Portsmouth Gas Co. v. Federal Power Commission

247 F.2d 90
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 25, 1957
DocketNo. 13528
StatusPublished
Cited by2 cases

This text of 247 F.2d 90 (Portsmouth Gas Co. v. Federal Power Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Portsmouth Gas Co. v. Federal Power Commission, 247 F.2d 90 (D.C. Cir. 1957).

Opinion

WILBUR K. MILLER, Circuit Judge.

Portsmouth Gas Company, a retail distributor of natural gas, asks us to review and set aside an order of the Federal Power Commission which permitted its sole supplier, United Fuel Gas Company, to amend its demand-commodity rate form by providing for a long-term contract demand instead of the previously effective annually ascertained maximum-day demand. United Fuel also proposed substantial increases in both demand and commodity charges but, on motion of Portsmouth and two other intervenors, the Commission reserved that part of the proposal for future determination, and confined the hearing which preceded the order to the single issue raised by the proposed change in the demand billing formula. So, the actual rate level was not fixed, changed or affected by the order.

This is one of three petitions for review of the order which were heard together but, because of marked differences, are being treated in separate opinions. The other two were Cincinnati Gas & Electric Co. v. Federal Power Comm., No. 13,515, 1957, 100 U.S.App.D.C.-, 246 F.2d 688, and Dayton Power & Light Co. v. Federal Power Comm., No. 13, 525, 1957, 100 U.S.App.D.C.-, 246 F.2d 694.

This case is unlike the Cincinnati Gas case, No. 13,515, where Cincinnati Gas and its subsidiary alleged aggrievement only by the long-term billing commitment feature of the contract demand component, and we held that apprehension of possible future injury through changes that might conceivably occur in economic conditions, but are not presently anticipated, did not give the petitioners standing to seek review of the Commission’s order.

The present case is also unlike the Dayton case, No. 13,525, where we held that Dayton, which does not purchase gas from United Fuel or from Central Kentucky Natural Gas Company, whose rate form was also altered by the order, was not directly affected by the order and so lacked standing to seek review.

Portsmouth says in its brief it “is aggrieved by the orders1 of the Commission in that its all requirements contract is unilaterally modified and rescinded, its property taken without due process of law and it is unreasonably and arbitrarily discriminated against.” The Portsmouth brief goes on to say:

“In United Gas Pipe Line Company v. Mobile Gas Service Corporation, 350 U.S. 332 [76 S.Ct. 373], 100 L.Ed. 291 [373] (2-27-56), the Supreme Court held that the Natural Gas Act did not author[92]*92ize unilateral contract changes simply by the filing of a new rate schedule with the Federal Power Commission. The Commission may, however, make a change in the form of contract or the tariff under Sec. 5(a) of the Natural Gas Act [15 U.S.C.A. § 717d(a)] when the public interest so demands. In Federal Power Commission v. Sierra Pacific Power Company, 350 U.S. 348 [76 S.Ct. 368], 100 L.Ed. 300 [388] 2-27-56), the Court held that under the substantially identical provisions of the Federal Power Act [16 U.S.C.A. § 791a et seq.], the filing of a new rate and its approval by the Commission were ineffective to supersede the contract between the parties. The Court declared that the Commission’s sole concern was whether the contract rate was so low as to adversely affect the public interest. The contract was held not to be ‘unjust’ or ‘unreasonable’ simply because it was unprofitable to the public utility.
“From these ultimate facts and legal principles, it follows, a fortiorari, that neither United nor the Federal Power Commission can change the contract between United and Portsmouth from an all requirements basis to a contract demand basis, or effectuate a change in the rate therein provided, without the consent of Portsmouth, short of a finding, not here present, that the contract adversely affects the public interest.”

We observe that a similar objection to the order was urged before the Commission in Portsmouth’s application for rehearing, and so is appropriate for our consideration under § 19(b) of the Act.2 It might be argued that, in objecting to the introduction of a contract demand provision, Portsmouth conceded the legality or at least the effectiveness of a previously existing demand-commodity rate with respect to its purchases from United Fuel. Regardless of that consideration, we think it just and proper for present purposes first to examine Portsmouth’s theory stated in the foregoing excerpts from its brief.

In order to determine the validity of Portsmouth’s assertion that the order in question unilaterally “modified and rescinded” its all-requirements contract to the extent that it is aggrieved thereby, it is necessary first to ascertain just what the contract between the parties was when the order was entered; to find exactly its terms and conditions.

For many years, we are told, Portsmouth purchased its entire gas supply from United Fuel under a contract between them dated October 22, 1931. This agreement, which fixed a flat commodity rate of 37 cents per Mcf with a limited allowance for leakage, was for a term of five years from November 1, 1931; but by an annual exchange of letters — ■ the last being in 1938 — the parties agreed “to extend the expired contract in all of its terms for another year from November 1st, or until we conclude a new contract.” As late as August 7, 1953, a new contract had not been concluded, for as of that date the Commission said in Re United Fuel Gas Company, 100 PUR (NS) 405, 433, footnote 19:

“The October 22, 1931, service agreement with Portsmouth provides for the supply of the Buyer’s entire requirements. No superseding service agreement or notice of cancellation has been filed, and the October 22, 1931, service agreement continues to remain on file with the Commission as an executed service agreement under United Fuel’s F PC Gas Tariff.”

While the record does not show whether a new contract has been executed since August 7, 1953, we gather from the briefs that there has been no further agreement. If there has been none, we hold that the contract of October 22, 1931, is still effective except insofar as [93]*93it may have been lawfully altered or amended.

We are unable to learn from the record the terms and conditions of the October 22, 1931, contract which seems not to have been introduced, nor whether there has been any lawful alteration thereof or amendment thereto. United Fuel asserts that Article Third of that instrument, which fixed a flat rate of 37 cents per Mcf, “is no longer in effect, that the rate provisions which replaced said Article Third have been ‘open’ rates, subject to change under Section 4 of the Act [15 U.S.C.A. § 717c], that they have many times actually been changed by filings under said Section 4, that Portsmouth has participated in all of these changes * *

As the bases for the conclusions just quoted, United Fuel makes the following statements in its brief:

“The 1931 ‘contract’ provided in Article Third for a price of 37$ for each 1,000 cubic feet (Mcf).

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