UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


AUTOMATED POWER

v.

FERC


98-1415a

D.C. Cir. 2000


*	*	*


Rogers, Circuit Judge: Automated Power Exchange, Inc.  ("APX")
petitions for review of two orders of the Federal  Energy Regulatory
Commission ("FERC") asserting jurisdic- tion over APX as a public
utility within the meaning of the  Federal Power Act and requiring APX
to file certain informa- tion about itself. APX operates a
computerized marketplace  in which buyers and sellers of electric
energy enter into  short-term power supply contracts at prices
displayed by the  APX computer, subject to the buy and sell limits
established  by market participants. FERC concluded that because the 
APX computer plays a role in setting market price, APX is a  public
utility subject to regulation under the Federal Power  Act. See 16


APX contends that FERC has impermissibly expanded its  limited
jurisdiction to include, for the first time, entities that  neither
sell nor transmit power in interstate commerce but  only facilitate
trades. Viewing itself as no more than a "high  tech power broker,"
APX maintains that FERC's orders rely  on a faulty understanding of
APX's marketplace and are  contrary to long-standing agency precedent
defining the char- acteristics of a public utility. APX contends,
alternatively,  that assuming FERC's jurisdiction, FERC has
arbitrarily  imposed different filing requirements on it than have
been  imposed on similarly situated entities.1 Because FERC's 




__________

n 1 The petitions of APX and the California Power Exchange Cor-
poration ("CalPX") challenging FERC's imposition of the annual fee 
paid by other public utilities have become unripe as a result of 
FERC's decision to waive the annual fee until it has conducted a 
general review of the issue. See PJM Interconnection, L.L.C., 88  FERC
p 61,109 at p. 61,257-58 (1999); on reh'g, 89 FERC p 61,133  (1999).
Accordingly, the court granted petitioners' motion to dis- miss
CalPX's appeal in No. 98-1419 and that portion of APX's 


interpretation of the Federal Power Act is entitled to defer- ence and
FERC has distinguished APX from the entities over  which it previously
has declined to assert jurisdiction and has  explained why its
decision here is in harmony with its rele- vant precedent, we deny the
petition for review.


I.


The instant case began when APX filed an application  requesting that
FERC disclaim jurisdiction over its operation,  or, alternatively,
grant APX market-based rate authority,  accept for filing its rate
schedule to become effective January  1, 1998, and waive prior notice
and other filing requirements  and annual charges. The Federal Power
Act ("FPA" or "the  Act") applies to the transmission or sale at
wholesale of  electric energy in interstate commerce, see FPA s
201(b)(1),  16 U.S.C. s 824(b)(1) (1994), and FERC's jurisdiction
extends  over all facilities for such transmission or sale of electric
 energy. See id. As a result, FERC has jurisdiction over any  "public
utility," which the Act defines as any person who owns  or operates
facilities subject to FERC's jurisdiction. FPA  s 201(e), 16 U.S.C. s


In its application, APX asserted that it will not be a public  utility
under the FPA because it will not make sales for resale  of electric
power in interstate commerce or transmit electric  energy therein, and
will not own or operate any facilities  subject to FERC's
jurisdiction. Furthermore, APX stated  that it will not take title to
the electricity which is sold, will  not exercise control over
decisions by any market participant  to purchase or sell electricity,
and will not dictate prices at  which a buyer or seller must transact.
Rather, APX claimed,  it will serve as an information management agent
for buyers  and sellers of electricity that choose to voluntarily
trade using  APX's services. Thus, APX's application put before FERC 
the question whether a new market institution that will  operate as an
electric power exchange is a public utility as 




__________

n petition challenging the annual fee. See Automated Power Exch. v. 
FERC, 1999 WL 1215753 (D.C. Cir. Nov. 30, 1999).


defined in the Federal Power Act and is therefore subject to  FERC's
jurisdiction.


In the orders under review, FERC acknowledged that the  archetypal
"facilities" under the Act are power generating  plants and
transmission lines, but also recognized that the  phrase "facilities
... for sale" has long been read broadly to  include, among other
intangibles, contracts used by resellers.  See Automated Power
Exchange, Inc., 82 FERC p 61,287 at  p. 62,106 (1998) ("Hearing
Order"); see also Hartford Elec.  Light Co. v. FPC, 131 F.2d 953, 961
(2d Cir. 1942); Citizens  Energy Corp., 35 FERC p 61,198 at p. 61,453
(1986). FERC  recognized that APX does not own or operate either
tradition- al physical facilities used to transmit power or paper
facilities  used to resell power. However, FERC had recognized a new 
kind of public utility in recent decisions concerning the Cali- fornia
Power Exchange ("CalPX"), a state-created market- place that operates
in the geographic area in which APX  seeks to compete. In its CalPX
orders, FERC had construed  the FPA's provision covering facilities
for wholesale sale of  electricity to include the operators of a power
exchange if the  operator exercises "effective control" over sales in
the mar- ketplace, Pacific Gas and Elec. Co. et al, 77 FERC p 61,204 
at p. 61,805 (1996) ("First CalPX Order") or, alternatively, if  the
operator is an "integral part of the transactional chain."  Southern
Cal. Edison Co., 80 FERC p 61,262 at p. 61,946  (1997) ("Second CalPX
Order").2 FERC thus concluded that,  like CalPX, APX also exercised
"effective control" over sales  in its market and was an "integral
part of the transactional  chain" because "APX will determine the
market price at  which energy will be sold, and [ ] it will take the
combined  actions of the seller and buyer participants as well as APX




__________

n 2 Because FERC's jurisdiction over CalPX had not been contest- ed,
FERC had pithily described that the key attributes of CalPX's 
operations that rendered it jurisdictional were that CalPX would 
control sales in its market by aggregating supply and demand,  setting
price, and matching buyers and sellers, see, e.g., First CalPX  Order,
77 FERC at p. 61,806-07, and that CalPX was a necessary  intermediary
through which all sales would take place. See Second  CalPX Order, 80
FERC at p. 61,946.


effectuate wholesale sales." Hearing Order, 82 FERC at p.  62,108; see
also Automated Power Exchange, Inc., 84 FERC  p 61,020 at p. 61,085-86
(1998) ("Rehearing Order"). FERC  rejected the argument that APX was
more like the computer- ized bulletin board system over which FERC had
disclaimed  jurisdiction in Continental Power Exchange, 68 FERC  p
61,235 (1994), noting that unlike APX's market, participants  in
Continental's system determined price through direct ne- gotiation.
See Hearing Order, 82 FERC at p. 62,108-09.  Upon denying the petition
for rehearing, FERC ordered APX  to file a "detailed description and
explanation of its services,  including the calculation of market
price, fees, and all rele- vant terms" as described in its order.
Rehearing Order, 84  FERC at p. 61,089-91.


II.


To appreciate the substance of APX's challenges to the  orders under
review and FERC's reasoning, some back- ground concerning changes in
the electric power industry and  how the APX market operates is


At the end of the twentieth century, the wholesale electric  power
industry was undergoing a significant transformation.  Beginning with
Congress' decision to mandate that certain  power generators be
allowed to "wheel" power,3 the tradition- al monopoly structure of the
power industry began breaking  down, see Campaign for a Prosperous
Georgia v. SEC, 149  F.3d 1282, 1284 (11th Cir. 1998), so that by the
mid-1990s a  wholesale market for low-cost power generated by a
variety  of power sellers had emerged and traditional vertically-
integrated utilities were competing for sales of power at 




__________

n 3 "Wheeling" involves a transfer by direct transmission or dis-
placement electric power from one utility to another over the 
facilities of an intermediate utility. See Public Utilities Regulatory
 Policies Act of 1978, 16 U.S.C. ss 796(17)-(18), 824a-3, 824i, 824k 
(1994); Otter Tail Power Co. v. United States, 410 U.S. 366, 368 
(1973); Richard D. Cudahy, Retail Wheeling: Is This Revolution 
Necessary?, 15 Energy L.J. 351, 351 & n.2 (1994); cf. Association of 
Oil Pipe Lines v. FERC, 83 F.3d 1424, 1429 (D.C. Cir. 1996).


wholesale. FERC, in response to enactment of the Energy  Policy Act of
1992, Pub. L. No. 102-486, 106 Stat. 2776, 2905- 21 (1992), codified
at 42 U.S.C. ss 13201-13556 (1994), pro- mulgated Order No. 888,
Promoting Wholesale Competition  Through Open Access
Non-Discriminatory Transmission  Services by Public Utilities, 61 Fed.
Reg. 21,540 (1996),  codified as revised at 18 C.F.R. Pts. 35 & 385
(1999),4 which  "transformed the competitive environment." Louisiana
En- ergy and Power Auth. v. FERC, 141 F.3d 364, 370 (D.C. Cir.  1998).
As a result, FERC notes in it brief, the industry now  consists of a
variety of electric power sellers and power  marketers, which purchase
and resell power generated by  others. APX seeks to market its
services to participants in  the electric power market in the western
United States, of  which California is the hub, consuming nearly half
of the  power generated in the entire region. As of 1997, approxi-
mately 100 entities traded power in the western market;  furthermore,
according to FERC, 650 entities in addition to  the owners and
operators of physical facilities have applied to  act as middlemen


Prior to the emergence of power exchanges, the industry  had developed
standardized power contracts covering five  periods of time, ranging
from power for the following month  to power in the next hour.6 Of
these, the most prevalent 




__________

n 4 For the revisions and clarifications of Order No. 888, see 76 
F.E.R.C. p 61,009 (1996), 76 F.E.R.C. p 61,347 (1996), and 79 
F.E.R.C. p 61,182 (1997), on reh'g, Order No. 888-A, 62 Fed. Reg. 
12274 (1997), on reh'g, Order No. 888-B, 81 F.E.R.C. p 61,248  (1997),
on reh'g, Order No. 888-C, 82 F.E.R.C. p 61,046 (1998), on  appeal sub
nom. Transmission Access Policy Study Group, et al. v.  FERC, No.
97-1715 (D.C. Cir.) (submitted November 3, 1999).


5 This number does not necessarily reflect 650 new entrants  because a
number of traditional utilities are divesting themselves of  their
generating facilities and focusing on the transmission business.  See,
e.g., Second CalPX Order, 80 FERC at p. 61,944.


6 Long-term (month-ahead) contracts are designed to meet easily 
foreseeable demand in order to assure that a utility whose demand 
routinely exceeds its own supply can meet its baseload require-


have been contracts formed in the spot market for next-day  and
hour-ahead power. According to APX's brief, beginning  in the
mid-1980s, buyers and sellers in both the long-term  and spot markets
found each other through power brokers or  power marketers,7 a
practice that made sense when the  universe of potential buyers and
sellers was small, and consid- erations other than price were at
issue. The arrival of  market-based rate authority, and open access
tariffs has  sparked an interest among industry participants to eschew
 brokers and marketers in favor of trading power in a market- place,
particularly in the spot market where transaction costs  have come to


To spur development of such a marketplace, the California  Public
Utilities Commission ("CPUC") created the California  Power Exchange.
Buyers and sellers submit bids to CalPX,  which ranks, evaluates, and
matches the bids. Bids are  phrased in terms of megawatthours whereby
participants  offer to contract, for example, for power to be




__________

n ments, to supplement power to meet seasonal demand, or to assist  in
financing investment in power generation. Since 1996, the New  York
Mercantile Exchange has provided a market in which month- long
contracts can be traded. By contrast, short-term contracts  meet less
foreseeable demand, such as that caused by a heatwave,  and are
divided into periods of (1) 23 days (power each day during  the 16
hours of peak demand); (2) 6 days (same); (3) next-day  (peak or
off-peak); and (4) hour-ahead.


7 A power broker seeks out potential buyers or sellers on behalf  of an
undisclosed principal and proposes the terms on which the  principal
is willing to deal. At oral argument, it was clarified that  once a
compatible counterpart has been identified and the broker  either
commences, or even concludes, negotiations, at some point  the broker
steps back from the transaction, which is concluded  directly between
principals. Thus, while the broker may have  facilitated price
negotiations, the principals have not bound them- selves to accept the
price the broker negotiates. Unlike a broker, a  power marketer is a
reseller who may not own or operate generat- ing or transmission
facilities but who purchases (takes title) to  power and then resells
(conveys title) it to its customers. See  generally Citizens Energy
Corp., 35 FERC p 61,198 (1986).


during the peak hours the following day. There is one round  of
bidding, after which CalPX assesses the aggregate supply  and demand
for each hour of power. Although CalPX is not  formally a party to the
contracts, CalPX matches buyers and  sellers for each hour of power at
a price and on terms  determined by CalPX. See First CalPX Order, 77
FERC at  p. 61,806-07. To ensure that an adequate supply of power 
would be available in the fledgling market, the CPUC direct- ed the
three largest investor-owned public utilities in Califor- nia to sell
their entire power supply through the CalPX  through the year 2001.
See id. at p. 61,803-05.


APX was established to compete with CalPX. Like CalPX,  APX operates
separate hourly markets, although APX's mar- ket is more expansive,
dividing California into two power  zones and allowing participants to
contract for up to 168  hours (one week's worth) of power.8 Unlike in
CalPX's  market, bidding is ongoing in the APX market and prices 
fluctuate from the opening of trading until trading stops  shortly
before delivery. However, price fluctuations in the  APX market are a
function of the APX computer's algorithm  rather than a reflection of
direct price negotiations by market  participants. Thus, when a new
hourly market opens, the 




__________

n 8 Because each hour of power is traded separately, prices will 
fluctuate for each hour. For example, assume it is 10:00 a.m on 
Monday, November 22, 1999. Consistent with current practice,  APX
allows for purchase of hour-ahead power, i.e., from 11:00 a.m.  to
12:00 p.m. of that day through and until one week from that  point. If
the price per megawatt for the period between 11:00 a.m.  to 12:00
p.m. is X, the price for power from 12:00 p.m. to 1:00 p.m.  could be
Y; and the price for the 1:00 p.m. to 2:00 p.m. period could  be Z;
and so on until 168 hours later: 9:00 a.m. to 10:00 a.m. of the 
following Monday. When it becomes 11:00 a.m. on Monday, No- vember 22,
trading stops for the hour of 11:00 a.m. to 12:00 p.m. and  trading
opens for the next hour one week later, i.e. 10:00 a.m. to  11:00 a.m.
on Monday, November 29, 1999, and all hours prior.  Thus, at any given
time, the APX markets cover the next 168 hours.  And the markets in
each of the two California zones are indepen- dent so that the price
of power from 10:00 a.m. to 11:00 a.m. on  November 22nd may differ


APX computer, acting as electronic auctioneer, displays an  initial
price per megawatthour based on the price for power  of the same hour
of the day in the previous seven days.  Responding to the initial
price, participants enter buy or sell  orders. The orders specify the
quantity sought or offered,  and may contain price or time limits
within which the APX  computer shall fulfill an order. If neither
limitation is set,  the order remains pending until matched, and is
for whatever  is the market price displayed by the APX computer at the
 time the computer finds a matching order. Then, after  displaying the
initial price, the APX computer alters the price  periodically in
response to the activity of the participants.  The price does not
fluctuate with each new order placed.  Rather, at certain unspecified
intervals, the APX computer  clears the market by matching as many buy
and sell orders as  it can at the then-displayed price. This matching
process  forms binding contracts.9 The market-clearing process con-
tinues throughout the 168-hour period in which trading for  that hour
of power occurs, happening with increasing fre- quency as the time for
delivery approaches. Each time after  clearing the market, the APX
computer alters the displayed  price, raising it if the majority of
unmatched orders are to  buy (demand exceeds supply) and lowering it
if unmatched  orders are to sell (supply exceeds demand). The amount
of  the price fluctuation is a function of the APX computer's non-


Consequently, the phrase "market price" when used in  relation to the
APX marketplace describes the price APX's  computer estimates to be
most likely to clear the market  rather than the more common meaning
in other contexts, i.e., 




__________

n 9 For example, if a seller offered to sell at or above $8.00 per 
megawatthour and a buyer offered to buy at or below $8.20 per 
megawatthour, and the APX Market Price at the time of clearing  was
$8.05 per megawatthour, the computer would clear those orders  by
forming a contract between the two parties for $8.05 per 
megawatthour. This example, furnished by the parties, assumes a 
bilateral contract, but in reality it will more often be the case that
 contracts formed through the APX market will be multilateral, 
although the role of the APX Market Price is unchanged.


a price at which willing buyers and sellers have agreed to  trade.10
While participants can set the price range or price  limits, only APX
can set the final price at which the sale is  actually transacted. APX
acknowledges that it could have  designed its computer program to
allow participants to nego- tiate price by including a price term in
their respective offers,  but APX considered that a less efficient
means of operating a  power exchange. Although APX considers its
computer- generated "market price" to be a feature likely to attract 
participants to its market, from FERC's perspective, it is  precisely
this feature that makes APX a public utility.


III.


APX challenges FERC's assertion of jurisdiction over it on  several
grounds. First, APX contends that the plain meaning  of "sale" in the
FPA or as construed previously by FERC and  the courts limits FERC's
jurisdiction to those entities that as  "public utilities" transmit or
take title to power. Second,  APX contends that even if the language
of the FPA can  reasonably be interpreted to include as a "public
utility" an  entity that exercises control over sales without taking
title to  power, FERC's interpretation was arbitrary and capricious 
because it failed to follow or explain its departure from its 
precedents distinguishing the jurisdictional treatment of pow- er
brokers and power marketers. Third, APX contends that  even if FERC's
statutory interpretation is consistent with its  precedent, FERC
arbitrarily applied that interpretation to  the APX market by
concluding that the price-setting feature  of APX's computer made APX
more like CalPX, over which  FERC had asserted jurisdiction, than like
the computerized  bulletin board system over which FERC had disclaimed
 jurisdiction in Continental Power Exchange, 68 FERC 




__________

n 10 See, e.g., Associates Commercial Corp. v. Rash, 520 U.S. 953,  117
S. Ct. 1879, 1884 & n.2 (1997); United States v. 50 Acres of  Land,
469 U.S. 24, 25 n.1 (1984); United States v. Cartwright, 411  U.S.
546, 551 (1973); Recording Indus. Ass'n of Am. v. Librarian of 
Congress, 176 F.3d 528, 533 (D.C. Cir. 1999).


p 61,235 (1994). Finally, APX contends that even if it is  subject to
FERC's jurisdiction, FERC arbitrarily imposed  filing requirements on
it different from those imposed on  similarly situated entities.


The court reviews FERC's statutory interpretation under  the
now-familiar framework announced in Chevron U.S.A.  Inc. v. NRDC,
Inc., 467 U.S. 837, 842-43 (1984). Relying on  the traditional tools
of statutory construction, the court first  considers whether Congress
addressed the precise question  at issue. See Southern Cal. Edison Co.
v. FERC, 195 F.3d  17, 22-23 (D.C. Cir. 1999). If Congress left
ambiguous how  the FPA is to apply to power exchanges, the court will
uphold  FERC's interpretation so long as it is reasonable. See id. 
Even if FERC's statutory interpretation might otherwise be 
reasonable, however, FERC must also interpret the Act  consistently
with its own precedent or explain its reasons for  departure
therefrom. See Louisiana Pub. Serv. Comm'n v.  FERC, 184 F.3d 892, 897
(D.C. Cir. 1999). Finally, when  applying its interpretation of the
Act, FERC must demon- strate that it has made a reasoned decision
based upon  substantial evidence in the record. See Sithe/Independence
 Power Part., L.P. v. FERC, 165 F.3d 944, 948 (D.C. Cir.  1999).


APX's threshold contention--that either the plain meaning  of the FPA
or FERC precedent limits FERC jurisdiction to  entities that, unlike
APX, take title to the power--merits  little discussion. The phrase
"facilities ... for [wholesale]  sale" of electricity admits of more
than one meaning. Power  exchanges such as APX did not exist when
Congress enacted  s 201 of the FPA, and while this fact alone does not
foreclose  the possibility that Congress enacted language directed at
the  precise issue at hand, it makes that possibility unlikely.11 




__________

n 11 Indeed, contrary to APX's position, the Second Circuit, in a 
pre-Chevron case in which the court specifically avoided reliance on 
the pre-Chevron form of judicial deference to administrative exper-
tise, understood the plain meaning of "facilities" to be a "widely 
inclusive term, embracing anything which aids or makes easier the 


Moreover, the breadth of the statutory language and the  absence of
other indicia of congressional intent concerning the  jurisdictional
treatment of exchanges like APX demonstrates  that Congress did not
address the precise question at hand.  See, e.g., Military Toxics
Project v. EPA, 146 F.3d 948, 958  (D.C. Cir. 1998); Formula v.
Heckler, 779 F.2d 743, 758-59  (D.C. Cir. 1985). Consequently, the
question becomes, under  Chevron's second step, whether FERC's
construction of the  FPA is reasonable. Again, given the breadth of
the statutory  language, FERC's interpretation of "facilities ... for
[whole- sale] sale" as encompassing facilities used to exercise
effective  control over the sale in a power exchange is a permissible 
construction of the FPA. Additionally, the FERC precedent  on which
APX relies does not limit public utilities to those  entities that
take title to power. See, e.g., Washington Water  Power Co., 74 FERC p
61,033 at p. 61,083-84 (1996); Citizens  Energy Corp., 35 FERC at p.


APX's next contention, that FERC's statutory interpreta- tion in the
orders under review is inconsistent with its  precedents concerning
power brokers and power marketers,  fares no better. APX acknowledges
that FERC relied on its  statutory interpretation announced in the
CalPX orders, but  APX contends that interpretation is unlawful. Prior
to the  emergence of power exchanges, FERC had distinguished  between
power marketers (or resellers)--which were subject  to FERC
jurisdiction because they took title to electricity and  therefore
used contracts as paper facilities for the wholesale  sale of
electricity--and power brokers, which were not sub- ject to FERC
jurisdiction because they only acted as agents  of the principals and
had no proprietary interest in the  electricity being purchased. See
Citizens Energy Corp., 35  FERC at p. 61,452-53.12 APX maintains that




__________

n performance of the activities involved in the business of a person or
 corporation." Hartford, 131 F.2d at 961, 966.


12 Citizens involved a non-profit organization that sought to act as 
both a power broker and a power marketer. With respect to the 
brokering services, FERC opined that no question of jurisdiction 
appeared to arise. See Citizens Energy Corp., 35 FERC at p. 


than a "high tech power broker" and that, therefore, the  orders under
review are contrary to Citizens, where FERC  claimed jurisdiction
because the non-profit organization would  take title to power as a
reseller, and that FERC has failed to  offer a reasoned explanation
for its departure from precedent.


Yet, FERC's decision in Citizens is not fairly read to have  held that
an entity owns facilities for the wholesale sale of  electric power
if, and only if, that entity takes title to the  power. Similarly, in
the power broker and related prece- dents cited by APX, FERC's
reasoning did not address a  situation in which an entity did not take
title but played a role  in setting the price at which wholesale power
sales would  occur. See Washington Water Power Co., 74 FERC at p. 
61,084 ("Washington Power represents that it would not have  the
obligation or ability to initiate, control, or change a 
transaction."); Idaho Power Co., 74 FERC p 61,149 at p.  61,524 (1996)
(similar); cf. LG & E Power Marketing, Inc., 68  FERC p 61,247 at p.
62,125 (1994). Therefore, when FERC  addressed how the FPA applies to
power exchanges, it was  not obliged to distinguish its power
broker/power marketer  precedents.13




__________

n 61,452. However, FERC asserted jurisdiction over Citizens with 
respect to its reselling services because it would be using paper 
facilities, such as contracts, accounts, and records, to engage in 
wholesale sales of electric power in interstate commerce. See id. at 
p. 61,453.


13 APX also contends that FERC's integral-to-the-transaction  standard
is inconsistent with other precedents in which FERC had  held that an
entity that schedules wholesale sales but that does not  take title to
power was not a public utility. See Idaho Power Co.,  74 FERC at p.
61,524-25. APX's contention would have force were  FERC's standard
read to include any actor without whom transac- tions may not occur.
But FERC made clear that to the extent its  standard carries with it a
"but for" component, that component is  limited to those entities
essential for a transaction to take place at a  specific price. See
Hearing Order, 82 FERC at p. 62,108 ("But for  APX's intervention in
the process, wholesale sales transactions  between buyers and sellers
will not necessarily occur at the speci- fied market price.").


APX maintains that even if the CalPX orders and Conti- nental are the
correct frame of reference, and that a power  exchange is a public
utility when it exercises effective control  over sales, FERC
arbitrarily concluded that APX exercised  such control like CalPX and
unlike Continental. FERC in  fact recognized that APX does not play as
interventionist a  role as CalPX in pairing buyers and sellers and in
setting the  terms of their transactions, but the material similarity
it  identified was that the APX computer selects a price within  the
range set by participants and that price may be different  from the
price the participants would have selected had they  engaged in direct
negotiations. See Rehearing Order, 84  FERC at p. 61,086; Hearing
Order, 82 FERC at p. 62,108.  APX somewhat misses the point in its
response that this  observation is "irrelevant" because participants
in its market  voluntarily submit to its "price setting" role and are,
there- fore, not controlled by APX. FERC concluded that even if, 
under its current terms of service, APX may face economic 
disincentives from setting price at the highest possible point  within
the participants' range, because APX had the power to  set a price
different from one that would have resulted from  direct negotiations,
APX exercised effective control over sales  in its market. Thus,
FERC's analysis suffices to show that  voluntary participation in
APX's marketplace does not make  irrelevant the potential gap between
the APX-set price and a  directly-negotiated price.


However, there is some force to APX's argument that it is  materially
different from CalPX because all participants in  APX's marketplace,
unlike some of those in the CalPX mar- ket, can choose not to trade
through APX's system at any  time and can carefully calibrate their
bids through price and 




__________

n With respect to APX's contention that FERC failed to consider 
whether it need assert jurisdiction over APX in order to protect 
consumers inasmuch as FERC regulates sellers participating in  APX
transactions, because APX did not raise this issue before  FERC in its
rehearing request, the court lacks jurisdiction to  consider it under
FPA s 313(b). See Granholm ex rel. Michigan  Dep't of Natural
Resources v. FERC, 180 F.3d 278, 282 (D.C. Cir.  1999).


time limits. FERC's analysis might have delved deeper into  why the
power to select a price within a range set by  participants gives APX
"control" over sales even when APX  market participants, presumed to
be rational profit-seekers,  choose to rely on APX's computer to
determine a market- clearing price in lieu of direct negotiations,
power brokers,  CalPX, or any other marketplaces that may develop,
particu- larly given that participants can exit from the APX market-
place at any time should inequities or more attractive alterna- tives
appear. It is also true, as APX contends, that, under  the Federal
Power Act, Congress did not vest FERC with  general jurisdiction over
all participants in the wholesale  electric power industry, regardless
of whether the industry  undergoes significant transformation not
anticipated by Con- gress. See Chemehuevi Tribe of Indians v. FPC, 420
U.S.  395, 422-24 (1975); Henry v. FPC, 513 F.2d 395, 401 (D.C.  Cir.


Nonetheless, Congress chose broad language to describe  FERC's
jurisdiction, and, under the applicable deferential  standard of
review, see Public Util. Comm'n of the State of  California v. FERC,
143 F.3d 610, 615 (D.C. Cir. 1998), the  court cannot say that FERC
unreasonably concluded that  facilities used to exercise control over
wholesale sales are  subject to its jurisdiction and that the power to
establish the  price at which sales will take place, notwithstanding
market  participants' voluntary acquiescence in the exercise of such 
power, is sufficient to demonstrate such control. Although  the roles
APX and CalPX play in their respective markets  differ in certain
respects, FERC could reasonably focus,  consistent with the standards
it has adopted for operators of  power exchanges, on the power to set
price as being indica- tive of exercising control over wholesale sales
of electricity.  With respect to that criterion, the record supports
FERC's  view that APX is more like CalPX than Continental. Indeed, 
APX acknowledged in its brief that it "is no mere bystander  in the
market it operates." At oral argument APX conceded  that participants
who bid in the APX market are obliged to  accept the price APX sets
within the overlapping range  established by the participants' bids, a


could always be set at the highest point in that range without  the
knowledge of participants or ratepayers. These acknowl- edgments are
tantamount to a concession that APX is a de  facto third party to the
buyer-seller transaction, and, thus,  that its services make it an
integral part of the transaction.


Although FERC may conclude after a period of experience  in the new
computerized market for electricity that regulation  of such entities
as APX is no longer necessary, FERC could  reasonably conclude in the
orders under review that the  manner in which APX participates in the
sale and purchase  makes it a de facto third party to the transaction
and not  simply a bystander that provides information that the parties
 can accept or reject. While the parties voluntarily decide to  use
APX's services and can set limits on the prices at which  they will
sell and buy, they are bound to the market price  that APX sets within
those limits once they submit a bid. So  far as the record indicates,
FERC has no way to determine at  this point exactly where APX will set
the market price; there  is no experience to show whether the APX
price may always  be on the high end or, conversely, on the low end,
of the  parties' price range. Similarly, because APX treats informa-
tion concerning the frequency of market clearing as a pro- prietary
trade secret, it is unclear from the record how  responsive the APX
market price is likely to be to partici- pants' bidding behavior, and,
consequently, bidders' time  limits may afford insufficient leverage.
Notwithstanding  FERC's determination that prices set by APX for its
services  will be fair and just, it remains to be seen whether prefer-
ences or other forms of discrimination or unfairness may  result from
APX's operations.


Under these circumstances, FERC's determination is rea- sonable even if
participants in APX's market have decided  that savings from the lower
transaction costs of the APX  pricing system outweigh any of its
disadvantages relative to a  market-based, directly-negotiated pricing
system. Although  FERC might have taken a different tack, relying
instead on  indirect monitoring of APX through review of filings by
public  utilities that participate in the APX marketplace, see 16 
U.S.C. s 824d(c); LG&E Power Marketing, Inc., 68 FERC at 


p. 62,124, its decision to assert jurisdiction directly over APX  is
consistent with the Act and the standards FERC has  adopted for power
brokers and resellers. In time, FERC  may agree that APX's price
"setting" activities reflect the  collective actions of the voluntary,
profit-seeking participants  in a market, and is undertaken as an
agent of the parties  rather than as an independent agent; but
deference to  FERC's expertise is due where it concludes that APX's de
 facto third-party role is substantively different from that of a 
traditional power broker over which FERC has previously  disclaimed


Finally, APX's challenge to the filing requirements FERC  imposed is
unpersuasive. In many respects, FERC has  treated APX like other
public utilities that lack market  power, granting it the same waivers
as those utilities. See  Rehearing Order, 84 FERC at p. 61,086;
Hearing Order, 82  FERC at p. 62,110. To the extent that APX has been
treated  differently, that treatment flows from the differences
between  the role APX plays in jurisdictional sales, and the role
played  by other public utilities granted market-based rate authority.
 FERC has no prior experience with a market like the one  APX operates
and it is entirely possible that the type of  information it seeks to
have filed, namely, a detailed state- ment concerning APX's business,
could ultimately cause  FERC to conclude, in light of experience with
the APX  market, that there is no need for APX to be regulated. In 
the meantime, the court cannot conclude that FERC's filing 
requirements are arbitrary inasmuch as those requirements  are
reasonably related to FERC's legitimate regulatory con- cerns and to
the differences between APX and other public  utilities. APX's
objections cannot overcome the fact that how  APX adjusts the price
goes to the essence of FERC's juris- dictional concern--to ensure that
APX's rate-setting and  power sales mechanisms are "just, reasonable,
and not unduly  discriminatory or preferential." Hearing Order, 82


Accordingly, we deny the petition for review.