity,
transmission facilities move it over long distances, and
distribution facilities move it over short distances to individual
customers. Detroit Edison Co. v. FERC, 334 F.3d 48, 49 (D.C.
Cir. 2003). The transmission market has high barriers to entry,

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so transmission owners typically “enjoy a natural monopoly.”
Transmission Access Pol’y Study Grp. v. FERC, 225 F.3d 667,
683 (D.C. Cir. 2000) (Transmission Access).
The Federal Power Act allows FERC to regulate some, but
not all, types of these facilities. Section 201(b) empowers the
Commission to regulate the “transmission” and wholesale
“sale” of electricity in interstate commerce, as well as
“facilities” for such transmission or sale. 16 U.S.C.
§ 824(b)(1). But it also states that the agency, except as
specifically provided, does not have jurisdiction over facilities
used for the “generation,” intrastate transmission, or local
distribution of electricity. Id.
The modern structure of the electricity market reflects
decades of changing technology and regulations. “In the bad
old days,” power grids were run by “vertically integrated
monopolies” that owned generation, transmission, and
distribution facilities. Midwest ISO Transmission Owners v.
FERC, 373 F.3d 1361, 1363 (D.C. Cir. 2004). Utilities sold
these services in bundled packages to customers in limited
geographic areas. Pub. Util. Dist. No. 1 v. FERC, 272 F.3d
607, 610 (D.C. Cir. 2001). Eventually, technological advances
made it easier to generate electricity and transmit it over long
distances. See Transmission Access, 225 F.3d at 681. But
transmission owners exploited their monopoly power to deny
competing sellers access to their facilities. See id. at 682–84.
This practice resulted in artificially high electricity prices for
consumers. Id. at 682.
In 1996, FERC responded with a regulation known as
Order No. 888, which required transmission owners to give
other generators equal access to interstate transmission
facilities. Promoting Wholesale Competition Through Open
Access Non-Discriminatory Transmission Services by Public

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Utilities; Recovery of Stranded Costs by Public Utilities and
Transmitting Utilities, 61 Fed. Reg. 21,540 (May 10, 1996).
Among other things, the Commission required transmission
owners to “file open access nondiscriminatory tariffs” for
wholesale transmission service, thus effectively “unbundling”
sale of the power itself from sale of the transmission service.
See Detroit Edison, 334 F.3d at 50. In Transmission Access,
this Court upheld Order No. 888 “in nearly all respects.” 225
F.3d at 681.
Implementation of Order No. 888 proved challenging.
“[E]very time a new generator of electricity asked to use a
transmission network owned by another—to interconnect the
two entities—disputes between the generator and the owner of
the transmission grid would arise,” thus consistently delaying
market entry by new generators. ESI Energy, LLC v. FERC,
892 F.3d 321, 324 (D.C. Cir. 2018). FERC responded with
Order No. 2003, Standardization of Generator Interconnection
Agreements and Procedures, 68 Fed. Reg. 49,846 (Aug. 19,
2003), which “require[d] all transmission facilities to adopt a
standard agreement for interconnecting with generators larger
than 20 megawatts.” Nat’l Ass’n of Regul. Util. Comm’rs v.
FERC, 475 F.3d 1277, 1279 (D.C. Cir. 2007) (Utility
Commissioners). These agreements are known as Large
Generator Interconnection Agreements (LGIAs). Order No.
2003 prescribed a standard LGIA. See Pac. Gas & Elec. Co.
v. FERC, 533 F.3d 820, 823 (D.C. Cir. 2008). In Utility
Commissioners, this Court upheld Order No. 2003—including
its imposition of the standard LGIA—against various facial
challenges under section 201(b). See 475 F.3d at 1279–80.
One final feature of the grid bears mention. To facilitate
coordination among different transmission owners, FERC has
encouraged them to establish Independent System Operators,
which operate transmission facilities on behalf of the individual

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owners. See Morgan Stanley Cap. Grp. v. Pub. Util. Dist. No.
1, 554 U.S. 527, 536–37 (2008). In the six New England states,
ISO New England operates the regional power grid. As
required by section 205(c) of the Federal Power Act, 16 U.S.C.
§ 824d(c), it has filed a systemwide tariff setting rates and other
terms of service. See Constellation Mystic Power, LLC v.
FERC, 45 F.4th 1028, 1036 (D.C. Cir. 2022).
B
This case involves a dispute between NextEra Energy
Resources, LLC, which transmits electricity through the New
England grid, and Avangrid, Inc., which wishes to do so. It
turns on various provisions in the governing tariff and LGIA.
NextEra owns Seabrook Station, a nuclear power-plant
located in Seabrook, New Hampshire. Electricity flows from
the plant through a circuit breaker, which serves to interrupt
fault currents—abnormally high currents caused, for example,
by short circuits. When a fault occurs, the circuit breaker
temporarily cuts Seabrook off from the grid. The breaker thus
protects both Seabrook Station, which could be damaged by a
high-voltage backflow of electricity, as well as the broader grid
itself. As the amount of power flowing though the grid
increases, so does the necessary capacity of the breaker.
As required by Order No. 2003, NextEra and ISO New
England have entered into a Large Generator Interconnection
Agreement governing the terms of Seabrook’s connection to
the regional transmission grid. Article 9.7.5 of the LGIA
requires Seabrook to “install” and “maintain” circuit breakers
in accordance with “Good Utility Practice.” J.A. 326. The
LGIA defines “Good Utility Practice” to include practices that
could reasonably be expected to safely and reliably accomplish
a desired result at reasonable cost. Id. at 283.

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In 2017, Massachusetts engaged Avangrid to develop its
New England Clean Energy Connect (NECEC) project. The
project will supply Massachusetts utilities with power
generated by hydroelectric facilities in Quebec. As part of the
project, Avangrid and NECEC Transmission LLC have built a
transmission line running from the Canadian border to
Lewiston, Maine, where the power will enter the regional grid.
The ISO New England tariff sets forth rules governing the
connection of new power sources to the grid. For proposed
elective projects such as NECEC, the tariff requires ISO New
England to conduct a study before the connection may take
place. If the study reveals that interconnection would have a
“significant adverse effect” on the reliability of other
transmission owners’ or customers’ facilities, the project “shall
not proceed” unless its sponsor “takes such action or constructs
at its expense such facilities as the ISO determines to be
reasonably necessary to avoid such adverse effect.” J.A. 724.
Avangrid sought to connect the NECEC power line to the
regional grid. After performing the requisite study, ISO New
England determined that, with that connection, Seabrook could
not safely remain connected to the grid unless it upgraded its
circuit breaker. The breaker is currently operating at 99.6% of
its capacity. If further power flowed from the NECEC line, the
breaker would operate at 101.2% of its capacity. In other
words, the size of a potential fault current could overwhelm the
breaker and cause it to fail.
Seabrook and Avangrid disputed whether or how the
circuit breaker should be upgraded. The parties agreed on
several points: Avangrid cannot connect to the grid unless and
until Seabrook upgrades the breaker; Avangrid must pay the
direct costs of any upgrade; and any upgrade should take place
while the plant refuels during a planned outage. But Seabrook

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and Avangrid disagreed on whether the upgrade would require
extending the plant’s outage time. They disagreed on whether
Avangrid must compensate Seabrook for indirect costs such as
its legal costs and any lost profits on energy sales. Most
significantly, they disagreed on whether Seabrook must
upgrade the breaker even if Avangrid does not provide the
degree of compensation that Seabrook has demanded.
C
Both parties asked FERC to resolve the dispute. Seabrook
petitioned for a declaration that it was not required to upgrade
the circuit breaker or, alternatively, that it was entitled to a full
recovery of its direct and indirect costs. Soon after, Avangrid
filed an administrative complaint seeking to prevent Seabrook
from blocking the interconnection.
FERC ruled primarily for Avangrid. NextEra Energy
Seabrook, LLC, 182 FERC ¶ 61,044 (2023). It concluded that
because the circuit breaker was part of the Seabrook generation
facility, tariff provisions requiring transmission network
upgrades did not apply. Id. PP 75–76. But the Commission
ruled that Good Utility Practice, as required by the LGIA,
compelled Seabrook to upgrade the breaker. Id. PP 79–88.
Finally, FERC concluded that Avangrid was not required to
reimburse Seabrook for indirect costs of the upgrade such as
any lost profits or legal expenses. Id. PP 100–06.
On rehearing, Seabrook argued that because the circuit
breaker was part of its generation system and not part of the
interstate transmission system, FERC lacked statutory
authority to require the upgrade. The Commission rejected that
contention based on this Court’s decision in Utility
Commissioners. NextEra Energy Seabrook, LLC, 183 FERC
¶ 61,196, PP 17–19 & n.39 (2023). The agency also reaffirmed

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its rulings regarding the terms of the LGIA, id. PP 20–26, and
the extent of required compensation, id. PP 36–46.
Seabrook has petitioned for review of these orders. We
have jurisdiction under 16 U.S.C. § 825l(b).
II
We review FERC orders under the Administrative
Procedure Act, which requires us to consider whether agency
decisions are “arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).
This standard of review is deferential to the agency; we must
uphold decisions that are “reasonable and reasonably
explained.” See FCC v. Prometheus Radio Project, 141 S. Ct.
1150, 1158 (2021).
In the past, we have deferred to FERC’s reasonable
interpretation of ambiguous tariffs and contracts within its
jurisdiction. See Wabash Valley Power Ass’n v. FERC, 45
F.4th 115, 119 (D.C. Cir. 2022); Long Island Power Auth. v.
FERC, 27 F.4th 705, 716 (D.C. Cir. 2022). We have described
these deference principles as “Chevron-like” in nature. PSEG
Energy Resources & Trade LLC v. FERC, 665 F.3d 203, 208
(D.C. Cir. 2011); see Chevron U.S.A. Inc. v. NRDC, 467 U.S.
837, 843–44 (1984). This raises a question whether the
principles survive the overruling of Chevron in Loper Bright
Enterprises v. Raimondo, 144 S. Ct. 2244 (2024). But we need
not consider deference here because FERC’s interpretation of
the disputed provisions of the LGIA and the tariff are in fact
correct. See FERC v. Elec. Power Supply Ass’n, 577 U.S. 260,
277 n.5 (2016).

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A
The Federal Power Act states that FERC generally “shall
not have jurisdiction” over “facilities used for the generation of
electric energy.” 16 U.S.C. § 824(b)(1). In its initial order,
FERC concluded that the “location and purpose” of the
Seabrook circuit breaker, which serves to protect the plant from
fault currents, “indicate that the breaker is a generator
component” not subject to the network upgrades required for
transmission facilities. NextEra Energy Seabrook, 182 FERC
¶ 61,044, P 76. Based on that ruling, Seabrook argues that
FERC lacks statutory authority to require replacement of the
circuit breaker. On rehearing, FERC asserted the power “to
enforce Seabrook’s obligations with respect to its own facilities
under the Seabrook LGIA.” NextEra Energy Seabrook, 183
FERC ¶ 61,196, P 19. Under binding precedents, FERC had
this authority.
To police the jurisdictional lines drawn by section 201(b),
we ask three questions: first, whether the action at issue directly
affects facilities or transactions that FERC may regulate;
second, whether FERC has impermissibly regulated matters
outside its jurisdiction; and third, whether the contested
assertion of authority is consistent with the statute’s core
purposes. See, e.g., Elec. Power Supply Ass’n, 577 U.S. at
276–77; Nat’l Ass’n of Regul. Util. Comm’rs v. FERC, 964
F.3d 1177, 1185–86 (D.C. Cir. 2020).
All three considerations support FERC’s authority here.
First, the upgrade directly affects the transmission of electricity
in interstate commerce, an area where FERC may regulate. As
explained above, Seabrook’s barely-good-enough circuit
breaker currently prevents other power sources from
connecting to the interstate grid without posing substantial
risks to Seabrook. If FERC could not order an upgrade in those

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circumstances, incumbent generators could unilaterally
prevent competing sellers from joining the grid, which would
directly—and substantially—limit how much electricity could
be transmitted. And if FERC could not require generators to
install circuit breakers at all, the entire grid would be left
vulnerable to widespread outages from fault currents.
Second, FERC has not impermissibly regulated Seabrook
as a generator. Section 201(b) prohibits FERC from regulating
generators “except as specifically provided,” yet it permits
FERC to regulate the interstate “transmission” of electricity.
16 U.S.C. § 824(b). Construing these provisions, we held in
Transmission Access that “FERC may exercise jurisdiction
over generation facilities to the extent necessary to regulate
interstate transmission.” 225 F.3d at 718. Likewise, in Utility
Commissioners, we explained that FERC may require an
interconnected generator to make “physical changes” to its own
facilities if the changes “bear a close enough relation to
FERC’s exercise of jurisdiction over jurisdictional
transactions.” 475 F.3d at 1282.
Seabrook objects that its circuit breaker serves to protect
its own generator—not interstate transmission facilities. But at
the point of interconnection, the safety and reliability of
generators and transmission facilities are closely related. And
we have already held that FERC, in imposing the standard
LGIA, permissibly “exercised its jurisdiction over the terms
of” relationships between generators and transmission owners
“with respect to electricity flowing” between the two kinds of
facilities at the point of interconnection. See Utility
Commissioners, 475 F.3d at 1280. In the order under review,
FERC merely enforced a provision of the standard LGIA. And
Seabrook gives us no reason to suppose that FERC’s authority
to require an effective circuit breaker at the point of
interconnection is any more tenuous than its authority to

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impose the standard LGIA writ large. If the entire LGIA bears
a close enough relationship to FERC’s authority over interstate
transmission facilities, as we have held, then so do the few
LGIA provisions that specifically address the maintenance of
an effective circuit breaker. See id. at 1282.
Finally, FERC’s assertion of jurisdiction over Seabrook’s
circuit breaker is consistent with the core statutory purpose of
ensuring that different generators may safely and reliably
connect to the interstate transmission system. See S.C. Pub.
Serv. Auth. v. FERC, 762 F.3d 41, 63 (D.C. Cir. 2014). As
explained above, the parties do not dispute that unless
Seabrook upgrades the breaker, Avangrid may not connect.
B
On the merits, FERC correctly construed the LGIA to
require Seabrook to upgrade its circuit breaker.
Article 9.7.5 of the LGIA requires Seabrook, in
compliance with “Good Utility Practice,” to “provide, install,
own, and maintain relays, circuit breakers and all other devices
necessary to remove any fault contribution” of Seabrook “to
any short circuit occurring” on the transmission system. J.A.
326. Article 9.7.5 further makes Seabrook “solely responsible
to disconnect” if grid conditions “could adversely affect” the
power plant. Id. at 326–27. Seabrook argues its duty to
mitigate short circuits requires only a snapshot assessment of
whether its circuit breaker is up to the task at any fixed moment
in time. But as the Commission explained, Seabrook’s
obligation to “install” and then “maintain” a circuit breaker
imposes a “continuing responsibility” to have an adequate
breaker in place, which means a breaker capable of protecting
Seabrook in light of changing grid conditions. See NextEra
Energy Seabrook, 183 FERC ¶ 61,196, P 22. And given the
thrust of Orders 888 and 2003—expanding independent

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generators’ access to the grid—such changing conditions must
include the interconnection of new generators like Avangrid.
The LGIA’s definition of “Good Utility Practice”
reinforces this conclusion. Article 1 of the LGIA defines that
phrase to include practices that, “in the exercise of reasonable
judgment in light of the facts known at the time the decision
was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business
practices, reliability, safety and expedition.” J.A. 283.
Seabrook does not dispute that maintaining a circuit breaker
capable of protecting its plant from fault currents is necessary
to ensure safety and reliability at a reasonable cost. Nor could
it, given FERC’s uncontested finding that the failure of an
“overdutied” breaker “could lead to catastrophic equipment
failure at the nuclear facility.” NextEra Energy Seabrook, 182
FERC ¶ 61,044, P 84. Seabrook does contend that its refusal
to upgrade the breaker would prevent new generators from
joining the grid and thus ensure that the breaker remains
adequate. But this kind of anti-competitive behavior is hardly
consistent with “good business practices.” J.A. 283. And
contractual provisions purporting to authorize such anti-
competitive behavior would likely be unenforceable in any
event. See Restatement (Second) of Contracts §186 (1981) (“A
promise is unenforceable on grounds of public policy if it is
unreasonably in restraint of trade.”).
Seabrook claims that section I.3.10 of the ISO New
England tariff prevents any danger of overloading the circuit
breaker. That provision states that if a market participant’s
planned project would “have a significant adverse effect upon
the reliability or operating characteristics” of facilities of
another market participant, the proponent “shall not proceed to
implement such plan unless” it “takes such action or constructs
at its expense such facilities as the ISO determines to be

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reasonably necessary to avoid such adverse effect.” J.A. 724.
Under Seabrook’s reading, this provision forbids Avangrid
from connecting the NECEC project to the grid unless and until
Seabrook upgrades its circuit breaker. And because the breaker
reliably protects the nuclear plant without Avangrid’s power
added to the grid, Seabrook currently has no duty to upgrade.
Seabrook frames its position as merely enabling it to insist
on receiving full compensation for the upgrade. But
Seabrook’s position plainly implies that it may exclude
Avangrid from the grid by refusing to upgrade its circuit
breaker, no matter what compensation Avangrid offered or was
ordered to pay. Even worse, the argument further implies that
Seabrook may prevent interconnection by any new generator
whose additional power would nudge its breaker from 99.6
percent of capacity to just over 100 percent. This concern is
not hypothetical. After Avangrid applied to interconnect, ISO
New England received many other interconnection requests—
all of which it expects to “have some impact on the Seabrook
Breaker,” and all of which “assumed that the Seabrook Breaker
will be upgraded.” Id. 537. Although Seabrook tries to
obfuscate the troubling implications of its position, the dissent
acknowledges and embraces them. See post at 4–5.
In our view, Seabrook misreads the tariff. By its terms,
section I.3.10 prevents a project sponsor from proceeding only
until it “constructs at its expense such facilities as the ISO
determines to be reasonably necessary to avoid” adverse
impacts on other facilities. J.A. 724. That provision does not
foreclose Avangrid from connecting to the grid unless and until
Seabrook agrees to the interconnection. Instead, it merely
requires Avangrid to construct, or at least pay for, facilities
reasonably necessary to prevent its interconnection from
harming other generators or transmission owners. Here, that
means Avangrid must pay for an upgrade of Seabrook’s circuit

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breaker. Regulatory context reinforces this conclusion. As
explained above, the governing tariff and LGIA implement a
regime to facilitate market entry by new generators. And that
requires access to the transmission grid. Giving incumbent
generators a veto over new entry would frustrate that system.
For these reasons, Seabrook is wrong to argue that the tariff
negates its obligation to maintain the circuit breaker in
anticipation of changing conditions and new entrants.
The dissent frames its analysis around the proposition that
section I.3.10 of the tariff does not require Seabrook to upgrade
its circuit breaker, as FERC has acknowledged. Post at 6
(citing NECEC Transmission LLC, 176 FERC ¶ 61,148, P 23
(2021)). That much is true; the duty to upgrade arises under
article 9.7.5 of the LGIA, construed in accordance with the
LGIA’s definition of Good Utility Practice. Section I.3.10
addresses the duty to pay for the upgrade, which falls on
Avangrid. The dissent chides us for giving short shrift to the
text of section I.3.10. But the dissent does not explain how that
provision, which requires Avangrid to “construct[] at its
expense” the necessary upgrade, grants Seabrook a unilateral
right to veto Avangrid’s interconnection.
The dissent further says that we interpret section I.3.10 as
permitting Avangrid to connect to the grid before Seabrook
upgrades its circuit breaker. Post at 6. But as we have already
indicated, we agree with the dissent on this point: Section
I.3.10 clearly prohibits Avangrid from interconnecting until the
new breaker is constructed. Our disagreement with the dissent
centers on other points: whether article 9.7.5 of the LGIA
requires Seabrook to maintain an adequate breaker as new
generators join the grid (it does) and whether section I.3.10 of
the tariff permits Seabrook to frustrate new entrants by refusing
to upgrade the breaker (it does not).

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Lastly, the dissent criticizes us for even considering
statutory and regulatory purpose in construing the LGIA and
the tariff. But the LGIA is no ordinary private contract; it is a
standard set of terms imposed by FERC to advance the goal of
Orders 888 and 2003 to foster competition in electricity
markets. The dissent does not dispute that its reading of the
tariff and LGIA would frustrate that goal. Yet courts should
prefer textually permissible readings that would advance
statutory or regulatory goals over ones that would frustrate
them. See, e.g., Staub v. Proctor Hosp., 562 U.S. 411, 420
(2011) (Scalia, J.); A. Scalia & B. Garner, Reading Law 63
(2012) (“A textually permissible interpretation that furthers
rather than obstructs a document’s purpose should be
favored.”). These are bedrock principles of statutory
construction. Our application of them here does not, as the
dissent contends, smuggle into our analysis a “Chevron-like
framework,” post at 6.1
C
In the orders under review, FERC refused to order
Avangrid to reimburse Seabrook for certain indirect upgrade
1 Seabrook and the dissent also invoke article 30.5 of the LGIA,
which states that the agreement “does not create rights, remedies, or
benefits” in favor of any third parties. J.A. 356; see post at 6–7 n.3.
We read that provision to mean that Avangrid cannot claim status as
an intended third-party beneficiary to that contract, which would
enable it to sue in court for breach of contract. See, e.g., Brooks v.
Trs. of Dartmouth Coll, 20 A.3d 890, 900 (N.H. 2011); Restatement
(Second) of Contracts § 302 cmt. a (1981). We do not read that
provision—imposed by FERC in Order No. 2003—to restrict
FERC’s own authority to police transactions or facilities as otherwise
authorized by section 201(b). Nor do we read it to cabin the reach of
article 9.7.5.

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costs, including legal expenses and opportunity costs in the
form of lost profits. FERC reasoned that neither the ISO New
England tariff nor agency precedent affords compensation for
such indirect costs. NextEra Energy Seabrook, 182 FERC ¶
61,044, PP 100–06; NextEra Energy Seabrook, 183 FERC ¶
61,196, PP 36–46. Seabrook contends that this determination
was arbitrary. We disagree.
As noted above, section I.3.10 of the tariff provides that if
a new interconnection would impose a “significant adverse
effect” on the systems of an incumbent generator, the
connection may not proceed until the new participant “takes
such action or constructs at its expense such facilities” as are
reasonably necessary to avoid the harm. J.A. 724. This
provision makes Avangrid responsible for the direct costs of
replacing the circuit breaker, which involve “construct[ing]”
the “facilities” necessary to protect Seabrook from future fault
currents. But foregone profits or legal expenses cannot easily
be described as the costs of constructing new facilities.
Moreover, as we explained in rejecting a transmission owner’s
claim for outage costs, “under well-established FERC rules, all
rates and charges must be clearly and specifically set forth.” S.
Co. Servs., Inc. v. FERC, 353 F.3d 29, 34 (D.C. Cir. 2003).
Here, even if the tariff arguably reaches the indirect costs
demanded by Seabrook, it does not cover those costs “clearly
and specifically.”
FERC also correctly described its own precedent, under
which opportunity costs are not usually available for outages
made to complete a generator interconnection. In Order No.
2003, the Commission reasoned that estimating such costs in
advance is often difficult and, as a general matter, such outages
“should be considered a normal part of doing business.” 104
FERC ¶ 61,103, PP 714–15. FERC then clarified that a
generator or transmission owner may recover for outage costs

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if “the Interconnection Agreement specifically authorizes it”
and if recovery is “justified on a case-by-case basis.” Order
No. 2003-A, 106 FERC ¶ 61,220, P 647; see, e.g., Midwest
Independent Transmission System Operator, Inc., 100 FERC
¶ 61,262, PP 44–46 (2002). But the threshold for finding that
an interconnection agreement provides for recovery of indirect
costs is high. For instance, in Southern Company Services, we
upheld the denial of outage costs despite a provision in the
interconnection agreement allowing recovery for “‘all costs
and expenses’ in connection with ‘planning, design,
construction, [and] installation’ of the interconnection
facilities.” 353 F.3d at 34. Here, neither the tariff nor the LGIA
provides for any broader recovery.
Seabrook takes issue with FERC’s reliance on the tariff at
all. It observes that the Commission declined to rely on the
tariff in finding a duty to upgrade the circuit breaker, but then
invoked the tariff to determine the amount of its requisite
compensation. We see no contradiction. The fact that the tariff
obligates new interconnection customers to pay for direct but
not indirect costs of any necessary upgrades is irrelevant to the
question whether the LGIA requires incumbent generators like
Seabrook to allow the upgrades.
Seabrook also invokes the “cost causation” principle,
which provides that “costs are to be allocated to those who
cause the costs to be incurred and reap the resulting benefits.”
S.C. Pub. Serv. Auth., 762 F.3d at 85 (cleaned up). If the
upgrade is necessary to connect Avangrid to the interstate
transmission system, Seabrook reasons, then Avangrid should
pay its full cost. But the tariff does require Avangrid to pay the
full direct costs of replacing the circuit breaker. Moreover, as
FERC explained, the upgrade may also be fairly described as
benefitting Seabrook by allowing it to continue selling power
through an integrated and expanding transmission system.

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NextEra Energy Seabrook, 182 FERC ¶ 61,044, P 105. In any
event, the cost-causation principle does not require FERC to
“allocate costs with exacting precision.” Old Dominion Elec.
Coop. v. FERC, 898 F.3d 1254, 1260 (D.C. Cir. 2018) (cleaned
up). And FERC has never understood that background
principle generally to require compensation for indirect costs
such as lost profits during interconnection outages.
Seabrook notes that, in certain limited contexts, FERC has
allowed recovery of opportunity costs where necessary to
eliminate perverse incentives, such as for delay. Here, though,
FERC found that “there is no perverse incentive that would be
remedied by opportunity costs.” NextEra Energy Seabrook,
182 FERC ¶ 61,044, P 102. To the contrary, it concluded that
Seabrook—which must manage any upgrade of its own circuit
breaker—“is in the best position to ensure” that the outage
period is not unduly extended. Id. P 105. We see no good
reason to question the reasonableness of this expert and
seemingly obvious judgment.
Finally, Seabrook raises the specter of “enterprise risk”
from the “catastrophic consequences” of a botched upgrade.
Pet. Br. at 52. On this point, the parties spar over FERC’s
rulings that consequential damages are generally unavailable in
the interconnection context and that Seabrook did not preserve
a claim for such damages in the administrative proceedings
under review. See NextEra Energy Seabrook, 183 FERC ¶
61,196, P 39. For the reasons explained above, we see nothing
arbitrary in FERC’s rulings that such damages are generally
unavailable and should not be evaluated ex ante. Beyond that,
we reserve judgment on the question whether, if the worst-case
scenario imagined by Seabrook comes to pass, there would be
any mechanism for further compensation based on whatever
happens when the upgrade actually takes place.

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19
In sum, FERC did not arbitrarily deny recovery for indirect
costs at this time. The tariff does not compel such recovery,
and FERC decisions make it at least generally unavailable.
III
FERC did not exceed its statutory jurisdiction, correctly
interpreted the governing tariff and LGIA, and permissibly
denied Seabrook compensation for any indirect costs. We
therefore deny the petitions for review.
So ordered.

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RAO, Circuit Judge, dissenting: At the center of this case
is a contract dispute. Is Seabrook Station required to upgrade
its circuit breaker so that Avangrid can connect to the ISO New
England grid? Under the plain meaning of the relevant
contracts, Seabrook has no such obligation. The Federal
Energy Regulatory Commission reached the opposite
conclusion in order to prevent Seabrook from holding up a
competitor’s interconnection. The majority takes a similar
approach. But under longstanding precedent, FERC must
interpret tariffs and contracts according to their plain meaning,
a rule that promotes stability and predictability in the provision
of energy. FERC has no authority to ignore the terms of a tariff
to achieve particular policy outcomes. If FERC finds the
application of a tariff unjust and unreasonable, section 206 of
the Federal Power Act provides a process for modifying it.
Because FERC neither followed the plain meaning of the ISO
New England Tariff nor modified it through a section 206
proceeding, its order should be vacated. I respectfully dissent.
I.
NextEra Energy Seabrook, LLC, owns Seabrook Station,
a nuclear power plant. When Seabrook connected to the power
grid, it entered into a contract with ISO New England and New
Hampshire Transmission. This Large Generator
Interconnection Agreement (LGIA) requires Seabrook to
maintain a breaker adequate to avoid faults, consistent with
Good Utility Practice. LGIA art. 9.7.5. Seabrook’s circuit
breaker is currently adequate but will become overloaded if
more entrants connect to the grid. Avangrid, a competitor to
Seabrook, seeks to connect its New England Clean Energy
Connect (NECEC) project to the grid. The ISO New England
Tariff provides detailed rules governing new interconnections.
In particular, section I.3.10 prevents interconnections until a
new entrant “constructs at its expense” any facilities the ISO
determines are “reasonably necessary to avoid” the “adverse
effect[s]” caused by the interconnection. ISO New England

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2
identified upgrading Seabrook’s breaker as the only
technologically feasible way to avoid an adverse effect from
Avangrid connecting.
Seabrook and Avangrid disagree about what obligations
the LGIA and Tariff place on Seabrook to upgrade its breaker.
FERC concluded that Seabrook would violate article 9.7.5 of
the LGIA if it did not upgrade its breaker, and the majority
agrees.
II.
Under the Administrative Procedure Act, we “decide all
relevant questions of law.” 5 U.S.C. § 706. We interpret FERC
tariffs like contracts and “must enforce unambiguous tariff
language.” Long Island Power Auth. v. FERC, 27 F.4th 705,
716 (D.C. Cir. 2022). Because contract interpretation is a
question of law, we do not defer to agencies.1 See Loper Bright
Enters. v. Raimondo, 144 S. Ct. 2244, 2265 (2024). Our task is
not to interpret with an eye to policy, but simply to “determine
the plain meaning of” the tariff. Ameren Servs. Co. v. FERC,
330 F.3d 494, 499 (D.C. Cir. 2003); see also Idaho Power Co.
v. FERC, 312 F.3d 454, 462 (D.C. Cir. 2002) (“The fact that
FERC’s order[] directly conflict[s] with the plain meaning of
the tariff alone merits a reversal.”).
The majority and the Commission conclude that Seabrook
would breach the LGIA if it declined to upgrade its breaker.
The problem with this interpretation, however, is that neither
1 While we have never deferred to agencies’ interpretation of
unambiguous contracts, we sometimes afforded Chevron-like
deference to FERC’s interpretation of ambiguous contracts. See
Ameren Servs. Co. v. FERC, 330 F.3d 494, 498–99 (D.C. Cir. 2003).
That practice, however, is incompatible with the Supreme Court’s
recent decision in Loper Bright.

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3
the Tariff nor the LGIA requires Seabrook to upgrade its
breaker to accommodate Avangrid’s connection. Without a
contractual obligation to upgrade, Seabrook cannot be in
violation of the LGIA. 2
I begin with the text of the relevant contracts—the Tariff
and the LGIA. The Tariff details the parties’ rights and
obligations with respect to a new interconnection. Section
I.3.10 of the Tariff provides that a new project like Avangrid’s
cannot interconnect until it “constructs at its expense such
facilities as the ISO determines to be reasonably necessary to
avoid [any identified] adverse effect.” Only when a new project
satisfies the requirements of section I.3.10 will it “have the
right to be interconnected.” Tariff § II.47.5. Everyone agrees
that if Avangrid connects, Seabrook’s breaker will be
overloaded, and so “Avangrid cannot connect to the grid unless
and until Seabrook upgrades the breaker.” Majority Op. 6.
While an upgrade is necessary for Avangrid to connect, the
Tariff imposes no duty on Seabrook to agree to the upgrade.
Neither FERC nor the majority point to any such provision in
the Tariff. In fact, the Tariff provision that imposes a duty on
some incumbents to upgrade does not apply to Seabrook. As
FERC correctly concluded, that provision applies only to
“Network Upgrades,” a defined term that does not include
upgrades to generation facilities like Seabrook Station.
NextEra Energy Seabrook, LLC, 182 FERC ¶ 61,044, P 76
(2023) (interpreting, in relevant part, Tariff Schedule 25,
§ 3.2.2.1). The natural consequence of having no contractual
duty to upgrade is that Seabrook may exercise veto power,
because upgrades to Seabrook’s breaker are a condition
precedent to Avangrid’s interconnection.
2 Because I find Seabrook has no contractual obligation to upgrade,
I need not address the allocation of indirect costs for such an upgrade.

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4
Indeed, FERC recognized that this was the most natural
reading of the Tariff when, one year into this three-year
proceeding, the Commission initiated a parallel section 206
proceeding and solicited proposed modifications to the Tariff.
As FERC explained, the Tariff “could create the situation
where” an interconnection could not occur until an upgrade is
made to “an existing generator,” like Seabrook, but the Tariff
“does not require the existing generator to take action with
respect to” that upgrade. NECEC Transmission LLC, 176
FERC ¶ 61,148, P 23 (2021). Under this reading, the Tariff
“may be unjust and unreasonable.” Id. FERC realized that the
Tariff allowed for the type of hold up problem present in this
case and that, to address the problem, the Tariff would need to
be modified. The majority agrees: “the tariff does not require
Seabrook to upgrade its circuit breaker.” Majority Op. 14.
Once we recognize that the Tariff imposes no obligation
on Seabrook to upgrade, and that the Tariff prevents Avangrid
from connecting unless Seabrook agrees to make the upgrades,
there can be no violation of the LGIA if Seabrook chooses not
to upgrade. Under article 9.7.5 of the LGIA, Seabrook must
maintain an adequate circuit breaker; but Seabrook’s breaker is
currently adequate.
Reading the Tariff and the LGIA together, Seabrook has
no duty to upgrade in order for Avangrid to connect. If
Seabrook refuses to upgrade, then under the Tariff, Avangrid
cannot connect, and the breaker will remain adequate. The only
scenario in which Seabrook’s breaker would be overloaded—
if Avangrid interconnects but Seabrook does not upgrade—is
expressly foreclosed by the Tariff.
III.
Neither FERC nor the majority grapple with the plain
meaning of the contracts. Their conclusion that Seabrook must

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5
upgrade for Avangrid’s connection ultimately depends on
policy concerns about ensuring competition and open grid
access. Yet policy concerns cannot rewrite the terms set in the
Tariff and the LGIA.
FERC’s orders focus on the policy problem of allowing
Seabrook to have veto power over Avangrid’s connection.
Notably, FERC did not refute Seabrook’s argument about
Tariff section I.3.10, namely that Avangrid’s interconnection
“cannot occur until Seabrook’s breaker is replaced.” NextEra
Energy Seabrook, LLC, 183 FERC ¶ 61,196, P 23 (2023).
Instead, FERC expressed “concern” that Seabrook was
“exercising veto power over the interconnections of new and
competing interconnection customers.” Id. With no
consideration of the import of Tariff section I.3.10, FERC
assessed what would happen if Avangrid connected before
Seabrook upgraded. FERC found that Seabrook’s “breaker will
be overdutied following [Avangrid’s] authorized
interconnection” and that the Good Utility Practice “standard
would be violated if Seabrook failed to replace the breaker
prior to energization of [Avangrid’s] Project.” Id. at PP 21, 24
(emphases added). The problem FERC sought to avoid,
however, is unambiguously foreclosed by Tariff section I.3.10.
The majority’s primary argument is that the LGIA requires
Seabrook to “maintain” an adequate breaker and this imposes
a “continuing responsibility” to upgrade its facilities when
there are changes to the grid. Majority Op. 11. Yet that still
leaves the question of whether Avangrid’s new connection is
the type of change that requires Seabrook to make an upgrade.
On this key question, the majority cannot point to any
contractual provision and so must rely on policy concerns
about equal access to the grid and the ipse dixit that “changing

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6
conditions must include the interconnection of new
generators.” Majority Op. 12 (emphasis added).
The majority’s conclusion also rests on the premise that,
despite section I.3.10 of the Tariff, Avangrid may connect
before Seabrook’s breaker is upgraded and cause an overload.
But this premise is contrary to both Seabrook’s and Avangrid’s
reading of the Tariff and relies on a Tariff interpretation that
the Commission never expressed. In fact, FERC has recognized
that when the necessary upgrade must be made to an existing
generation facility such as Seabrook Station, the Tariff does not
impose any requirement on that facility to make the upgrade.
NECEC Transmission LLC, 176 FERC ¶ 61,148, P 23 (2021).
Because the Tariff also plainly prevents Avangrid from
interconnecting until after Seabrook’s breaker upgrade is
constructed, there is no risk of an overloaded breaker.
Finally, the majority reverts to a Chevron-like framework,
insisting its interpretation is “textually permissible” and
consistent with regulatory goals. Even assuming for a moment
the majority’s interpretation is permissible, which it is not, it is
certainly not the best interpretation because it does not account
for section I.3.10 of the Tariff. And if an interpretation “is not
the best, it is not permissible.” Loper Bright Enters., 144 S. Ct.
at 2266.
Whether Seabrook having veto power “would frustrate”
the interconnection process and whether that veto power is
inconsistent with the policy goals of other FERC orders are
irrelevant to the court’s interpretive task, which requires
enforcing the “plain meaning” of FERC tariffs.3 Ameren Servs.
3 In any event, the majority reads the purposes of the LGIA too
broadly. FERC has undoubtedly sought to promote competition, but
the LGIA furthered that goal in a specific way by “preventing
transmission facility owners from favoring affiliated generators over

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7
Co., 330 F.3d at 499. It is improper to overrule the plain
meaning by “say[ing] that since the overall purpose of the
[contract] is to achieve x, any interpretation of the text that
limits the achieving of x must be disfavored.” A. Scalia & B.
Garner, Reading Law 168 (2012).
Moreover, the LGIA is governed by New Hampshire law,
which similarly requires following the ordinary meaning of
contracts. LGIA art. 14.2.1; Greenhalgh v. Presstek, Inc., 886
A.2d 1000, 1003 (N.H. 2005). Neither FERC nor the majority
provide an explanation for why federal energy policy concerns
are relevant to finding the plain meaning of the LGIA under
New Hampshire law. Because there is no contractual duty in
the Tariff or the LGIA that prevents Seabrook from exercising
veto power, FERC cannot impose one through interpretation.
But FERC is not without authority to address what it
considers an undesirable hold-up problem. FERC may initiate
a section 206 proceeding and modify the Tariff if the
Commission determines its plain meaning is “unjust,
unreasonable, unduly discriminatory or preferential.” 16
U.S.C. § 824e(a). If Seabrook having veto power over new
entrants is—as it may well be—unjust and unreasonable,
FERC can modify the Tariff to eliminate Seabrook’s veto
power. Because FERC reached the policy outcome it desired
by departing from the plain meaning of the Tariff, it abandoned
the section 206 proceeding it had initiated. NextEra Energy
Seabrook, LLC, 183 FERC ¶ 61,196 at P 50.
independents in interconnection.” Nat’l Ass’n of Regul. Util.
Comm’rs v. FERC, 475 F.3d 1277, 1279 (D.C. Cir. 2007). The goal
of fostering competition does not extend to third parties like
Avangrid because the LGIA plainly states that it is “not intended” to
“create rights, remedies, or benefits” for third parties. LGIA art. 30.5.

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8
The broader regulatory context and policy concerns cited
by the majority may be relevant to FERC’s determinations
when setting just and reasonable rates and practices. These
considerations, however, are impermissible for the judicial task
of identifying the plain meaning of existing tariffs and
contracts.
* * *
FERC possesses fairly sweeping authority to approve and
prospectively modify tariffs under a just and reasonable
standard. Once those tariffs are set, however, they are binding
contracts that must be enforced according to their plain
meaning, and FERC cannot retroactively change them. Okla.
Gas & Elec. Co. v. FERC, 11 F.4th 821, 829 (D.C. Cir. 2021)
(discussing the filed rate doctrine). The ordinary meaning of a
tariff provides vital notice to regulated parties about what is
required and allows those parties to order their business
accordingly.
Leaning heavily on policy concerns, the majority allows
FERC to deviate from the terms of a tariff. This has the same
effect as a retroactive change, which the Supreme Court has
recognized “could have an ‘unsettling effect on
other … transactions’ and would have a ‘potential for
disruption of … markets.’” Ark. La. Gas Co. v. Hall, 453 U.S.
571, 579 (1981) (quoting Ark. La. Gas Co. v. Hall, 13 FERC
¶ 61,000, 61,213 (1980)).
Prospective changes to the Tariff must be pursued in a
section 206 proceeding, which protects the reliance interests of
regulated parties. Before modifying a tariff, FERC must find
the “existing rates … to be entirely outside the zone of
reasonableness.” City of Winnfield v. FERC, 744 F.2d 871, 875
(D.C. Cir. 1984) (Scalia, J.). And section 206 requires FERC
to exercise its policymaking authority with regulatory

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9
protections such as notice to affected parties and a hearing. 16
U.S.C. § 824e(a). The abandoned section 206 proceeding in
this case, for example, prompted dozens of filings from public
and private entities. See In re ISO New England, FERC Docket
No. EL21-94-000. Following the section 206 process would
have also allowed FERC to consider more fully the
consequences of modifying the Tariff, such as the other issue
in this case: how the costs of any required upgrades should be
allocated.
Because the Tariff and the LGIA imposed no obligation on
Seabrook to upgrade its facilities to allow Avangrid to connect,
I would grant Seabrook’s petition and vacate FERC’s order.

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