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


POTOMAC ELEC POWER

v.

FERC


99-1209a

D.C. Cir. 2000


*	*	*


Rogers, Circuit Judge: Potomac Electric Power Company  ("PEPCO")
petitions for review of two orders of the Federal  Energy Regulatory
Commission ("FERC") denying its re- quest under s 206 of the Federal
Power Act ("FPA"), 16  U.S.C. s 824e (1994), for unilateral
modification of the rates  prescribed by a long-term, fixed rate,
power transmission  service agreement between PEPCO and the Allegheny
Power  System ("APS"). Because FERC did not abuse its discretion  in
applying the stringent Mobile-Sierra public interest stan- dard, and
because a mere rate disparity or a benefit to the  purchasing utility
or its customers from a rate modification  does not suffice, without
more, to satisfy that standard, we  conclude that FERC's decision to
dismiss the complaint was a  reasonable exercise of its authority.
Accordingly, we deny  the petition.


I.


In 1987, PEPCO entered into an 18.5 year power supply  agreement with
the Ohio Edison System, which was com- prised of Ohio Edison Company
and Pennsylvania Power  Company. In order to effect delivery of the
power to  PEPCO's service area, PEPCO and the Ohio Edison System  each
entered into a transmission service agreement with the  APS, an
integrated electric utility system directly connected  to both PEPCO
and the Ohio Edison System. Under the  three agreements, PEPCO would
purchase contract entitle- ments to a share of the Ohio Edison
System's installed  generating capacity and associated energy, APS
would pur- chase from the Ohio Edison System the power intended for 
PEPCO, and APS would, in turn, resell the power purchased 


from the Ohio Edison System to PEPCO. The dispute in the  instant case
involves the agreement between PEPCO and  APS.


PEPCO's agreement with APS provided in relevant part  that the base
rate for the APS transmission service would  commence at $1.70 per
kW-month, increase to $2.255 per kW- month in 1994, and increase again
to $2.815 per kW-month in  1999. In addition, the agreement required
PEPCO to pay an  "adder" of $1.00 per megawatt-hour for each
megawatt-hour  of energy that APS delivered. Furthermore, the
agreement  was a "fixed rate" contract, meaning that the parties
agreed  not to unilaterally request a rate change from the Commis-
sion, as provided in section 9.3 of the agreement, which  stated:


It is the intention of the parties that the rates and terms  of service
specified herein shall remain in effect for the  entire term set forth
in this Article, and shall not be  subject to change pursuant to the
Federal Power Act  absent mutual agreement of the parties or as
provided in  section 3.4.


Section 3.4, in turn, provided for renegotiation "[i]n the event  that
reasonably unforeseeable circumstances beyond the con- trol of any
party to this Agreement result in a gross inequity  to any party" and
outlined a procedure for dispute resolution  in case parties fail to
reach a new agreement.


APS submitted the three agreements for FERC approval  in March 1987.
See Monongahela Power Co., 39 F.E.R.C.  p 61,350, reh'g denied, 40
F.E.R.C. p 61,256 (1987). In its  review of the filing, FERC noted
that PEPCO represented  that "the rate levels are completely justified
on the basis of  cost factors." Id. at 62,093. Also as recounted by
FERC at  the time, PEPCO maintained that "once rates are determined 
to be cost-justified, the noncost factors such as the potential 
savings to PEPCO are superfluous, and the filing cannot be  deemed
deficient even if the noncost support were deemed  insufficient." Id.
FERC also noted that "[n]o party to [the]  proceeding has alleged that
the rates under the three pro- posed agreements are unjust and
unreasonable," and that  "[o]ur review indicates that the rates to


generate excessive revenues and should be accepted for filing  without
suspension." Id. at 62,096. FERC accepted the  three contracts for
filing to become effective June 1, 1987.  See id. at 62,098.


In 1996, FERC issued the first in a series of orders known 
collectively as "Order No. 888" to address problems associat- ed with
electric transmission monopolies in the bulk power  markets. See
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).1 The Order  required all public utilities that own, operate,
or control  interstate transmission facilities to file an open access
non- discriminatory transmission tariff. See id. at 21,540. In its 
open access transmission tariff ("OATT") proceeding pursu- ant to
Order No. 888, APS agreed to charge a rate of $1.49  per kW-month for
its transmission service, a rate substantial- ly less than the rate
PEPCO was obligated to pay under its  1987 agreement with APS.


Thereafter, PEPCO filed a complaint against APS, request- ing that FERC
summarily order APS to reduce the rate for  transmission services
under the 1987 agreement to the same  level as APS's rate for
comparable service under its OATT.  The Federal Power Act provides
that electricity rates may be  modified in one of two ways: under s
205, the seller may  attempt to prompt rate changes by filing a new
rate schedule,  which will be reviewed by FERC to determine whether
the  proposed rates are just and reasonable, see 16 U.S.C. s 824d, 
and under s 206, FERC may reform the rates "upon its own  motion or
upon complaint" if it determines the rates have  become "unjust,
unreasonable, unduly discriminatory or pref-




__________

n 1 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).


erential." Id. s 824e(a). PEPCO's request for a rate de- crease,
claiming that APS's rate was "excessive and unreason- able," asked
FERC to exercise its authority under s 206 to  modify existing
contracts and reduce the contractual trans- mission rate to the OATT


APS moved to dismiss the complaint, citing section 9.3 of  the
agreement under which the parties had agreed to elimi- nate the right
of either party to initiate rate modification  pursuant to FERC's s
206 authority. APS relied primarily  on the "Mobile-Sierra" doctrine,
named after the two Su- preme Court cases that established the "public
interest"  standard for FERC review of electricity rates in contracts 
restraining unilateral rate changes. See United Gas Pipe  Line Co. v.
Mobile Gas Serv., 350 U.S. 332 (1956); Federal  Power Comm'n v. Sierra
Pacific Power Co., 350 U.S. 348  (1956). Under the public interest
standard of the Mobile- Sierra doctrine, FERC has s 206 authority to
modify rates  "fixed" by a Mobile-Sierra provision " 'where [the
existing  rate structure] might impair the financial ability of the
public  utility to continue its service, cast upon other consumers an 
excessive burden, or be unduly discriminatory.' " Papago  Tribal Util.
Auth. v. FERC, 723 F.2d 950, 953 (D.C. Cir.  1983) (alteration in
original) (quoting Sierra, 350 U.S. at 355);  see also Metropolitan
Edison Co. v. FERC, 595 F.2d 851, 855  (D.C. Cir. 1979). In essence,
APS maintained that PEPCO  failed to make the required showing under
the Mobile-Sierra  doctrine that the public interest was adversely
affected by the  existing contract.


In response, PEPCO asserted that the public interest was  adversely
affected by the contractual rate because the exces- sive rates were
entirely borne by its ratepayers. PEPCO  also maintained that because
of APS's market power, it had  little bargaining power at the time it
entered the agreement  to influence the terms of the contract,
including the Mobile- Sierra provision in section 9.3. Furthermore,
PEPCO con- tended that the rate APS charged itself and others,
approxi- mately half of what PEPCO was being charged for the same 
service, constituted undue discrimination prohibited under the 


FERC dismissed PEPCO's complaint. See Potomac Elec.  Power Co. v.
Allegheny Power Sys., 85 F.E.R.C. p 61,160  (1998). Emphasizing that
it "does not take contract modifica- tion lightly," FERC reasoned that
the mere fact that PEPCO  was subject to higher rates under its
agreement with APS  than it would be under APS's OATT was insufficient
reason  for abrogating an agreement that PEPCO had fully sup- ported
at the time of filing and FERC had approved as just  and reasonable.
Id. at 61,632-33. FERC also rejected PEP- CO's request that it act sua
sponte to reduce the rates for the  benefit of PEPCO's ratepayers,
reasoning that it would be  inappropriate to convert PEPCO's
unilateral request for ref- ormation into a FERC-initiated contract
modification where  the parties' agreement contained a Mobile-Sierra
provision,  and where PEPCO had failed to satisfy the public interest 
standard. See id. at 61,633.


In denying PEPCO's petition for rehearing, FERC reject- ed PEPCO's
contention that FERC had erred by failing to  assess whether the rates
were just and reasonable, and  defined the issue instead to be whether
the rates, having been  found to be just and reasonable when
originally approved,  had become contrary to the public interest. See
Potomac  Elec. Power Co. v. Allegheny Power Sys. 87 F.E.R.C.  p
61,030, at 61,105 (1999). FERC noted that, under its prece- dent, the
fact that a contract has become uneconomic to one  of the parties does
not necessarily make the contract contrary  to the public interest
under the FPA. FERC found no  reason to deviate from this precedent
because PEPCO failed  to present any other ground for finding the
agreement con- trary to the public interest. See id. Responding to
PEPCO's  argument that the contract was the result of uneven bargain-
ing power and that FERC's failure to modify the rates rested  on its
faulty assumption that PEPCO had willingly entered  into the
agreement, FERC stated first, that PEPCO's conten- tion was
inconsistent with PEPCO's representations in 1987,  see id. at 61,106
n.10, and second, that FERC's decision was  based not on PEPCO's
initial willingness to enter the agree- ment, but on PEPCO's failure
to demonstrate that revising  the agreement was in the public


Finally, in response to PEPCO's request that FERC follow  the approach
it had adopted in Order No. 888 to allow  modification where rates are
shown to be no longer just and  reasonable, FERC deemed the request
misplaced because its  Order No. 888 Mobile-Sierra finding applied
only to a dis- crete set of wholesale requirements contracts, not to
trans- mission contracts like the one at issue. See id. at 61,106


II.


On appeal, PEPCO contends that by emphasizing only the  policies
favoring fixed rate contracts and ignoring the FPA's  concerns with
fairness and anti-competitiveness, FERC failed  to meet the FPA's
mandate. More specifically, PEPCO first  maintains that FERC's
application of the Mobile-Sierra pub- lic interest standard ignored
FERC's precedent calling for a  "flexible" version of the test in
situations where FERC is  acting or is requested to act on behalf of
non-party ratepay- ers that are affected by the contract. Even if FERC
applied  the correct "version" of the standard, PEPCO maintains 
second that FERC failed to fulfill its obligation under the  public
interest standard to ensure that the rates charged  under PEPCO's
agreement with APS are neither unduly  discriminatory nor excessively
burdensome on PEPCO's rate- payers. Nor had FERC, PEPCO continues,
taken into ac- count that the agreement was the result of uneven
bargaining  power, even though FERC had stated this factor was
relevant  to a public interest analysis and had made a general finding
 that transmission contracts entered into before Order No. 888  often
reflected the exercise of market power. In other  words, PEPCO
submits, FERC acted arbitrarily and capri- ciously by not applying a
flexible public interest standard and,  alternatively, by concluding
that PEPCO had not met its  burden under the stringent Mobile-Sierra


The court will uphold FERC's orders unless they are  "arbitrary,
capricious, an abuse of discretion, or otherwise not  in accordance
with law." 5 U.S.C. s 706(2)(A). Likewise, the  court will uphold
FERC's factual findings as long as they are 


supported by substantial evidence. See 16 U.S.C. s 825l(b);  see also
Texaco, Inc. v. FERC, 148 F.3d 1091, 1095 (D.C. Cir.  1998) (citing
Koch Gateway Pipeline Co. v. FERC, 136 F.3d  810, 814 (D.C. Cir.
1998)). We hold that FERC's decision to  dismiss the complaint was not
an unreasonable exercise of its  authority.


PEPCO concedes, implicitly in its briefs and explicitly at  oral
argument, that the public interest standard set out in  Mobile and
Sierra, and not the just and reasonable standard,  controls PEPCO's s
206 request. The court has observed  that the Mobile-Sierra public
interest standard is much more  restrictive than the FPA's "just and
reasonable" standard,  see, e.g., Union Pacific Fuels, Inc. v. FERC,
129 F.3d 157,  161 (D.C. Cir. 1997); San Diego Gas & Elec. Co. v.
FERC,  904 F.2d 727, 730 (D.C. Cir. 1990), even characterizing the 
burden under the public interest standard as "practically 
insurmountable," Papago, 723 F.2d at 954, and "almost insur-
mountable." Kansas Cities v. FERC, 723 F.2d 82, 87-88  (D.C. Cir.
1983); see also Tennessee Gas Pipeline Co., 60  F.E.R.C. p 61,318, at
62,104 (1992); Central Maine Power  Co., 54 F.E.R.C. p 61,206, at
61,613-14 (1991). PEPCO chal- lenges such a restrictive
characterization of the standard, and  contends that FERC was bound by
its own precedent to  adopt an approach "less restrictive" than the


For this proposition, PEPCO relies on Northeast Utilities  Service
Company, 66 F.E.R.C. p 61,332 (1994), aff'd 55 F.3d  686 (1995). In
Northeast Utilities, FERC, reviewing a rate  agreement in connection
with a utility merger, modified a  fixed-rate contract "under the
public interest standard re- quired by the Mobile-Sierra doctrine."
Id. at 62,076. In  modifying the contract, FERC rejected the
proposition that  the Mobile-Sierra doctrine requires a generally
applicable  standard that is so stringent as to be "practically
insurmount- able." FERC explained:


[I]f the Commission is to comply with both the Mobile- Sierra
imperative to respect contractual arrangements,  on the one hand, and
our statutory mandate to protect 


the public interest and ensure that rates are just and  reasonable and
not unduly discriminatory or preferential,  on the other, the "public
interest" standard of review  under the Mobile-Sierra doctrine cannot
be "practically  insurmountable" in all cases.


Id. (footnote omitted) (quoting Papago, 723 F.2d at 954). In  other
words, FERC took the position that the court's charac- terization of
the standard in Papago did not "preclude[ ] the  Commission from
concluding in other circumstances that the  interests of third parties
sufficiently outweigh the contracting  parties' interests in contract
stability to justify the Commis- sion's ordering contract
modifications." Id. at 62,086. FERC  distinguished Papago on the basis
that "Papago expressly  addressed rate changes, not the scope of the
Commission's  authority upon its initial review of a newly-filed
contract," id.,  and declared that in situations where it is reviewing
a fixed- rate agreement "for the first time, without having had any 
previous opportunity to determine whether its terms are  lawful," a
more relaxed public interest standard is warranted.  Id. at 62,087.
The First Circuit affirmed. See Northeast  Utils. Serv. Co. v. FERC,
55 F.3d 686, 692 (1st Cir. 1995).


FERC, in two subsequent cases that PEPCO also relies on,  reaffirmed
its position in Northeast Utilities. In Southern  Company Services,
Inc., 67 F.E.R.C. p 61,080 (1994), FERC  reiterated that "the public
interest standard of review does  not bind the Commission to a
practically insurmountable  burden in all cases in which the
Commission might act to  change rates." Id. at 61,227. More
specifically, FERC stat- ed that the cases do not "impose a
practically insurmountable  burden when the Commission proceeds sua
sponte or at the  request of non-parties to change rates, terms and
conditions  in order to protect non-parties to a contract." Id.
(citing  Northeast Utils., 66 F.E.R.C. at 62,081-88). Similarly, in 
Florida Power & Light Co., 67 F.E.R.C. p 61,141 (1994),  FERC stated,
"when we are acting sua sponte or at the  request of non-parties to
change rates, terms and conditions  in order to protect non-parties,
we are not bound to a  standard of review that is practically


Thus, as PEPCO contends, FERC has at times expressed  an intent to
apply a standard that is more flexible than the  "practically
insurmountable" standard that Papago described.  However, unlike the
circumstances in which FERC has stated  it would apply a more flexible
standard, PEPCO's s 206  request does not involve "the Commission
proceed[ing] sua  sponte or at the request of non-parties to change
rates ... in  order to protect non-parties to a contract." Southern
Co., 67  F.E.R.C. at 61,227; see also Florida Power, 67 F.E.R.C. at 
61,399. PEPCO is not itself a non-party. Nor did it offer  any
evidence (beyond speculation) that the only potential non- parties
here, its ratepayers, were adversely affected by the  existing rates;
it did not, for example, even attempt to show  how much if any of the
rate disparity was passed on to  PEPCO ratepayers rather than borne by
the utility itself.  Nor does PEPCO's request involve a "newly-filed
or previ- ously unreviewed agreement." Northeast Utils, 66 F.E.R.C. 
at 62,087.2 FERC was clear in Northeast Utilities that it was  "not
being asked to allow a party a unilateral rate change  from a
fixed-rate contract whose terms [it] previously accept- ed," and that
it was instead "reviewing the ... [c]ontract for  the first time,
without having had any previous opportunity to  determine whether its
terms are lawful." Id. As FERC  explained, applying the "practically
insurmountable" standard  in first review cases would mean that "[its]
ability to protect  the public interest would be negligible and public
regulation  would consist of little more than rubber-stamping private 
contracts." Id. By contrast, FERC had approved PEPCO's  1987 agreement
with APS long before it was presented in  1998 with a complaint by one




__________

n 2 This court has not had occasion to address, and need not do so 
here, whether FERC has authority to apply a Mobile-Sierra stan- dard
that is more flexible than the "practically insurmountable"  standard
whenever it reviews a "newly-filed or previously unre- viewed
agreement," Northeast Utils, 66 F.E.R.C. at 62,087, or  "proceeds sua
sponte or at the request of non-parties to change  rates ... in order
to protect non-parties to a contract." Southern  Co., 67 F.E.R.C. at
61,227; see also Florida Power, 67 F.E.R.C. at  61,399.


a unilateral rate change. The concerns that FERC raised in  Northeast
Utilities with regard to applying the "practically  insurmountable"
public interest standard when reviewing a  contract for the first time
thus do not apply here.


The question remains whether FERC abused its discretion  in concluding
that PEPCO failed to meet its burden under the  Mobile-Sierra public
interest standard. PEPCO contends  that FERC, in its public interest
analysis, failed to consider  the excessive burden on PEPCO's
ratepayers and the dis- criminatory impact of the disparity between
the transmission  rates set by the 1987 agreement and APS's OATT
transmis- sion rate. The problem with PEPCO's position is that, other 
than pointing out that the contract rate is twice APS's OATT  rate, it
has presented no evidence regarding how the contract  rates are unduly
discriminatory or excessively burdensome on  PEPCO ratepayers. The
court has repeatedly emphasized  the importance of contractual
stability in a number of cases  involving the Mobile-Sierra doctrine.
See, e.g., Maine Pub.  Serv. Co. v. FERC, 964 F.2d 5, 10 (D.C. Cir.
1992); Cities of  Bethany v. FERC, 727 F.2d 1131, 1139 (D.C. Cir.
1984);  Town of Norwood v. FERC, 587 F.2d 1306, 1313 (D.C. Cir. 
1978). Furthermore, the court has consistently stated that  rate
disparity attributable to the operation of the Mobile- Sierra doctrine
is not on that basis alone unduly discriminato- ry. See Maine Pub.
Serv., 964 F.2d at 10; Cities of Bethany,  727 F.2d at 1139, 1141;
Metropolitan Edison, 595 F.2d at 857  n.38; Boroughs of Chambersburg
v. FERC, 580 F.2d 573,  577-78 (D.C. Cir. 1978). In addition, FERC
precedent makes  clear that the fact that a contract has become
uneconomic to  one of the parties does not necessarily render the
contract  contrary to the public interest. See Soyland Power Coop., 
Inc. v. Central Illinois Pub. Serv. Co., 51 F.E.R.C. p 61,004,  at
61,013 (1990); Public Service Co., 43 F.E.R.C. p 61,469, at  62,152
(1988); Gulf States Utils. Co. v. Southern Co. Servs.,  Inc., 43
F.E.R.C. p 61,003, at 61,014 (1988). Considering such  precedent in
favor of protecting contractual stability,  PEPCO's failure to provide
any evidence of undue discrimina- tion or excessive burden, other than
the disparity in rates and  a bald claim that PEPCO ratepayers would


from a rate modification, renders its request wholly inade- quate.
Therefore, FERC's summary dismissal of PEPCO's  public interest
argument was within its authority.


PEPCO also maintains that because of uneven bargaining  power in 1987,
it did not necessarily enter into the fixed-rate  agreement with APS
willingly. However, PEPCO's willing- ness was not part of FERC's
rationale for dismissing the  complaint. FERC pointed out in denying
rehearing:


The "premise" for the Commission's ruling is not that  PEPCO willingly
agreed to the Agreement's rates and  terms. Rather, the "premise" for
the Commission's rul- ing is that contract modification is not to be
taken lightly  and that, in this case, PEPCO has failed to demonstrate
 that a revision to the Agreement is in the public interest.


PEPCO, 87 F.E.R.C. at 61,106 (footnote omitted). Moreover,  PEPCO can
hardly escape the consequences of the fact that  its statements to
FERC in 1987 show that it fully supported  the fixed-rate agreement,
see id. at 61,106 n.10, and that it  has not alleged bad faith
negotiation on the part of the parties  to the agreement. Nothing in
the record on appeal demon- strates that the contract was the result
of APS's market  power; to the contrary, PEPCO has admitted that it
had  other supply options when it entered the agreement with APS  in
1987. See Monongahela Power Co., 39 F.E.R.C. at 62,092.  While the
existence of other options does not necessarily  mean an absence of
market power, PEPCO's assertion to  FERC in 1987 that the transmission
agreement was cost- justified and represented cost savings over other
supply  options supports such a conclusion. Therefore, absent any 
claim, much less evidence, of unfairness or bad faith in the  original
negotiations, it is reasonable for FERC to require  parties "to live
with their bargains as time passes and various  projections about the
future are proved correct or incorrect."  Norwood, 587 F.2d at


To the extent that PEPCO maintains that FERC's refusal  to modify the
contract is inconsistent with Order No. 888-A,  it fares no better. In
Order No. 888-A, FERC found that,  prior to July 11, 1994, wholesale
requirements contracts 


were "entered into during an era in which transmission  providers
exerted monopoly control over access to their  transmission
facilities," and that, as a result, "[m]any of  these contracts were
the result of uneven bargaining power."  Order No. 888-A, FERC Stats.
& Regs. p 31,048, at 30,193  (1997). Accordingly, FERC concluded that
it was in the  public interest to permit those requirements customers
to  seek modification of their contracts under the just and rea-
sonable standard, even if the contract contained a Mobile- Sierra
provision. See id. at 30,189. However, as PEPCO  concedes, Order No.
888-A's exception to application of the  Mobile-Sierra standard
plainly applies only to requirements  contracts. Moreover, as PEPCO
again concedes, for non- requirements contracts, such as the APS
agreement, FERC  declined to extend its generic Mobile-Sierra findings
to all  long-term block purchases of electricity. See id. at 30,195. 
FERC distinguished these contracts from requirements con- tracts based
on its conclusion that, in "the majority of cir- cumstances, such
long-term supply contracts are voluntary  arrangements in which
neither party had market power."  Id. FERC noted, "[p]arties can avail
themselves of the  section 205 and 206 procedure already available if
they want  to seek modification of such contracts." Id. That is what 
PEPCO did here by requesting FERC to employ its s 206  authority, and
FERC denied PEPCO's petition under the  Mobile-Sierra doctrine.
Therefore, FERC has precisely fol- lowed the procedure it outlined in


It appears, then, that PEPCO's complaint is ultimately  directed at
FERC's application of the Mobile-Sierra doctrine.  PEPCO maintains
that APS had monopoly power at the time  of the 1987 agreement and
that FERC, "[h]aving expressly  offered buyers ... the opportunity to
make section 206 filings  to demonstrate that contracts that they
previously had en- tered into were the subject of uneven bargaining
power," has  an obligation to take APS's monopoly power into account
in  its application of the Mobile-Sierra doctrine. PEPCO's con-
tention amounts to a claim that FERC's decision to loosen the 
Mobile-Sierra standard for certain wholesale requirements  contracts
is equivalent to a commitment on FERC's part to 


conduct a case-by-case inquiry into the presence and extent of  market
power in every other non-requirement contract con- taining a
Mobile-Sierra provision. However, Order No.  888-A merely states that
"[p]arties can avail themselves of  the section 205 and 206 procedures
... if they want to seek  modification," id., and does not say
anything one way or the  other about the relevance of uneven
bargaining power to the  standard Mobile-Sierra analysis.3 Besides,
FERC's position  in Order No. 888-A was a carefully considered balance
be- tween "the desire to honor existing contractual arrange- ments"
and "the need to provide some means to accelerate  the opportunity of
parties to participate in competitive mar- kets." Id. at 30,192. FERC
continued, "To accomplish this  balance, the Commission ... has made
Mobile-Sierra public  interest findings ... only as to a limited set
of contracts:  those wholesale requirements contracts executed on or
before  July 11, 1994...." Id. Therefore, any request for FERC to 
extend its Order No. 888-A exception for requirements con- tracts must
be considered in light of the need for such a  balance, and nothing in
Order No. 888-A obliges FERC to  strike the balance in the same way in
all contexts. While  PEPCO correctly points out that FERC's discussion
of  PEPCO's No. 888-A contention is terse, see PEPCO, 87 




__________

n 3 In fact, at least one circuit court has expressed skepticism  about
the relevance of uneven bargaining power in Mobile-Sierra  analysis.
The First Circuit stated:


As for the seller's market power, reliance on this factor threat- ens
to erode the Mobile-Sierra doctrine so substantially that a  fuller
explanation from the Commission is required before  proceeding down
this route. After all, some measure of mar- ket power could be present
in a large number of contracts. A  case-by-case inquiry into the
presence and extent of market  power would inject a new and
potentially time-consuming ele- ment into the Mobile-Sierra analysis,
and it is not entirely  clear in any event why the Commission should
protect a buyer  who voluntarily enters into an agreement with a


Northeast Utils. Serv. Co. v. FERC, 993 F.2d 937, 961 (1st Cir. 
1993).


F.E.R.C. at 61,106 n. 11, and the relevance of uneven bargain- ing
power to the Mobile-Sierra analysis remains unclear,  PEPCO has failed
to demonstrate that it was subject to  APS's monopoly power at the
time it entered into the 1987  agreement. Having presented no
evidentiary detail that  might have compelled FERC to consider
whether, by analo- gy, it should extend its Order No. 888-A public
interest  findings on a case-by-case basis to non-requirements con-
tracts possibly involving relevantly similar factual circum- stances,
PEPCO fails to show that FERC's summary dismiss- al was


Ultimately, PEPCO's case suffers from a failure of proof.  PEPCO's
counsel explained at oral argument that PEPCO  did not seek a hearing
before FERC on its s 206 complaint  because PEPCO considered its
allegations regarding the im- pact of the 1987 agreement on its
ratepayers to be unrebut- ted. The court strains, in light of
precedent, to imagine how  PEPCO could conclude that it did not have a
burden to offer  evidence on this and other relevant factual issues,
such as  whether and the extent to which the agreement rates ad-
versely impact PEPCO's ratepayers and whether APS had  market power at
the time the 1987 agreements were signed.  PEPCO's position would
undoubtedly have been strengthened  had there been evidence in the
record to support the asser- tions in its briefs regarding the
asserted impact on ratepayers  and APS's market power, although we
express no opinion on  the outcome under those circumstances.


In sum, given the practically insurmountable standard that  it faced,
PEPCO was obligated to do more than point to the  disparity between
the agreement rates and the rates it would  pay under the APS open
access tariff. FERC reasonably  concluded that PEPCO failed to
demonstrate that the APS  rates in the 1987 agreement are contrary to
the public  interest. While FERC retains the statutory authority and 
duty to correct or prevent an electric rate schedule that  " 'might
impair the financial ability of the public utility to  continue its
service, cast upon other consumers an excessive  burden, or be unduly
discriminatory,' " Papago 723 F.2d at  953 (quoting Sierra, 350 U.S.
at 355), it acted within its  discretion to conclude from the face of
the complaint that the 


rates in the previously approved agreement that PEPCO fully  supported
and claimed was justified were not contrary to the  public interest.
Accordingly, we deny the petition.