FERC Filings
Memorandum of EPSA in Support of Appeal of Order Denying Calpine Corp.'s Motion for Interlocutory Appeal on the Status of its Unaffiliated Outside Experts Under 9(b)(5) of the Protective Order
The Presiding Judge's Decision is Fatally Flawed
The detriment to the public interest and the irreparable harm to Calpine and other competitive suppliers could have been avoided if the Presiding Judge had not engaged in such a strained reading of the Protective Order and had adequately considered the practical consequences of his decision. It is important to note as an initial matter that the provisions of the Protective Order in this case are significantly more stringent than the Commission’s Model Protective Order (MPO), and was the subject of lengthy deliberation by the parties. The MPO, however, already provides sufficient protection of confidential information, which is why it was adopted by the Commission in the first place. Thus the deviations were not necessary in the first instance, particularly if the deviations are to be interpreted in a manner that excludes individuals who have the very expertise that the Commission needs and who routinely review confidential materials.
The relevant provision of the Protective Order in dispute is Section 9(b)(5). That Section prohibits the review of Highly Sensitive Protective Materials (HSPM) by an outside expert or an employee of an outside expert that is directly involved in or has direct or supervisory responsibilities over the following activities:
1) the purchase, sale or marketing electricity (including transmission service at retail or wholesale;
2) the negotiation or development of participation or cost sharing arrangements for transmission or generation facilities;
3) or other activities or transactions or a type with respect to which the disclosure of HSPM may present an unreasonable risk of harm. (emphasis added)
Dr. Roach and Mr. Janssen, in particular, and BPI, in general, are not directly involved in and do not have direct or supervisory responsibilities over these activities for Calpine, nor was there any proof that he engages in such services for any client in the Entergy region. They are consultants that provide services, like many others in the energy industry (including Entergy's consultant, Dr. Tierney), which assist Calpine on regulatory matters like this proceeding. This is the same type of work they have performed for EPSA and through participation in cases before the Louisiana Public Service Commission. To the extent that Calpine engages in activities referenced in Section 9(b)(5), the individuals “directly involved in” or with “direct or supervisory responsibilities for” these activities are all Calpine employees, not Dr. Roach and his colleagues.
The fundamental flaw in the Presiding Judge's reasoning is that he takes various statements from Boston Pacific's web site concerning the services they provide and then translates those services into Dr. Roach being "directly involved in" or “having direct or supervisory responsibilities” over the activities covered by Section 9(b)(5). In fact, Entergy worked hard to refrain from focusing on the actual work Dr. Roach performs for actual clients, preferring instead to focus on general work and a generic list of the services he performs. The fallacy of Entergy’s innuendo-based argument was revealed, however, when Entergy agreed that they had no evidence that the actual work Dr. Roach had performed for an actual client in the Entergy region, Teco Power Services Corporation, fell within the scope of Section 9(b)(5). Unfortunately, the Presiding Judge ignored such facts and relied on innuendo.
Having fundamentally misread Section 9(b)(5), the Presiding Judge then attempts to bolster his decision by arguing that Dr. Roach cannot view the HSPM because he is involved in the type of consulting services that, if the HSPM were disclosed, "may present an unreasonable risk of harm." As the Presiding Judge states:
If there is any doubt of this interpretation, although I harbor none, I find that such consulting services come under the residual prohibition of 9(b)(5) of ...other activities or transactions of a type with respecting the disclosure of [HSPM] may present an unreasonable risk of harm.
The Presiding Judge did not consider the practical effect of such reasoning. In this proceeding, Entergy is not independent from its marketing affiliates that won the RFP process, and is thus being required to prove that the PPAs that it entered into with these affiliates are just and reasonable. Calpine needs access to this information to ensure that the RFP was the result of an open and transparent process. Yet, the Presiding Judge denies Calpine access because Dr. Roach provides the type of consulting services that the "disclosure of HSPM may present an unreasonable risk of harm", presumably to Entergy, the party attempting to defend its actions with its affiliates. In other words, the Presiding Judge has allowed Entergy to decide who can access information to challenge a transaction between it and its affiliate. The Commission will never get to the bottom of affiliate transactions if the fox, i.e. Entergy, is allowed to guard the hen house in this manner.
Finally, the Presiding Judge makes much of the arrangements that Entergy and its affiliate have entered into with Dr. Tierney. Unfortunately, he focuses solely on the work that Dr. Tierney might engage in with an Entergy affiliate, throughout her work in the monitoring process. That is not the point. Dr. Tierney and her firm presumably have other clients and she too cannot “separate out the information they would learn from Entergy’s HSPM” in any further work for those clients. Yet, the Presiding Judge denies Dr. Roach access to confidential information presumably to protect against that same scenario.
Moreover, the Presiding Judge makes much that Dr. Tierney has agreed to refrain from using the confidential information for any purpose other than monitoring the RFP process. Dr. Roach has agreed to that same tenet in the Protective Order. Section 15 of the Protective Order states:
If a Reviewing Representative’s scope of employment includes the marketing of energy or generation assets, ….such Reviewing Representative may not use information contained in any Protected Materials obtained through this proceeding to give any Participant or any competitor of any Participant a commercial advantage. (emphasis added)
Likewise Section 30 states:
The contents of Protected Materials or any other form of information that copies or discloses Protected Materials shall not be disclosed to anyone other than in accordance with this Protective Order and shall be used only in connection with this proceeding. Any violation of this Protective Order and of any Non-Disclosure Certificate executed hereunder shall constitute a violation of an order of the Commission. (emphasis added)
In addition, Dr. Roach agreed that BPI will not to advise any client on how to bid into (a) any Entergy RFPs at any time during our involvement in this litigation, (b) any Entergy RFP resulting from this litigation, or (c) any Entergy RFP at all for three years after the date on which Calpine submits direct testimony associated with this proceeding.
In sum, the Presiding Judge’s unequal treatment of Dr. Roach as compared to Dr. Tierney is discriminatory on its face and should be overturned.