Tec Cogeneration Inc. v. Florida Power & Light Company

76 F.3d 1560, 1996 U.S. App. LEXIS 3998
CourtCourt of Appeals for the Eleventh Circuit
DecidedMarch 8, 1996
Docket94-4323
StatusPublished

This text of 76 F.3d 1560 (Tec Cogeneration Inc. v. Florida Power & Light Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tec Cogeneration Inc. v. Florida Power & Light Company, 76 F.3d 1560, 1996 U.S. App. LEXIS 3998 (11th Cir. 1996).

Opinion

76 F.3d 1560

64 USLW 2582, 1996-1 Trade Cases P 71,329,
Util. L. Rep. P 14,091

TEC COGENERATION INC., RRD Corporation, as they are partners
in South Florida Cogeneration Associates, Thermo
Electron Corporation, Rolls-Royce, Inc.,
Plaintiffs-Appellees,
v.
FLORIDA POWER & LIGHT COMPANY, FPL Group, Inc., FPL Energy
Services, Inc., Defendants-Appellants,
Wayne H. Brunetti, Larry T. Atkinson, Joe C. Collier, Jr.,
Clark Cook, et al., Defendants.

Nos. 94-4323, 94-4496.

United States Court of Appeals,
Eleventh Circuit.

March 8, 1996.

James R. Atwood, Washington, DC, Daniel M. Gribbon, Steven J. Rosenbaum, Washington, DC, for appellants.

David H. Erichsen, Boston, MA, Charles J. Gray, Peter A. Spaeth, Boston, MA, for appellees.

Appeals from the United States District Court for the Southern District of Florida.

Before EDMONDSON, Circuit Judge, HILL, Senior Circuit Judge, and MILLS*, District Judge.

HILL, Senior Circuit Judge:

This is an appeal from the denial of a motion for summary judgment by the district court.1 Two questions are presented: first, whether a public utility is immune from antitrust liability under the state-action doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), for its allegedly anti-competitive conduct concerning a cogenerator2 in the areas of wheeling,3 rates, and interconnection; and second, whether lobbying of a county legislative body by the utility is protected from antitrust liability under the Noerr/ Pennington doctrine. Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). The district court found that the utility was not entitled to immunity from antitrust sanctions for its actions. We disagree. The denial by the district court of the utility's motion for summary judgment is reversed.4

I. FACTUAL BACKGROUND

Shortly after Congress enacted the Public Utility Regulatory Policies Act of 1978 (PURPA),5 Metropolitan Dade County, Florida (Dade) began to consider a cogeneration facility as part of its Miami Downtown Government Center (Center), then in the planning stages. At the time, Appellees (Cogenerators)6 were engaged in the business of developing cogeneration projects nationwide. They also supplied turbines and related services for use in cogeneration projects. The Cogenerators encouraged Dade to construct such a facility using their equipment and services.

Appellant Florida Power & Light Company (FPL)7 is an investor-owned public electric utility engaged in three functions: generation, transmission, and distribution and sale of electric energy.8 It services southern and eastern Florida, including most of Dade. FPL is regulated by the Florida Public Service Commission (PSC).9 It owns and controls ninety percent of the total electrical generating capacity in its service area and the electrical grid with which Center can interconnect. FPL has monopoly power within its service area both as to the purchase of wholesale power and the sale of retail power.

In 1981, Dade issued requests to bid on the Center cogeneration facility. Cogenerators' proposal was selected and in late 1983, Dade and the Cogenerators entered into contracts providing for the construction and operation of a twenty-seven megawatt cogeneration facility at Center and for the supply of cogeneration equipment for the project. The Cogenerators agreed to operate Center for Dade for sixteen years. The Cogenerators also contracted to supply electrical and thermal power to Dade.10 Dade and the Cogenerators were to share in the profits, if any, from operating the Center; the Cogenerators were to absorb the losses.11 The final contract allowed for excess power, if any, from Center, to be dispensed to Dade facilities outside Center, such as to the Jackson Memorial Hospital/Civic Center complex (Hospital).12 Practically speaking, excess power could be dispensed only one of two ways, either via a wheeling arrangement with FPL or by constructing a separate transmission line. A separate line would require the approval of the local legislative body, i.e., the Dade County Board of Commissioners (Commission). With these parameters in place, construction of the cogeneration facility commenced in mid-1984 and the facility became fully operational at the end of 1986.13

Center, armed with the capability to produce twenty-seven megawatts of electrical power, actually needed only ten megawatts with which to operate. With seventeen surplus megawatts of generating capacity, Center quickly proved to be unprofitable. By then, however, the die was cast; the project was in place.14 Fingers began to point as the Cogenerators and Dade each blamed the other for a projection miscalculation of this magnitude.15

To reduce their losses, the Cogenerators sought a logical use for the excess power. Under rules promulgated by the PSC, two options were immediately available: (1) the Cogenerators could either sell the surplus electricity to FPL at a rate equal to FPL's avoided cost;16 or (2) the Cogenerators could force FPL to transmit or wheel the excess power to another Florida utility, who in turn would purchase it at its own avoided cost rate.

At avoided cost rates, it appeared that the Cogenerators could not break even with either option. FPL alleges that the Cogenerators deliberately ignored their two legitimate options and pursued a third, allegedly illegitimate, alternative in order to obtain higher prices for their power: the Cogenerators approached FPL to wheel their surplus power to other Dade facilities outside Center, most notably, to Hospital, two miles northwest. Believing that the Cogenerators' request violated the PSC's self-service wheeling rules,17 FPL declined to wheel.

Rebuffed by FPL, the Cogenerators then turned to the best efforts clause in its contract with Dade.

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Related

TEC Cogeneration Inc. v. Florida Power & Light Co.
76 F.3d 1560 (Eleventh Circuit, 1996)
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337 U.S. 541 (Supreme Court, 1949)
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