4-County Electric Power Ass'n v. Tennessee Valley Authority

930 F. Supp. 1132, 1996 U.S. Dist. LEXIS 8371, 1996 WL 388826
CourtDistrict Court, S.D. Mississippi
DecidedJune 3, 1996
Docket4:95CV158LN
StatusPublished
Cited by7 cases

This text of 930 F. Supp. 1132 (4-County Electric Power Ass'n v. Tennessee Valley Authority) is published on Counsel Stack Legal Research, covering District Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
4-County Electric Power Ass'n v. Tennessee Valley Authority, 930 F. Supp. 1132, 1996 U.S. Dist. LEXIS 8371, 1996 WL 388826 (S.D. Miss. 1996).

Opinion

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

There are pending in this cause for decision two motions by plaintiff 4-County Electric Power Association (4-County), one for summary judgment on counts three through six of its complaint against defendant Tennessee Valley Authority (TVA), and the other to dismiss or, alternatively, for summary judgment on the counterclaims asserted against it by TVA. There has also been filed a cross-motion by TVA for summary judgment on each of plaintiffs claims in this case. The court has thoroughly reviewed the parties’ submissions on these motions and concludes, for the reasons that follow, that 4-County’s motions should be denied and TVA’s motion should be granted.

The following undisputed facts are gleaned from the parties’ memoranda and supporting affidavits. TVA, a federal agency organized and existing under the TVA Act, 16 U.S.C. § 831Z -831dd, maintains and operates one of the nation’s largest electric power systems as part of a program to fulfill its mission for the development of the Tennessee Valley region’s resources and economy. It produces and sells electricity to 160 municipal and cooperative distributors for millions of residential, commercial, industrial and governmental customers, and also sells electricity directly to a number of industrial customers with large or unusual loads and several federal agency installations. The area in which TVA supplies power covers about 80,000 square miles, which includes most of Tennessee, northern Alabama, northeastern Mississippi, southwestern Kentucky and parts of Georgia, North Carolina and Virginia, and has a population of over 8,000,000. The plaintiff in this case, ^County, is a Mississippi rural electric cooperative corporation which sells and distributes power to its members, which are retail customers in eastern and northeastern Mississippi. For nearly sixty years, 4-Coun-ty has been a distributor of TVA power pursuant to a series of wholesale power supply contracts, contract renewals and amendments. Like each of the preceding contracts between the parties, the current contract, executed October 31, 1978 for a twenty-year term, requires that TVA supply and 4-Coun-ty purchase from TVA all of its power for distribution to 4-County’s customers and authorized either party to terminate the contract on four years’ notice to the other. In 1989, however, that changed.

During the fall of 1989, as a result of an extensive construction program undertaken by TVA to assure an adequate power supply for the TVA region, TVA had a temporary surplus of generating capacity. In light of that surplus, the TVA Board developed and authorized the “Growth Credit Program” (GCP), a special incentive program for TVA distributors which was intended to attract *1136 new industries to the TVA area and to encourage existing industries and businesses to expand. Under this program, participating distributors apply direct credits against the power bills of qualified industries, i.e., new industries whose loads exceed 1000 kw and existing industries or businesses which increase their loads by 1000 kw or more, and are reimbursed for those credits and further retain an additional amount equal to ten percent of all credits passed on to their customers. The program commenced October 1, 1989 and, though initially designed to last six years, was subsequently extended by two years through September 30,1997.

As reflected by contemporaneous TVA Board minutes, when the GCP was devised, the TVA Board determined that even though the

net revenue from the new load development [was] expected to more than offset program costs and provide a net benefit to the TVA system[,] ... [s]ince the credits [would] be funded by TVA in anticipation of long-term benefits accruing to all ratepayers from increased load growth, the program agreement for distributors [would] include a wholesale power contract amendment providing that under no circumstances [would] the contract end upon less than 10 years’ notice.

Thus, ^County, along with each of TVA’s distributors, was offered an opportunity to participate in the GCP in exchange for its agreement to extend the termination notification period from four to ten years. 4-County agreed and the parties entered into a supplement to the power contract, incorporating these terms. Thereafter, 4-County began receiving the benefits of the GCP program and to this date is still participating in the GCP.

In December 1993, some three years after its execution of the GCP supplement, 4-County, in accordance with its contractual right, gave TVA notice of termination of the power contract effective December 6, 2003. 1 Thereafter, in 1994, TVA implemented what it called the “Enhanced Growth Credit Program” (EGCP), a program similar in form and purpose to the GCP. Like the GCP, the EGCP, as proposed and adopted, was “not [made] available through distributors that [did] not have, and maintain, a 10-year contractual commitment to purchase their power requirements from TVA.” Consequently, the EGCP was not made available to 4-County which, because of its 1993 notification of termination, no longer had a ten-year contractual commitment to purchase its power from TVA.

Upon TVA’s refusal to allow 4-County the opportunity to participate in the EGCP, 4-County attempted over a period of time to negotiate with TVA for approval of some form of participation in the EGCP; but TVA has advised that 4-County may not participate in and receive the benefits of the EGCP unless it withdraws its termination notice and becomes contractually committed to TVA for ten years. Unable to secure a resolution from TVA that would allow its participation in the EGCP without its having to withdraw its notice of termination, 4-County filed the present action against TVA seeking damages, and asking that it either be relieved of its remaining contractual obligations to TVA or that TVA be enjoined to allow 4-County to participate not only in the EGCP, but in any and all other incentive programs which TVA might in the future offer its distributors.

Essentially, 4-County complains in this case that while it enticed new industrial customers to settle within its service area with the prospect of receiving the full benefits of not only the GCP, but also the EGCP and any other TVA-sponsored incentive programs, TVA refuses to allow 4-County its “right” to participate in the EGCP solely because 4-County gave notice of termination of its power contract. It objects that as a result of TVA’s actions, it is now contractually obligated to purchase all of its power from TVA through December 6, 2003 without receiving the discounts given TVA’s other wholesale distributors and thus is at a competitive disadvantage in maintaining existing *1137 industrial customers and securing new industrial customers.

In count one of its complaint against TVA, 4-County alleges that TVA’s refusal to allow it to participate in the EGCP is not related to any credible concern over the need for adequate revenues but is instead punitive, so that upon review under § 706 of the Administrative Procedures Act, the court should set aside TVA’s refusal as “arbitrary, capricious [or] an abuse of discretion.” 5 U.S.C.

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Cite This Page — Counsel Stack

Bluebook (online)
930 F. Supp. 1132, 1996 U.S. Dist. LEXIS 8371, 1996 WL 388826, Counsel Stack Legal Research, https://law.counselstack.com/opinion/4-county-electric-power-assn-v-tennessee-valley-authority-mssd-1996.