Xcel Energy Services Inc., on Behalf of Its Public Utility Affiliate, Southwestern… v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 5, 2023 Decided August 4, 2023
No. 20-1429
XCEL ENERGY SERVICES INC., ON BEHALF OF ITS PUBLIC
UTILITY AFFILIATE, SOUTHWESTERN PUBLIC SERVICE
COMPANY,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
GOLDEN SPREAD ELECTRIC COOPERATIVE, INC., ET AL.,
INTERVENORS
Consolidated with 22-1049, 22-1064
On Petitions for Review of Orders
of the Federal Energy Regulatory Commission
Joseph W. Lowell and Phyllis G. Kimmel argued the causes
for petitioners. With them on the joint briefs was Timothy T.
Mastrogiacomo. Pamela Wu and Stephen M. Spina entered
appearances.

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Beth G. Pacella, 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.
Matthew J. Binette argued the cause for intervenors for
respondent. With him on the brief were John Longstreth,
Donald A. Kaplan, Victoria M. Lauterbach, Gunnar Birgisson,
Daniel E. Frank, Allison E. Speaker, and Richard M. Lorenzo.
Before: SRINIVASAN, Chief Judge, RAO and CHILDS,
Circuit Judges.
Opinion filed for the Court by Circuit Judge CHILDS.
CHILDS, Circuit Judge: In the energy industry, utility
companies can ask their Regional Operator to fulfill a
transmission service request, a physical transfer of power to its
electrical grids. That increased power may require use of an
existing physical structure that amplifies the grid’s capability,
known as a Creditable Upgrade.
It is the Regional Operator’s responsibility to assess
charges for Creditable Upgrade usage. The Tariff standard for
doing so is whether use of an upgrade is not needed “but for”
the request. A methodology then actualizes that standard to
assign the associated costs directly to the utility company for
reimbursement by their customers.
In this consolidated appeal of the Federal Energy
Regulatory Commission’s (FERC) orders, two utility
companies argue that Attachment Z2 plainly requires utilizing
the N-1 Contingency Analysis (N-1) methodology. And they
assert that FERC erred in concluding that the Tariff was
ambiguous, relying on extrinsic evidence to interpret that the

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Reservation Stack Analysis (RSA) was the appropriate
methodology. Second, they claim that the Regional Operator
violated the filed rate doctrine because the filed rate was
unclear about how much they would be charged. Finally,
Petitioners contend that their charges offend Attachment Z1
because the Regional Operator neither identified the upgrade
facilities that would accommodate their requests nor provided
them with an estimate of the costs of such upgrades.
We deny in part and dismiss in part the petitions for
review. FERC correctly concluded that Section II.B of
Attachment Z2 does not plainly require the N-1 methodology
because the Tariff is ambiguous. Further, FERC’s reliance on
extrinsic evidence to ascertain that the Tariff allows the RSA
methodology was not arbitrary and capricious. We lack
jurisdiction to consider Petitioners’ filed rate doctrine
argument because they failed to exhaust it at the rehearing stage
below. And the challenged sections of Attachment Z1 do not
concern the Attachment Z2 charges for which Petitioners
complain.
I.
A.
Kansas Electric Power Cooperative, Inc. (KEPCo) and
Xcel Energy Services, Inc. (Xcel) (collectively, Petitioners) are
utility companies that distribute electricity to their customers.
Intervenor Southwest Power Pool, Inc. (Regional Operator)
provides transmission services for that electricity. Its electrical
transmission lines stretch approximately 60,000 miles, from
Arkansas to Wyoming and from Texas to North Dakota. The
terms and conditions between Petitioners’ and the Regional
Operator’s contracted services are governed by individual
service agreements. Incorporated in those service agreements

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is a Tariff, which sets the rates of service. Attachment Z is the
Tariff at issue in this consolidated appeal.
“Attachment Z provide[s] that a utility [] initially fund[s]
upgrades needed to accommodate its expansion of service . . . .
Other utilities that subsequently use the upgraded transmission
facilities . . . pay a share of the upgrade costs.” Okla. Gas &
Elec. Co. v. FERC, 11 F.4th 821, 825 (D.C. Cir. 2021).
Attachment Z “does not guarantee full reimbursement; rather,
it provides financial compensation to the funding customer
when use is made of the Network Upgrades . . . .” Sw. Power
Pool, 122 FERC ¶ 61,060, 61,370 (2008).
In 2008, FERC approved splitting Attachment Z into the
two attachments relevant to this appeal. Attachment Z2
provides the standard which figures Petitioners’ costs for use
of existing Creditable Upgrades.
The same year that FERC approved Attachment Z2’s
creation, the Regional Operator proposed a revision to provide
revenue credits from transmission service requests “that could
not be provided ‘but for’” the upgrade. Request For Rehearing
of Xcel Energy Services Inc. [hereinafter Xcel Reh’g Req.] at
22, J.A. 420 (quoting Regional Operator Transmittal Letter at
7–8); see also Request for Rehearing of Kansas Electric Power
Cooperative, Inc. [hereinafter KEPCo Reh’g Req.] at 19 nn.63–
64, J.A. 161. The Regional Operator’s goal was to reimburse
utilities that supply entities by using network upgrades for
usage not only by customers who received service in the
forward direction of the initial overload but also from those
who received energy in the backward direction. Sw. Power
Pool, 123 FERC ¶ 61,208, 62,329 (2008). The “but for”
language augmented, but did not disturb, the Tariff’s dual
standard that utilities be charged for any request’s “subsequent
incremental use” of the Creditable Upgrade itself.

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FERC accepted the Regional Operator’s filing requesting
the additional “but for” language and the Regional Operator’s
reasoning that the revision would complement a continued
“subsequent incremental use” standard to assess upgrade
charges. Id. Petitioners did not object to FERC’s order at the
time. And neither the filing requesting the Attachment Z2
revision nor FERC’s order approving it mentioned any
methodology because both were still being developed. Indeed,
the software needed to calculate the credits was not developed
until 2015. See Okla. Gas, 11 F.4th at 825.
The relevant version of Attachment Z2, Section II.B,
provides:
Revenue for credits will be provided from (i) new Long-
Term Network Integration Transmission Service, and (ii)
new transmission service taken under the non-rate terms
and conditions of this Tariff by Transmission Owners
subject to Section 39.1 of this Tariff, that could not be
provided but for one or more Creditable Upgrades to
accommodate designation of new Network Loads or
Transmission Owner’s(s’) loads, new Designated
Resources or increases in the designation of existing
Designated Resources above previously designated levels.
Attachment Z2, § II.B (2013), Pet’r’s Br. at A28 (emphasis
added).1 In the immediate next sentence, the Tariff introduces
the phrase “subsequent incremental use.” Id. It states:
Revenue credits shall be determined based upon the
subsequent incremental use of each affected Creditable
1 Attachment Z2 was revised in 2008, 2010, and 2013. The 2010 and
2013 revisions did not augment Section II.B’s “but for” and

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Upgrade for such new or increased Network Load or
Transmission Owner load or Network Resource.
Id. (emphasis added).
Under Attachment Z1, however, the Regional Operator
studies long-term transmission service requests to determine
whether any new transmission facilities or new network
upgrades to existing facilities are needed to accommodate
transmission service requests. As relevant here, the Tariff
requires the Regional Operator to do two things: (1) “determine
the upgrades required to reliably provide all of the requested
service,” Attachment Z1, § III.a (2010), Pet’r’s Br. Addendum
at A12, and (2) “identify the facilities limiting the availability
of the requested aggregate transmission service and the
upgrades required to provide this service.” Id. § III.c at A13.
B.
Petitioners’ transmission service requests occurred
between 2008 and 2010. When service requests are submitted,
the Regional Operator conducts an Aggregate Facilities Study
Report to identify a cost estimate. The Regional Operator
issued these reports in 2012.
For KEPCo, the Regional Operator noted in Table Three
of the Aggregate Study Report that KEPCo may need to pay
four Creditable Upgrade charges. Table Two, however, stated
that KEPCo’s four transmission service requests had no
Creditable Upgrade charges allocated to them. For Xcel, the
report noted that Petitioners may need to pay for twenty-five
“subsequent incremental use” language at issue in this appeal. In this
opinion, we will refer to the 2013 version because that was the most
recent Tariff for which Petitioners were assessed charges in 2016.

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Creditable Upgrades. At least one report explained that the
service agreement would identify the “terms and conditions
of . . . confirmed service.” Aggregate Facilities Study Rep. at
2, J.A. 65.
KEPCo’s four service agreements confirmed zero
Creditable Upgrade charges. The agreement stated, “[t]hese
upgrade costs are not assignable to the Network Customer.”
Complaint Requesting Fast-Track Processing of Kansas
Electric Power Cooperative, Inc. at 12, J.A. 12 (citation
omitted). Xcel’s service agreement, however, confirmed
charges for five Creditable Upgrades.
Meanwhile, a working group within the Regional Operator
developed a methodology to realize Attachment Z2’s dual “but
for” and “subsequent incremental use” standards. That work
was reflected in a White Paper, which compared two
methodologies: N-1 and RSA. 2011 Crediting Process Task
Force White Paper [hereinafter White Paper] at 1–20, J.A. 272–
92. N-1 works like this: Petitioners’ transmission service
requests are configured within a computerized transmission
system model. The model then runs two simulations, one with
the upgrade and one without it, to gauge whether the request
required use of the upgrade. If the resulting transmission
model cannot sustain the transmission service request without
the benefit of the upgrade, the service request satisfies the “but
for” condition, and revenue credits are due. It is, therefore, a
model that analyzes request-by-request and upgrade-by-
upgrade.
For various reasons, the White Paper concluded that the N-
1 methodology was impractical. White Paper at 2–3, J.A. 274–
75. First, it would be adversely impacted by the volume of
transmission service requests. That is because each request
would need to be analyzed against each upgrade to see if the

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upgrade is necessary. Hundreds of requests occur each hour.
Second, the methodology could be affected by the order in
which each request and upgrade are assessed. Third, the
methodology’s baseline transmission model could be
imprecise with embedded past-upgrades needed for past-
approved requests. As a result, it would require that past-
upgrades be removed to study whether recent requests benefit
from the same upgrade. But, likely, new requests would still
need the baseline upgrade, obfuscating whether the “but for”
test is clearly met.
Given the N-1 methodology’s shortcomings, the White
Paper recommended the RSA methodology. White Paper at 3–
7, J.A. 275–79. After combining multiple like transmission
service requests into a stack, determining whether that stack
cumulatively utilizes at least three percent of a particular type
of upgrade, and configuring the direction and magnitude of the
stack’s impact on the upgrade, it then applies three rules. White
Paper 4–6, 8, J.A. 276–78, 280. For forward energy flows,
Rule One determines if the reservation stack subsequently uses
the upgrade in the same direction which caused the upgrade to
be needed. For backward energy flows, Rule Two figures if
the reservation stack could not have been provided at the time
immediately before use of the upgrade “but for” the capacity
provided by the upgrade. Rule Three augments Rule Two if
the requests are long-term or short-term. The application of
these three rules varies depending on the particular upgrade at
issue. After all rules are applied, the Regional Operator
determines the cost associated for use of the upgrade.
Ultimately, stakeholders, including Petitioners, unanimously
endorsed the White Paper’s conclusions.
In 2016, applying the RSA methodology, the Regional
Operator imposed upgrade charges that had not been
specifically mentioned in the service agreements. The

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Regional Operator billed KEPCo for seven Creditable
Upgrades, totaling $6.2 million. Four of those upgrades were
not included in Table Two of the 2010 Aggregate Study Report
and none were included in its service agreements. Similarly,
the Regional Operator billed Xcel for 101 Creditable Upgrades,
totaling $12.8 million. Seventy-six of those upgrades were not
identified in its aggregate study, and ninety-six were not
included in its service agreement.
C.
In 2016 and 2017, Petitioners filed complaints with three
primary arguments relevant to this appeal. First, they argued
that the Regional Operator’s assignment of certain Creditable
Upgrade charges using the RSA methodology violated
Attachment Z2’s “but for” standard. Second, they contended
that the Regional Operator violated the filed rate doctrine
because, in part, the filed rate failed to include the upgrade
charges that they would ultimately be assessed. Finally, they
argued that the Regional Operator disregarded Attachment
Z1’s instruction to determine the required upgrades and their
requisite cost estimates.
FERC dismissed each Petitioner’s complaint. First, FERC
decided that Attachment Z2’s “but for” standard did not plainly
require the N-1 methodology. Order on Complaint and
Establishing Hearing and Settlement Judge Procedures
[hereinafter KEPCo Compl. Ord.], 161 FERC ¶ 61,145 (2017),
J.A. 120; Order on Complaint [hereinafter Xcel Compl. Ord.],
162 FERC ¶ 61,203 (2018), J.A. 390. FERC explained that the
RSA methodology better realized the Tariff’s standards by
relying on two sources of extrinsic evidence: the 2012 White
Paper and the Regional Operator’s 2008 filing requesting the
addition of the “but for” language to Attachment Z2. KEPCo
Compl. Ord. ¶¶ 64–72, J.A. 119–24; Xcel Compl. Ord. ¶¶ 73–

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76, J.A. 390–91 (collapsing the filed rate doctrine and
Attachment Z2 analyses into one). Second, FERC rejected
Petitioners’ contention that the Attachment Z2 charges violated
the filed rate doctrine. It decided that Petitioners were notified
of possible upgrade charges in the Aggregate Facilities Study
Reports and the White Paper. KEPCo Compl. Ord. ¶¶ 60–61,
J.A. 117–18; Xcel Compl. Ord. ¶¶ 73–76, J.A. 390–91.
Finally, FERC concluded that the Regional Operator did not
violate Attachment Z1, KEPCo Compl. Ord. ¶¶ 62–63, J.A.
118–19; Xcel Compl. Ord. ¶¶ 77–79, J.A. 392–93, reasoning
that when the Regional Operator stated that charges may be
assessed in the 2010 Aggregate Study Report, it satisfied its
obligations. KEPCo Compl. Ord. ¶ 63, J.A. 119; Xcel Compl.
Ord. ¶ 77, J.A. 392.
Petitioners then requested a rehearing. They argued that:
FERC’s interpretation of Attachment Z2 violated its plain
terms; FERC did not make any findings that Attachment Z2
was ambiguous; FERC wrongly considered extrinsic evidence
to alter the meaning of Attachment Z2; and FERC disregarded
Xcel’s evidence. Petitioners also contended that FERC erred
in finding that the Regional Operator’s assignment of upgrade
charges did not violate the filed rate doctrine because it failed
to list the total number of charges Petitioners would be required
to pay. And they re-emphasized that the Regional Operator
violated Attachment Z1’s process requirements.
FERC denied the requests for rehearing. In its rehearing
orders, FERC affirmed most of its prior rulings. Order on
Complaint and Establishing Hearing and Settlement Judge
Procedures [hereinafter KEPCo Reh’g Ord.], 178 FERC
¶ 61,095 (2022), J.A. 177–79, 182–87; Order Addressing
Arguments Raised on Rehearing [hereinafter Xcel Reh’g Ord.],
178 FERC ¶ 61,096 (2022), J.A. 450–58. However, FERC no
longer concluded that Petitioners had notice for charges during

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the historical period (2008-2016) because Attachment Z2 “did
not provide notice that upgrade users could be charged outside
of Section I.7.1.’s [one-year] billing requirements.” Okla. Gas,
11 F.4th at 831; see also KEPCo Reh’g Ord. ¶¶ 16–18, J.A.
173–75; Xcel Reh’g Ord. ¶¶ 39–41, J.A. 460–61. Regardless,
Attachment Z2 still provided notice of prospective obligations
after 2016. KEPCo Reh’g Ord. ¶ 18, J.A. 175; Xcel Reh’g Ord.
¶ 41, J.A. 461.
Petitioners timely filed petitions for review.
D.
We review FERC’s actions under the Administrative
Procedure Act’s “arbitrary and capricious” standard. 5 U.S.C.
§ 706(2)(A); FERC v. Elec. Power Supply Ass’n, 577 U.S. 260,
292 (2016). And we must uphold FERC’s determination “if
the agency has examine[d] the relevant [considerations] and
articulate[d] a satisfactory explanation for its action[,]
including a rational connection between the facts found and the
choice made.” Elec. Power Supply Ass’n, 577 U.S. at 292
(alterations in original) (quotations and citation omitted); see
also Coal. of MISO Transmission Customers v. FERC, 45 F.4th
1004, 1017 (D.C. Cir. 2022).
II.
A.
We first answer whether Attachment Z2, Section II.B
plainly requires the N-1 methodology. It does not.
“When reviewing [FERC’s] interpretation of a [T]ariff,
this [C]ourt first consider[s] de novo whether the relevant
language unambiguously addresses the matter at issue, and if

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so, we apply that unambiguous meaning.” Okla. Gas, 11 F.4th
at 827 (quotations and citation omitted). “If, however, there is
ambiguity, we defer to [FERC’s] construction so long as that
construction is reasonable.” Id.; see also Old Dominion Elec.
Coop. v. FERC, 892 F.3d 1223, 1230 (D.C. Cir. 2018); ESI
Energy, LLC v. FERC, 892 F.3d 321, 331 (D.C. Cir. 2018).
Starting with the Tariff, Attachment Z2 states in relevant
part that “[r]evenue for credits will be [assessed for
transmission service requests] that could not be provided but
for one or more Creditable Upgrades . . . .” Attachment Z2,
§ II.B (2013), Pet’r’s Br. Addendum at A28 (emphasis added).
It continues, “Revenue credits shall be determined based upon
the subsequent incremental use of each affected Creditable
Upgrade . . . .” Id.
Petitioners ask us to read this Tariff as plainly requiring
the N-1 methodology. To do so, they argue that the RSA
methodology disregards the Tariff’s “but for” standard because
it fails to apply it with integrity, disregarding the phrase “could
not be provided” in the text. Pet’r’s Br. 31–35. We disagree.
The plain text of Attachment Z2, Section II.B is
ambiguous with respect to what methodology could be used to
calculate charges. As FERC concluded, Petitioners’ preferred
N-1 methodology is not mentioned in Attachment Z2. E.g.,
Xcel Reh’g Ord. ¶ 21, J.A. 451. And the Tariff does not
prescribe how the Regional Operator is to comply with the “but
for” requirement. For example, it does not specify (i) what
weight a methodology should give the Tariff’s dual “but for”
and “subsequent incremental use” standards, (ii) how strict the
methodology’s application of the “but for” standard must be,

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nor (iii) whether transmission service requests and a Creditable
Upgrade must be analyzed on an individual basis.
Petitioners tell us, however, that FERC failed to conclude
expressly that Attachment Z2 was ambiguous. But on
rehearing, FERC “found that the revenue crediting process as
described under Attachment Z2 in the Tariff is ambiguous.”
Xcel Reh’g Ord. ¶ 23, J.A. 453. It also signaled in a footnote
that the Tariff contained latent ambiguity because, while the
language may appear facially clear, its vagueness arises from
applying the language to the underlying facts. Id. at ¶ 21 n.45,
J.A. 451. Moreover, FERC stated that Attachment Z2 “is
susceptible to more than one meaning and could be satisfied by
more than one methodology.” Id. at ¶ 22, J.A. 452–53. Even
assuming FERC’s explanation did not convey that the Tariff
was ambiguous concerning its “but for” language, FERC never
concluded that the plain text was clear.
B.
We must next decide whether FERC’s interpretation of
Attachment Z2, Section II.B was reasonable. It was. The two
sources of extrinsic evidence that FERC relied on to conclude
that the RSA methodology was the correct interpretation of
Attachment Z2, Section II.B are the following: a 2012 White
Paper and the Regional Operator’s 2008 filing requesting the
addition of the “but for” language to Attachment Z2. Each of
these was within FERC’s purview to ascertain Attachment Z2’s
meaning in light of the Tariff’s ambiguity.
This Court affords “substantial deference” to FERC’s
interpretations of ambiguous Tariff provisions, even when it
uses extrinsic evidence. Old Dominion Elec. Coop., Inc. v.
FERC, 518 F.3d 43, 49 (D.C. Cir. 2008). Indeed, “[o]nly if [a
Tariff] is ambiguous can FERC consider extrinsic evidence as

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an aid to interpretation.” Appalachian Power Co. v. FERC, 101
F.3d 1432, 1435 (D.C. Cir. 1996) (citation omitted).
1.
Relying on the White Paper, FERC concluded that the N-
1 methodology was practically inferior to the RSA. The White
Paper conducted a thorough feasibility study that compared the
two methodologies. It detailed that the RSA methodology
pools like transmission service requests and applies Rules to
best realize the Tariff’s dual “but for” and “subsequent
incremental use” standards. FERC agreed. Because of the
volume and order of transmission service requests, and
problems with the base model of the N-1 methodology, FERC
decided that the N-1 methodology would be a poor tool to
isolate whether a particular upgrade is not needed “but for” the
requests. KEPCo Reh’g Ord. ¶ 37 nn.85–86, J.A. 184; Xcel
Reh’g Ord. ¶ 22 nn.47–48, J.A. 452.
Petitioners’ attempts to weaken the White Paper’s
practical comparison as either contradicting the substantial
evidence before FERC or as the result of unreasoned decision
making fail. Petitioners largely make three complaints about
the White Paper: 1) that it was considered four years after
Attachment Z2 was agreed to in 2008 and thus cannot be used
as extrinsic evidence of intent; 2) that it contradicts the plain
text of Attachment Z2’s “but for” test because FERC describes
the RSA methodology as merely “facilitating” a transmission
service request; and 3) that FERC misrepresents the N-1
methodology’s feasibility because, in 2018, the Regional
Operator decided that it would eliminate short-term
transmission requests as eligible for Creditable Upgrades,
thereby reducing the vast number of reservation requests that
make the N-1 methodology more practically difficult to
implement. We will take each in turn.

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First, in considering the White Paper, FERC noted
Farmland Industries, Inc. v. Grain Board of Iraq, 904 F.2d
732, 736 (D.C. Cir. 1990), which stated that “if extrinsic
evidence supports more than one reasonable interpretation of
the contract, . . . the trier of fact [can] resolve the dispute.”
KEPCo Reh’g Ord. ¶ 39 n.88, J.A. 185; Xcel Reh’g Ord. ¶ 24,
n.50 J.A. 453. But “it is not necessary to give weight to
extrinsic evidence made during litigation and prepared long
after the contract has been negotiated.” Amerada Hess Pipeline
Corp. v. FERC, 117 F.3d 596, 606–07 (D.C. Cir. 1997); see
KEPCo Reh’g Ord. ¶ 38, n.88, J.A. 185.
Here, while the White Paper did post-date the service
agreement, numerous transmission customer stakeholders,
including Petitioners, unanimously endorsed its conclusion that
the RSA methodology was preferred to the N-1 methodology.
KEPCo Reh’g Ord. ¶ 6, J.A. 169; Xcel Reh’g Ord. ¶ 7, J.A.
445. And the 2012 White Paper’s purpose was to realize
Attachment Z2’s “but for” standard. See White Paper at 1, J.A.
273. Further, Amerada did not prohibit any consideration of
delayed extrinsic evidence merely because of a time difference.
117 F.3d at 606–07. On the record before us, reliance upon the
White Paper is not erroneous solely because it followed
Attachment Z2.
Second, Petitioners argue that FERC erred in describing
the RSA methodology as merely “facilitat[ing]” use of a
Creditable Upgrade rather than describing usage as
“necessary,” per the Tariff’s standards. Pet’r’s Br. 41–43. And
by doing so, “FERC is mistaking the White Paper’s own
characterization of its process for what the process actually
does.” Id. at 43. However, FERC’s reasoning reveals that it
correctly understood the RSA methodology. At the outset,
FERC reasoned that the RSA methodology “gives meaning

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both to the ‘but for’ language and the ‘subsequent use’
language in the Tariff . . . .” Xcel Reh’g Ord. ¶ 25, J.A. 454.
It also explained that “[t]o be considered a ‘Creditable
Upgrade’ in the first instance, the upgrade will have been
determined to be needed to relieve a constraint to accommodate
flow from the previously-granted service.” Id. at ¶ 24, J.A. 453
(emphasis added). That explanation follows the White Paper,
which made clear that it did not automatically include just “any
use of the upgrade” but only those above a three-percent effect
on Creditable Upgrades and in the same direction as the needed
upgrade. White Paper at 4–6, 8, J.A. 276–78, 280. Thus,
FERC did not err in describing the RSA methodology and in
concluding that it satisfies Attachment Z2, Section II.B.
Petitioners next argue that FERC misrepresented the
feasibility of the N-1 methodology because, in 2018, the
Regional Operator decided it would eliminate short-term
transmission requests as eligible for Creditable Upgrades. Sw.
Power Pool, Inc., 163 FERC ¶ 61,092 (2018). But FERC did
not reason that the N-1 methodology was only plagued by the
volume of short-term requests. KEPCo Reh’g Ord. ¶ 37
nn.85–86, J.A. 184; Xcel Reh’g Ord. ¶ 22 nn.47–48, J.A. 452.
As the White Paper noted, and the Regional Operator’s witness
confirmed, the volume of requests—both long-term and short-
term—affect the N-1 methodology’s practicality. See White
Paper at 2–3, J.A. 274–75; KEPCo Reh’g Ord. ¶ 37 n.85, J.A.
184. Besides, as FERC explained, the N-1 methodology is also
inaccurate due to the order of requests and its baseline
transmission model that could already include needed
upgrades. White Paper at 2–3, J.A. 274–75. Petitioners’ attack
against just one of the N-1 methodology’s weaknesses does not
persuade us that FERC’s reasoning—even with short-term
requests deemed ineligible for utilizing Creditable Upgrades
post-2018—contradicts the evidence before it.

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2.
FERC’s second source of extrinsic evidence for the RSA
methodology comes from a filing and order almost a decade
before charges were assigned to Petitioners. FERC explained
in detail how, in 2008, when Attachment Z2 was first created,
the Regional Operator revised its Tariff to add the “but for”
language. KEPCo Reh’g Ord. ¶ 42, J.A. 187; Xcel Reh’g Ord.
¶¶ 27–29, J.A. 455–56. The point was to prevent free riders
who benefit from transmission service for backward-flowing
energy. Sw. Power Pool, 123 FERC ¶ 61,208, 62,329. In its
filing, the Regional Operator reiterated that the “proposal [wa]s
consistent with currently effective Section VII.2 of Attachment
Z (now Section [II.B] of Attachment Z2), which requires
network customers to pay for new[,] or increased uses of
network upgrades.” Xcel Reh’g Req. at 22, J.A. 420 (citation
omitted). FERC accepted the Regional Operator’s request
without qualification. See Sw. Power Pool, 123 FERC
¶ 61,208, 62,329. And Petitioners did not object at that time to
the Regional Operator’s proposed filing or FERC’s order. As
FERC noted, the revised Tariff confirmed far earlier than the
2016 charges that the correct methodology would perform both
the “but for” and the “subsequent incremental use” standards.
See KEPCo Reh’g Ord. ¶ 42, J.A. 187; Xcel Reh’g Ord. ¶ 28,
J.A. 455.
In sum, FERC’s reasoning was not arbitrary and capricious
in concluding that the RSA methodology best realizes the
Tariff’s standards for how to assess Creditable Upgrade
charges. Accordingly, we cannot say that FERC’s orders

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contradicted the substantial evidence before it. Nor can we say
that the orders constituted unreasoned decision making.
II.
We next address whether FERC erred in concluding that
the Regional Operator did not violate the filed rate doctrine.
We cannot consider the merits of that question because
Petitioners failed to exhaust at the rehearing stage below that
its complaint was about the filed rate’s lack of specificity.
The Federal Power Act requires public utilities to file with
FERC schedules showing “all rates and charges” and the
“classifications, practices and regulations affecting such rates
and charges.” 16 U.S.C. § 824d(c) (emphasis added). Such is
the filed rate doctrine, which “assures that customers receive
adequate notice of their utility costs.” Ark. Pub. Serv. Comm’n
v. FERC, 891 F.3d 377, 383 (D.C. Cir. 2018). That doctrine is
impenetrable and does not yield to equities. Okla. Gas, 11
F.4th at 829–30.
But 16 U.S.C. § 825l(a) requires that parties “set forth [the
grounds for rehearing] specifically.” That obligation is
jurisdictional. New Eng. Power Generators Ass’n v. FERC,
879 F.3d 1192, 1197–98 (D.C. Cir. 2018); Wabash Valley
Power Ass’n v. FERC, 268 F.3d 1105, 1114 (D.C. Cir. 2001)
(describing the Federal Power Act’s exhaustion requirement as
an “unusually strict requirement”).
On appeal, Petitioners argue that “FERC overlooks the fact
that . . . [S]ection 205(c) of the Federal Power Act and FERC’s
own implementing regulations . . . create the obligation to
specify all charges in the service agreements.” Pet’r’s Br. 53
(emphasis added). But below, their arguments did not concern
whether Attachment Z2’s “but for” language was specific

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enough to qualify as a filing of the rate. Rather, they argued
whether their assessed charges generally appeared in the filed
rate. KEPCo Reh’g Req. at 7–13, J.A. 149–55; Xcel Reh’g
Req. at 30–37, J.A. 428–35. For example, below, “KEPCo
explained that it relied on the[ service] agreements that did not
specify directly assigned cost liability—or even indicate a
possibility of directly assigned cost liability—for Z2 facilities.”
KEPCo Reh’g Req. at 9, J.A. 151. Yet, that argument pertains
to whether the Regional Operator failed to list the number of
all Creditable Upgrades that might be required, not that
Attachment Z2, Section II.B and the service agreements were
too vague to qualify as a filed rate. Therefore, this Court cannot
squint its eye to read into Petitioners’ use of the word “specify,”
KEPCo Reh’g Req. at 9, J.A. 151, to clear the jurisdictional
hurdle for “specific[]” arguments. 16 U.S.C. § 825l(a).
Had Petitioners been clearer about their complaint,
FERC’s orders below may have been different. Perhaps, FERC
would have noted this Court’s relevant precedents regarding a
filed rate’s specificity. See, e.g., Cleveland v. FERC, 773 F.2d
1368 (D.C. Cir. 1985); Keyspan-Ravenswood, LLC v. FERC,
474 F.3d 804 (D.C. Cir. 2007); see also Oral Arg. Tr. 73:12–
24. Those cases were missing throughout Petitioners’ briefing
below. And FERC may have been prompted to defend or
contextualize its use of the unfiled White Paper as rate-setting.
See Oral Arg. Tr. 65:3–14. But FERC did not do so because
Petitioners were imprecise in presenting their arguments
below. Ultimately, exhausting specific arguments is
Petitioners’ burden.

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III.
Finally, we must answer whether Attachment Z1 requires
the Regional Operator to notify Petitioners of all their charges
under Attachment Z2. It does not.
Attachment Z1 requires that the Regional Operator (1)
“determine the upgrades required to reliably provide all of the
requested service,” Attachment Z1, § III.a (2010), Pet’r’s Br.
Addendum at A12, and (2) “identify the facilities limiting the
availability of the requested aggregate transmission service and
the upgrades required to provide this service.” Id. § III.c at
A13. By its own terms, Attachment Z1 does not concern the
Attachment Z2 charges for which Petitioners complain.
Because of that difference, this Court cannot use it to reverse
FERC’s order below.
FERC appropriately noted that the purpose of Attachment
Z1 is to identify new transmission facilities or new upgrades to
existing facilities, while Attachment Z2 is designed to calculate
a customer’s obligation to pay for its use of existing Creditable
Upgrades funded by others. See KEPCo Reh’g Ord. ¶¶ 4–5,
J.A. 168–69; Xcel Reh’g Ord. ¶¶ 4–5, J.A. 443–44; see also
Int. Br. 31–33. Although FERC did not expressly invoke this
rationale as the basis for rejecting Petitioners’ Attachment Z1
challenge, we may nevertheless affirm FERC’s order because,
“when an agency relies on multiple grounds for its decision,
some of which are invalid, we may nonetheless sustain the
decision as long as one is valid and ‘the agency would clearly
have acted on that ground even if the other were unavailable.’”
Bally’s Park Place, Inc. v. NLRB, 646 F.3d 929, 939 (D.C. Cir.
2011) (quoting Casino Airlines, Inc. v. Nat’l Transp. Safety
Bd., 439 F.3d 715, 717 (D.C. Cir. 2006)); see also Texas
Neighborhood Services v. HHS, 875 F.3d 1, 7 (D.C. Cir. 2017)
(holding an agency’s arbitrary failure to consider an issue was

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harmless because its other reasonable conclusions “amply
supported [its] decision”).
Because the difference between Attachment Z1 and
Attachment Z2 arises out of their plain texts, and FERC’s
orders acknowledged that difference, we conclude FERC
“would clearly have acted on [this] ground even if the other
[grounds] were unavailable.” Bally’s Park Place, Inc., 646
F.3d at 939 (quotations and citation omitted). Therefore,
denying the petitions for review on this issue is consistent with
this Court’s precedents.
* * *
For the foregoing reasons, we dismiss in part the petitions
for review related to the filed rate doctrine because that issue
was not exhausted at the rehearing stage below. We otherwise
deny in part the petitions for review.
So ordered.

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