Hughes v. PPL Energyplus

Oral argument transcript · No. 14-614 · October Term 2015 · argued February 24, 2016 · the respondent won

Decision: votes, opinion and citations · Official transcript (PDF) · Argument audio at the Supreme Court

Advocates

• Scott H. Strauss, Washington, D.C., for the petitioner
• Clifton S. Elgarten, Washington, D.C., for the petitioner
• Paul D. Clement, Washington, D.C., for the respondent
• Ann O'Connell, Assistant to the Solicitor General, amicus curiae supporting the respondent

Transcript

From the Court's official transcript; speaker labels as in the transcript, with advocates' full names from its list of appearances.

Chief Justice Roberts: We will hear argument this morning in Case No. 14­614, Hughes, Chairman of the Maryland Public Service Commission, v. Talen Energy Marketing and the consolidated case. Mr. Strauss. ORAL ARGUMENT OF SCOTT H. STRAUSS ON BEHALF OF THE NO. 14­614 PETITIONERS

Scott H. Strauss: Mr. Chief Justice, and may it please the Court: Maryland determined that new generation was needed for local reliability, so it directed its retail utilities to sign 20­year contracts with a competitively selected project developer. Maryland's action did not intrude on Federal authority, primarily for two reasons. The first reason is that Maryland's new resource did not distort the wholesale capacity auction. FERC revised its auction bidding rules to require the Maryland resource to bid on the basis of its cost, backing out any State contract revenue. The developer bid in accordance with the rules and cleared the auction. FERC says that means that the resource is Alderson Reporting Company Official 1 economic, needed, competitive, and does not suppress prices, any State revenue notwithstanding. The second reason is ­­

Chief Justice Roberts: Well, if it doesn't suppress prices, why did Maryland do it?

Scott H. Strauss: Maryland did it, Your Honor, because they saw a need for generation going forward. As is clear in the generation order, Maryland perceived a problem. It had large coal units that it believed were going to retire in the coming years, and it needed to have resources in place to be able to meet that need. So it undertook to have those resources built pursuant to the contract mechanism before you.

Justice Kennedy: But if that hadn't happened, prices would have been higher. So it was to suppress prices.

Scott H. Strauss: No, it was not to suppress prices, and, frankly, Your Honor, could not have suppressed prices. FERC revised the rules in 2011 to be clear that the resource had to bid on the basis of its costs without regard to the State revenue. So there was no way for it to suppress prices. If the costs had been too high for the resource, it would never have cleared. It wouldn't have been in the market at all. It was only Alderson Reporting Company Official 1 in the market because it was able to clear on the basis of its cost, which showed it was efficient. And FERC made that finding. FERC found it needed, competitive, and not suppressive of prices notwithstanding the subsidy.

Justice Ginsburg: Well, why was this done through stepping on FERC's turf at all? I mean, could it have been done by requiring long­term contracts with the new generator?

Scott H. Strauss: It was done through long­term contracts, Your Honor, but the question of getting involved with FERC's turf is as follows: FERC has ­­ has set up the capacity auction in PJM, and when under that auction, PJM procures three years in advance for a one­year period all the capacity the region needs, and then it allocates the cost of that capacity among all the utilities. But it tells the utilities that you have a way to hedge against those costs. If you have long­term resources, resources that you bought or procured through contract, you can bid them in, and if they clear, they will offset the cost. Maryland's concern was this: It wanted and needed the resource, but it was concerned that the resource clear so that it hedge against the cost and customers not pay twice for the same resource. Alderson Reporting Company Official 1 So in order to do that, it entered into the contract for differences. And the way it did that was it did a competitive procurement and found a developer who was willing to undertake the risk of nonclearance. And that was the issue. The contract for differences assigns and allocates that risk to the developer, not the State, and that enabled the resource to go forward in a way that would not result in any possibility of a double charge. The contract developer ­­ the developer receives the contract price. The utilities paid the contract price and no more than that, received the market price. That is exactly the way this would have worked if we had simply done it as a bilateral, with one key difference. The difference is that the risk of nonclearance is with the developer, not the ­­

Justice Alito: Well, there's another key difference. If you had done it directly with ­­ if CPV had contracted directly with the distribution utilities, that would have been subject to regulation by FERC, would it not?

Scott H. Strauss: Yes. This contract was as well.

Justice Alito: Only after you lost in the Fourth Circuit did you concede that, isn't that correct, Alderson Reporting Company Official 1 on the very day of the Fourth Circuit's decision?

Scott H. Strauss: No, Your Honor.

Justice Alito: No.

Scott H. Strauss: In the district ­­ let me explain why. In the district court, during the district court litigation, CPV obtained market­based rate authority from the FERC and filed a motion with the court telling the court that the case should be dismissed because the contract was being entered into pursuant to that authority. And that made it a FERC contract that could be reviewed at FERC. So any party could have filed the complaint.

Justice Alito: But your initial position was that it did not have to be reviewed by FERC; wasn't that ­­ isn't that right?

Scott H. Strauss: That's ­­ that's correct. The position below was that it was either of two things, Your Honor. Either it was a non­jurisdictional financing arrangement or it was a FERC­jurisdictional contract. But either way it was not preempted, and that was the question. It was either subject to FERC's jurisdiction or outside it. But the question of whether it was preempted would not have been ­­ the answer would have been the same regardless. The district court decided that it would deal with that motion in its Alderson Reporting Company Official 1 order, and decided in its opinion that while it probably was a FERC­jurisdictional contract, the judge went ahead and found what Maryland had done unconstitutional.

Justice Kagan: I'm not sure why it is that when you say it was subject to FERC's jurisdiction, that doesn't end the case right there against you, because if it's subject to FERC's jurisdiction, that means it's a wholesale sale. And that's for FERC to do is to set the rates and other terms of wholesale sales, and that's not for the States to do. So that means you're preempted.

Scott H. Strauss: No, that's ­­ no, no. No, it does not. You're exactly right, Your Honor. Wholesale sale is for FERC to review. But the way the statute works, sellers under the statute are permitted to set rates as an initial matter by contract or tariff. FERC superintends that process, as this Court decided in the NRG case a number of years ago. In this case, the developer, the seller set the rate through a contract entered into with the State utility. That contract would be subjected to FERC review. That's just another day on ­­

Justice Kagan: Are you saying that Maryland didn't set the rates just because they use an auction? Is that what you're saying?

Scott H. Strauss: Maryland did not set the rate Alderson Reporting Company Official 1 because Maryland did not select the price. The price was selected by the seller.

Justice Kagan: That's true of FERC itself. FERC doesn't set rates anymore, either. It allows an auction to set rates, but we would never say that that doesn't mean that they are FERC rates, that they are FERC­approved rates. And so here, the fact that Maryland decided not to set rates directly but to allow an auction to do it, I mean, that's just a mechanism that Maryland chose. They are still Maryland's rates.

Scott H. Strauss: The ­­ the auction ­­ the auction that FERC designed, the wholesale auction, permits, if not incentivizes, exactly what was done here. FERC has made that very clear. The purpose of the auction is to ­­ in part, to provide information to the market about what kinds of long­term contracting is ­­ are needed, what is needed.

Justice Kennedy: But you used the auction dynamic, the auction mechanism to go outside of the ­­ of that dynamic.

Scott H. Strauss: What we did was perfect ­­ yes, Your Honor, but that's perfectly permissible. Remember, the ­­

Justice Kennedy: That ­­ that's ­­ I ­­

Scott H. Strauss: Let me explain. Alderson Reporting Company Official

Justice Kennedy: I'm ­­ I'm sure that that's one of the issues in the case.

Scott H. Strauss: Yes, Your Honor. The auction dynamic allows for parties, and indeed encourages parties, to enter into long­term contracts for capacity resources and bid them into the auction. But they can't clear the auction. They don't become auction resources unless they are able to do so. And in this case, FERC had in front of it exactly what Maryland and a related program in New Jersey were about at the time they revised the rules. What FERC sought to do was to reconcile the issue of the State programs and how they would interact with the auction, and FERC did that. It set a different bidding process, and Maryland followed that bidding process. The CPV resource bid in accordance with it and cleared on that basis.

Justice Alito: But the ­­ as originally set up, CPV had no incentive to ­­ to bid anything other than zero; isn't that right? All it was interested in was clearing the market.

Scott H. Strauss: That is ­­ that is correct.

Justice Alito: And that affects the dynamic of the ­­ of the PJM auction, does it not?

Scott H. Strauss: Yes. Yes, Justice Alito, it Alderson Reporting Company Official 1 does. And that's why in 2011, FERC, when it became aware that this had happened, changed the rules. Remember, originally, when FERC approved the auction in 2006, it said that State resources that were being built for reliability, which is exactly what this resource is, could bid in at zero, a zero price, and clear automatically in order to ensure that States could meet their responsibilities to ensure of a liability. In 2011, when FERC became aware of the Maryland and New Jersey programs, it revised the rules. But it didn't prohibit those resources; it didn't preclude them. It changed the rules so that they could continue to bid, but they had to bid on a cost basis.

Justice Sotomayor: But ­­ but I have to say that they also looked at a long­term contract ­­ FERC did, and PJM ­­ in the PJM Interconnection order, and it determined that a seven­year lock­in period for a new generator was unfair, unjust and unreasonable. It's something it can do. Why didn't that end what you're doing? You're arguing that you're not affecting price. FERC disagrees, because you have no incentive to bid anything other than zero. I don't understand why this case is not ended by FERC's determination that locked­in contracts are unjust and unreasonable. Alderson Reporting Company Official

Scott H. Strauss: FERC determined that under the auction it would not allow a guarantee of more than three years. But FERC did not at that time say that long­term contracts outside the auction were prohibited. Long­term contracts are a staple of this industry, as this Court knows, and FERC was not trying to prohibit them. What FERC was doing there was, the three­year lock­in, which I think is what you're alluding to, Justice Sotomayor ­­

Justice Sotomayor: How is it different than your contract?

Scott H. Strauss: It's different in that this is a 20­year agreement.

Justice Sotomayor: I know the years are different, but I'm talking about the mechanics.

Scott H. Strauss: The mechanics of it are that it operates outside the auction, but bids into the auction. The ­­ the new entry price adjustment to which you refer functions within the auction and for a very specific purpose. It's designed to address the situation in which you have a relatively small geographic zone and a relatively large plant that's built. The concern is that when you build that resource and put it in the market, it creates a glut, and prices will crater. And the concern was because of that, no Alderson Reporting Company Official 1 one will ever build such a resource. So the auction allows you to lock those prices in for three years, but that's simply in that particular circumstance. What FERC said when asked to make it longer was that's not the purpose of the auction. The auction is not intended to ensure revenue certainty. It's intended to provide information, information that the market can use in making contracting decisions. And that is exactly what happened here. Maryland looked at the ­­ at the auction results, came up with a program to have a resource built outside the auction, which would then bid into the auction, but it had to do it in accordance with FERC rules. FERC is the gatekeeper of the auction. Maryland couldn't insert itself into the auction in a way that FERC didn't allow, even if it wanted to.

Justice Kagan: Mr. Strauss ­­

Justice Breyer: I didn't ­­ I ­­ I didn't ­­ I have to admit for myself, in this kind of brief, it would have been much, much easier if people had used simplified examples with real numbers. I have a hard time thinking in terms of simply abstract words. But as far as I understand it, my law clerk says that this cost­based system of FERC is that the minimum­offer price has to be set, that is, they have to set a price Alderson Reporting Company Official 1 at 90 percent of the cost of new entry for a combustion turbine generator or a combined cycle generator. That's as they calculated ­­ PJM, or if it's neither of those two kinds of generators, it's at 70 percent; is that correct?

Scott H. Strauss: I believe that is, Your Honor.

Justice Breyer: If that's correct, then if I have a generator up somewhere in the hills of ­­ of surrounding their hills in Maryland, and it's more expensive to get coal up into those hills or oil or natural gas, and so I have a generator that I can ­­ that's 500 megawatts, and it allows me, based on cost, to charge, if I were to charge the full cost, and that depends on the banks and loans and so forth, it allows me to charge $220 a megawatt­day. Okay?

Scott H. Strauss: Okay.

Justice Breyer: Does that? I can go to FERC, and I can say 70 percent of that is what I am going to put into the pool, 'cause I know that Maryland will give me the rest. And this is not one of those two kinds. And 70 percent of 220 is around ­­ I don't know, my math isn't too good ­­ 180. So they get awarded the contract 'cause it's 180, but there's some other firms that are more expensive over here, and those other firms don't get Alderson Reporting Company Official 1 into it at all because we used up all the generating capacity that we needed for the next five years with your firm and a few others. And that changes rather dramatically who supplies the contract, and it also changes the price at which retailers across PJM will pay for the electricity they are getting from the pool. Now, is that right? That's either right or wrong.

Scott H. Strauss: Well, Your Honor ­­

Justice Breyer: If it's right, it seems like the end of the matter. If it's wrong, then you explain to me why.

Scott H. Strauss: Here's what's going on, Your Honor. If the cost of the generator is below the default price, that 90 or 70 percent price that you described, the generator is ­­ that is its offer floor, and the generator is permitted ­­

Justice Breyer: Now, I'm assuming that the cost is higher than the 70 percent.

Scott H. Strauss: That ­­ that might ­­ that might be a problem, but I have two answers to that, Your Honor. First of all, that was not this case. In this case, the ­­ the resource bid on the basis of its cost, and its cost base number was below the default Alderson Reporting Company Official 1 price. So there was no issue of a ­­ of what you've described as a resource with a cost above the default price that gets to bid the default.

Justice Breyer: So you're asking only for the case where it's below. You're not interested in the case where it's above. And this whole case has been argued only in the case where it's below.

Scott H. Strauss: Well, that is actually what happens, Your Honor.

Justice Breyer: I'm not saying what happens. I'm saying we have to decide a legal issue. Is my legal issue to include my example or is it not?

Scott H. Strauss: I think it does not include your example, Your Honor. That is a different kind of distortion. The Solicitor General mentions it in its brief. And if FERC ­­ FERC, in 2011, when they revised the minimum­offer rule, did not find reason to adjust the offer level higher, which might have limited that ­­ that problem. If FERC now believes that that distortion exists ­­

Justice Breyer: I don't want to use up all your time.

Scott H. Strauss: I'd like to reserve the balance for rebuttal. Thank you.

Chief Justice Roberts: Thank you, counsel. Alderson Reporting Company Official 1 Mr. Elgarten. ORAL ARGUMENT OF CLIFTON S. ELGARTEN ON BEHALF OF THE NO. 14­623 PETITIONER

Clifton S. Elgarten: Mr. Chief Justice, and may it please the Court: Let me respond first to Justice Kagan's comment. The way the Federal Power Act works is States have the power and the authority, recognized by FERC, on the purchasing end of any contract to direct their local utilities to enter into any contract they want. When they direct a purchaser to do so, that gives rise to a contract that is certainly within FERC's jurisdiction to review. They review the rates charged on the other side of the contract, the seller side of the contract, and they review the ultimate contract itself. But the notion that you are setting the rate by engaging in a contract with a seller is completely inconsistent with what has always been ­­ and I can only say always been the rule ­­ and that's how the Federal Power Act is written as set forth in our reply brief. The Federal Power Act supplies jurisdiction on the seller side of those rates.

Justice Kagan: If I understand what you just said, you're not relying on Mr. Strauss's argument. Mr. Strauss said that this wasn't a ­­ setting a Alderson Reporting Company Official 1 wholesale rate because Maryland did it by auction. But you're saying that's irrelevant; that Maryland could have just picked a price, and ­­ and that that would have been fine so long as at some point FERC had the power to review and veto it. Is that what you're saying?

Clifton S. Elgarten: No. It's ­­ it's a fair point, but no, Maryland could not have picked a price. It could not impose that price on the seller.

Justice Kagan: Well ­­

Clifton S. Elgarten: The ­­ the long­standing rule of FERC has been if it's competitively set by the seller, leaving the seller free to respond to the ­­ to the bid of the purchaser, then it is subject to FERC, and that review process is there. And it is not inconsistent with Mr. Strauss's position. In the specific circumstance of an auction, what we had here ­­

Justice Kagan: I guess I ­­

Clifton S. Elgarten: Yes.

Justice Kagan: ­­ I don't understand that. I mean, just take a hypothetical case where ­­ where Maryland said to all its utilities, this is the price and this is the only price that you will pay for electricity. Alderson Reporting Company Official

Clifton S. Elgarten: Crosses the line.

Justice Kagan: Are you ­­ are you saying that ­­

Clifton S. Elgarten: I belive that would ­­

Justice Kagan: ­­ Maryland could do that?

Clifton S. Elgarten: I believe ­­ there's a case from ­­ from the Commission, says that would cross the line. I am imposing a price that all my utilities would sell. That crosses the line.

Justice Kagan: Okay. Then you are saying that everything's dependent on the difference between picking a price and letting an auction pick a price. But I guess I ­­ I'll repeat the question that I made to ­­ to Mr. Strauss. I mean, we know that one of the ways that you pick a price is by letting an auction determine that price. That's exactly what FERC does.

Clifton S. Elgarten: We ­­ we had a competitive bid to bid ­­ build a power plant. That's what was set up here. We were talking ­­ in answering your first question, I was answering the conceptual question of what it is FERC regulates. FERC regulates the seller side of ­­ of every transaction. In the auction context, things get a little more complicated, as you just discussed in the ­­ in the Alderson Reporting Company Official 1 EPSA case. This case, however, was a procurement to build a power plant. CPV bid to build this power plant. It looked at the costs it would take to build a power plant in this locale, how much turbines cost, how much it would cost to run the plant and to bid into the market and make it available to the market. Of course, it then divided the price over the 20 years. You have 240 monthly payments. That's exactly what we bid. We understood that for Maryland to pay for us to build a power plant and to keep all the profits from our sales in ­­ in the markets, both the energy sales and capacity sales, both were involved ­­ that would be unfair. They didn't want the ratepayers to both finance our power plant construction, which is what Maryland was after, and keep all the revenues. So the contract reads ­­ and this is on page 17 of the reply brief ­­ the contract reads: "We turn over all the revenues for 20 years, and we build the power plant." They pay us to build the power plant. We turn over the revenues. It is correct enough that the net of that is the difference between the revenues and the price. But the purchase here was to build the power plant. Now, how did it impact the auction? How Alderson Reporting Company Official 1 does it impact the auction? The auction was always set up by FERC on the understanding that States have the inherent power, and I mean the reserve power under the Federal Power Act itself to direct these kinds of long­term contracts, to direct capacity purchases outside because they control the purchasing decisions of their local utilities every single day. They review them and they control them. And they understood that States would be using long­term contracts to support new generation. So FERC didn't, just as an act of grace, allow constant sales of capacity outside the auction. They constructed the auction against the existing authority of the States to do exactly what was done here.

Justice Kennedy: Would it be correct or incorrect to say that under Maryland law, you entered ­­ you entered the auction, and as a result, you altered the consequences of that auction in a way that was inconsistent with FERC's policy. Is that a fair or an unfair statement?

Clifton S. Elgarten: No, it is not fair, because FERC's policy, it was expressed. They said when States do exactly what was done here, before they even set up the auction ­­ and then in ­­ in fact they said, if Alderson Reporting Company Official 1 States do what we do here, we have a mechanism in our auction not to correct it, to adjust the auction so the auction still functions. And that was the point Mr. Strauss was making. The minimum­offer price rule, which has two formats, is acceptable to FERC because FERC says if you comply with that rule, it does not artificially suppress prices. That was FERC's judgment, whether it was a 70 percent or 80 percent situation of how you bid. FERC has determined that is competitive, economic ­­ these are quotes ­­ does not ­­ does not artificially suppress prices because FERC wants those bids in. You're a competitive resource. In our case, however, we didn't even use that default price. We used a pure cost­based price. So the concern the government expresses that there's a possibility of an exception which they say they haven't corrected ­­ I think FERC did it on purpose and said it doesn't suppress prices ­­ the possibility of that exception is eliminated. We were ­­ we, in our case, because we bid a pure cost­based bid. And when you bid a pure cost­based bid, does it affect the market? Of course. The addition of supply affects the market. FERC doesn't think that's a bad thing. FERC thinks that's a wonderful thing. Alderson Reporting Company Official

Justice Breyer: Why? That's another problem I have here. I ­­ don't spend more than a minute on this, but I don't understand the procedural posture of this case. That is, it seemed to me it started out by saying that there was a ­­ a Supremacy Clause private right of action or something, which I think there isn't, in my opinion.

Clifton S. Elgarten: Uh­huh.

Justice Breyer: And then ­­ and then it seemed to go we don't have FERC's opinion. We only have it through the SG. I thought there was a doctrine called primary jurisdiction where if the agency really ­­ their views is really relevant on that, you got their views directly, what happened to all that?

Clifton S. Elgarten: We want to be in front of ­­ of the Commission. We believe the Commission should decide these issues. We think the Commission would decide these issues favorably to us because they have done so in connection with this very case. When the issue arose of this offer ­­

Justice Alito: Of course.

Clifton S. Elgarten: ­­ being presented ­­

Justice Alito: Well, I don't understand your position. You're ­­ you're arguing that FERC does not think that this adversely affects the auction? Is Alderson Reporting Company Official 1 that what you're saying?

Clifton S. Elgarten: Adversely affects the auction. In fact ­­

Justice Alito: Why ­­

Clifton S. Elgarten: ­­ the auction ­­

Justice Alito: Why has FERC filed a brief arguing the opposite? I ­­

Clifton S. Elgarten: I ­­ if you read ­­

Justice Alito: You're arguing as if they're not even here.

Clifton S. Elgarten: If you ­­ if you read the FERC's decisions that we've cited, the 135 and 137 FERC ­­ that's how it's numbered in the briefs ­­ if you read that and you read the quotes that are included in the Joint Appendix, you will see that FERC has determined that these bids are competitive if they are submitted in this way. Why ­­

Justice Kennedy: So you're saying that FERC ­­ FERC doesn't understand its own order?

Clifton S. Elgarten: I'm saying FERC's ­­ as happened in the Morgan Stanley case, there is a little bit of changing of ­­ of tunes that's at issue here. If this issue was presented to the Commission ­­ which is exactly who should decide these issues of energy policy, not this Court, whether something artificially Alderson Reporting Company Official 1 suppresses. These kinds of issues of energy policy and how the auctions should work should be decided by FERC. Under this Court's case, Northwest Central, it says if the issue between the State's authority and the Federal authority can be reconciled ­­ and they were reconciled with these specific contracts in front of us. FERC modified the rules to allow exactly this bid and determined that it did not artificially suppress prices. Does it affect prices? Of course. New supply affects prices.

Justice Sotomayor: I'm sorry. How would this ­­

Clifton S. Elgarten: Does it artificially do that?

Justice Sotomayor: How would this work normally? Meaning forget that a lawsuit was started. You enter into this contract. Do you have to submit the contract to FERC?

Clifton S. Elgarten: No. Because we have what's called market­based rate authority. It's been discussed in your cases. So we notify them. Anyone can protest to FERC, yes. Anyone ­­

Justice Sotomayor: Can somebody protest here?

Clifton S. Elgarten: They didn't. They ­­ well, they ­­ we thought they did. They raised an objection. Alderson Reporting Company Official 1 They said this is adversely affecting the auction. FERC resolved their objection. FERC had in front of it the very complaints we have here. The complaints about ­­ excuse me ­­ the RFPs and the solicitations from New Jersey and Maryland, and they presented this to FERC. FERC said, ah, we take care of this in our auction ­­ we've always known how ­­ with the minimum­offer price rule. They said the minimum­offer price rule, when it is applied, will result in not artificially suppressing prices. That is how this was presented to FERC. With these specific contracts, they are in ­­ they are in Volume III of the Fourth ­­ Fourth Circuit appendix. These specific contracts. Now, if they want to protest it again and say these have rates, or the rates that affect the jurisdiction, they are free to protest it yet again. And I am ­­ I believe FERC would come up with the same conclusion again and say this is perfectly appropriate to bid into the auction in this way. Now, if somebody wants to petition, let's close this what they are calling the "loophole," the one that Justice Breyer suggested, because it doesn't require a bid at exactly a cost­based price. They can Alderson Reporting Company Official 1 go to FERC and close that loophole. It wouldn't have affected our case at all because we bid a cost­based, but they can go to FERC on every one. All of the conflict preemption issues should be addressed to FERC. They are not really for this Court, which is obviously having some trouble conceptualizing how this all works, to resolve. Those conflict preemption on the Northwest Central issues go to FERC.

Justice Ginsburg: You wouldn't ­­

Clifton S. Elgarten: They should not ­­

Justice Ginsburg: ­­ get to conflict preemption if field preemption applies.

Clifton S. Elgarten: That's absolutely correct. And so on the issue of field preemption, have we exercised an authority that belongs to FERC? No. By setting ­­ by directing a contract or competitively soliciting, we are not setting the rate. If we did, the hypothetical from Justice Alito, we ­­ if we said everybody in the State must pay that rate, FERC has dealt with that issue. That crosses the line. Competitive solicitations do not. When ­­ the purpose ­­

Justice Ginsburg: What is your explanation for why FERC is on the other side now, when you're Alderson Reporting Company Official 1 saying it was in your corner earlier?

Clifton S. Elgarten: FERC ­­ FERC, as the Commission through its rulings and orders based on evidence and appeal, as reflected in the New Jersey appeal, the NJBPU, appeal of that order, they were on our side. When they were asked to join this case, the Third Circuit said get in; they had two weeks. I think they took an ill­advised position, but it's certainly not a position that was done on the record subject to an order. And that's what's decisive here. If the ­­

Chief Justice Roberts: Thank you, counsel. Mr. Clement. ORAL ARGUMENT OF PAUL D. CLEMENT ON BEHALF OF THE RESPONDENTS

Paul D. Clement: Mr. Chief Justice, and may it please the Court: Maryland's effort to dictate what CPV receives in connection with its wholesale sales to the wholesale market operator is plainly preempted. Maryland's targeting of the Federal market was direct in this case. CPV gets nothing unless it bids and clears the PJM auction. Once it does, it must sell all of its output, all of its energy and capacity to PJM. Alderson Reporting Company Official 1 If those things happen, then CPV receives, thanks to the State of Maryland and its State action, payment streams in conjunction ­­ in connection with those sales to PJM that are different from and far more stable than the prevailing price on the PJM auction. And ­­

Justice Breyer: Why? The ­­ the way that they've described it to me ­­ I'll try this once more. Because truer words were never spoke, than I am not quite on top of how this thing works. But the ­­ the ­­ the way he described is, what are they bidding into the PJM is their real cost. And when they are bidding their real cost, Maryland isn't going to pay them a dime. If they are an inframarginal unit, which I assume they would be, the cost for PJM is going to be higher, not lower. And there will be extra money. So what they are going to do is they are going to be paying Maryland. Now, what they said is, we're going to be paying you. Oh, he's shaking his head. So I haven't got that right, either. (Laughter.)

Justice Breyer: No? No, I have got it right? I don't know. I'm guessing at getting it right. Alderson Reporting Company Official 1 Maybe not. Anyway, I ­­ well, you see my problem ­­

Paul D. Clement: Well, I ­­

Justice Breyer: ­­ which is understanding this.

Paul D. Clement: Well, I guess I can see your problem, which is, I think, first, there's a factual premise there ­­

Justice Breyer: Yes.

Paul D. Clement: ­­ which is ­­ I think it's pretty much conceded that, at least in the first couple of years of this, the expectation is that CPV is going to be receiving an additional payment, a forced payment, from the LSC, the loading serving entity, to PJM. So that's just a factual premise for you.

Justice Breyer: But are they bidding their true cost into PJM?

Paul D. Clement: Well, they sure didn't start that way. And let me start here. I mean, they had, as I think Justice Alito alluded to, a completely different incentive in bidding their costs into PJM than would a private generator with new capacity. A private generator with new capacity is going to build its actual ­­ bid in its actual costs Alderson Reporting Company Official 1 because they don't want to clear at the expense of having an unprofitable generator. It's a completely different dynamic for somebody like CPV, because the bidding clear requirement for them is just an obstacle to get to the pot of gold at the end of the rainbow, which is all these guaranteed payments for 20 years. So they have every incentive to understate their cost. That incentive was realized here. They talked about bidding in their costs. When they first bid in their costs, they bid in their costs at less than $14 a megawatt­day. Okay? Now, when PJM took a look at that, they ended up upping the figure sevenfold to about $96. So that's a great measure of their incentive to distort their costs for FERC. Now, what they will say is, ah, but Mr. Clement, the $96 bid cleared, and that's all that matters. Well, with all due respect, that's wrong. FERC says it's wrong. A bid like this can still have a price effect ­­ suppressive effect. And you can see that in a couple of ways. I want to say one thing, though, is FERC is here on our side in part because they are on its record Alderson Reporting Company Official 1 as saying this MOPR ­­ the minimum­offer price rule. The MOPR is not some sort of cure­all that is designed to ward off any price­suppressive bid. It is a default rule. It is a coarse screen to deal with the most egregious cost­reducing bids. It also depends on an estimate of cost. And here's why it doesn't really work for a bid like this. One of the most important costs is your cost of capital. Well, what was CPV's cost of capital without this program? They told you. They told Maryland, without the 20­year guarantee, we can't get any financing for this project. We can't do it. At the bench trial, they told the district court, our ability to bid this project depends entirely on the ­­

Justice Breyer: Well, that's another way of saying that the bid that ­­ that ­­ that FERC says that they have to make is not their actual costs ­­

Paul D. Clement: What ­­

Justice Breyer: ­­ because if in fact it's based on a cost of capital that is lower than what the cost of capital really is, that is a misstatement of their cost or a ­­ an ­­ a lower­than­actual cost, just as much as if the steel were in fact less expensive than what they actually have to pay. Alderson Reporting Company Official

Paul D. Clement: Absolutely. And of course, another component of cost is going to be future fuel costs. And anybody who's been to the pump lately knows that we can all have a lot of variance as to what we think are going to be future fuel costs, but if I could return to the capital cost and just finish this point, it's even worse that it's misstated, because ultimately, because they are getting a 20­year guarantee and no one else is, everybody else is calculating their cost of a new generation financing based on the three­year price signal that the ­­ that the ­­ that the capacity market is settling, it destroys the ability to do an apples­to­apples comparison. And then the one thing we know for certain here is that this project ended up displacing a project that actually could be built based on the three­year forward price and without a 20­year contract.

Chief Justice Roberts: But you'd have ­­ you'd have no objection if Maryland just decided to subsidize the construction of the plant, would you?

Paul D. Clement: We would, Your Honor. I think it might be a harder case, but particularly if the subsidy was conditioned on a bid­and­clear requirement, I would be here making a preemption argument. You might not think it's as good of a preemption argument, and I Alderson Reporting Company Official 1 think that the only difference is because the statutory text of the Federal Power Act, it seems to me to make our position clearly correct, is the provision that says that FERC has the authority to dictate what a seller receives in connection with a wholesale sale.

Justice Kennedy: How do you define the field that's preempted?

Paul D. Clement: Well, I think the field that is preempted is the ability of a government actor to set wholesale rates for wholesale sales. And so if you have State action that sets rates for wholesale sales ­­ and "rates" in this context is defined by the statute as including what a seller receives for wholesale sales ­­ we think that's preempted.

Justice Kennedy: Are they ­­ are they setting rates by having ended the auction?

Paul D. Clement: We certainly think so, and more importantly, I think, for purposes of this case, so did the district court. I mean, it's kind of odd for me to hear my friends on the other side, as I heard them in the colloquy with Justice Kagan, they essentially conceded they lose if Maryland sets the rates, and that would be an odd concession in any case, but particularly where at footnote 48 at the district court's opinion, the district court finds ­­ as a matter of fact, I'll Alderson Reporting Company Official 1 concede it's a mixed question of fact and law and all, but still there it is. The district court ­­

Justice Kennedy: In a sense, I guess all of the bidders in the conventional auction in effect set their rates by their bid.

Paul D. Clement: Sure. And I think what Justice Kagan alluded to is if Maryland ­­

Justice Kennedy: So why is this ­­ why is this different?

Paul D. Clement: Well, it's ­­ it's not, because I ­­ I think the point is, if Maryland is not setting the rates here, than FERC's not setting any wholesale rates, and that's not right. And so just because you use an auction mechanism to set the rate, that doesn't mean that it's not the State setting the rate. And if you look at footnote 48, it's ­­ it goes beyond that because, based on particular findings, based on the testimony of the chairman of the Maryland PSC, the district court said that actually because there was back and forth between Maryland and CPV, this was Maryland setting the rate.

Chief Justice Roberts: So is Maryland setting the rates when it subsidizes the construction of a power plant?

Paul D. Clement: Well, if ­­ Mr. Chief Justice, Alderson Reporting Company Official 1 suppose they decided to ­­ I mean, potentially they could. Not all subsidies are created equal. If they had a subsidy that was measured, a dollar­for­dollar subsidy based on sales to PJM, I would think that would actually be setting the rate. Again, you might disagree with me, but I would say that in that case, you would have a very similar situation. I think this case is that much clearer because these payments from the LSC is directly conditioned on selling to PJM.

Justice Sotomayor: Mr. Clement, can you tell me how I write this opinion? And I'll ask you why.

Paul D. Clement: Okay.

Justice Sotomayor: As I look at the relevant statutory provisions, what it says is that FERC has the power to ensure that rates that are set are fair, are just and reasonable. So it doesn't say it gets to set the rates. It says it can do rules and regulation that control how the rates are set so that I'm not sure how this is field preemption. At best, I think it might be conflict preemption. And so if I think it's conflict preemption, that something about Maryland's plan conflicts with the system that FERC has set in place, how do I articulate the rule in this case? What is it that conflicts with FERC's rules and regulations with respect to setting ­­ participating in Alderson Reporting Company Official 1 the market ­­ in the auction?

Paul D. Clement: Sure.

Justice Sotomayor: Because as I understand it, and I don't think you ­­ you've told me any differently, that the people who are auctioning in the market can and do enter into contracts with States on a regular basis.

Paul D. Clement: Oh, not with contracts with the States. That's not what my friends on the other side were saying. They enter into voluntary bilateral contracts off of the market.

Justice Sotomayor: Exactly.

Paul D. Clement: And that is not what's happened here.

Justice Sotomayor: All right. Voluntary contracts outside the market.

Paul D. Clement: Right.

Justice Sotomayor: Why is this involuntary? Because of the State ­­

Paul D. Clement: Because the State told the load­serving entities that they had to make these payments to CPV.

Justice Sotomayor: All right. So is that what conflicts? I'm ­­ I'm trying to articulate the preemption rule in some simplified way. I'm a little Alderson Reporting Company Official 1 bit like Justice Breyer on this. I'm not quite sure how everything is working, but I don't think it can be field preemption, because you have to explain what field we're talking about and what rule we're setting in the future. I think it's conflict preemption.

Paul D. Clement: I think it's both, Your Honor. I think part of the reason this is difficult is because it's like an overdetermined equation. There is both field preemption here, but there's also conflict preemption, and there are multiple evidences of conflict preemption, because nobody's tried to do anything like this before ­­

Justice Sotomayor: So give me a simple ­­ sir, when I write this opinion ­­

Paul D. Clement: Sure ­­ right.

Justice Sotomayor: ­­ give me ­­ give me the first paragraph. This conflicts with what?

Paul D. Clement: This conflicts with FERC's determination that the PJM rates for the PJM auctions are just and reasonable. As you said, the starting premise here is the statute gives FERC the authority to determine whether wholesale rates are just and reasonable. FERC has done that effectively ex ante with respect to the PJM markets by its regulations of PJM. FERC has said that the auction clearing rate for sales Alderson Reporting Company Official 1 to PJM is just and reasonable. Now, the authority of FERC extends not just to what the nominal rate is in the auction but to what the supplier receives in connection with that sale. So if a State, through State action, says, it's all very well CPV that you've sold that to PJM and PJM has given you a hundred, this is your lucky day, we're going to give you another 50, that is clearly preempted because a State is having the supplier receive something in connection with a wholesale sale to PJM that is different from the rate that FERC has determined is reasonable.

Justice Breyer: Let me try that with the example. Five thousand new megawatts of capacity is needed. Existing suppliers can't supply more than four. So FERC is trying to get an extra thousand. The people whom it will choose to give it and will allow to bid are those who are the new people who have the lowest cost. All of those people in a rising market will have higher costs than the existing people. So if in fact FERC looks to the existing people and says, which can bid? And says, you have to use your real costs. And if they really implement that, what you just said is going to have no effect on the market, because they will be in the market whether they Alderson Reporting Company Official 1 are given a subsidy or whether they are not given a subsidy. And indeed, it won't affect the price because the price is affected only by the marginal units, who, by definition, have higher costs than anything that FERC will look to to see what these people's costs are. Therefore, it is without impact, and they add to that. We would like to make this argument to FERC where they have to focus on it and not just say in general to the SG, this is how we think, because by the time we're finished, we'll be able to modify present rules so that they will see that they are not hurt at all in the actual world by our costs. I did get something like that out of what they said. Maybe I'm wrong in what they think. Maybe they'll just agree because they think I'm agreeing with them at the moment, but I would like to know some response to that.

Paul D. Clement: Here's your response, Justice Breyer, and it comes in two parts, because there's at least two parts to that question. First, I take issue with the premise because it may be that some new generation will come in, in your hypothetical, but it won't necessarily be this one. And Alderson Reporting Company Official 1 in fact here we know, as a matter of fact, that it wouldn't be this one, except for the 20­year guarantee, and so they displaced somebody. But please don't just shrug your shoulders ­­

Justice Breyer: No, no, I am agreeing with you. I am. (Laughter.)

Paul D. Clement: That is a huge ­­

Justice Breyer: I'm not shrugging my shoulders.

Paul D. Clement: That is a huge difference, because this ­­ the message this all sends to my clients is don't take FERC's direction that you should be competing based on market forces and efficiency. We should stop competing efficiently on the PJM and try to put the best bid together based on the three­year advanced auction. We should start competing for subsidies, and we should start competing for guarantees. The second part of your question, what about FERC primary jurisdiction. This is all a bit rich coming from my friends on the other side because, as Justice Alito alluded to, when this all started, their position was this has nothing to do with FERC at all. This is a financial arrangement that FERC can't even Alderson Reporting Company Official 1 look at. Then my friend talks about how, well, they eventually got market­based rate authority from FERC in a submission. Well, I ­­ I'd ask you to take a look at what they said on Joint Appendix page 142 of that submission. What they said about the contract is they said, quote, "CPV Maryland also notes that it included the CFD in this application solely for informational purposes and is not requesting that the Commission address or discuss Commission jurisdiction over the CFD in its decision on CPV's Maryland's request for market­based rate." Don't look what's behind that curtain, Mr. FERC. We don't want you to do anything with that. We're just here to try to get market­based rate authority. For them now to come in, not having raised any objection to the Supremacy Clause cause of action ­­ and by the way, there was a Commerce Clause cause of action there as well, which is maybe why the parties overlooked it, and I do think that's not jurisdictional, so I think we're past that. So for them to come in now and say, oh, this has to go to FERC, I'm sorry; it's a bit rich. And I understood why they were making the MOPR argument at the Alderson Reporting Company Official 1 early stages of this litigation before FERC filed the brief. But I am a little mystified why, at this late stage of the game, after FERC has filed three briefs saying that the MOPR is not sufficient to eliminate price­suppressive bids, that they're still saying we win because FERC's on our side. I mean, that is a bit mystifying. And I think FERC is absolutely right on this for the reasons that we've already talked about. I mean, you can't really even apply the MOPR in an apples­to­apples way if you have this kind of 20­year guarantee, because the cost of capitals are completely out of whack. And of course, they do have the problem that their own testimony is they wouldn't be on the market at all if they didn't have this 20­year guarantee. So in the first capacity auction that we had to deal with, the price was suppressed. In every energy auction since then, the price was suppressed. And that's why I think FERC ­­ you know, they never tried to design the MOPR as this perfect thing. You talked about the 90 percent and the 70 percent? Way back in one of those proceedings, my client said, FERC, why isn't it a hundred percent? If you think about the economics of this, it should be a hundred percent. And FERC's response was, eh, close Alderson Reporting Company Official 1 counts, this isn't perfect, we don't pretend it's perfect so we think 90 perfect is a rough compromise. Fair enough. Probably not arbitrary and capricious, but it doesn't mean that this is something that the MOPR is some perfect solution. I also don't think there's anything terribly anomalous about the procedural posture of this case. I think it's exact procedural posture you had in front of you in the Schneidewind case. That was a district court action, declaratory judgment for preemption. What I think makes this a preemption case, and what completely distinguishes voluntary bilateral contracts, is State action. It's the State action forcing the LSCs to make these payments, and essentially conditioning CPV's participation on the PJM market on the bid­and­clear requirement. That's State action that's preempted. In the typical voluntary bilateral contract, you don't have State action. The parties make their agreement. They eventually submit it to FERC, or if it's a market­based rate, somebody can object. And the only time you really get State action at that point is at the very end of the process when the State's doing retail rate regulation, and that's the point where Mississippi Power & Light and Nantahala come in and say Alderson Reporting Company Official 1 if at that late stage when there's finally State action that the State has to take FERC's wholesale rate determinations as a given; they can't second guess them at late stage. But here you got the State action right up front, and the State action is preempted.

Justice Kagan: Mr. Clement, it ­­ it does seem to me important what the kind of State action is. And this goes back to the question that the Chief Justice raised with you. If the State had just said we need another power plant and had delivered a load of money to CPV and said go build a power plant, you're not saying that that would be preempted, are you? If it's not at all, it ­­ it ­­ you know, that's going to have an effect on the kind of bids that CPV is going to make. But the State is not itself changing the outcomes of the auction process. You wouldn't say that's preempted, would you?

Paul D. Clement: It would depend. I mean, the way you just described it, I would say ­­ especially because I think it's a helpful answer ­­ of course not, not preempted. (Laughter.)

Paul D. Clement: But if they conditioned all of that money on a bid­and­clear requirement, I would be saying that that was preempted. I think it's a harder Alderson Reporting Company Official 1 case, but I'd hate to lose that case here because there are cases like that that are being litigated in the lower court. Thank you, Your Honor.

Chief Justice Roberts: Thank you, counsel. Ms. O'Connell. ORAL ARGUMENT OF ANN O'CONNELL FOR UNITED STATES, AS AMICUS CURIAE, SUPPORTING THE RESPONDENTS

Ann O'Connell: Mr. Chief Justice, and may it please the Court: In the government's view, the Maryland Generation Order is preempted because by requiring the State­selected generator to bid into and clear the PJM capacity auction in order to receive the guaranteed payments provided in the contract, the Maryland program directly intrudes on the Federal auction, and it also interferes with the free market mechanism that FERC has approved for setting capacity prices in that auction.

Chief Justice Roberts: Do you have a position on the question that Mr. Clement avoided, about what if the State ­­ what if the State subsidized the power plant? Is that good or bad?

Ann O'Connell: I ­­ I agree with Mr. Clement's answer. If the State just ­­ Alderson Reporting Company Official

Chief Justice Roberts: What ­­ what was Mr. Clement's answer? (Laughter.)

Ann O'Connell: If the State ­­ if the State just paid to build a power plant, that's not directly targeting what's happening in the PJM auction. Sure, it's adding supply to the market. But as long as the State is staying within its sphere under the Federal Power Act, that's fine. But I also agree with the second part of his answer, which is that if there was some kind of a bid­and­clear requirement in the auction attached to it; for example, if the State paid to build the power plant and turned it over to CPV, but then they said, okay, we want to get some money back for this power plant that we built, so you're going to bid the capacity of this plant into the auction. And unless you clear, we're taking the plant away from you, or something like that. That changes the incentives of the participants in FERC's auction. And that's what ­­ what is the key ­­

Justice Sotomayor: So that's the conflict?

Ann O'Connell: Yes. Yes.

Justice Sotomayor: That's ­­ that's because ­­ you're articulating it as ­­ and correct me Alderson Reporting Company Official 1 if I'm wrong ­­ that the conflict is in affecting the bid price in any way. Requiring it, affecting it, or ­­

Ann O'Connell: Yes. It's ­­

Justice Sotomayor: ­­ determining it.

Ann O'Connell: It's in creating a conflict, changing the incentives of the people in the market in a way that conflicts with the market mechanism that FERC has set up. We think that shows both field and conflict preemption.

Justice Kagan: Ms. O'Connell, you ­­ you have both arguments field and conflict. If ­­ if you were to win this case, would you rather win it on field or conflict? (Laughter.)

Justice Kagan: And why?

Ann O'Connell: I mean, I think that field preemption is probably a better way to decide the case, and it would ­­ it would be a broader ruling. In such a ­­ in such a ruling, I think the ­­ the Court would say that when the State does something that alters the incentives of the people that are participating in FERC's market, that is intruding on the Federal field.

Justice Sotomayor: But for ­­ that ­­ that answers the earlier question: No, they can't give money to build a generator because that changes the Alderson Reporting Company Official 1 incentives. The generator's cost by definition change if it's receiving subsidies for free.

Ann O'Connell: If ­­ if the State is just acting completely outside of the auction with no requirement to bid into and clear in the auction, then that is not something that changes the incentives of the folks that are participating in the auction, which is what happened here. The ­­ the cost ­­

Justice Kagan: Well, why do you even need the sort of change­in­incentives language? Why isn't the field preemption argument more that this ­­ this ­­ this scheme essentially takes the rate that the auction produces and changes that rate for CPV and for all the utilities in Maryland?

Ann O'Connell: I think ­­ Justice Kagan, the ­­ the reason why we don't agree with that broader interpretation is because we ­­ FERC does not think that just receiving extra money in ­­ in connection with capacity that's being sold into the auction is necessarily preempted, and let me explain why. There's something that happens in this industry, a widespread practice called contracts for differences. The contracts in this case are sometimes referred to as contracts for differences, but because of Alderson Reporting Company Official 1 the bid­and­clear requirement they don't operate in the same way. Parties can enter into a hedge agreement. For ­­

Justice Kagan: No, but that's ­­ but that's ­­ when Mr. Clement said that there's a real difference here between voluntary agreements ­­ you know, if there's a contract for differences, fine, but that this is Maryland coming in and effectively forcing the LSCs to enter into such a contract, and by doing so, changing the wholesale rate.

Ann O'Connell: Well, I think the ­­ the problem that ­­ that FERC sees with this is the effect that it has on the auction. If this was just a bilateral contract occurring outside of the auction where Maryland was accepting the results of a competitive procurement and then submitting that bilateral contract to FERC for review, that's where FERC would review that contract. The field that we're talking about here is the auction. And what FERC is concerned about here is the effects on the auction of a State program like the one here that ties a subsidy or ­­ or extra payments under the contract to a requirement that the ­­ the person receiving it bid into and clear the capacity in Alderson Reporting Company Official 1 the auction.

Justice Kagan: See, when we ­­

Chief Justice Roberts: How far does your ­­ how far do you think your authority reaches with respect to indirect effects on the auction? I guess that was the point of my question on the subsidies. I mean, a lot of things are going to have an effect on the auction. Is it only because of the legal mandate in this case?

Ann O'Connell: Yes. It's ­­ it's because the ­­ the ­­ the program in this case, by requiring the capacity to be bid into the auction and clear, it directly targets the auction. It has a direct effect on the auction. We ­­ we recognize that, in the context of the Federal Power Act, the State has its sphere too. The State regulates retail rates. The State has control over generation. And it can do things within that sphere that have indirect effects on ­­ on FERC's field. But in this case the problem is that, because of the bidding­and­clearing requirement, it's directly altering the incentives of the people in that market.

Justice Alito: Well, why doesn't the ­­ the Alderson Reporting Company Official 1 MOPR correct the problem?

Ann O'Connell: The MOPR corrects it to some extent because the MOPR is choosing what ­­ what FERC thinks is a fair price for a new generator to bid in at. The MOPR isn't a complete solution because, as we've described in our brief, if somebody bids in at the minimum­offer price rule but its costs are actually higher, it is necessarily going to knock somebody out of the auction that would have cleared otherwise, and the price of the auction will go down. But ­­ and I ­­ I think, as Mr. Clement correctly pointed out, the MOPR is not a ­­ a perfect solution to this. In ­­ in this particular case, I think the incentives of what ­­ what were ­­ was happening under the State program is demonstrated by the fact that CPV tried to bid in so low even when it tried to cost­justify their bids. And the market monitor in PJM, when trying to actually reconstruct CPV's costs, came to different numbers on what those costs would be. So it's not a perfect way to try to screen out offers that are not actually based on cost or that should not be coming in. And ­­ and, additionally, just the fact that FERC had to expand the MOPR to cover this program I think shows that there's been an intrusion onto FERC's Alderson Reporting Company Official 1 field. FERC has tried to correct what's happening in these programs through extending the minimum­price offer rule to these bids, but I think that ­­ that just shows that's what's happening here is that the State programs are changing the incentives of the ­­ the people in the field.

Justice Kagan: Well, but I don't see how that could be true. If FERC could, in fact, get rid of the problem, then it leaves you with no conflict.

Ann O'Connell: I don't think that's right. I think the conflict is still with the ­­ the market mechanism that FERC has set up in order to determine wholesale capacity rates in the auction. When you have a program that has this bid­and­clear requirement, it alters those incentives. Even if there's not an actual price­suppressive effect, the ­­ the ­­ the possibility for a conflict or the imminent possibility of a conflict still calls for field preemption. The ­­ the Court of appeals cited Schneidewind and Northern Natural Gas on page 21a of the ­­ of the Petition Appendix showing that ­­ that's still field preemption. It's ­­ what ­­ what FERC is concerned about is the effects of the ­­ of the State program on the participants in its auction. In this particular ­­ the Alderson Reporting Company Official 1 way that these contracts are constructed, CPV is going to get the contract price regardless of whether the clearing price is lower or higher.

Justice Breyer: I can see it. But what are the words of the field preemption thing that puts outside the preemption the thing that's worrying the Chief Justice? See, I ­­ I ­­ I mean, you ­­ you want to say the field is so defined ­­

Ann O'Connell: Well ­­

Justice Breyer: ­­ as, and ­­ and now, look, billions of actions of States affect the cost of the generator and thereby affect the bid price into the PJM auction. Now, 99.99999 percent we want the State to do. They're perfectly free to do. But you want this 1 percent no. And ­­ and ­­ and I want the words that are going to define that field. That's what Justice Sotomayor was asking for before. It's something to do with the rule here in Maryland that forces them not just to have these artificial costs but to put it on the ­­ the auction.

Ann O'Connell: Right.

Justice Breyer: What are the words?

Ann O'Connell: I think directly targeting Alderson Reporting Company Official 1 the auction to take some words from ONEOK would be a fine way to do it.

Justice Breyer: I see targeting.

Ann O'Connell: The ­­ the ­­ the field that we're talking about is the PJM auction. And any ­­ a State program that directly targets the auction and the incentives of the participants in that auction by the bid­and­clear requirement is ­­ would be preempted under a field­preemption theory. We think also under a conflict­preemption theory. I ­­ I could distinguish just a ­­ just a little bit the contracts for differences that are not tied to a bid­and­clear requirement in the auction. States ­­ or the parties in this context will sometimes enter into a hedge agreement where they agree on a price. Like a hundred dollars, if the auction clearing price is below that, say it's 80, then the person that the generator has contracted with, like Merrill Lynch or something, owes the generator $20 regardless of what ­­ what else happens. That transaction will always take place. The generator then has to make a separate decision of whether it wants to bid into the auction. If it's ­­ if the auction price is 80 and its costs are 90, it's not going to. If its costs are 70, it will bid Alderson Reporting Company Official 1 in. That sort of a contract for differences is not preempted here. It's just when there's a bidding­and­clearing requirement that the subsidy is tied to.

Chief Justice Roberts: Thank you, counsel. Mr. Strauss, you have three minutes remaining. REBUTTAL ARGUMENT OF SCOTT H. STRAUSS ON BEHALF OF THE NO. 14­614 PETITIONERS

Scott H. Strauss: Thank you, Your Honor. We did not ­­ Maryland did not require CPV to bid into the auction. CPV agreed to do so in response to a competitive procurement. FERC has no issue with competitive procurements, and that can be found in the Joint Appendix. At page 909, there is a regulation in which FERC essentially says so. That's all that happened here. The question of whether we targeted the auction: We did not regulate the auction. We could not regulate the auction. We could not regulate CPV, either. They're a wholesale generator. They make their own choices, and they made their own agreement here to enter into this contract. Alderson Reporting Company Official 1 We couldn't regulate the outcome of the auction because FERC regulates the outcome of the auction. They control every aspect of it. And in this case, what FERC found was a rule change was needed to address this very contract. The change was made. The resource bid in accordance with the rule change and cleared. FERC said its rule change would reconcile the tensions between State policy and auction integrity. FERC said that this resource was economic, needed, competitive, and did not suppress prices. There was no undue price suppression or no artificial price suppression from this resource. FERC said that and ­­ and said it more than once. Even with the State subsidy. And the reason is very clear: Because the bid was a cost­based bid without regard to the contract revenue. And keep in mind, there's been a lot of talk about a subsidy here. Maryland concluded that, over the life of this contract, this was going to be a better deal for ratepayers than for the generator. And that is in the generation order. The only other point I would make, Your Honor, is that the rule that should be articulated Alderson Reporting Company Official 1 here is one that allows each of the parties to fulfill their responsibilities under the statute. Sellers get to set rates as an initial matter. FERC gets to review those rates, and States get to direct the procurement decisions of their retail utilities. Been a lot of talk here about what the retail utilities were forced to do. The subject is State regulation. State courts have affirmed what Maryland did here with respect to its retail utilities. There should be no question about that. States can take actions where necessary to develop new power plants. And as we move forward into an era of a new generation portfolio in this country, the last thing the Court should be considering is trying to limit State options. It's very important to keep them open, especially in a case here, where FERC has reviewed this precise contract. If you look on page 6 of our reply brief, there is a quote from the FERC rehearing order in November of 2011 in which FERC describes an acceptable arrangement and describes this arrangement: one in which local utilities contract with a generator and the generator bids the unit into the market. That is exactly what happened under this contract. FERC speaks approvingly of it. Alderson Reporting Company Official 1 Thank you, Your Honor.

Chief Justice Roberts: Thank you, counsel. Case is submitted. (Whereupon, at 11:06 a.m., the case in the above­entitled matter was submitted.) 7 9 11 13 15 17 19 21 23 25 Alderson Reporting Company OOffffiicciiaall Page 61 A agency 24:12 appeals 54:19 attached 48:12 balance 17:24 ago 9:18 APPEARANCES auction 4:19,20,24 banks 15:14 a.m 2:1 4:2 60:4 agree 41:17 47:24 2:2 6:13,14 9:23 10:5 base 16:25 ability 33:14 34:12 48:10 50:17 56:16 appendix 25:15 10:9,11,12,12,15 based 15:12 29:3 35:9 agreed 57:13 27:14 43:5 54:21 10:18,19 11:3,6,7 33:21 34:10,15 able 5:11 6:1 11:8 agreeing 41:17 57:17 11:7,14,24 12:3 36:17,17 37:4 41:12 42:6 apples­to­apples 13:2,4,17,18,19 42:15,17 53:21 above­entitled 1:24 agreement 13:13 34:13 44:10 14:1,5,5,10,12,13 basis 4:21 5:21 6:1 60:5 45:20 51:3 56:15 application 43:8 14:14,15 19:1,17 11:17 12:13 16:24 absolutely 28:14 57:24 applied 27:10 20:12,16,24 21:25 38:7 34:1 44:8 agreements 51:7 applies 28:13 22:1,1,12,13,18 behalf 2:3,5,7 3:4,7 abstract 14:22 ah 27:7 32:17 apply 44:10 22:19,25 23:2,2,3 3:10,17 4:9 18:3 acceptable 23:6 ahead 9:2 appropriate 27:20 24:25 25:3,5 27:1 29:15 57:10 59:20 AL 1:5,10,19 approved 12:3 27:8,21 29:23 believe 15:6 20:6 accepting 51:16 Alito 7:17,24 8:3,13 47:19 30:5 35:16 36:4 24:16 27:19 act 18:7,20,21 22:4 11:18,23,25 24:21 approvingly 59:25 36:14 38:1 39:25 believed 5:9 22:11 35:2 48:9 24:23 25:4,6,9 arbitrary 45:3 40:3 42:18 44:16 believes 17:19 52:17 28:19 31:21 42:23 argued 17:7 44:18 46:16 47:15 belive 20:4 acting 50:4 52:25 arguing 12:21 47:17,19 48:6,12 belongs 28:16 action 4:16 24:6 allocates 6:16 7:6 24:24 25:7,9 48:17,20 50:4,5,7 bench 33:13 30:2 35:11 40:5 allow 10:8 13:2 argument 1:25 3:2 50:13,20 51:14,15 best 37:19 42:17 43:18,20 45:10,13 14:16 22:12 26:7 3:5,8,11,15 4:4,8 51:21,22 52:1,5,8 better 49:17 58:21 45:13,16,19,22 40:17 18:2,24 29:14 52:13,14,15 53:9 beyond 36:17 46:1,4,5,7 allows 10:4 11:4 34:24,25 41:9 53:10 54:13,25 bid 4:21,23 5:21 actions 55:12 59:11 14:2 15:12,14 43:25 47:7 50:12 55:14,22 56:1,5,6 6:20 11:6,16,19 actor 35:9 59:1 57:9 56:7,13,17,23,24 12:6,13,13,22 actual 31:25,25 alluded 31:21 36:7 arguments 49:11 57:13,21,21,22 14:12 16:24 17:3 33:18 41:14 54:15 42:23 arose 24:20 58:2,3,9 19:14 20:19,19 add 41:8 alluding 13:8 arrangement 8:19 auctioning 38:5 21:3,6,9 23:9,21 adding 48:7 altered 22:18 42:25 59:21,21 auctions 26:2 39:19 23:21,22,22 26:7 addition 23:23 altering 52:23 articulate 37:23 authority 4:17 8:7 27:21,25 28:2 additional 31:13 alters 49:20 54:15 38:24 8:10 18:8 22:14 31:25 32:11,11,18 additionally 53:23 amicus 2:11 3:13 articulated 58:25 26:4,5,19 28:16 32:21 33:3,7,14 address 13:20 47:8 articulating 48:25 35:4 39:21 40:2 33:17 36:5 40:17 43:10 58:5 ANN 2:9 3:12 47:7 artificial 55:22 43:3,16 52:4 40:22 42:17 47:14 addressed 28:5 anomalous 45:7 58:13 automatically 12:7 48:16 49:2 50:5 adjust 17:17 23:2 answer 8:23 46:20 artificially 23:7,12 available 21:7 51:25 52:13 53:4 adjustment 13:18 47:25 48:2,11 25:25 26:8,13 avoided 47:21 53:16 55:13 56:23 admit 14:19 answering 20:20,21 27:11 awarded 15:23 56:25 57:13 58:6 advance 6:15 answers 16:21 asked 14:4 29:6 aware 12:2,9 58:17,17 advanced 42:18 49:24 asking 17:4 55:19 bid­and­clear adversely 24:25 B ante 39:23 aspect 58:3 34:23 45:16 46:24 25:2 27:1 anybody 34:3 assigns 7:6 back 36:20 44:22 48:12 51:1 54:14 affect 23:23 26:9 anymore 10:4 Assistant 2:9 46:8 48:15 56:8,13 27:17 41:3 55:12 Anyway 31:2 assume 30:15 backing 4:22 bidders 36:4 55:13 appeal 29:4,5,5 assuming 16:18 bad 23:25 47:23 bidding 4:20 11:15 affirmed 59:8 AAllddeerrssoonn RReeppoorrttiinngg CCoommppaannyy Official Page 62 11:15 30:12,13 capacity 4:19 6:13 changing 25:22 42:9,12 46:6,18 component 34:2 31:16,22 32:4,10 6:15,17 11:5 16:2 46:16 49:6 51:11 46:23 47:21 51:6 compromise 45:2 bidding­and­clea... 21:13 22:5,12 54:5 53:11 concede 7:25 36:1 52:22 57:4 29:24 31:23,24 charge 7:9 15:13 Clement's 47:25 conceded 31:11 bids 13:17 23:13 34:11 40:14 44:16 15:13,15 48:2 35:22 25:16 29:23 33:5 47:15,19 48:16 charged 18:13 clerk 14:23 conceptual 20:21 44:5 46:15 53:6 50:20 51:25 52:13 Chief 4:3,10 5:4 client 44:23 conceptualizing 53:17 54:3 59:23 54:13 17:25 18:4 29:12 clients 42:13 28:7 bilateral 7:14 38:10 capital 33:9,9,21,22 29:16 34:18 36:22 CLIFTON 2:5 3:6 concern 6:22 13:23 45:12,18 51:15,18 34:6 36:25 46:8 47:5 18:2 13:25 23:16 billions 55:12 capitals 44:12 47:10,20 48:1 close 27:23 28:1 concerned 6:23 bit 25:22 39:1 capricious 45:3 52:3 55:7 57:6 44:25 51:21 54:23 42:21 43:24 44:7 care 27:7 60:2 coal 5:9 15:10 concession 35:23 56:12 case 4:4,6 8:8 9:6 choices 57:24 coarse 33:4 concluded 58:20 bought 6:20 9:17,18 11:2,8 choose 40:17 colloquy 35:21 conclusion 27:20 Breyer 14:18 15:7 12:23 16:23,24 choosing 53:3 combined 15:2 conditioned 34:23 15:17 16:10,18 17:5,6,6,7 19:22 chose 10:10 combustion 15:1 37:9 46:23 17:4,10,21 24:1,9 20:6 21:1,1 23:14 Circuit 7:25 27:14 come 27:19 41:24 conditioning 45:15 27:24 30:7,24 23:20 24:4,19 29:7 43:17,23 45:25 conflict 28:4,8,12 31:4,9,16 33:16 25:21 26:3 28:2 Circuit's 8:1 comes 41:21 37:20,21 39:5,9 33:20 39:1 40:13 29:6,22 34:22 circumstance 14:3 coming 5:10 42:22 39:10 48:22 49:1 41:21 42:6,10 35:18,23 37:6,7 19:17 51:9 53:22 49:5,8,11,13 54:9 55:4,11,24 56:3 37:23 45:7,9,11 cited 25:12 54:19 comment 18:7 54:11,17,17 brief 14:20 17:16 47:1,1 49:12,17 Clause 24:6 43:18 Commerce 43:19 conflict­preempt... 18:20 21:18 25:6 50:24 52:10,12,21 43:19 Commission 1:5 56:10 44:2 53:6 59:18 53:13 58:4 59:16 clear 5:8,20 6:1,21 4:5 20:7 24:16,16 conflicts 37:22,24 briefs 25:13 44:3 60:3,4 6:24 10:14 11:7 24:17 25:23 29:3 38:24 39:17,18 broader 49:18 cases 26:20 47:2 12:6 32:1,4 47:14 43:9,10 49:7 50:17 cause 15:19,23 48:17 50:5 51:25 comparison 34:13 conjunction 30:3 build 13:23 14:1 43:18,19 52:13 58:16 competing 42:15 connection 24:19 20:19 21:2,3,4,11 Central 26:3 28:8 cleared 4:23 5:24 42:16,18,19 29:19 30:3 35:5 21:19,20,23 31:25 certain 34:14 11:17 32:18 53:9 competitive 5:1 6:4 40:4,10 50:19 46:12 48:5,13 certainly 18:12 58:7 7:3 20:18 23:10 consequences 49:25 29:8 35:17 clearer 37:8 23:13 25:16 28:22 22:19 built 5:12 12:4 certainty 14:6 clearing 11:21 51:17 57:14,15 considering 59:14 13:23 14:11 34:15 CFD 43:8,10 39:25 55:3 56:17 58:11 consolidated 4:6 48:16 chairman 1:3 4:5 clearly 35:3 40:8 competitively 4:14 constant 22:12 36:18 clears 29:23 19:12 28:17 constructed 22:13 C change 50:1 58:5,6 Clement 2:7 3:9 complaint 8:12 55:1 C 3:1 4:1 58:7,8 29:13,14,16 31:3 complaints 27:3,4 construction 21:15 calculated 15:3 change­in­incent... 31:6,10,18 32:18 complete 53:5 34:20 36:23 calculating 34:9 50:11 33:19 34:1,21 completely 18:17 context 20:24 35:12 called 24:12 26:19 changed 12:2,12 35:8,17 36:6,10 31:21 32:3 44:12 52:16 56:14 50:23 changes 16:3,5 36:25 37:10,12 45:12 50:4 continue 12:13 calling 27:23 48:19 49:25 50:6 38:2,8,13,17,20 complicated 20:25 contract 4:22 5:13 calls 54:18 50:14 39:6,15,18 41:20 comply 23:7 6:20 7:2,5,10,11 Alderson Reporting Company Official Page 63 7:12,22 8:9,11,20 23:15,21,22 27:25 28:21 designed 10:12 dismissed 8:9 9:2,16,19,20 28:2 58:17 cure­all 33:2 13:20 33:2 displaced 42:3 12:15 13:11 15:23 cost­justify 53:17 curiae 2:11 3:13 destroys 34:12 displacing 34:15 16:4 18:9,10,12 cost­reducing 33:5 47:8 determination distinguish 56:11 18:14,15,15,17 costs 5:21,23 6:19 curtain 43:13 12:24 39:19 distinguishes 45:12 21:17,18 26:16,17 21:4 31:22,25 customers 6:25 determinations distort 4:19 32:15 28:17 34:17 43:6 32:10,11,11,16 cycle 15:2 46:3 distortion 17:15,19 45:18 47:16 51:8 33:8,18 34:3,5 determine 20:16 distribution 7:19 D 51:10,15,18,19,24 40:20,23 41:5,7 39:22 54:12 district 8:4,5,5,24 55:2 57:2,25 58:5 41:14 53:7,18,19 D 2:7 3:9 4:1 29:14 determined 4:12 33:13 35:19,24,25 58:17,21 59:17,22 55:22 56:24,25 D.C 1:21 2:3,5,7,10 12:17 13:1 23:10 36:2,19 45:9 59:25 counsel 17:25 day 8:1 9:21 22:7 25:16 26:8 40:11 divided 21:8 contracted 7:19 29:12 47:5 57:6 40:7 determining 49:4 doctrine 24:11 56:18 60:2 deal 8:25 33:4 develop 59:11 doing 12:20 13:7 contracting 10:16 country 59:13 44:17 58:22 developer 4:15,22 45:23 51:10 14:8 counts 45:1 dealt 28:21 7:3,7,10,10,16 dollar­for­dollar contracts 4:14 6:8 couple 31:11 32:23 decide 17:11 24:17 9:18 37:3 6:11 11:5 12:25 course 21:7 23:23 24:18 25:24 49:17 dictate 29:18 35:4 dollars 56:16 13:4,5 22:5,9 26:6 24:21 26:9 34:1 decided 8:25 9:1,17 difference 7:15,15 double 7:9 27:13,15 38:6,8 44:13 46:20 10:8 26:2 34:19 7:18 20:11 21:22 dramatically 16:4 38:11,16 45:13 court 1:1,25 4:11 37:1 35:1 42:12 51:7 due 32:20 50:23,24,25 55:1 8:5,6,8,8,24 9:17 decision 8:1 43:11 differences 7:2,6 dynamic 10:19,20 56:12 13:6 18:5 25:25 56:23 50:24,25 51:8 11:4,23 32:3 control 22:6,8 28:6 29:17 33:14 decisions 14:8 22:6 56:12 57:2 37:18 52:18 58:3 35:19,25 36:2,19 25:12 59:5 different 11:14 E conventional 36:4 45:9 47:3,11 decisive 29:11 13:10,12,15 17:14 E 3:1 4:1,1 corner 29:1 49:19 54:19 59:14 declaratory 45:10 30:4 31:21 32:3 earlier 29:1 49:24 correct 7:25 8:16 court's 26:3 35:24 default 16:15,25 36:9 40:11 53:19 early 44:1 11:22 15:5,7 courts 59:8 17:2,3 23:15 33:3 differently 38:5 easier 14:20 21:21 22:16 23:2 cover 53:24 define 35:6 55:18 difficult 39:7 economic 5:1 23:11 28:14 35:3 48:25 CPV 1:14 7:18 8:6 defined 35:12 55:9 dime 30:14 58:10 53:1 54:1 11:16,19 21:3 definition 41:5 direct 18:9,11 22:4 economics 44:24 corrected 23:18 29:18,22 30:1 50:1 22:5 29:22 52:14 effect 32:22,22 36:4 correctly 53:12 31:12 32:4 36:20 delivered 46:11 59:4 40:24 46:14 51:13 corrects 53:2 38:22 40:6 43:7 demonstrated directed 4:13 52:8,14 54:16 cost 4:21 6:2,16,21 46:11,15 48:14 53:15 directing 28:17 effectively 39:23 6:24 12:13 15:1 50:14 53:16 55:1 Department 2:10 direction 42:14 51:9 15:12,13 16:14,19 57:12,13,22 depend 46:18 directly 7:18,19 effects 51:22 52:5 16:25,25 17:2 CPV's 33:9 43:11 dependent 20:11 10:8 24:14 37:9 52:20 54:24 21:5,6 30:12,13 45:15 53:18 depends 15:14 33:5 47:17 48:5 52:14 efficiency 42:15 30:16 31:17 32:8 crater 13:25 33:14 52:23 55:25 56:6 efficient 6:2 33:6,8,9,21,22,23 created 37:2 described 16:16 disagree 37:5 efficiently 42:16 33:23 34:2,6,9 creates 13:24 17:2 30:8,11 disagrees 12:22 effort 29:18 40:18 44:12 50:1 creating 49:5 46:19 53:6 discuss 43:10 egregious 33:5 50:9 53:21 55:12 cross 20:7 describes 59:20,21 discussed 20:25 eh 44:25 cost­based 14:24 crosses 20:1,9 design 44:20 26:19 either 8:17,18,20 Alderson Reporting Company Official Page 64 8:21 10:4 16:7 ET 1:5,10,19 54:8 8:21 9:5,7 12:24 folks 50:7 30:22 57:23 eventually 43:3 factual 31:7,15 18:12 22:20,23 followed 11:15 electricity 16:6 45:20 fair 19:7 22:20,22 23:8 24:10 25:12 follows 6:12 19:25 everybody 28:20 37:16 45:3 53:4 25:20 36:12 37:24 footnote 35:24 Elgarten 2:5 3:6 34:9 far 14:23 30:4 52:3 39:18 42:14 44:6 36:16 18:1,2,4 19:7,11 everything's 20:11 52:4 44:25 46:2 48:19 forced 31:13 59:7 19:20 20:1,4,6,18 evidence 29:4 favorably 24:18 49:22 52:20 53:25 forces 42:15 55:21 22:22 24:8,15,22 evidences 39:10 February 1:22 FERC­approved forcing 45:14 51:9 25:2,5,8,11,20 ex 39:23 Federal 4:16 18:7 10:7 forget 26:15 26:13,18,24 28:11 exact 45:8 18:19,21 22:4 FERC­jurisdicti... formats 23:6 28:14 29:2 exactly 7:13 9:12 26:5 29:21 35:2 8:19 9:2 forth 15:14 18:20 eliminate 44:4 10:13 11:9 12:5 47:17 48:8 49:22 field 28:13,15 35:7 36:20 eliminated 23:20 14:9 20:17 21:9 52:17 35:8 37:19 39:2,3 forward 5:7 7:8 enabled 7:7 22:14,24 25:24 FERC 4:20,25 5:20 39:9 49:8,11,12 34:16 59:12 encourages 11:4 26:7 27:25 38:12 6:3,3,13 7:20 8:7 49:16,22 50:12 found 6:3 7:3 9:3 ended 12:24 32:14 59:24 8:10,11,14 9:8,13 51:20 52:20 54:1 57:16 58:4 34:14 35:16 example 17:12,14 9:16,20 10:3,4,6 54:6,18,22 55:5,9 four 40:15 energy 1:8,17 4:6 40:14 48:13 10:12,14 11:8,12 55:18 56:4 Fourth 7:25 8:1 21:12 25:24 26:1 examples 14:21 11:14 12:1,3,9,15 field­preemption 27:14,14 29:24 44:17 exception 23:17,20 12:21 13:1,3,6,7 56:9 frankly 5:18 ENERGYPLUS excuse 27:4 14:4,13,14,16,24 figure 32:14 free 19:13 27:18 1:9,18 exercised 28:16 15:18 17:16,16,19 filed 8:7,12 25:6 47:18 50:2 55:16 engaging 18:17 existing 22:13 18:8 19:4,12,14 44:1,3 friend 43:2 ensure 12:7,8 14:6 40:15,20,21 20:17,22,22 22:2 finally 46:1 friends 35:20 38:9 37:15 exists 17:20 22:11 23:6,6,10 finance 21:15 42:22 enter 11:5 18:10 expand 53:24 23:12,18,24,25 financial 42:25 front 11:9 24:15 26:16 38:6,10 expectation 31:12 24:24 25:6,13,15 financing 8:19 26:6 27:3 45:8 51:3,10 56:15 expense 32:1 25:19,19 26:2,7 33:12 34:10 46:5 57:25 expensive 15:10,25 26:17,21 27:1,3,6 find 17:17 fuel 34:2,5 entered 7:1 8:9 33:24 27:7,12,19 28:1,3 finding 6:3 fulfill 59:1 9:19 22:17,18 explain 8:5 10:25 28:5,9,16,20,25 findings 36:17 full 15:13 entirely 33:14 16:12 39:3 50:21 29:2,2 32:16,21 finds 35:25 functions 13:19 entities 38:21 explanation 28:24 32:24 33:17 35:4 fine 19:4 48:9 51:8 23:3 entity 31:14 expressed 22:23 37:14,22 39:21,23 56:2 future 34:2,5 39:4 entry 13:18 15:1 expresses 23:16 39:25 40:2,11,16 finish 34:6 G EPSA 21:1 extending 54:2 40:21 41:6,9 finished 41:12 equal 37:2 extends 40:2 42:21,24,25 43:3 firm 16:3 G 4:1 equation 39:8 extent 53:3 43:14,24 44:1,3,8 firms 15:24,25 game 44:3 era 59:12 extra 30:17 40:16 44:19,23 45:20 first 4:18 16:23 gas 15:11 54:20 especially 46:19 50:19 51:23 47:18 49:7 50:18 18:6 20:20 31:7 gatekeeper 14:14 59:16 51:13,18,18,21 31:11 32:10 39:17 general 2:9 17:15 ESQ 2:3,5,7,9 3:3,6 F 53:3,24 54:1,8,12 41:23 44:16 41:11 3:9,12,16 fact 10:7 22:25 54:23 57:15,18 five 16:2 40:14 generating 16:1 essentially 35:21 25:3 33:20,24 58:2,4,8,10,13 FKA 1:9,18 generation 4:12 5:7 45:14 50:13 57:18 35:25 36:1 40:21 59:3,16,19,20,25 floor 16:16 5:8 22:10 34:10 estimate 33:6 42:1,1 53:16,23 FERC's 6:7,12 focus 41:10 41:24 47:13 52:19 Alderson Reporting Company Official Page 65 58:23 59:13 47:15 I interpretation 26:14,22 27:24 generator 6:9 guarantees 42:19 50:18 28:10,12,19,24 III 27:14 12:18 15:2,2,8,11 guess 19:19 20:13 intrude 4:16 29:12,16 30:7,24 ill­advised 29:8 16:14,16,17 31:23 31:6 36:3 46:3 intrudes 47:17 31:4,9,16,21 imminent 54:17 31:24 32:2 47:14 52:6 intruding 49:22 33:16,20 34:18 impact 21:25 22:1 49:25 53:4 55:13 guessing 30:25 intrusion 53:25 35:6,15,21 36:3,7 41:7 56:18,19,22 57:23 involuntary 38:18 36:8,22,25 37:10 implement 40:23 H 58:22 59:22,23 involved 6:12 21:13 37:13 38:3,12,15 important 33:8 generator's 50:1 H 2:3 3:3,16 4:8 irrelevant 19:2 38:18,23 39:1,13 46:7 59:15 generators 15:4 57:9 issue 7:5 11:13 17:1 39:16 40:13 41:20 importantly 35:18 geographic 13:22 happen 30:1 17:11,12 24:20 42:6,10,23 46:6,9 impose 19:9 getting 6:11 16:6 happened 5:15 25:22,23 26:4 47:5,10,20 48:1 imposing 20:8 30:25 34:8 12:2 14:9 24:14 28:15,21 41:23 48:22,24 49:4,10 incentive 11:19 GINSBURG 6:6 25:21 38:14 50:8 57:15 49:15,23 50:10,16 12:22 31:22 32:7 28:10,12,24 57:19 59:24 issues 11:2 24:17 51:5 52:2,3,25 32:9,15 give 15:20 39:13,16 happening 48:6 24:18 25:24 26:1 54:7 55:4,7,11,19 incentives 48:19 39:16 40:8,17 53:15 54:1,4 28:4,8 55:24 56:3 57:6 49:6,21 50:1,6 49:24 happens 17:9,11 60:2 52:23 53:14 54:5 given 40:6 41:1,1 50:22 56:20 J 54:15 56:7 46:3 hard 14:22 Jersey 11:10 12:10 K incentivizes 10:13 gives 18:12 39:21 harder 34:22 46:25 27:5 29:4 Kagan 9:4,22 10:3 include 17:12,13 glut 13:24 hate 47:1 join 29:6 14:17 18:23 19:10 included 25:14 go 7:8 10:19 15:17 head 30:21 Joint 25:15 43:5 19:19,21 20:2,5 43:7 24:10 28:1,3,8 hear 4:3 35:20 57:16 20:10 35:21 36:7 including 35:13 43:24 46:12 53:10 heard 35:20 judge 9:2 46:6 49:10,15 inconsistent 18:18 goes 36:16 46:8 hedge 6:18,24 51:3 judgment 23:8 50:10,16 51:5 19:16 22:20 going 5:7,10 15:19 56:15 45:10 52:2 54:7 incorrect 22:17 16:13 30:14,16,17 helpful 46:20 jurisdiction 8:22 Kagan's 18:6 indirect 52:5,20 30:18,19 31:12,25 high 5:24 9:5,7 18:13,21 keep 21:11,16 industry 13:5 50:23 34:2,5 40:7,24 higher 5:15 16:19 24:12 27:18 42:21 58:19 59:15 information 10:15 46:14,15 48:16 17:18 30:16 40:19 43:10 KENNEDY 5:14 14:7,7 52:7 53:8 55:1,18 41:5 53:8 55:3 jurisdictional 10:18,24 11:1 informational 43:8 56:25 58:21 hills 15:8,9,10 43:21 22:16 25:18 35:6 inframarginal gold 32:5 Honor 5:6,18 6:11 Justice 2:10 4:3,10 35:15 36:3,8 30:15 good 15:22 34:25 8:2,18 9:12 10:22 5:4,14 6:6 7:17,24 KEVIN 1:3 inherent 22:3 47:23 11:3 15:6 16:9,14 8:3,13 9:4,22 10:3 key 7:15,17 48:21 initial 8:13 9:15 government 23:16 16:22 17:9,14 10:18,24 11:1,18 kind 14:19 17:14 59:3 35:9 34:21 39:6 47:4 11:23,25 12:14 35:19 44:11 46:7 insert 14:15 government's 57:11 58:25 60:1 13:9,10,14 14:17 46:15 48:11 integrity 58:9 47:12 huge 42:9,12 14:18 15:7,17 kinds 10:16 15:4,21 intended 14:6,7 grace 22:11 Hughes 1:3 4:4 16:10,18 17:4,10 22:4 26:1 interact 11:13 great 32:15 hundred 40:7 17:21,25 18:4,6 knock 53:8 Interconnection guarantee 13:2 44:23,25 56:16 18:23 19:10,19,21 know 13:14 15:19 12:16 33:11 34:8 42:2 hurt 41:13 20:2,5,10 22:16 15:21 20:15 30:25 interested 11:20 44:11,15 hypothetical 19:22 24:1,9,21,23 25:4 34:14 41:18 42:1 17:5 guaranteed 32:6 28:19 41:25 25:6,9,18 26:11 44:19 46:14 51:8 interferes 47:18 Alderson Reporting Company Official Page 66 known 27:8 6:19 10:16 11:5 markets 21:12 40:14 needed 4:13 5:1,10 knows 13:6 34:3 12:15 13:4,5 22:5 39:24 mentions 17:15 6:4,23 10:17,17 22:9 Maryland 1:4,14 Merrill 56:19 16:2 40:15 58:5 L longer 14:4 4:5,12,21 5:5,6,8 message 42:13 58:10 language 50:11 look 32:13 36:16 9:3,22,25 10:1,8 mind 58:19 needs 6:16 large 5:9 13:22 37:13 41:6 43:1,4 10:10 11:9,15 minimum­offer neither 15:3 late 44:2 46:1,4 43:13 55:12 59:18 12:10 14:10,14 14:24 17:17 23:5 net 21:22 lately 34:3 looked 12:15 14:10 15:9,19 19:1,3,8 27:9,9 33:1 53:7 never 5:24 10:5 Laughter 30:23 21:4 19:23 20:5 21:10 minimum­price 30:9 44:19 42:8 46:22 48:3 looks 40:21 21:16 22:17 27:5 54:2 new 4:12,18 6:9 49:14 loophole 27:23 28:1 30:2,13,18 33:11 minute 24:3 11:10 12:10,17 law 14:23 22:17 lose 35:22 47:1 34:19 35:22 36:7 minutes 57:7 13:18 15:1 22:9 36:1 lost 7:24 36:11,18,20,21,22 Mississippi 45:25 26:9 27:5 29:4 lawsuit 26:15 lot 34:4 52:7 58:19 43:7 47:12,16 misstated 34:7 31:23,24 34:10 leaves 54:9 59:6 50:15 51:9,16 misstatement 33:22 40:14,18 41:24 leaving 19:13 low 53:16 55:21 57:12 58:20 mixed 36:1 53:4 59:11,12 legal 17:11,12 52:9 lower 30:16 33:21 59:9 modified 26:7 NJBPU 29:5 let's 27:22 47:3 55:3 Maryland's 4:16 modify 41:12 nobody's 39:11 letting 20:12,16 lower­than­actual 4:18 6:22 10:10 moment 41:18 nominal 40:3 level 17:18 33:23 29:18,21 37:22 money 30:17 46:11 non­jurisdictional liability 12:8 lowest 40:18 43:11 46:24 48:15 49:24 8:18 life 58:21 LSC 31:14 37:8 math 15:22 50:19 nonclearance 7:4 Light 45:25 LSCs 45:14 51:10 matter 1:24 9:16 monitor 53:17 7:16 limit 59:14 lucky 40:7 16:11 35:25 42:1 monthly 21:9 normally 26:15 limited 17:18 Lynch 56:19 59:3 60:5 MOPR 33:1,2 Northern 54:20 line 20:1,8,9 28:21 matters 32:19 43:25 44:4,10,20 Northwest 26:3 litigated 47:2 M mean 6:7 10:6,9 45:4 53:1,2,3,5,12 28:8 litigation 8:6 44:1 making 14:8 23:4 19:22 20:15 22:3 53:24 notes 43:7 little 20:24 25:21 34:24 43:25 31:20 35:19 36:15 Morgan 25:21 notify 26:20 38:25 44:2 56:12 mandate 52:9 37:1 44:7,9 45:4 morning 4:4 notion 18:16 LLC 1:9,10,14,18 marginal 41:4 46:18 49:16 52:7 motion 8:7,25 notwithstanding 1:19 market 5:25 6:1 55:8 move 59:12 5:2 6:5 load 46:11 7:13 10:16 11:21 Meaning 26:15 multiple 39:10 November 59:20 load­serving 38:21 13:24 14:8 21:6,7 means 4:25 9:7,10 mystified 44:2 NRG 9:17 loading 31:14 23:23,24 29:20,21 measure 32:15 mystifying 44:7 number 9:17 16:25 loans 15:14 34:11 38:1,6,11 measured 37:3 numbered 25:13 local 4:13 18:9 22:7 38:16 40:19,25,25 mechanics 13:15 N numbers 14:21 59:22 42:15 44:14 45:15 13:16 N 3:1,1 4:1 53:19 locale 21:5 47:18 48:7 49:6,7 mechanism 5:13 Nantahala 45:25 lock 14:2 49:22 52:24 53:17 10:9,19 23:1 natural 15:11 O lock­in 12:17 13:8 54:11 59:23 36:14 47:18 49:7 54:20 O 3:1 4:1 locked­in 12:24 market­based 8:6 54:12 necessarily 41:25 O'Connell 2:9 3:12 long 19:4 48:7 26:19 43:3,12,15 meet 5:11 12:7 50:21 53:8 47:6,7,10,24 48:4 long­standing 45:21 megawatt­day necessary 59:11 48:23 49:3,5,10 19:11 Marketing 1:8,17 15:15 32:12 need 5:7,11 46:10 49:16 50:3,16 long­term 6:8,10 4:6 megawatts 15:12 50:10 51:12 52:11 53:2 Alderson Reporting Company Official Page 67 54:10 55:10,23,25 22:6,12 38:16 percent 15:1,4,18 29:17 42:4 47:11 presented 24:22 56:4 50:4 51:15 55:6 15:21 16:15,19 point 19:4,8 23:3 25:23 27:6,12 object 45:21 overdetermined 23:9,9 44:21,22 34:6 36:11 45:22 pretend 45:1 objection 26:25 39:8 44:23,25 55:15,17 45:24 52:6 58:24 pretty 31:11 27:2 34:19 43:18 overlooked 43:21 perfect 10:21 44:20 pointed 53:12 prevailing 30:5 obstacle 32:5 owes 56:19 45:1,2,2,5 53:12 policy 22:20,23 price 7:11,12,13 obtained 8:6 53:20 25:24 26:1 58:9 10:1,1 12:6,21 P obviously 28:6 perfectly 10:22 pool 15:19 16:6 13:18 14:25,25 occurring 51:15 P 4:1 27:20 55:16 portfolio 59:13 16:5,15,15 17:1,3 odd 35:19,23 page 3:2 21:18 43:5 period 6:15 12:17 position 8:13,17 19:3,8,9,23,24 offer 16:16 17:18 54:20 57:17 59:18 permissible 10:22 19:16 24:24 29:8 20:8,12,12,16,17 24:20 54:2 paid 7:11 48:5,13 permits 10:13 29:9 35:3 42:24 21:8,23 23:5,15 offers 53:21 paragraph 39:17 permitted 9:15 47:21 23:15 27:9,10,25 offset 6:21 part 10:15 32:25 16:17 possibility 7:9 30:5 32:22 33:1 oh 30:21 38:8 43:23 39:7 42:20 48:10 person 51:25 56:18 23:17,19 54:16,17 34:10,16 41:3,4 oil 15:10 participants 48:19 petition 27:22 posture 24:4 45:7,8 44:17,18 49:2 okay 15:15,16 54:25 56:7 54:21 pot 32:5 53:4,7,10 55:2,3 20:10 32:12 37:12 participating 37:25 Petitioner 1:15 2:6 potentially 37:1 55:13 56:16,17,24 48:14 49:21 50:7 3:7 18:3 power 18:7,8,20,21 58:12,13 once 29:23 30:8 participation 45:15 Petitioners 1:6 2:4 19:5 20:19 21:2,3 price­suppressive 58:14 particular 14:3 3:4,17 4:9 57:10 21:4,11,15,20,20 33:3 44:5 54:16 one­year 6:15 36:17 53:13 54:25 pick 20:12,16 21:24 22:3,3,4 prices 5:2,5,15,16 ONEOK 56:1 particularly 34:22 picked 19:3,8 35:2 36:24 37:15 5:18,19,23 6:4 open 59:15 35:23 picking 20:12 45:25 46:11,12 13:24 14:2 23:8 operate 51:1 parties 11:4,5 PJM 6:14,14 11:24 47:23 48:5,9,13 23:12,19 26:8,9 operates 13:17 43:20 45:19 51:3 12:16,16 15:3 48:15 52:17 59:11 26:10 27:11 47:19 operator 29:20 56:14 59:1 16:5 29:23,25 PPL 1:9,18 58:11 opinion 9:1 24:7,10 parts 41:21,22 30:4,5,12,16 practice 50:23 primarily 4:17 35:24 37:11 39:14 party 8:11 31:14,17,22 32:13 precise 59:17 primary 24:12 opposite 25:7 PAUL 2:7 3:9 37:4,9 39:19,19 preclude 12:12 42:21 options 59:15 29:14 39:24,24 40:1,6,6 preempted 8:20,23 private 24:6 31:23 oral 1:24 3:2,5,8,11 pay 6:25 16:5 19:24 40:10 42:16 45:15 9:10 29:20 35:7,9 31:24 4:8 18:2 29:14 21:10,20 28:20 47:14 48:6 53:18 35:14 40:8 45:17 probably 9:1 45:3 47:7 30:14 33:25 55:14 56:5 46:5,13,17,21,25 49:17 order 5:8 7:1 9:1 paying 30:18,20 place 5:11 37:23 47:13 50:21 56:8 problem 5:9 16:21 12:7,16 25:19 payment 30:3 56:21 57:3 17:19 24:2 31:2,7 29:5,10 47:13,15 31:13,13 plainly 29:20 preemption 28:4,8 44:13 51:13 52:21 54:12 58:23 59:19 payments 21:9 32:7 plan 37:22 28:13,13,15 34:24 53:1 54:9 orders 29:3 37:8 38:22 45:14 plant 13:22 20:19 34:25 37:19,20,21 procedural 24:3 originally 11:18 47:16 51:23 21:2,3,4,6,11,15 38:25 39:3,5,9,10 45:7,8 12:3 people 14:20 38:5 21:20,20,24 34:20 39:11 45:10,11 proceedings 44:22 outcome 58:1,2 40:16,18,19,20,22 36:24 46:11,12 49:9,17 50:12 process 9:17 11:15 outcomes 46:16 49:6,21 52:23 47:23 48:5,13,15 54:18,22 55:5,6 11:16 19:15 45:23 output 29:24 54:5 48:16,18 premise 31:8,15 46:17 outside 8:22 10:19 people's 41:7 plants 59:11 39:21 41:23 procured 6:20 13:4,17 14:12 perceived 5:8 please 4:11 18:5 present 41:12 procurement 7:3 Alderson Reporting Company Official Page 68 21:1 51:17 57:14 8:22 20:13,21,21 rebuttal 3:15 17:24 request 43:11 review 9:13,21 59:4 36:1 41:22 42:20 57:9 requesting 43:9 18:13,13,15 19:5 procurements 46:8 47:21 49:24 receive 40:9 47:15 require 4:20 27:25 19:15 22:7 51:18 57:16 52:6 57:20 59:10 received 7:12 57:12 51:19 59:3 procures 6:14 quite 30:10 39:1 receives 7:11 29:19 requirement 32:4 reviewed 8:11,14 produces 50:14 quote 43:7 59:19 30:1 35:5,13 40:4 34:23 45:16 46:24 59:16 profits 21:11 quotes 23:11 25:14 receiving 31:13 48:12 50:5 51:1 revised 4:20 5:20 program 11:10 50:2,19 51:25 51:24 52:22 54:14 11:11 12:10 17:16 R 14:11 33:10 47:16 recognize 52:16 56:8,13 57:4 RFPs 27:5 51:22 52:12 53:15 R 4:1 recognized 18:8 requiring 6:8 47:13 rich 42:21 43:24 53:24 54:14,24 rainbow 32:6 reconcile 11:12 49:2 52:12 rid 54:8 56:6 raised 26:25 43:17 58:8 reserve 17:23 22:3 right 8:15 9:6,12 programs 11:13 46:9 reconciled 26:5,6 resolve 28:7 11:20 16:7,7,10 12:10 54:2,4 rate 8:6 9:19,25 reconstruct 53:18 resolved 27:2 24:6 30:22,25,25 prohibit 12:11 13:6 18:16 19:1 26:19 record 29:9 32:25 resource 4:19,21,25 36:13 38:15,17,23 prohibited 13:4 28:18,20 36:14,16 refer 13:19 5:21,24 6:23,24 39:15 44:8 46:4 project 4:15 33:12 36:21 37:5 39:25 referred 50:25 6:25 7:7 11:16 54:10 55:23 33:14 34:14,15 40:3,11 43:3,12 reflected 29:4 12:5 13:23 14:1 rise 18:12 protest 26:21,22 43:15 45:21,24 regard 5:22 58:17 14:11 16:24 17:2 rising 40:19 27:16,18 46:2 50:13,14 regardless 8:24 23:13 58:6,10,13 risk 7:4,6,15 provide 10:15 14:7 51:11 55:2 56:20 resources 5:11,12 ROBERTS 4:3 5:4 provided 47:16 ratepayers 21:14 region 6:16 6:19,19 11:6,7 17:25 29:12 34:18 provision 35:3 58:22 regular 38:7 12:4,11 36:22 47:5,20 provisions 37:14 rates 9:9,15,23 10:4 regulate 57:21,22 respect 32:20 37:25 48:1 52:3 57:6 PSC 36:18 10:5,6,7,8,10 57:22 58:1 39:24 52:5 59:9 60:2 Public 1:4 4:5 18:13,22 27:17,17 regulates 20:22,22 respond 18:6 19:13 rough 45:2 pump 34:3 35:10,11,12,16,22 52:18 58:2 Respondents 2:8 rule 17:17 18:19 purchase 21:23 36:5,12,13,23 regulation 7:20 2:11 3:10,14 19:11 23:5,7 27:9 purchaser 18:11 37:15,17,18 39:19 37:18 45:24 57:17 29:15 47:9 27:10 33:1,4 19:14 39:22 52:18 54:13 59:8 response 41:19,20 37:23 38:25 39:4 purchases 22:5 59:3,4 regulations 37:25 44:25 57:14 53:7 54:3 55:20 purchasing 18:9 reaches 52:4 39:24 responsibilities 58:4,7,8,25 22:6 read 25:8,11,14,14 rehearing 59:19 12:8 59:2 rules 4:20,23 5:20 pure 23:15,21,22 reads 21:17,18 related 11:9 rest 15:20 11:11 12:2,10,12 purpose 10:14 real 14:21 30:12,13 relatively 13:21,22 result 7:8 22:18 14:14 26:7 37:17 13:20 14:5 23:18 40:23 51:6 relevant 24:13 27:10 37:24 41:13 28:23 realized 32:9 37:14 results 14:11 51:16 ruling 49:18,19 purposes 35:18 really 24:13,13 reliability 4:13 retail 4:13 45:24 rulings 29:3 43:9 28:5 33:6,22 12:5 52:18 59:5,7,9 run 21:6 pursuant 5:12 8:10 40:23 44:10 45:22 relying 18:24 retailers 16:5 put 13:24 15:19 reason 4:18 5:3 remaining 57:8 retire 5:10 S 42:17 55:22 17:17 39:7 50:17 Remember 10:23 return 34:6 S 2:5 3:1,6 4:1 18:2 puts 55:5 58:16 12:3 revenue 4:22 5:2 sale 9:8,13 35:5 reasonable 37:16 repeat 20:13 5:22 14:6 58:18 40:4,10 Q 39:20,23 40:1,12 reply 18:20 21:18 revenues 21:16,19 sales 9:9 21:12,13 question 6:11 8:21 reasons 4:17 44:8 59:18 21:21,22 21:13 22:12 29:19 Alderson Reporting Company Official Page 69 30:4 35:10,11,13 36:14 37:15,17,18 27:22 32:4 42:3 47:14 58:20 37:4 39:25 37:23 49:8 54:12 45:21 53:6,8 statement 22:21 sufficient 44:4 saw 5:7 59:3 sorry 26:11 43:24 States 1:1,25 2:11 suggested 27:24 saying 9:22,24 sets 35:11,22 sort 33:2 50:11 3:13 9:10 12:7 superintends 9:16 17:10,11 19:2,6 setting 18:16,25 57:2 18:7 22:2,9,14,23 supplier 40:4,9 20:2,10 24:5 25:1 28:17,18 35:16 Sotomayor 12:14 23:1 38:6,9 47:8 suppliers 40:15 25:18,20 29:1 36:12,12,15,21,23 13:9,10,14 26:11 55:12 56:14 59:4 supplies 16:4 18:21 33:1,17 38:10 37:5,25 39:4 26:14,22 37:10,13 59:10 supply 23:24 26:10 44:4,5 46:12,25 47:19 38:3,12,15,18,23 statute 9:14,15 40:15 48:7 says 4:25 14:23 settling 34:12 39:13,16 48:22,24 35:12 39:21 59:2 support 22:9 20:7 23:6 26:4 seven­year 12:17 49:4,23 55:19 statutory 35:1 supporting 2:11 32:21 33:17 35:3 sevenfold 32:14 sought 11:12 37:14 3:14 47:9 37:14,17 40:5,22 SG 24:11 41:11 speaks 59:25 staying 48:8 suppose 37:1 40:22 57:18 shaking 30:21 specific 13:20 steel 33:24 suppress 5:1,5,16 scheme 50:13 shoulders 42:5,11 19:17 26:6 27:13 stepping 6:7 5:17,23 23:7,12 Schneidewind 45:9 showed 6:2 27:15 stop 42:16 23:19 26:8 58:11 54:20 showing 54:21 spend 24:2 Strauss 2:3 3:3,16 suppressed 5:19 SCOTT 2:3 3:3,16 shows 49:8 53:25 sphere 48:8 52:17 4:7,8,10 5:6,17 44:17,18 4:8 57:9 54:3 52:20 6:10 7:22 8:2,4,16 suppresses 26:1 screen 33:4 53:20 shrug 42:4 spoke 30:9 9:11,25 10:11,21 suppressing 27:11 second 5:3 42:20 shrugging 42:10 stable 30:5 10:25 11:3,22,25 suppression 58:12 46:3 48:10 side 18:14,14,22 stage 44:3 46:1,4 13:1,12,16 14:17 58:13 see 25:15 31:2,6 20:23 28:25 29:6 stages 44:1 15:6,16 16:9,13 suppressive 6:4 32:22 41:6,13 32:25 35:20 38:10 Stanley 25:21 16:20 17:8,13,23 32:22 52:2 54:7 55:4,8 42:22 44:6 staple 13:5 18:25 20:14 23:4 Supremacy 24:5 56:3 sign 4:14 start 31:18,20 57:7,9,11 43:18 sees 51:13 signal 34:11 42:18,19 Strauss's 18:24 Supreme 1:1,25 select 10:1 similar 37:7 started 24:5 26:15 19:16 sure 9:4 11:1 31:18 selected 4:15 10:2 simple 39:13 42:23 streams 30:3 36:6 37:19 38:2 sell 20:9 29:24 simplified 14:21 starting 39:20 subject 7:20 8:21 39:1,15 48:6 seller 9:18 10:2 38:25 State 4:22 5:2,22 9:5,7 19:14 29:9 surrounding 15:9 18:14,17,22 19:9 simply 7:14 14:3,22 7:7 9:20 11:13 59:7 system 14:24 37:22 19:13,13 20:22 single 22:7 12:4 28:20 30:2,2 subjected 9:20 T 35:4,13 sir 39:14 35:11 36:15 38:19 submission 43:4,6 sellers 9:14 59:2 situation 13:21 38:20 40:5,5,9 submit 26:16 45:20 T 3:1,1 selling 37:9 23:9 37:7 45:13,13,16,19,22 submitted 25:17 take 19:22 21:4 sends 42:13 small 13:21 46:1,2,4,5,7,10,15 60:3,5 27:7 41:23 42:14 sense 36:3 sold 40:6 50:20 47:22,22,25 48:4 submitting 51:17 43:4 46:2 56:1,21 separate 56:22 solely 43:8 48:4,8,13 49:20 subsidies 37:2 59:10 Service 1:4 4:5 solicitations 27:5 50:3 51:22 52:17 42:19 50:2 52:7 takes 50:13 serving 31:14 28:22 52:18,18 53:15 subsidize 34:20 Talen 1:8,17 4:6 set 6:13 9:8,15,19 soliciting 28:18 54:4,24 55:15 subsidized 47:22 talk 58:19 59:6 9:23,25 10:4,5,8 Solicitor 2:9 17:15 56:6 58:9,15 59:8 subsidizes 36:23 talked 32:10 44:9 11:14,18 14:25,25 solution 45:5 53:5 59:8,14 subsidy 6:5 34:23 44:21 18:20 19:12 20:19 53:13 State's 26:4 45:23 37:3,4 41:1,2 talking 13:15 20:20 22:1,24 35:9 36:4 somebody 26:22 State­selected 51:23 57:4 58:15 39:4 51:20 56:5 Alderson Reporting Company Official Page 70 talks 43:2 26:25 14:23 18:23 19:21 48:15 55:8,15,16 28:7 30:10 targeted 57:20 thousand 40:14,16 24:3,23 25:19 55:17 world 41:14 targeting 29:21 three 6:14 13:3 38:3 wanted 6:22 14:16 worrying 55:6 48:6 55:25 56:3 14:2 44:3 57:7 understanding wants 23:12 27:22 worse 34:7 targets 52:14 56:6 three­year 13:7 22:2 31:4 56:23 wouldn't 5:25 28:1 tariff 9:16 34:10,16 42:17 understate 32:8 ward 33:3 28:10 42:2 44:14 tell 37:11 tied 56:13 57:5 understood 21:10 Washington 1:21 46:17 telling 8:8 ties 51:23 22:8 43:25 2:3,5,7,10 write 37:11 39:14 tells 6:17 time 11:10 13:3 undertake 7:4 wasn't 8:14 18:25 written 18:20 tensions 58:9 14:22 17:22 41:12 undertook 5:12 way 5:23 6:18 7:2,8 wrong 16:8,11 terms 9:9 14:22 45:22 undue 58:12 7:13 8:20 9:14 32:20,21 41:16 terribly 45:6 told 33:10,10,13 unfair 12:18 21:14 14:15 18:7 22:19 49:1 testimony 36:18 38:4,20 22:21 25:17 27:21 30:7 X 44:14 top 30:10 unit 30:15 59:23 30:11 31:19 33:16 text 35:2 transaction 20:23 United 1:1,25 2:10 38:25 43:19 44:10 x 1:2,11,13,20 Thank 17:24,25 56:21 3:13 47:8 44:22 46:19 49:2 Y 29:12 47:4,5 57:6 trial 33:13 units 5:9 41:5 49:7,17 51:2 years 5:10 6:15 57:11 60:1,2 tried 39:11 44:19 unjust 12:18,25 53:20 55:1 56:2 9:18 13:3,14 14:2 thanks 30:2 53:16,16 54:1 unprofitable 32:2 ways 20:15 32:23 16:2 21:8,19 theory 56:9,10 trouble 28:6 unreasonable we'll 41:12 31:12 32:7 thing 23:25,25 true 10:3 31:17 12:18,25 we're 30:19 39:3,4 30:10 32:24 34:13 54:8 upping 32:14 40:7 41:12 43:15 Z 44:20 55:5,6 truer 30:9 use 9:23 14:8 17:21 43:22 48:17 51:20 zero 11:20 12:6,6 59:13 try 30:8 40:13 23:14 36:14 40:23 56:5 12:23 things 8:17 20:24 42:16 43:15 53:20 utilities 4:14 6:17 we've 25:12 27:8 zone 13:22 30:1 52:7,19 trying 13:6 38:24 6:18 7:11,19 44:9 53:5 think 13:8 17:13 40:16 53:18 59:14 18:10 19:23 20:8 Wednesday 1:22 0 23:18,24 24:7,17 tunes 25:22 22:7 50:15 59:5,7 weeks 29:7 24:25 29:7 31:7 turbine 15:2 59:9,22 went 9:2 1 31:10,21 34:5,21 turbines 21:5 utility 9:20 whack 44:12 1 55:17 34:25 35:1,8,14 turf 6:7,12 wholesale 4:19 9:8 10:04 2:1 4:2 V 35:17,18 36:6,11 turn 21:19,21 9:9,12 10:12 19:1 11:06 60:4 37:4,7,20,21 38:4 turned 48:14 v 1:7,16 4:5 29:19,20 35:5,10 135 25:12 39:2,5,6,7 41:11 twice 6:25 variance 34:4 35:10,11,13 36:13 137 25:12 41:16,17 43:21,22 two 4:17 8:17 15:4 veto 19:5 39:22 40:10 46:2 14 32:12 44:8,19,24 45:2,6 15:20 16:21 23:5 view 47:12 51:11 54:13 57:23 14­614 1:6 2:4 3:4 45:8,11 46:20,25 29:7 41:21,22 views 24:13,14 widespread 50:23 3:17 4:4,9 57:10 49:8,16,19 50:16 typical 45:18 Volume 27:14 willing 7:4 14­623 1:15 2:6 3:7 50:18 51:12 52:4 voluntary 38:10,15 win 44:5 49:12,12 18:3 53:11,14,25 54:3 U 45:12,18 51:7 wonderful 23:25 142 43:5 54:10,11 55:25 Uh­huh 24:8 words 14:22 30:9 17 21:18 W 56:9 ultimate 18:15 55:5,17,24 56:1 18 3:7 thinking 14:22 ultimately 34:7 W 1:3 work 26:2,14 33:6 180 15:22,24 thinks 23:25 53:4 unconstitutional want 17:21 18:10 worked 7:14 Third 29:7 9:3 21:14 24:15 27:16 working 39:2 2 thought 24:11 understand 12:23 32:1,24 43:14 works 9:14 18:7 20 21:8,19 32:7 Alderson Reporting Company Official Page 71 56:19 20­year 4:14 13:13 33:11 34:8,16 42:2 44:11,15 2006 12:4 2011 5:20 12:1,9 17:16 59:20 2016 1:22 21a 54:20 220 15:15,21 1:22 240 21:8 3:10 4 3:4 3:14 35:24 36:16 50 40:8 500 15:12 3:17 6 59:18 70 15:4,18,21 16:15 16:19 23:9 44:21 56:25 80 23:9 56:17,24 90 15:1 16:15 44:21 45:2 56:25 909 57:17 32:14,18 99.99999 55:15 Alderson Reporting Company