Vermont Department v. FERC
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Vermont Department v. FERC, (1st Cir. 1993).
Opinion
USCA1 Opinion
June 3, 1993 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1165
NORTHEAST UTILITIES SERVICE COMPANY,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1261
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1262
MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1263
TOWNS OF CONCORD, NORWOOD AND WELLESLEY, MASSACHUSETTS, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
______________________
No. 92-1264
CENTRAL MAINE POWER CO., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1316
CITY OF HOLYOKE GAS & ELECTRIC DEPARTMENT,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1328
CANAL ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1336
THE AMERICAN PAPER INSTITUTE, INC., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
__________________
No. 92-1340
BOSTON EDISON COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1510
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________
ERRATA SHEET
The opinion of this court issued on May 19, 1993, is amended
as follows:
On page 28, line 12 from the bottom, within block quote:
change "single person with a least 75-percent" to "single person
with at least 75-percent".
On page 43, line 3 from the bottom: change "born" to
"borne".
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1165
NORTHEAST UTILITIES SERVICE COMPANY,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1261
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1262
MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1263
TOWNS OF CONCORD, NORWOOD AND WELLESLEY, MASSACHUSETTS, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
______________________
No. 92-1264
CENTRAL MAINE POWER CO., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1316
CITY OF HOLYOKE GAS & ELECTRIC DEPARTMENT,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1328
CANAL ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1336
THE AMERICAN PAPER INSTITUTE, INC., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
__________________
No. 92-1340
BOSTON EDISON COMPANY, ET AL.,
Petitioners,
Free access — add to your briefcase to read the full text and ask questions with AI
USCA1 Opinion
June 3, 1993 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1165
NORTHEAST UTILITIES SERVICE COMPANY,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1261
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1262
MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1263
TOWNS OF CONCORD, NORWOOD AND WELLESLEY, MASSACHUSETTS, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
______________________
No. 92-1264
CENTRAL MAINE POWER CO., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1316
CITY OF HOLYOKE GAS & ELECTRIC DEPARTMENT,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1328
CANAL ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1336
THE AMERICAN PAPER INSTITUTE, INC., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
__________________
No. 92-1340
BOSTON EDISON COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1510
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________
ERRATA SHEET
The opinion of this court issued on May 19, 1993, is amended
as follows:
On page 28, line 12 from the bottom, within block quote:
change "single person with a least 75-percent" to "single person
with at least 75-percent".
On page 43, line 3 from the bottom: change "born" to
"borne".
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1165
NORTHEAST UTILITIES SERVICE COMPANY,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1261
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1262
MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1263
TOWNS OF CONCORD, NORWOOD AND WELLESLEY, MASSACHUSETTS, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
______________________
No. 92-1264
CENTRAL MAINE POWER CO., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1316
CITY OF HOLYOKE GAS & ELECTRIC DEPARTMENT,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1328
CANAL ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1336
THE AMERICAN PAPER INSTITUTE, INC., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
__________________
No. 92-1340
BOSTON EDISON COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1510
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
PETITIONS FOR REVIEW OF ORDERS OF
THE FEDERAL ENERGY REGULATORY COMMISSION
____________________
Before
Torruella, Circuit Judge,
_____________
Bownes, Senior Circuit Judge,
____________________
and Boudin, Circuit Judge.
_____________
____________________
Gerald M. Amero, with whom Catherine R. Connors and Pierce,
________________ ____________________ _______
Atwood, Scribner, Allen, Smith & Lancaster and Arthur W.
________________________________________________ __________
Adelberg, and Anne M. Pare, were on brief, for petitioner Central
________ ____________
Maine Power Company.
Harvey L. Reiter, with whom William I. Harkaway, Kathleen L.
________________ ___________________ ___________
Mazure, and McCarthy, Sweeney & Harkaway, were on brief, for
______ ______________________________
petitioners Vermont Department of Public Service, Vermont Public
Service Board, Rhode Island Attorney General, Rhode Island
Division of Public Utilities and Carriers, Maine Public Utilities
Commission and Massachusetts Department of Public Utilities.
George H. Williams, Jr., with whom Morley Caskin, was on
________________________ _____________
brief, for petitioners Canal Electric Company, Commonwealth
Electric Company and Cambridge Electric Light Company.
J.A. Bouknight, Jr., with whom David B. Raskin, David L.
____________________ ________________ _________
Schwartz, and Newman & Holtzinger, P.C., and Robert P. Wax,
________ ___________________________ ______________
General Counsel, were on brief, for petitioner Northeast
Utilities Service Company.
Randolph Elliott, with whom William S. Scherman, General
________________ ____________________
Counsel, Jerome M. Feit, Solicitor, Katherine Waldbauer, and Eric
______________ ___________________ ____
Christensen, were on brief, for respondent Federal Energy
___________
Regulatory Commission.
____________________
Alan J. Roth, Scott H. Strauss, William S. Huang, Spiegel &
_____________ ________________ _________________ _________
McDiarmid, Nicholas J. Scobbo, Ferriter, Scobbo, Sikora, Caruso &
_________ __________________ __________________________________
Rodophele, Wallace L. Duncan and Duncan, Weinberg, Miller &
_________ __________________ ____________________________
Pembroke, on brief for petitioner Massachusetts Municipal
________
Wholesale Electric Company.
Charles F. Wheatley, Jr., Peter A. Goldsmith and Wheatley &
_________________________ __________________ __________
Ranquist, on brief for petitioners Towns of Concord, Norwood &
________
David J. Bardin, Noreen M. Lavan, Eugene J. Meitgher, Steven
_______________ _______________ __________________ ______
R. Miles, and Arent, Fox, Kintner, Plotkin & Kahn, on brief for
________ ___________________________________
petitioner City of Holyoke Gas & Electric Department.
James T. McManus, Michael E. Small, Wright & Talisman, P.C.
_________________ ________________ _______________________
and Frederick S. Samp, General Counsel, on brief for petitioner
__________________
Bangor Hydro-Electric Co.
Steven Halpern on brief for petitioner Massachusetts
_______________
Department of Public Utilities.
Alan H. Richardson on brief for petitioner American Public
___________________
Power Association.
Mitchell Tennenbaum, Senior Staff Attorney, on brief for
___________________
petitioner Maine Public Utilities Commission.
Edward G. Bohlen, Assistant Attorney General, and Scott
__________________ _____
Harshbarger, Attorney General, on brief for petitioner
___________
Massachusetts Attorney General.
Julio Mazzoli, Special Assistant, and James E. O'Neil,
______________ ________________
Attorney General, on brief for petitioner Rhode Island Division
of Public Utilities and Carriers and Rhode Island Office of
Attorney General.
Robert F. Shapiro, Lynn N. Hargis and Chadbourne & Parke, on
_________________ ______________ __________________
brief for petitioner The American Paper Institute, Inc.
Wayne R. Frigard on brief for petitioner Boston Edison
__________________
Company.
George M. Knapp, Roger B. Wagner, David A. Fazzone, John F.
________________ _______________ ________________ _______
Smitka, and McDermott, Will & Emery, on brief for petitioner
______ _________________________
Montaup Electric Company.
Robert S. Golden, Jr., Assistant Attorney General, Richard
_____________________ _______
Blumenthal, Attorney General, and Howard E. Shapiro, Special
__________ ___________________
Assistant Attorney General, and Van Ness, Feldman & Curtis, on
___________________________
brief for intervenor Connecticut Department of Public Utility
Control.
Kenneth M. Simon, Larry F. Eisenstat, and Dickstein, Shapiro
________________ __________________ __________________
& Morin, on brief for intervenor Masspower.
_______
Harold T. Judd, Senior Assistant Attorney General, John P.
_______________ _______
Arnold, Attorney General, Glen L. Ortman, John S. Moot, and
______ _______________ _____________
Verner, Liipfert, Bernhard, McPherson and Hand, Chrtd., on brief
_______________________________________________________
for intervenors The State of New Hampshire and New Hampshire
Public Utilities Commission.
Kenneth D. Brown on brief for intervenor Public Service
_________________
Electric and Gas Company.
Edward Berlin, Kenneth G. Jaffee, Martin W. Gitlin, and
______________ ___________________ _________________
Swidler & Berlin, and Cynthia A. Arcate, on brief for intervenor
_________________ _________________
New England Power Company.
____________________
May 19, 1993
____________________
BOWNES, Senior Circuit Judge. These petitions for
BOWNES, Senior Circuit Judge.
____________________
review challenge the Federal Energy Regulatory Commission's
("FERC" or "the Commission") decision to conditionally
approve the merger of Northeast Utilities ("NU") and the
Public Service Company of New Hampshire ("PSNH"). Certain
joint petitioners and intervenors1 contend that FERC erred
when it: (1) held that the benefits of the merger outweighed
its costs; and (2) failed to condition the merger on NU's
waiver of single participant status ("SPS") in the New
England Power Pool ("NEPOOL"). A group of public and private
electric utilities, state commissions, state agencies,
independent power producers, cogenerators and electric end
users2 claim that FERC erred when it: (1) allowed the
consummation of the merger upon the filing of, rather than
upon approval of, a transmission tariff; (2) adopted
____________________
1 Joint petitioners and intervenors include: Central Maine
Power Company; Boston Edison Company; Bangor Hydro-Electric
Company; the Towns of Concord, Norwood and Wellesley,
Massachusetts; Maine Public Utilities Commission;
Massachusetts Department of Public Utilities; Vermont
Department of Public Service; Vermont Public Service Board;
Rhode Island Attorney General; Rhode Island Division of
Public Utilities and Carriers; Massachusetts Municipal
Wholesale Electric Company; and, City of Holyoke Gas &
Electric Department.
2 This group of petitioners and intervenors includes the
joint petitioners and intervenors listed in n.1, supra (with
_____
the exception of Central Maine Power Company), and: The
American Paper Institute, Inc.; American Public Power
Association; Canal Electric Company; Commonwealth Electric
Company; Cambridge Electric Light Company; Massachusetts
Attorney General; and, Montaup Electric Company.
-6-
transmission access conditions that gave "native load"
customers a priority over other customers; and (3) endorsed
"opportunity cost" pricing principles. The Holyoke Gas &
Electric Department ("Holyoke") argues that FERC erred when
it failed to: (1) conduct an appropriate review of the
environmental impact of the proposed merger; and, (2) make
findings regarding allegations of anticompetitive
consequences of the merger that were unique to Holyoke.
Finally, Northeast Utilities Service Company ("NUSCO")
asserts that FERC's orders changing the terms of three rate
schedules filed in conjunction with its merger application
were arbitrary, capricious, and an abuse of discretion.
For the reasons which follow, we reject
petitioners' arguments and affirm the Commission's decisions
with the exception of the Commission's decision to change the
terms of the Seabrook Power Contract which we remand for
consideration under the "public interest" standard.
I. BACKGROUND.
I. BACKGROUND.
A. Parties to the Approved Merger.
A. Parties to the Approved Merger.
Northeast Utilities ("NU") is a registered holding
company under the Public Utility Holding Company Act of 1935
(PUHCA). 15 U.S.C. 79 et seq. (1988). Northeast Utilities
__ ____
Service Company ("NUSCO") is a service company subsidiary of
-7-
NU and supplies centralized administrative and support
services to NU's operating companies.3
Prior to the merger, Public Service Company of New
Hampshire ("PSNH") was the largest electric utility in New
Hampshire, supplying electric service to some 375,000 retail
customers, approximately three-quarters of the State's
population, in every county in the State. PSNH also provided
wholesale service to the New Hampshire Electric Cooperative,
three New Hampshire municipalities, and one investor-owned
utility, Vermont Electric Power Company. PSNH had the
largest ownership share, approximately 35.6 percent, of
Seabrook Unit No. 1, a nuclear generating facility declared
to be available for service on June 30, 1990.
B. The Merger Proposal.
B. The Merger Proposal.
On January 28, 1988, PSNH filed a voluntary
petition in the United States Bankruptcy Court for the
District of New Hampshire for reorganization under Chapter 11
of the Bankruptcy Code. 11 U.S.C. 1101 et seq. (1988).
__ ____
PSNH alleged that it was unable to recover in its rates the
outlays it had made in the construction and operation of the
Seabrook nuclear power plant. On April 20, 1990, after
____________________
3 NU's operating companies are Connecticut Light and Power
Company (CL&P), Western Massachusetts Electric Company,
Holyoke Water Power Company (HWP) and HWP's wholly-owned
subsidiary, Holyoke Power and Electric Company (HP&E). These
companies are wholly-owned subsidiaries of NU and are public
utilities supplying retail and wholesale electric service in
Connecticut and Massachusetts.
-8-
sifting through several competing reorganization plans, the
bankruptcy court approved NU's proposal to merge with PSNH
and to acquire and operate all of PSNH's power facilities.
See In re Public Service Co. of New Hampshire, 963 F.2d 469,
___ _________________________________________
470 (1st Cir.), cert. denied, Rochman v. Northeast Utilities
_____ ______ _______ ___________________
Service Co., 113 S. Ct. 304 (1992).
___________
NU's proposal contained a two-step process: first,
PSNH would emerge from bankruptcy as a stand-alone company
bound to a merger agreement with NU; second, PSNH would be
merged with an NU subsidiary created solely for the
acquisition (NU Acquisition Corporation), with PSNH emerging
as the surviving entity. After the merger, PSNH would be a
wholly-owned subsidiary of NU and would transfer its
ownership interest in Seabrook to a newly formed NU
subsidiary, North Atlantic Energy Corporation ("North
Atlantic"). The second step would occur only after all
necessary approvals were received from the relevant
regulatory agencies.
C. Procedural History.
C. Procedural History.
On January 8, 1990, NUSCO, on behalf of NU and NU's
operating subsidiaries, filed an application with FERC under
section 203 of the Federal Power Act ("FPA"), 16 U.S.C.
824b (1988), seeking authorization for PSNH to dispose of all
of its jurisdictional facilities and concurrently to merge
with, and become a subsidiary of, NU. In connection with
-9-
this application, NUSCO filed four rate schedules with FERC
pursuant to 205 of the FPA: the Seabrook Power Contract,4
the Sharing Agreement5 and two Capacity Interchange
Agreements.6
The Commission consolidated consideration of the
merger application and rate schedules, accepted the rate
schedules for filing and suspended their effectiveness, and
set for hearings before an administrative law judge ("ALJ")
the questions of whether the Commission should grant the
203 application and approve the rate schedules. See
___
Northeast Utilities Service Co., 50 F.E.R.C. 61,266, reh'g
_______________________________ _____
granted in part and denied in part, 51 F.E.R.C. 61,177
_____________________________________
(1990). In its order, the Commission directed the parties to
____________________
4 The Seabrook Power Contract is a life-of-the-unit power
sales agreement between PSNH and North Atlantic entered into
concurrently with NU's acquisition of PSNH and the transfer
of PSNH's share of Seabrook to North Atlantic. Under the
contract, PSNH agreed to purchase North Atlantic's entire
share of Seabrook capacity and energy, according to a cost-
of-service formula rate. The contract was intended to ensure
that North Atlantic would recover all of its costs from PSNH
regardless of whether or not Seabrook actually operated.
5 The Sharing Agreement allocates the benefits and obliga-
tions from the integrated operation of PSNH and the current
NU system, as well as the joint planning and operations of
these systems. This agreement established a formula for
sharing the expected post-merger benefits that would accrue
to NU and PSNH operating companies as a result of operating
efficiencies and the ability to take single participant
status under the NEPOOL agreement.
6 The two Capacity Interchange Agreements provide for the
sale and purchase of energy between PSNH and Connecticut
Light & Power Company (CL&P) over a ten-year term.
-10-
address the effect of the proposed merger on NU's market
power and "whether any transmission conditions are necessary
to eliminate any adverse effect of the proposed merger and,
if so, what specific conditions should be imposed." 50
F.E.R.C. at 61,834-35.
On December 20, 1990, the ALJ issued its Initial
Decision approving the 203 application and the rate
schedules with certain modifications and conditions.
Northeast Utilities Service Co., 53 F.E.R.C. 63,020 (1990).
_______________________________
The Commission, in Opinion No. 364, issued on August 9, 1991,
affirmed in part and reversed in part the ALJ's decision,
conditionally approving the 203 application and the rate
schedules. Northeast Utilities Service Co., 56 F.E.R.C.
________________________________
61,269 (1991). On January 29, 1992, after considering
additional filings by the parties and oral argument on
transmission pricing issues, the Commission issued Opinion
No. 364-A, affirming its conditional approval of the 203
application and rate schedules. Northeast Utilities Service
___________________________
Co., 58 F.E.R.C. 61,070 (1992).
___
Petitions for review of Opinions No. 364 and 364-A
were filed in this court and in the District of Columbia
Circuit Court. The Judicial Panel on Multidistrict
Litigation consolidated these petitions for review in this
court, where further petitions for review were filed. 28
U.S.C. 2112(a) (1988). Subsequently, in Opinion No. 364-B,
-11-
the Commission denied a request for rehearing of Opinion No.
364-A. Northeast Utilities Service Co., 59 F.E.R.C. 61,042
_______________________________
(1992). A petition for review of Opinions No. 364-A and 364-
B was filed in this court, where it was consolidated with the
earlier filed petitions. We review the Commission's orders
under the jurisdiction established by 16 U.S.C. 825l.
II. STANDARD OF REVIEW.
II. STANDARD OF REVIEW.
On review, we give great deference to the
Commission's decision. U.S. Dep't of Interior v. FERC, 952
______________________ ____
F.2d 538, 543 (D.C. Cir. 1992). FERC's findings of fact are
reviewed under the "substantial evidence" standard of review.
16 U.S.C. 825l ("The finding of the Commission as to the
facts, if supported by substantial evidence, shall be
conclusive."). Therefore,
[w]e defer to the agency's expertise,
particularly where the statute prescribes
few specific standards for the agency to
follow, so long as its decision is
supported by "substantial evidence" in
the record and reached by "reasoned
decisionmaking," including an examination
of the relevant data and a reasoned
explanation supported by a stated
connection between the facts found and
the choice made.
Electricity Consumers Resource Council v. FERC, 747 F.2d
________________________________________ ____
1511, 1513 (D.C. Cir. 1984). "Pure" legal errors require no
deference to agency expertise, and are reviewed de novo.
__ ____
Questions involving an interpretation of the FPA involve a de
__
novo determination by the court of Congressional intent; if
____
-12-
that intent is ambiguous, FERC's conclusion will only be
rejected if it is unreasonable. Chevron USA v. Natural
___________ _______
Resources Defense Council, 467 U.S. 837, 842-45 (1984);
___________________________
Boston Edison Co. v. FERC, 856 F.2d 361, 363 (1st Cir. 1988).
_________________ ____
III. DISCUSSION.
III. DISCUSSION.
A. Conditional Approval of the Merger.
A. Conditional Approval of the Merger.
1. Background.
__________
In reaching his decision to approve the NU-PSNH
merger, the ALJ found that the merger would produce
significant benefits. Specifically, he found that: (1) PSNH
would emerge from bankruptcy as a viable utility on a solid
financial footing, 53 F.E.R.C. at 65,211; (2) improved
management techniques and economies of scale would reduce the
operating costs of Seabrook by some $527 million,7 id. at
___
65,212; (3) application of NU operating procedures to PSNH's
fossil steam plants would save $100 million, id. at 65,213;
___
(4) reductions in administrative and general expenses would
save $124 million, id.; (5) NU's record of buying lower-
___
priced coal on the spot market would save $39 million, id.;
___
and (6) the merger would yield $360 million in savings for NU
because of its ability to elect "single participant status"
____________________
7 This, and all other dollar amounts are net present values
unless otherwise noted.
-13-
in the New England Power Pool (NEPOOL), a power pool
comprised of most of the utilities in New England. Id.
___
The ALJ also found that unless several conditions
were imposed, the merger would have short- and long-term
anticompetitive consequences because of the merged company's
increased market power over key transmission facilities in
both the New England region and the Rhode Island and Eastern
Massachusetts submarket ("Eastern REMVEC"). 53 F.E.R.C. at
65,214-19. Under the authority of 203(b) of the FPA, 16
U.S.C. 824b(b), the ALJ approved the merger subject to
several conditions, including the following: (1) the merged
company must offer firm (non-interruptible) transmission
service for a minimum of 30 days and a maximum of 20 years,
53 F.E.R.C. at 65,220-21; (2) non-firm service must be
offered for a one-day minimum term, id. at 65,220; (3) the
___
merger would be consummated concurrently with the filing of a
compliance tariff which fully reflects all of the terms and
conditions set out in the ALJ's Initial Decision, id. at
___
65,221; (4) NU must implement its New Hampshire Corridor
Proposal,8 thereby making available 400 MW of transmission
____________________
8 The New Hampshire Corridor Transmission Proposal allows
New England utilities to purchase long-term transmission
rights from NU-PSNH in order to connect with power sources in
northern New England and Canada. See 53 F.E.R.C. at 65,225.
___
-14-
capacity for wheeling9 by utilities in both northern and
southern New England, id. at 65,225-27; and (5) the merged
___
company's veto power on NEPOOL's Management Committee would
be restricted for the ninety day period immediately following
consummation of the merger, id. at 65,230-31.
___
In Opinion No. 364, the Commission affirmed the
ALJ's finding that the merger, with appropriate conditions,
was consistent with the public interest. 56 F.E.R.C. at
62,011. It held, however, that the $364 million cost-shift
between NU-PSNH and other NEPOOL members should not have been
counted as a benefit of the merger because it simply shifted
costs dollar-for-dollar among the membership without any net
savings.10 56 F.E.R.C. at 61,997. The Commission also
held that, in evaluating the costs and benefits of the
merger, the ALJ correctly attributed the benefits resulting
from the merger to the merger even if those benefits could
have been achieved by other means.11 Id. at 61,994-96.
___
This conclusion was reiterated on rehearing in Opinion No.
364-A. 58 F.E.R.C. at 61,186-87.
____________________
9 "Wheeling" is defined as the "transfer by direct trans-
mission or displacement [of] electric power from one utility
to another over the facilities of an intermediate utility."
Otter Tail Power Co. v. U.S., 410 U.S. 366, 368 (1973).
____________________ ____
10 This issue is discussed in Part III(B), infra.
_____
11 This issue is discussed in Part III(A)(3), infra.
_____
-15-
Petitioners and intervenors argue that FERC erred,
as a matter of law, in holding that the benefits of the
merger outweighed its costs.
-16-
2. The Statutory Standard.
______________________
FERC's authority to consider the merger
applications of utilities is set forth in 203(a) of the
FPA, 16 U.S.C. 824b(a): the Commission "shall approve" a
proposed merger of utility facilities if, "[a]fter notice and
opportunity for hearing, . . . the Commission finds that the
proposed disposition, consolidation, acquisition, or control
will be consistent with the public interest." Id. The
___
Commission has the additional authority to grant approval for
such transactions "upon such terms and conditions as it finds
necessary or appropriate to secure the maintenance of
adequate service and the coordination in the public interest
of facilities subject to the jurisdiction of the Commission."
16 U.S.C. 824b(b). As the Commission noted when it
reviewed the Initial Decision of the ALJ,
[m]erger applicants need not show that a
positive benefit will result from a
proposed merger. The applicant must
fully disclose all material facts and
show affirmatively that the merger is
consistent with the public interest. It
is sufficient if the "probable merger
benefits . . . add up to substantially
more than the costs of the merger."
56 F.E.R.C. at 61,994 (quoting Utah Power & Light Co., 47
_______________________
F.E.R.C. at 61,750 (1989) (footnotes omitted); see also
_________
Pacific Power & Light Co. v. Federal Power Commission, 111
__________________________ _________________________
F.2d 1014, 1016 (9th Cir. 1940). We review the record,
therefore, to determine whether the Commission's finding that
-17-
the probable benefits of the NU-PSNH merger were
substantially more than its costs was supported by
substantial evidence.
3. Discussion.
__________
Petitioners make two claims with regard to FERC's
evaluation of the costs and benefits of the NU-PSNH merger.
First, they argue that the Commission should not have
included resolution of PSNH's bankruptcy as a benefit of the
merger because: (1) PSNH actually emerged from bankruptcy on
May 16, 1991, the effective date of the Reorganization Plan
("RP"); and (2) prior to gaining the bankruptcy court's
approval of the two-step RP, PSNH had to show that it would
be financially viable as a stand-alone entity because
regulatory approval for the second step of the RP (merger
with and into NU) was not assured. These two facts, however,
do not imply that it was error for FERC to consider the
"resolution of PSNH's bankruptcy" as a benefit, indeed as a
principal benefit, of the merger.
It is true that PSNH, as a technical matter,
"emerged" from bankruptcy prior to FERC's consideration of
the proposed merger. The ALJ and the Commission did not hold
otherwise. The ALJ stated, and the Commission summarily
affirmed the fact that "[t]he merger is part of a plan which
__________________
enables a reorganized PSNH to emerge from bankruptcy." 53
F.E.R.C. at 65,211 (emphasis added); see also 56 F.E.R.C. at
___ ____
-18-
61,993. Like the state regulators who approved the two-step
merger plan, the Commission evaluated the plan as a whole,
anticipating "the merger not `stand alone' PSNH as the
ultimate destiny for the reorganized company." 53 F.E.R.C.
at 65,211. "All parties to the reorganization contemplated
[stand alone] status as an interim step en route to the
merger." Id. It was the entire plan, which admittedly had
___
two sequential and severable steps, that allowed PSNH to
emerge from bankruptcy. There is no evidence that the state
regulators would have approved a plan to allow PSNH to emerge
from bankruptcy that included only the first "stand alone"
step. Indeed, there is evidence to the contrary.
FERC also found that "resolving" PSNH's bankruptcy
meant more than simply the emergence of PSNH from the
protection of bankruptcy court. FERC held that the final
resolution of PSNH's bankruptcy included the treatment of its
creditors and stockholders who stood to lose approximately
$250 million in the absence of the merger. As the ALJ
observed, the Commission "regard[s] the right of these public
bondholders as of primary importance after the consumers have
been protected." 53 F.E.R.C. at 65,211 (quoting In re Evans,
_______ ___________
1 F.P.C. 511, 517 (1937) (approving an acquisition involving
the reorganization of a bankrupt utility)). The Commission
also held that it was in the public interest to approve the
creation of a stronger, more viable merged entity, rather
-19-
than leaving PSNH in a "weakened", "stand alone" state. This
holding was sufficiently supported by evidence in the record.
Petitioners also claim that, given the bankruptcy
court's "feasibility finding" required by 11 U.S.C.
1129(a)(11),12 the Commission was estopped from reaching
the conclusion that a "stand alone" PSNH would be "weak."
We disagree. The bankruptcy court and FERC evaluated the
merger proposal under different standards. The bankruptcy
court was required to determine the likelihood of further
liquidation or reorganization proceedings were the plan to be
approved. FERC was obliged to determine whether the plan was
"consistent with the public interest." It was not
inconsistent for FERC to find that although PSNH was capable
of surviving as a stand alone entity, it would not be
"consistent with the public interest" to prevent a merger
that would result in an even stronger utility. The
principles of estoppel simply do not apply in a case such as
this, where the issues litigated and the standards applied in
the two proceedings are so different.
____________________
12 The Bankruptcy Code provides that:
(a) The court shall confirm a plan [of
reorganization] only if all of the following
requirements are met:
(11) confirmation of the plan is not likely to be
followed by the liquidation, or the need for
further financial reorganization, of the debtor or
any successor to the debtor under the plan, unless
such liquidation or reorganization is proposed in
the plan.
11 U.S.C. 1129(a)(11).
-20-
Even were petitioners correct in their asseveration
that FERC improperly counted the resolution of PSNH's
bankruptcy as a benefit of the merger, "the Commission's
error would be immaterial in light of the overwhelming excess
of other benefits ($791 million) over the costs (0) still
attributable . . . to the acquisition." City of Holyoke Gas
___________________
& Elec. Dep't v. S.E.C., 972 F.2d 358, 362 (D.C. Cir. 1992).
_____________ ______
Second, petitioners argue that FERC erred as a
matter of law in weighing as merger benefits results or
alleged savings that were, or could be, achieved by
"alternate means." Specifically, petitioners contend that
FERC's failure to apply the "alternate means" test
contradicted general agency policy and general antitrust
principles.
It is undisputed that utilities are "not immune"
from antitrust laws. Otter Tail Power Co. v. U.S., 410 U.S.
____________________ ____
366, 372-75 (1973); Town of Concord v. Boston Edison, 915
________________ ______________
F.2d 17 (1st Cir. 1990), cert. denied, 111 S. Ct. 1337
_____________
(1991). At issue in this case is whether FERC is required by
statute, or otherwise, to engage in "standard" antitrust
analysis before passing on 203 merger applications. In
claiming that FERC has such an obligation, petitioners rely
on a statute governing agency approval of bank mergers (the
-21-
"Bank Merger Act") which states that the agency with
jurisdiction over a proposed bank merger,13
shall not approve
(A) any proposed merger transaction
which would result in a monopoly, or
which would be in furtherance of any
combination or conspiracy to monopolize
or to attempt to monopolize the business
of banking in any part of the United
States, or
(B) any other proposed merger
transaction whose effect in any section
of the country may be substantially to
lessen competition, or to tend to create
a monopoly, or which in any other manner
would be in restraint of trade, unless it
finds that the anticompetitive effects of
the proposed transaction are clearly
outweighed in the public interest by the
probable effects of the transaction in
meeting the convenience and needs of the
community to be served. . . .
(6) The responsible agency shall
immediately notify the Attorney General
of any approval by it pursuant to this
subsection of a proposed merger
transaction.
12 U.S.C. 1828(c)(5)-(6). The Supreme Court, interpreting
the Bank Merger Act, has held that before a bank merger which
is injurious to the public interest may be approved, "a
showing [must] be made that the gain expected from the merger
cannot reasonably be expected through other means." U.S. v.
____
Phillipsburg Nat. Bank & Trust Co., 399 U.S. 350, 372 (1970).
__________________________________
Petitioners claim that the language of the Bank Merger Act is
sufficiently similar to the statute governing FERC's approval
____________________
13 Jurisdiction varies depending on whether the resulting
entity is a national bank, a state member bank, a state
nonmember bank, or a savings association.
-22-
of proposed mergers, 16 U.S.C. 824b(a), because both
contain a "public interest" standard, to require FERC to use
the "alternate means" test which bank regulators must use in
evaluating proposed bank mergers. We disagree.
As with any matter of statutory construction, we
first examine the language of the statute. Under 16 U.S.C.
824b(a), the Commission is required, after notice and
opportunity for hearing, to approve a proposed merger of
utility facilities if it finds that the proposal "will be
consistent with the public interest." That is all the
statute says. There is no explicit reference to antitrust
policies or principles. There is no evidence that Congress
sought to have the Commission serve as an enforcer of
antitrust policy in conjunction with the Department of
Justice and the Federal Trade Commission. The Bank Merger
Act reveals a quite different intention. There, Congress
explicitly set out standards for approval of bank mergers
that incorporate principles embodied in the Sherman and
Clayton Acts. 12 U.S.C. 1828(c)(5). By requiring the
reviewing agency to notify the Attorney General of any
decision to approve a proposed bank merger, 12 U.S.C.
1828(c)(6), Congress expressed its desire to have bank
regulators serve as pre-screening bodies of mergers which,
because of their importance or character, in most cases also
deserve the attention of the Department of Justice.
-23-
The Bank Merger Act carries with it the implicit
presumption that mergers are to be disapproved (the agency
"shall not approve" a bank merger "unless it finds that the
anticompetitive effects are clearly outweighed in the public
interest" by the benefits of the merger, 12 U.S.C.
1828(c)(5)). The FPA, on the other hand, requires the
Commission to approve any merger that is "consistent with the
public interest." 16 U.S.C. 824b(a). Antitrust
considerations are, of course, relevant in FERC's
consideration of the "public interest" in merger proposals.
The statute, however, does not require FERC to analyze
proposed mergers under the same standards that the Department
of Justice or bank regulators must apply.
Although the Commission must include antitrust
considerations in its public interest calculus under the FPA,
it is not bound to use antitrust principles when they may be
inconsistent with the Commission's regulatory goals. See
___
Otter Tail, 410 U.S. at 373 ("[a]lthough antitrust
___________
considerations may be relevant [in determining the public
interest], they are not determinative"). In Town of Concord,
_______________
this court observed that indiscriminate incorporation of
antitrust policy into utility regulation "could undercut the
very objectives the antitrust laws are designed to serve."
915 F.2d at 22. Therefore, "antitrust analysis must
sensitively `recognize and reflect the distinctive economic
-24-
and legal setting' of the regulated industry to which it
applies." Id. (quoting Watson & Brunner, Monopolization by
___ _______ _________________
Regulated "Monopolies": The Search for Substantive
_____________________________________________________________
Standards, 22 Antitrust Bull. 559, 565 (1977)).
_________
Petitioners may rest assured that were FERC to
approve a merger of utilities which ran afoul of Sherman Act
or other antitrust policies, the utilities would be subject
to either prosecution by government officials responsible for
policing the antitrust laws, or to suit by private citizens
meeting the requirements of standing. See Otter Tail, 410
___ __________
U.S. at 374-5.
B. FERC's Failure to Condition Merger on NU's Waiver
B. FERC's Failure to Condition Merger on NU's Waiver
of Single Participant Status.
of Single Participant Status.
Petitioners argue that the Commission erred in
failing to condition the merger on waiver by NU and PSNH of
"single participant status" ("SPS") in the New England Power
Pool ("NEPOOL"), thereby preventing the imposition of a $364
million cost shift from NU and PSNH to the other members of
NEPOOL.
1. Background.
__________
NEPOOL is a power pool comprised of most of the
utilities in New England. The association is governed by the
New England Power Pool Agreement ("the Agreement") which
establishes a "comprehensive interconnection and coordination
arrangement" among its members in order "to achieve greater
-25-
reliability and economies in the production of electricity."
Groton v. FERC, 587 F.2d 1296, 1298 (D.C. Cir. 1978).
______ ____
Section 202(a) of the Federal Power Act encourages such
voluntary interconnection and coordination of electricity
generating facilities in order to achieve economies of scale.
16 U.S.C. 824a; see also 16 U.S.C. 824a-1 (regarding
___ ____
pooling agreements). The Agreement was approved as a filed
rate schedule by FERC's predecessor, the Federal Power
Commission. 53 F.E.R.C. at 65,213. Under its terms, each
member is required to supply the pool with resources
("Capacity Responsibility") according to a formula based upon
the relationship of the member's peak load to an estimate of
aggregate peak load of all members.
NU experiences its peak load in the summer, and
PSNH experiences its peak load in the winter. By aggregating
these two, complementary, peak loads, NU-PSNH can achieve a
lower Capacity Responsibility than would be the case if the
two utilities remained separate. Because the overall
capacity requirements of NEPOOL will not change as a result
of the merger, the Capacity Responsibilities of other members
must rise to make up for the savings accruing to NU-PSNH.
The ALJ accepted the "undisputed" estimate that "single
participant status" (SPS) will result in a shifting of some
$360 million in costs from NU-PSNH to other members of the
pool. Id.
___
-26-
-27-
2. Discussion.
__________
Petitioners offer six arguments to support their
claim that FERC erred in failing to condition the merger on
waiver of SPS by NU and PSNH. First, petitioners claim that
the Commission did not properly interpret the provision of
the NEPOOL Agreement which governs the election of SPS. We
agree with the Commission's finding that the Agreement both
specifically allows for the election by NU-PSNH of SPS, and
encourages such elections. Section 3.1 of the Agreement
provides in relevant part that:
All Entities which are controlled by a
single person (such as a corporation or a
common law business trust) which owns at
least seventy-five percent of the voting
shares of each of them shall be
_____
collectively treated as a single
Participant for purposes of this
Agreement, if they elect such treatment.
They are encouraged to do so. Such an
______________________________
election shall be made by signing the
appropriate form at the end of a
counterpart of this Agreement.
(Emphasis supplied.) Both the ALJ and the Commission
interpreted section 3.1 to be an explicit endorsement of the
election of SPS by NU-PSNH. The ALJ stated that "[i]t is
undisputed that NU and PSNH qualify for such [single
participant] status under the Agreement." 53 F.E.R.C. at
65,213. The Commission gave great weight to the unrebutted
testimony of witness Bigelow, who participated in the
negotiation of the NEPOOL Agreement regarding the intent of
the original signatories to the Agreement and their
-28-
recognition of such potentially large cost-shifts among
NEPOOL members. Bigelow stated:
[W]hen we put NEPOOL together 20 years
ago, we recognized that these things
might happen. This is not something that
snuck up on people. . . . And we did
discuss at length what would happen
because . . . we were then coming up to a
potential merger of Boston Edison,
Eastern Utilities, New England Power. It
was recognized that these kinds of things
could happen in the future and we spelled
out the ground rules and recognized that
that would happen when it happened. And
the people who didn't like it got
something else for it.
53 F.E.R.C. at 65,214. Both the ALJ and the Commission
rejected petitioners' claim on the basis of both the language
of the Agreement, and Bigelow's unrebutted testimony that not
only had the signatories been aware of such a potentially
large savings shift, but that those utilities that were
dissatisfied with this risk received additional concessions
as compensation. We will not disturb the Commission's
findings.
Second, petitioners claim that the Agreement, as
interpreted in NEPOOL Power Pool Agreement, 56 F.P.C. 1562,
___________________________
1580 (1976), aff'd sub nom. Municipalities of Groton v. FERC,
______________ ________________________ ____
587 F.2d 1296 (D.C. Cir. 1978), prohibits utilities with peak
loads in different seasons from electing SPS. As the
Commission explained, this argument mischaracterizes the
Agreement and the decision of the Federal Power Commission
("FPC") in NEPOOL.
______
-29-
The NEPOOL Agreement, as initially filed
and as approved, allowed single
participant status for utilities
controlled by a single "person" owning at
least 75 percent of the voting shares of
each utility. An exception was expressly
allowed in the filed agreement for any
Vermont utility which elected to be
grouped with Vermont Electric Power
Company. This exception was approved for
essentially two reasons: (1) the Vermont
utilities had long acted as a single
contiguous integrated electric entity;
and (2) since they all experienced their
peak loads in winter, single participant
status would not give them a lower NEPOOL
Capability Responsibility (and consequent
savings). A broader exception was
denied, however, for a group of municipal
utilities (represented by MMWEC) that was
not entitled to single participant status
and that lacked the two cited attributes
of the Vermont utilities. The basis for
the denial was that allowing such status
for "any group of systems, such as MMWEC,
could well be detrimental to the
functioning of NEPOOL."
The NEPOOL decision, thus, does not
stand for the proposition that single
participant status is available only to
utilities having their peak loads in the
same season. Instead, another way,
indeed the primary way, in which
utilities may qualify is if they are
controlled by a single person with at
least 75-percent common ownership. That
is the basis upon which NU and PSNH will
presumably seek to qualify if the merger
is approved. Such status is expressly
allowed under the NEPOOL Agreement
regardless of when NU and PSNH experience
their peak loads.
56 F.E.R.C. at 61,996-97. The reasons offered by the FPC in
its decision to grant a special exception for Vermont
utilities seeking SPS were not intended to be, and are not,
conditions, in addition to those set out in the Agreement,
-30-
which must be satisfied to elect SPS. The FPC did not narrow
the scope of Section 3.1 to apply only to utilities sharing
the same peak load season; rather, it created a special
exception to the 75 percent rule to accommodate the unique
situation faced by Vermont utilities.
Third, petitioners claim that FERC failed to give
proper consideration to Section 4.2 of the Agreement, "the
interests of other pool members, and the purpose of the
Agreement as a whole." Essentially, petitioners argue that
allowing NU-PSNH to elect SPS would violate a general
provision of the Agreement, which states that participants
"shall not . . . take advantage of the provisions of this
Agreement so as to harm another Participant or to prejudice
the position of any Participant in the electric utility
business." We reject this argument for the same reasons
expressed by the Commission in its decision denying
petitioners' request for a rehearing:
[W]e find more relevance in the NEPOOL
Agreement's explicit endorsement of
single participant status than in the
agreement's general goal of "equitable
sharing" and prohibition on members
"taking advantage" of the agreement to
harm or prejudice other members. The
NEPOOL Agreement specifically encourages
eligible parties to seek single
participant status; the provisions cited
by the intervenors are general, not
specific. Construing the general
consistent with the specific, we find
single participant status for the merged
company consistent with an equitable
sharing, as envisioned by the NEPOOL
-31-
Agreement, and not violative of the ban
on taking advantage of the agreement's
provisions to harm or prejudice other
members.
58 F.E.R.C. at 61,189. We agree with FERC's interpretation
of the Agreement. The NEPOOL signatories explicitly
encouraged qualified members to seek SPS, indeed they
contemplated that members that merged might choose to do just
that. We agree with the Commission's construction of the
Agreement which avoids a direct conflict between Sections 3.1
and 4.2, and instead gives both provisions reasonable effect.
Fourth, petitioners argue that failure to condition
the merger on waiver of SPS would create "serious
disincentives" for current members to continue their
membership in NEPOOL, and that the breakup of NEPOOL is
contrary to the public interest. Petitioners imply that FERC
did not take seriously their complaints about SPS, but rather
rested its decision not to require a waiver solely on the
fact that the Agreement allowed the election of SPS. This is
simply not so.
The Commission reversed the ALJ on the issue of
whether SPS savings should be counted as a benefit of the
merger. The Commission found that because the cost shift
amounted to a zero-sum transaction, with NU and PSNH
benefitting and the other members burdened dollar-for-dollar,
the shift could not be counted as a benefit of the merger.
-32-
56 F.E.R.C. at 61,997. Thus, the Commission did not dismiss
petitioners' claims regarding SPS without thought.
Also, the ALJ found, and the Commission agreed,
that SPS was essential to the merger, and that the merger, as
conditioned, was in the public interest. FERC must approve a
proposed merger if it is consistent with the public interest.
16 U.S.C. 824b(a). FERC has the discretion to add
conditions to a proposed merger to ensure that the merger
will, taken as a whole, be in the public interest. 16 U.S.C.
824b(b). FERC need not, however, explain why every
condition, or failure to establish a condition is consistent
with the public interest when considered separately and apart
from the entire transaction. Petitioners seem to argue that
FERC was required by law to state why it was consistent with
the public interest to follow the explicit terms of the
approved fifteen year-old NEPOOL Agreement rather than to
condition the merger on waiver of a membership right
established by the Agreement. FERC had no such obligation.
It need not have explained why it failed to add a particular
condition prior to approving a merger. The statute simply
provides that "[t]he Commission may grant any application for
an order under this section in whole or in part and upon such
terms and conditions as it finds necessary or appropriate to
secure the maintenance of adequate service and coordination
in the public interest of facilities subject to the
-33-
jurisdiction of the Commission." 16 U.S.C. 824b(b). In
this case, the Commission set forth a reasonable basis for
approving the merger as consistent with the public interest
in light of the supplementary conditions the Commission found
necessary. FERC need not have gone further than this to
explain why it failed to place further conditions on the
merger.
Fifth, petitioners allege that FERC acted
inconsistently in its treatment of the NEPOOL Agreement's
provisions regarding voting rights and SPS. The Commission
adopted a condition limiting the merged company's NEPOOL
voting rights to prevent PSNH and NU from gaining a veto
power in NEPOOL. 56 F.E.R.C. at 62,043-45. FERC reasoned
that, while there was evidence that the signatories
anticipated that large cost-shifts would accompany the
election of SPS in merger situations, there was no evidence
that they anticipated the voting rights implications of such
mergers. 58 F.E.R.C. at 61,189. It was not, contrary to
petitioners' argument, inconsistent as a matter of logic to
condition voting rights where the Agreement was silent on the
need or lack of need to do so, while failing to condition SPS
where the Agreement explicitly favored the election of SPS.
Furthermore, it was not an error of law to condition voting
rights while leaving SPS rights untouched. Petitioners do
not contest the Commission's decision to condition NU-PSNH's
-34-
voting rights. We will uphold whatever conditions the
Commission imposes on a proposed merger so long as their
necessity is supported in the record by substantial evidence.
Finally, petitioners contend that the Commission
"failed to explain why burdening other NEPOOL members with
$364 million in additional costs with no offsetting benefits
to them is consistent with the public interest." In making
this argument, petitioners imply that each and every piece of
a complex package of merger agreements and conditions must be
able to withstand "public interest" analysis without regard
to other pieces of the package or to other conditions imposed
by the Commission. Petitioners also imply that if any
individual or group is harmed by a piece of the package, that
provision is not in the public interest and must therefore be
stricken or modified. Both implicit arguments are deeply
flawed.
In evaluating a transaction such as the one at
issue here, the Commission is required to find that the
entire transaction, taken as a whole, is consistent with the
public interest. 16 U.S.C. 824b(a). Each element of the
transaction need not benefit every utility or individual
which might be affected; rather, the whole transaction must
be consistent with the interest of "the public." There is no
reason to think that the interest of individual NEPOOL
members is synonymous with the "public" interest. As has
-35-
already been noted, FERC may add conditions to a proposed
merger before granting approval. 16 U.S.C. 824b(b). The
statute does not require, however, that FERC establish
conditions so that every effect of an approved merger could
withstand the "public interest" test.
At a less theoretical level, the ALJ determined
that the NEPOOL savings "were a vital part of the long and
strenuous negotiations which culminated in the resulting PSNH
reorganization plan," and the particular savings of $146
million for New Hampshire consumers were relied on
specifically by the State of New Hampshire in approving the
merged company's rate package. 53 F.E.R.C. at 65,213. The
Commission accepted this finding of the ALJ, while, at the
same time, it reversed the ALJ's decision to count the $360
million as a benefit of the merger. 58 F.E.R.C. at 61,997.
The fact that the cost-shift was not a benefit to be counted
in weighing the benefits and costs of the merger does not
mean that the election of SPS and the concomitant cost-shift
is not in the public interest. Election of SPS is in the
public interest because it is a central element of the merger
plan which, viewed as a whole, was found by FERC to be
consistent with the public interest based on substantial
evidence in the record. We approve the Commission's decision
not to condition the merger on waiver by NU of SPS.
C. Timing of Merger's Consummation.
C. Timing of Merger's Consummation.
-36-
In the proceedings before the ALJ, NU proposed
filing a transmission tariff within 60 days following the
merger. Intervenors and Commission staff proposed the filing
and approval of an interim transmission rate. The ALJ
rejected both proposals and instead held that the merger
would be consummated upon the filing of NU's compliance
___________
tariff. He reasoned as follows:
I see no need for requiring one tariff
(with potential for controversy, charges,
collections and refunds) to be followed
by yet another tariff, with its own
potential for still other disputes.
Avoiding a transitional period will
make it unnecessary to require a
transitional tariff. To achieve this
result, consummation of the merger must
be conditioned on the concurrent filing
of a compliance tariff which fully
reflects all of the terms and conditions
set out in this Initial Decision. Such a
condition should encourage a prompt and
fair compliance filing because NU could
not begin to reap the merger benefits
without it.
53 F.E.R.C. at 65,221. The Commission concurred:
We believe the GTC [General
Transmission Conditions] and the NH
Corridor Proposal, as modified herein,
adequately mitigate the merger's
anticompetitive effects without requiring
the adoption of the Merger Tariff. Trial
Staff stated that the Merger Tariff would
make service available immediately upon
approval of the merger. We believe that
the presiding judge accomplished the same
result by allowing consummation of the
merger when NU submits its compliance
filing.
We further believe that delaying the
merger's consummation until the
Commission accepts NU's compliance
-37-
submittal for filing would be
inappropriate given the uncertainty
surrounding issues which may be
challenged and subject to further
litigation in the compliance proceeding
and given our commitment to act before
the Merger Agreement's December 31, 1991
termination date. We believe that NU and
PSNH are entitled to a prompt and fair
resolution of this proceeding. At the
same time the intervenors are entitled to
have service begin as soon as practical,
together with a fair resolution of any
disputes raised regarding NU's compliance
filing. Accordingly, we believe that it
is in the best interests of all parties
to allow NU to consummate the merger when
it submits its compliance filing. We
shall also require NU to begin honoring
such requests for transmission service
under the GTC, as modified herein, at
that time. Such transmission service
will be provided at either the firm or
non-firm transmission rates proposed in
NU's compliance filing, subject to
refund, and without a refund floor. In
reviewing NU's filing to ensure
compliance with this Opinion, we will
hold NU to a very high standard. As NU
itself states, "[i]f NU fails to comply
with the letter or spirit of such
[Commission] requirement, NU would be
subject to summary judgment with respect
to any aspect of its compliance filing."
56 F.E.R.C. at 62,025.
Petitioners' stated concern is that, by allowing
the merger to be consummated prior to FERC's approval of the
compliance tariff, FERC did not provide a sufficient guaranty
that NU would provide transmission access that would mitigate
-38-
the merger's anticompetitive effects.14 Petitioners do
not, however, seek to unravel the merger. Rather, they
propose that any cost shift under the NEPOOL Agreement, see
___
discussion in Part III(B), supra, be postponed until after
_____
the compliance tariff is approved. Petitioners complain that
the course chosen by FERC creates an incentive on the part of
NU to delay proceedings on the compliance tariff, thereby
maximizing competitive advantage. Petitioners do not, of
course, point out that their proposal would create an
incentive on their part to delay final approval of the
compliance tariff, thereby postponing the day when the NEPOOL
cost shift will take effect.
The ALJ and the Commission carefully considered the
alternatives before reaching their decisions. The Commission
held that the anticompetitive effects of the merger would be
adequately mitigated by the dual requirements that NU
immediately provide transmission access upon the filing of
its compliance tariff, and that any fees collected by NU
would be subject to refund without a refund floor. Because
NU accepted these merger conditions, the Commission can
enforce NU's promise to pay such refunds if the Commission
finds them to be appropriate. See Distrigas of Massachusetts
___ __________________________
Corp. v. FERC, 737 F.2d 1208, 1225 (1st Cir. 1984). FERC
_____ ____
____________________
14 We note that, at oral argument, petitioners conceded
that no one had as yet sought access to NU's transmission
facilities.
-39-
explicitly warned NU that "[i]n reviewing NU's filing to
ensure compliance with this Opinion, we will hold NU to a
very high standard." 56 F.E.R.C. at 62,025.
The Commission balanced the merging companies' need
for a "prompt and fair resolution" of the merger proceeding
against the intervenors' need "to have [transmission] service
begin as soon as practical, together with a fair resolution
of any disputes raised regarding NU's compliance filing." 56
F.E.R.C. at 62,025. An agency's discretion is at its
"zenith" when it fashions remedies to effectuate the charge
entrusted to it by Congress. Niagra Power Corp. v. FPC, 379
__________________ ___
F.2d 153, 159 (D.C. Cir. 1967). See also, Consolo v. FMC,
___ ____ _______ ___
383 U.S. 607, 620-21 (1966); Environmental Action, Inc. v.
___________________________
FERC, 939 F.2d 1057, 1064 (D.C. Cir. 1991); Boston Edison Co.
____ _________________
v. FERC, 856 F.2d 361, 371 (1st Cir. 1988). We hold that
____
FERC's exercise of its discretion was not inappropriate in
these circumstances. FERC did not defer, as petitioners
suggest, consideration of the anticompetitive effects of the
merger which FERC itself identified. The Commission
recognized the effects, and dealt with them in a reasoned way
which balanced the competing interests of all parties.
FERC's remedy is not unreasonable, and we therefore affirm
its order.
D. Protection of Native Load Customers.
D. Protection of Native Load Customers.
1. Priority of Services.
____________________
-40-
a. Background.
__________
In its merger application, NU made a voluntary
commitment to provide wholesale transmission service,
including third party wheeling service,15 for any utility
over its existing transmission system. At the same time, NU
sought to limit this obligation by reserving an absolute
priority for power purchases on behalf of native load
customers (whose power needs NU is bound by franchise or
contract to meet). The ALJ held that although NU may
reasonably give native load service priority over wheeling
service if NU's transmission system had insufficient capacity
to serve both, 53 F.E.R.C. at 65,221-222, NU could not deny
firm wheeling requests based upon the reservation of
transmission capacity for its own non-firm sales, id. at
___
65,225.
In Opinion No. 364, the Commission balanced the
interests of native load customers and third party wheeling
customers and affirmed the ALJ's denial of an absolute
priority:
we . . . deny NU's proposal to give
higher priority to its own non-firm use
than to third party requests for firm
wheeling in allocating existing
transmission capacity. In no event,
however, will NU be required to provide
firm third party wheeling service out of
existing transmission facilities if
____________________
15 For a definition of "wheeling" see n.9, supra.
___ _____
-41-
reliability of service to native load
customers would be adversely affected.
56 F.E.R.C. at 62,021 (footnote omitted). The Commission
found it "reasonable to allow NU to reserve firm transmission
capacity to provide reliable service to its native load
________
customers." Id. (Emphasis in original.)
___
On rehearing, NU asked the Commission to clarify
the scope of the "reliability" criterion. The Commission
"reiterate[d] that under no circumstances will NU be required
to provide firm wheeling service out of existing transmission
capacity where doing so would impair or degrade reliability
of service to native load customers." 58 F.E.R.C. at 61,199
(emphasis removed). The Commission held the concept of
reliability generally encompasses the: (1) reservation of
transmission capacity to back up large generating units; (2)
provision of generation reserves; and (3) coverage of certain
future needs. As to the coverage of future demand
requirements, the Commission specifically ordered that "any
capacity needed for reliability purposes within a reasonable
planning horizon must be offered for wheeling use until NU
expects to need the capacity for reliability reasons." Id.
___
at 61,199-200.
Petitioners assert that the decision to accord a
priority to native load over transmission load is arbitrary,
discriminatory, and anticompetitive. They argue that FERC
neither defined nor justified the priority granted by
-42-
allowing reservation of transmission capacity for native load
service and that any such priority creates competitive
advantages for NU. We hold that the Commission adequately
defined and reasonably justified its decision to allow such a
reservation and properly addressed the anticompetitive
concerns raised by the intervenors.
b. Discussion.
__________
Although the Commission reaffirmed the general rule
that firm transmission service should be accorded priority
over non-firm service, even if the latter would benefit
native load, it nonetheless allowed NU to reserve firm
transmission capacity needed to ensure reliability of native
load service and allowed the use of this capacity for non-
firm transactions. 58 F.E.R.C. at 61,196. Thus, native load
service will receive a "priority" over third-party wheeling
service in allocating existing transmission capacity when
reliability of service to native load would be adversely
affected. The Commission specifically qualified this
priority by requiring NU to offer the capacity for wheeling
use until NU needed it to assure reliability to native load
customers.
There is nothing arbitrary or discriminatory about
FERC's decision. It struck a reasonable balance between the
competing interests of native load customers and third-party
wheeling customers. NU-PSNH is obligated to serve its native
-43-
load customers. In return for this obligation to serve, the
native load customers regularly bear the cost of transmission
facilities; native load customers pay for them, use them,
plan on them, and rely on them. As the ALJ noted, "[e]very
New England utility favors its own native load. Nothing in
the NEPOOL agreement requires its members to surrender their
native load preference, and none do." 53 F.E.R.C. at 65,222.
Thus, "NU should be allowed to give priority over safe and
reliable service to its native load customers using existing
transmission capacity built to serve those customers." 58
F.E.R.C. at 61,199. FERC explicitly defined and justified
the challenged native load "priority."
2. Transmission Upgrades Pricing.
______________________________
a. Background.
__________
NU's commitment to provide third-party transmission
service includes the obligation to build additional
transmission facilities as necessary to relieve transmission
constraints on its system. 58 F.E.R.C. at 61,204-10; 56
F.E.R.C. at 62,021-24. The issue then becomes, how should
the cost of constructing such transmission upgrades be
allocated. The ALJ stated that questions of cost allocation
are best addressed in future proceedings regarding the
particular responsibilities for particular facilities.
Nevertheless, the ALJ adopted the "but for" analysis for
determining responsibility proposed by NU witness Schultheis:
-44-
[W]heeling customers must make a pro rata
contribution whenever the facilities
would not have been needed but for the
wheeling transfers across a constrained
interface. This means that NU's native
load customers pay for the new facilities
they create the need for and wheeling
customers pay for the facilities they
create the need for.
53 F.E.R.C. at 65,223. The ALJ also noted that the financial
exposure of transmission customers was limited by the cost
caps to which NU was committed.16 Id. at 65,224. The
___
Commission agreed that cost questions should be litigated in
the context of a specific proposal, and accepted the concept
of the "but for" test as a framework for ascertaining cost
responsibility and the use of the proposed cost caps as a
reasonable means of limiting the transmission customers'
responsibility for future upgrades. 56 F.E.R.C. at 62,028-
030. The Commission reaffirmed that decision on rehearing.
58 F.E.R.C. 61,204-207.
Petitioners contend that the Commission failed to
adequately explain the pricing policy it will employ in
pricing transmission upgrades. Basically, petitioners claim
the ruling is too ambiguous to determine whether, or how, the
____________________
16 NU committed to cap cost responsibility to "(1) those
specific facilities identified by NU at the time of the
wheeling request as needing to be built or upgraded either at
the time of the request or in the future; and (2) the maximum
dollar amount contained in NU's initial estimate of a
wheeling customer's pro rata share of the costs of future
upgrades needed to accommodate a request for wheeling
service."
56 F.E.R.C. at 62,031-32.
-45-
Commission changed its policy from the traditional "rolled-
in" approach used in pricing transmission service. We hold
that the Commission provided a clear and reasoned
justification for the principles that will guide its future
determinations of transmission upgrade pricing. We affirm
the Commission's decision not to modify the basic principles
adopted in its order.
b. Discussion.
__________
In accepting as reasonable the "but for" test, the
Commission has done no more than approve a framework for
determining cost responsibility which furthers the general
principle that transmission costs should be borne by those
entities responsible for the cost. 58 F.E.R.C. 61,205.
Under this test, incremental cost pricing could be found
appropriate when firm wheeling across a particular interface
would degrade reliability absent upgrades. The Commission
specifically declined, however, to answer the requests of the
intervenors to decide the "rolled-in versus incremental"
rate17 issue in the abstract and chose instead to evaluate
it only within the context of a particular rate proposal or
upgrade. Id. The Commission articulated how it envisioned
___
____________________
17 Under "rolled in" pricing principles, the upgrade costs
would be rolled in with other company costs and charged to
all ratepayers as part of NU's general rate structure; while
administratively simple, it ignores any concept of
responsibility. Thus, incremental pricing principles look to
hold parties responsible for their share of upgrade costs.
-46-
pricing transmission upgrades and adopted a condition
limiting the amount NU may propose to collect from a
transmission customer to the greater of
(1) the incremental cost of new network
facilities required at the time the
customer's new transmission load is added
or (2) the rolled-in cost of all network
facilities required to serve the combined
transmission loads of [NU], including any
required transmission additions.
Id. at 61,206. Thus, a wheeling customer may be charged the
___
greater of rolled-in cost rates or incremental cost rates.
The Commission acknowledged that the introduction
of incremental cost pricing principles is a departure from
its traditional pricing policies18 and justified this new
policy on NU's unprecedented obligation to provide third
party transmission service. Id. The Commission noted that
___
incremental cost pricing may be appropriate in certain
circumstances, but decided to leave the details of cost
responsibility questions to a future specific section 205
rate case. When such a case arises, NU will bear the burden
of justifying "any direct assignments of costs and
support[ing] any arguments that reliability is degraded by a
particular firm transmission service. No presumption is
____________________
18 The Commission generally has adhered to rolled in
pricing, but has never precluded particularized cost
allocations to specific customers where appropriate. See
___
Utah Power & Light Co., 45 F.E.R.C. 61,095, at 61,291 n.163
______________________
(1988); Public Service Co. of Indiana, 51 F.E.R.C. 61,367,
_____________________________
at 62,203 (1990).
-47-
created by NU's `but for' criterion that firm wheeling
customers always cause the need for upgrades." Id. at 61,207
___
(quoting 56 F.E.R.C. at 62031). The Commission also allowed
that any reliance by NU upon the "but for" test may be
challenged in future actions. The Commission sufficiently
explained and justified the principles that will guide its
transmission upgrade pricing.
E. Opportunity Cost Pricing.
E. Opportunity Cost Pricing.
As has already been discussed, the Commission found
it necessary to impose a number of conditions on the proposed
NU-PSNH merger to mitigate the merged company's market power
in the markets for transmission and short-term bulk power.
58 F.E.R.C. at 61,195. Specifically, the Commission held
that NU must provide firm transmission service out of
existing capacity for any utility, subject only to a
reservation of sufficient capacity to maintain reliable
service to its native load customers and to honor existing
contractual obligations. NU was prohibited, however, from
denying a request for firm transmission service by reserving
capacity for non-firm transactions that would enable it to
provide more economical service to its native load customers.
56 F.E.R.C. at 62,014-21; 58 F.E.R.C. at 61,196-200. FERC
also held that NU must build additional transmission
facilities as needed to provide transmission where
insufficient capacity exists. 56 F.E.R.C. at 62,021-24; 58
-48-
F.E.R.C. at 61,204-10. The Commission found that these and
other conditions would "adequately mitigate" the merger's
anticompetitive effects. 58 F.E.R.C. at 61,213.
On rehearing, NU and the States of Connecticut and
New Hampshire argued that the Commission should address the
issue of firm transmission pricing because, in Opinion No.
364, FERC had established principles governing the related
issue of firm transmission priority which made NU's ability
to purchase inexpensive power (which would lower its cost of
serving its native load customers) subordinate to its
obligation to provide firm transmission for third parties.
58 F.E.R.C. at 61,201-02. The Commission agreed, but
declined to approve "opportunity cost pricing"19 outside
the context of a specific tariff proposal. Instead, the
Commission announced three "basic goals" to guide its future
decisions on the pricing of firm transmission service on the
merged company's existing capacity, and left the door open to
NU to propose a tariff based on opportunity costs or any
____________________
19 As the Commission explained, opportunity costs
are the revenues lost or costs incurred
by a utility in providing third-party
transmission service when transmission
capacity is insufficient to satisfy both
a third-party wheeling request and the
utility's own use. For example,
opportunity costs might include the
revenues lost or costs incurred because a
utility must reduce its own off-system
purchases or sales in order to overcome a
constraint on the [transmission] grid.
58 F.E.R.C. at 61,200-201.
-49-
other methodology that would meet the three goals. The
Commission explained its decision as follows:
We are now confronted with the need to
provide NU with enough specificity
regarding what it will be allowed to
propose for the pricing of future third-
party wheeling service, so that the
company can decide whether to proceed
with the merger. We also cannot ignore
the need to act as expeditiously as
possible given the commercial realities
and time pressures presented in corporate
matters subject to our jurisdiction, and
in particular the need to resolve a
bankruptcy situation. At the same time
we are confronted with the need to ensure
an adequate record on pricing issues and
to afford all parties an adequate
opportunity to voice their objections.
Balancing these respective needs, we
conclude that the best course is to
provide guidance on pricing issues, but
to defer specific pricing issues to the
compliance phase of this proceeding, or
to subsequent cases where the Commission
may consider specific proposals from NU
in a concrete, factual setting and with a
more developed record.
. . . .
First, the native load customers of the
_________________________________________
utility providing transmission service
_________________________________________
should be held harmless. Second,
_________________________________________
transmission customers should be charged
_________________________________________
the lowest reasonable cost-based rate for
_________________________________________
third-party transmission service. Third,
_________________________________________
the pricing should prevent the collection
_________________________________________
of monopoly rents by the transmission
_________________________________________
owner and promote efficient transmission
_________________________________________
decisions. In ruling on specific
_________
proposed rates, we will balance these
three goals in light of the facts and
circumstances presented at that time.
58 F.E.R.C. at 61,203 (emphasis added) (footnotes omitted).
FERC was careful to point out that it endorsed
opportunity cost pricing only insofar as NU could show that
-50-
it could "propose rates which include legitimate, verifiable
opportunity costs." Id. The Commission warned NU that any
___
such proposal would be carefully scrutinized and would be
subject to challenge. Id. at 61,203-04. Specifically, FERC
___
stated that NU would have to address the following issues
should it seek recovery of opportunity costs:
(1) whether opportunity costs should be
capped by incremental expansion costs or
any other cap; (2) whether current
wheeling and wholesale requirements
customers should be treated differently
from future wheeling and wholesale
requirements customers, e.g., by
____
receiving "grandfather" rights to
embedded cost rates for the amount of
transmission capacity they already use;
(3) how NU will identify those customers
responsible for growth on its system and
what particular new facilities are
necessary to accommodate that growth; (4)
whether and how third parties should be
protected from uncertainty regarding
fluctuations in opportunity costs; (5)
how the proposed rates will prevent the
collection of monopoly rents; and (6) how
the proposed opportunity costs will be
verified.
Id. The Commission expressly postponed consideration of
___
whether opportunity cost pricing would be inconsistent with
nondiscriminatory pricing and nondiscriminatory terms and
conditions of service until those issues were raised in a
concrete factual context. Id. at 61,204, n.118.
___
Petitioners claim that FERC's decision amounted to
an arbitrary endorsement of opportunity cost pricing that was
not supported by evidence in the record, was inherently
-51-
discriminatory, and contrary to FERC's regulation of natural
gas pipelines. Petitioners' underlying concern seems to be
that when the issue arises next in the context of the
Commission's review of NU's compliance tariff, FERC will
simply approve the tariff and dismiss petitioners' objections
on the ground that opportunity cost pricing principles had
already been endorsed by the Commission. Although we
understand petitioners' concerns, we believe that they are
misplaced and that FERC did not go as far as petitioners fear
in endorsing opportunity cost pricing.
Petitioners will have an opportunity to contest any
compliance tariff proposed by NU. The Commission itself laid
out a number of issues which NU would have to address were it
to propose a tariff based on opportunity costs. 58 F.E.R.C.
at 61,203. Only after carefully considering the competing
interests of providing guidance to NU as to what kinds of
tariffs it would consider, and the need to endorse specific
methodologies only on the basis of a fully-developed record,
did the Commission decide to outline broad pricing goals
which would allow for a number of pricing schemes including
opportunity cost pricing. Id. It was squarely within the
___
Commission's power to defer consideration of petitioners'
assertions until after NU filed its compliance tariff. As
the Supreme Court has held, "[a]n agency enjoys broad
discretion in determining how to handle related yet discrete
-52-
issues in terms of procedures, and priorities." Mobil
_____
Exploration & Producing Southeast, Inc. v. United
_______________________________________________ ______
Distribution Cos., 111 S. Ct. 615, 627 (1991) (citations
__________________
omitted). Petitioners argue that deferral was inappropriate
in this case because their objections went "to the heart of
the public interest determination to be made." Maryland
________
People's Counsel v. FERC, 761 F.2d 768, 778 (D.C. Cir. 1985).
________________ ____
We disagree.
The Commission announced pricing goals and
conditions that it determined would keep the merger
consistent with the public interest, and would result in
"just and reasonable rates." Until NU proposed a specific
tariff regime, the Commission did not have a developed record
to evaluate on the merits. The Commission remains free to,
and we expect it will, invite objections to NU's compliance
tariff from affected parties, and will reject any proposed
tariff that conflicts with its statutory responsibility to
approve rates that are "just and reasonable," and to approve
mergers that are, as conditioned, "consistent with the public
interest."
F. Environmental Impact Statement.
F. Environmental Impact Statement.
The City of Holyoke Gas & Electric Department
("HG&E") alleges that FERC's refusal to examine the potential
environmental impacts of its approval of the merger was
arbitrary and capricious. We disagree.
-53-
The National Environmental Policy Act of 1969, 42
U.S.C. 4321 et seq., ("NEPA") requires federal agencies to
__ ____
consider the potential environmental effects of a proposed
major federal action that may significantly affect the
quality of the human environment. Section 102(2)(C) of NEPA
states:
The Congress authorizes and directs that,
to the fullest extent possible: . . .
(2) all agencies of the Federal
Government shall
. . . .
(C) include in every recommendation or
report on proposals for legislation and
other major Federal actions significantly
affecting the quality of the human
environment, a detailed statement by the
responsible official on
(i) the environmental impact of the
proposed action,
(ii) any adverse environmental effects
which cannot be avoided should the
proposal be implemented,
(iii) alternatives to the proposed
action,
(iv) the relationship between local
short-term uses of man's environment and
the maintenance and enhancement of long-
term productivity, and
(v) any irreversible and irretrievable
commitments of resources which would be
involved in the proposed action should it
be implemented.
42 U.S.C. 4332(2)(C). Agencies were authorized, under
guidelines promulgated by the Council on Environmental
Quality ("CEQ"), to create categorical exclusions for actions
which do not individually or cumulatively have a significant
effect on the human environment. 40 C.F.R. 1507.3,
1508.4. FERC adopted such a category of exclusions,
-54-
including one for merger approvals such as the one at issue
in this case. That regulation states in pertinent part:
(a) General rule. Except as stated in
paragraph (b) of this section, neither an
environmental assessment nor an
environmental impact statement will be
prepared for the following projects or
actions:
. . . .
(16) Approval of actions under sections
4(b), 203, 204, 301, 304, and 305 of the
Federal Power Act relating to issuance
and purchase of securities, acquisition
or disposition of property, merger,
interlocking directorates, jurisdictional
determinations and accounting orders.
18 C.F.R. 380.4(a)(16). An agency need not issue a
"finding of no significant impact" in cases concerning
matters that fall into a categorical exclusion. 40 C.F.R.
1501.3, 1501.4, 1508.13.
CEQ guidelines also required agencies adopting
categorical exclusions to "provide for extraordinary
circumstances in which a normally excluded action may have a
significant environmental effect." 40 C.F.R. 1508.4. FERC
made such provision in its regulations:
(b) Exceptions to categorical
exclusions. (1) In accordance with 40 CFR
1508.4, the Commission and its staff will
independently evaluate environmental
information supplied in an application
and in comments by the public. Where
circumstances indicate that an action may
be a major Federal action significantly
affecting the quality of the human
environment, the Commission:
(i) May require an environmental report
or other additional environmental
information, and
-55-
(ii) Will prepare an environmental
assessment or an environmental impact
statement.
(2) Such circumstances may exist when
the action may have an effect on one of
the following:
(i) Indian lands;
(ii) Wilderness areas;
(iii) Wild and scenic rivers;
(iv) Wetlands;
(v) Units of the National Park System,
National Refuges, or National Fish
Hatcheries;
(vi) Anadromous fish or endangered
species; or
(vii) Where the environmental effects
are uncertain.
However, the existence of one or more of
the above will not automatically require
the submission of an environmental report
or the preparation of an environmental
assessment or an environmental impact
statement.
18 C.F.R. 380.4(b).20 HG&E argues that the NU-PSNH
merger might "alter mixes of generation in New England by
constraining the locations for new plants." HG&E points to
the language of 18 C.F.R. 380.4(b)(1)(ii) in support of its
position that FERC was compelled, at the least, to explain
why it was not obliged to perform the analysis of
environmental effects required by NEPA. HG&E also cites
FERC's decision in Southern California Edison Co., 49
__________________________________
F.E.R.C. 61,091 (1989) (holding that 380.4(b) was
triggered when approved merger would result in the dumping of
____________________
20 HG&E does not challenge the validity of any of the
applicable regulations cited above.
-56-
hundreds of tons of additional air contaminants into the most
polluted air in the United States).
There was no evidence in the record of identifiable
environmental harms that would likely result from the NU-PSNH
merger. The fact that new generating facilities might wind
up in different locations than would have been the case in
the absence of the merger does not approach in significance,
because its significance is not quantifiable, the known
effects of the merger between Southern California Edison
Company and San Diego Gas & Electric Company. Thus, the
factual situation presented in Southern California Edison is
__________________________
completely distinguishable from that of this case.
The character and location of the future
environmental effects of the NU-PSNH merger are so uncertain
that no meaningful environmental review would have been
possible, even had FERC made the effort. Here, FERC was not
approving a regional development plan. It was merely
approving a merger between utility companies, albeit a merger
involving two of the largest utilities in New England.
Energy demand may increase in New England over the following
decades, and the fact of the merger may influence how those
needs are met. Nevertheless, any attempt by FERC to prepare
an EIS would have involved little more than spinning out
multiple hypothetical development forecasts, with multiple
options for the type, amount and location of future
-57-
generating facilities. See Kleppe v. Sierra Club, 427 U.S.
___ ______ ___________
390, 401-2 (1976). Once concrete plans have been established
for the construction of transmission or generating
facilities, those proposals will be reviewed under NEPA or
the applicable state environmental review procedures.
FERC was justified in deciding that neither an
environmental assessment nor an environmental impact
statement was required prior to approving the NU-PSNH merger.
G. HG&E's "Unique" Harm.
G. HG&E's "Unique" Harm.
HG&E also contends that because it relied on PSNH
New Hampshire Corridor facilities for over one-third of its
electricity supply, it would be "uniquely threatened" by NU
in head-to-head competition for large, industrial loads. To
protect itself, HG&E requested that FERC either:
(1) disapprove the merger; (2) require the divestiture or
restructuring of NU's retail business in Holyoke (HWP); or
(3) grant HG&E grandfather rights to PSNH New Hampshire
Corridor transmission. The ALJ rejected the "drastic remedy"
of divestiture of HWP, stating that it was "wholly uncalled-
for by anything in this record," and holding that HG&E would
be adequately protected by the conditions to the merger
designed to address the anticompetitive effects on
transmission dependent utilities ("TDUs"). 53 F.E.R.C. at
65,232.
As the ALJ described,
-58-
[t]he Transmission Dependent Utilities
(TDUs) are "entirely dependent on NU or
PSNH for their bulk power transmission
needs." These companies (most of which
involve municipal ownership) are not big
enough to own or construct sufficient
generation to meet their loads. As their
brief states, they "are physically unable
to engage in any bulk power transaction
___
without using the NU or PSNH transmission
systems. Absent economic access to NU's
or PSNH's transmission facilities, the
TDU cannot survive as an independent
entity." The TDUs compete with NU and
PSNH in the wholesale bulk power market;
each TDU, like NU/PSNH, seeks out
attractive sources of supply. TDUs thus
"are in the uneasy position of having
their only source of essential
transmission service in the hands of
their principal competitor." These small
companies, uniquely vulnerable to
possible anticompetitive conduct, are
entitled to some measure of protective
assurance regarding NU/PSNH's post merger
conduct.
53 F.E.R.C. at 65,232-33. The ALJ held that "[a]ll rates,
terms and conditions of NU/PSNH transmission service to the
TDUs in effect on this date shall . . . be maintained after
the merger, unless and until changes are either agreed upon
by the merged company and the TDUs, or authorized by the
Commission." 53 F.E.R.C. at 65,233. In short, while finding
that TDUs were "uniquely vulnerable" to anticompetitive
conduct by NU-PSNH, the ALJ found that HG&E had not shown
that it was entitled to protections beyond those given to
TDUs generally. The Commission agreed, 56 F.E.R.C. at
62,049, but bolstered the protection for TDUs ordered by the
-59-
ALJ by imposing the additional condition that NU establish a
special tariff for TDUs. Id. at 62,050.
___
HG&E points to no evidence in the record to
indicate that it faced anticompetitive consequences of the
merger sufficiently different in character or magnitude to
warrant greater protections than those given to other TDUs.
We therefore affirm the Commission's actions to protect TDUs,
which were adequately explained and supported in the record.
H. Modifications to the Filed Rate Schedules.
H. Modifications to the Filed Rate Schedules.
The Commission analyzed the Seabrook Power Contract
and Capacity Interchange Agreements filed by NUSCO under the
"just and reasonable" standard of 206 of the FPA,21 and
ordered the following modifications to the rate schedules:
(1) deletion of the automatically adjusting rate of return on
equity provision in the Seabrook Power Contract; (2)
reduction of the rate of return on equity in the Seabrook
Power Contract from 13.75 percent to 12.53 percent;22 (3)
____________________
21 Section 206(a) of the FPA, 16 U.S.C. 824(e)(a)
provides:
Whenever the Commission, after hearing
had upon its own motion or upon
complaint, shall find that any rate . . .
collected by any public utility . . . is
unjust, unreasonable, unduly
discriminatory or preferential, the
Commission shall determine the just and
reasonable rate . . . to be thereafter
observed and in force, and shall fix the
same by order.
22 NUSCO did not appeal this modification.
-60-
North Atlantic's decommissioning expenses under the Seabrook
Power Contract and any subsequent changes thereto were made
subject to review by the Commission; (4) reduction in the
rate of return on equity specified in the two Capacity
Interchange Agreements from 14.50 percent to 13.17 percent
for the period from July 27, 1990 through August 8, 1991, and
thereafter to 12.93 percent; and (5) the Seabrook Power
Contract could be modified by the Commission in the future
under the "just and reasonable" standard of 206 of the FPA,
rather than the "public interest" standard agreed to by the
parties. 56 F.E.R.C. at 61,993; 58 F.E.R.C. at 61,185.
Each of the three parties to the Seabrook Power
Contract ("SPC"), NU, PSNH and the State of New Hampshire,
waived its right to file a complaint under 206 regarding
the rates contained in the agreement. Section 12 of the SPC
also provided that:
[E]ach [party] further agrees that in any
proceeding by the FERC under Section 206
the FERC shall not change the rate
charged under this Agreement unless such
rate is found to be contrary to the
public interest.
NU argues that the Commission violated the "Mobile-Sierra"
_____________
doctrine23 when it modified the SPC in disregard of the
intent of the parties.
____________________
23 This doctrine is based on the companion cases of United
______
Gas Pipe Line Co. v. Mobile Gas Service Co., 350 U.S. 332
__________________ _______________________
(1956) and FPC v. Sierra Pacific Power Co., 350 U.S. 348
___ __________________________
(1956).
-61-
Under the Mobile-Sierra doctrine, the Commission
_____________
must respect certain private contract rights in the exercise
of its regulatory powers. Parties to a contract may: (1)
waive their rights to file a complaint challenging that
contract, and (2) restrict the power of the Commission to
impose rate changes under 206 to cases in which it finds
the rates contrary to the public interest a more difficult
standard for the Commission to meet than the statutory
"unjust and unreasonable" standard of 206. See Papago
___ ______
Tribal Utility Authority v. FERC, 723 F.2d 950, 953 (D.C.
________________________ ____
Cir. 1983), cert. denied, 467 U.S. 1241 (1984). In Papago,
____________ ______
the court held that, regardless of the parties' intent, the
Commission retained, in any event,
the indefeasible right . . . under 206
to replace rates that are contrary to the
public interest, "as 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, 723 F.2d at 953, (quoting Sierra, 350 U.S. at 355).
______ ______
The court went on to note that "unduly discriminatory" in
this context "apparently means unduly discriminatory or
preferential to the detriment of purchasers who are not
parties to the contract." Papago, 723 F.2d at 953 n.4.
______
In this case, seemingly for the first time, the
Commission held that it also had the
-62-
authority under the public interest
standard to modify a contract where: it
__
may be unjust, unreasonable, unduly
________________________________
discriminatory or preferential to the
detriment of purchasers that are not
parties to the contract; it is not the
______________
result of arm's length bargaining; or it
_________________________________________
reflects circumstances where the seller
_________________________________________
has exercised market power over the
_________________________________________
purchaser.
_________
50 F.E.R.C. at 61,839 (emphasis added). The ALJ interpreted
that holding as follows:
The Commission made clear that in the
particular circumstances surrounding the
Seabrook contract, it retains power
through the "public interest" language
to make modifications under the
traditional just and reasonable and
nondiscrimination standards.
53 F.E.R.C. at 65,235. The standard established by the
Commission, and subsequently applied by the ALJ, conflates
the "just and reasonable" and "public interest" standards,
thereby circumventing the Mobile-Sierra doctrine. The
_____________
distinction between the "just and reasonable" and "public
interest" standards loses its meaning entirely if the
Commission may modify a contract under the public interest
standard where it finds the contract "may be unjust [or]
unreasonable." The parties' express intent was to avoid
review of rate schedules under the just and reasonable
standard. Mobile-Sierra protects their right to do so,
_____________
leaving the Commission with the power to modify rates only
when required by the public interest.
-63-
The Commission found that the SPC might unduly
discriminate against entities not parties to the contract,
and that there was no genuine arm's-length bargaining because
NU and PSNH negotiated the agreement at a time when they knew
they were about to merge and have identical interests. The
Commission held that, in this context, it could "carefully
scrutinize the rates, terms and conditions of the contract"
to determine if they were just. Id.
___
The Commission's explanation for employing a just
and reasonable standard seems to us inadequate. To the
extent the Commission is relying on NU's prospective
ownership of PSNH, it is unclear why the Commission should be
concerned about protecting PSNH from a perceived
disadvantageous arrangement imposed by its prospective owner
since any disadvantage visited on the prospective subsidiary
will be borne by its owner. If NU chooses to allocate risks
among its operating subsidiaries and one of its subsidiaries
is disfavored in this calculation, there would seem to be
little justification for the Commission stepping in on behalf
of the disfavored subsidiary absent some threat to the public
interest.
As for the seller's market power, reliance on this
factor threatens to erode the Mobile-Sierra doctrine so
_____________
substantially that a fuller explanation from the Commission
is required before proceeding down this route. After all,
-64-
some measure of market 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 element 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 dominant seller.
The most attractive case for affording additional
protection, despite the presence of a contract, is where the
protection is intended to safeguard the interests of third
parties, notably the buyer's customers. The Mobile-Sierra
_____________
doctrine itself allows for intervention by FERC where it is
shown that the interests of third parties are threatened.
Mobile, 350 U.S. at 344-45; Sierra, 350 U.S. at 355.
______ ______
However, the standard to be applied, as formulated by the
Supreme Court, is the protection of outside parties from
"undu[e] discriminat[ion]" or imposition of an "excessive
burden." Sierra, 350 U.S. at 355. If there is some reason
______
for departing from this public interest standard as framed by
the Supreme Court, the Commission has not supplied it.
We assume, without deciding, that: (1) FERC is
correct in its assertion that the State of New Hampshire did
not adequately represent the interests of non-parties to the
contract, and that, therefore, the SPC may have unduly
discriminated against those non-parties; and (2) the alleged
-65-
lack of arms'-length bargaining among NU, PSNH and the State
of New Hampshire gave the Commission the right to evaluate
the SPC. We hold, however, that the Commission was bound to
follow the Mobile-Sierra doctrine as explicated by Papago,
_____________ ______
and therefore should have evaluated the SPC under the public
interest standard, not the just and reasonable standard.
We therefore remand this issue for reconsideration
______
by FERC under the public interest standard.24
IV. SUMMARY.
IV. SUMMARY.
We affirm the Commission's orders in all respects
We affirm the Commission's orders in all respects
___________________________________________________
with the exception of its modifications of the Seabrook Power
with the exception of its modifications of the Seabrook Power
_____________________________________________________________
Contract filed with the merger proposal which we remand for
Contract filed with the merger proposal which we remand for
_____________________________________________________________
consideration under the public interest standard.
UNITED STATES COURT OF APPEALS
consideration under the public interest standard.
_________________________________________________
FOR THE FIRST CIRCUIT
____________________
No. 92-1165
NORTHEAST UTILITIES SERVICE COMPANY,
Petitioner,
____________________
24 We have considered, but find unpersuasive, NU's argument
that FERC committed error when it disrupted the bankruptcy
settlement by modifying the Capacity Interchange Agreements.
-66-
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1261
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1262
MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC COMPANY, ET AL.,
-67-
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
-68-
No. 92-1263
TOWNS OF CONCORD, NORWOOD AND WELLESLEY, MASSACHUSETTS, ET
AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
______________________
No. 92-1264
CENTRAL MAINE POWER CO., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
-69-
Respondents.
____________________
No. 92-1316
CITY OF HOLYOKE GAS & ELECTRIC DEPARTMENT,
Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
-70-
No. 92-1328
CANAL ELECTRIC COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
No. 92-1336
THE AMERICAN PAPER INSTITUTE, INC., ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
-71-
Respondents.
__________________
No. 92-1340
BOSTON EDISON COMPANY, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
-72-
No. 92-1510
VERMONT DEPARTMENT OF PUBLIC SERVICE, ET AL.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,
Respondents.
____________________
PETITIONS FOR REVIEW OF ORDERS OF
THE FEDERAL ENERGY REGULATORY COMMISSION
____________________
Before
Torruella, Circuit Judge,
_____________
Bownes, Senior Circuit Judge,
____________________
and Boudin, Circuit Judge.
_____________
____________________
-73-
Gerald M. Amero, with whom Catherine R. Connors and
________________ _____________________
Pierce, Atwood, Scribner, Allen, Smith & Lancaster and Arthur
__________________________________________________ ______
W. Adelberg, and Anne M. Pare, were on brief, for petitioner
____________ ____________
Central Maine Power Company.
Harvey L. Reiter, with whom William I. Harkaway,
__________________ _____________________
Kathleen L. Mazure, and McCarthy, Sweeney & Harkaway, were on
__________________ ____________________________
brief, for petitioners Vermont Department of Public Service,
Vermont Public Service Board, Rhode Island Attorney General,
Rhode Island Division of Public Utilities and Carriers, Maine
Public Utilities Commission and Massachusetts Department of
Public Utilities.
George H. Williams, Jr., with whom Morley Caskin, was on
_______________________ _____________
brief, for petitioners Canal Electric Company, Commonwealth
Electric Company and Cambridge Electric Light Company.
J.A. Bouknight, Jr., with whom David B. Raskin, David L.
___________________ _______________ ________
Schwartz, and Newman & Holtzinger, P.C., and Robert P. Wax,
________ __________________________ _____________
General Counsel, were on brief, for petitioner Northeast
Utilities Service Company.
Randolph Elliott, with whom William S. Scherman, General
________________ ___________________
Counsel, Jerome M. Feit, Solicitor, Katherine Waldbauer, and
______________ ____________________
Eric Christensen, were on brief, for respondent Federal
_________________
Energy Regulatory Commission.
____________________
-74-
Alan J. Roth, Scott H. Strauss, William S. Huang,
______________ _________________ ___________________
Spiegel & McDiarmid, Nicholas J. Scobbo, Ferriter, Scobbo,
____________________ ___________________ __________________
Sikora, Caruso & Rodophele, Wallace L. Duncan and Duncan,
____________________________ __________________ _______
Weinberg, Miller & Pembroke, on brief for petitioner
_______________________________
Massachusetts Municipal Wholesale Electric Company.
Charles F. Wheatley, Jr., Peter A. Goldsmith and
___________________________ _____________________
Wheatley & Ranquist, on brief for petitioners Towns of
_____________________
Concord, Norwood &
David J. Bardin, Noreen M. Lavan, Eugene J. Meitgher,
________________ ________________ ___________________
Steven R. Miles, and Arent, Fox, Kintner, Plotkin & Kahn, on
________________ ___________________________________
brief for petitioner City of Holyoke Gas & Electric
Department.
James T. McManus, Michael E. Small, Wright & Talisman,
_________________ ________________ __________________
P.C. and Frederick S. Samp, General Counsel, on brief for
____ __________________
petitioner Bangor Hydro-Electric Co.
Steven Halpern on brief for petitioner Massachusetts
_______________
Department of Public Utilities.
Alan H. Richardson on brief for petitioner American
___________________
Public Power Association.
Mitchell Tennenbaum, Senior Staff Attorney, on brief for
___________________
petitioner Maine Public Utilities Commission.
Edward G. Bohlen, Assistant Attorney General, and Scott
_________________ _____
Harshbarger, Attorney General, on brief for petitioner
___________
Massachusetts Attorney General.
-75-
Julio Mazzoli, Special Assistant, and James E. O'Neil,
_____________ ________________
Attorney General, on brief for petitioner Rhode Island
Division of Public Utilities and Carriers and Rhode Island
Office of Attorney General.
Robert F. Shapiro, Lynn N. Hargis and Chadbourne &
___________________ ________________ _____________
Parke, on brief for petitioner The American Paper Institute,
_____
Inc.
Wayne R. Frigard on brief for petitioner Boston Edison
_________________
Company.
George M. Knapp, Roger B. Wagner, David A. Fazzone, John
_______________ _______________ ________________ ____
F. Smitka, and McDermott, Will & Emery, on brief for
__________ __________________________
petitioner Montaup Electric Company.
Robert S. Golden, Jr., Assistant Attorney General,
________________________
Richard Blumenthal, Attorney General, and Howard E. Shapiro,
__________________ __________________
Special Assistant Attorney General, and Van Ness, Feldman &
____________________
Curtis, on brief for intervenor Connecticut Department of
______
Public Utility Control.
Kenneth M. Simon, Larry F. Eisenstat, and Dickstein,
_________________ ___________________ __________
Shapiro & Morin, on brief for intervenor Masspower.
_______________
Harold T. Judd, Senior Assistant Attorney General, John
______________ ____
P. Arnold, Attorney General, Glen L. Ortman, John S. Moot,
_________ _______________ _____________
and Verner, Liipfert, Bernhard, McPherson and Hand, Chrtd.,
________________________________________________________
on brief for intervenors The State of New Hampshire and New
Hampshire Public Utilities Commission.
-76-
Kenneth D. Brown on brief for intervenor Public Service
________________
Electric and Gas Company.
Edward Berlin, Kenneth G. Jaffee, Martin W. Gitlin, and
_____________ __________________ ________________
Swidler & Berlin, and Cynthia A. Arcate, on brief for
__________________ ___________________
intervenor New England Power Company.
____________________
____________________
-77-
BOWNES, Senior Circuit Judge. These petitions for
BOWNES, Senior Circuit Judge.
____________________
review challenge the Federal Energy Regulatory Commission's
("FERC" or "the Commission") decision to conditionally
approve the merger of Northeast Utilities ("NU") and the
Public Service Company of New Hampshire ("PSNH"). Certain
joint petitioners and intervenors25 contend that FERC erred
when it: (1) held that the benefits of the merger outweighed
its costs; and (2) failed to condition the merger on NU's
waiver of single participant status ("SPS") in the New
England Power Pool ("NEPOOL"). A group of public and private
electric utilities, state commissions, state agencies,
independent power producers, cogenerators and electric end
users26 claim that FERC erred when it: (1) allowed the
consummation of the merger upon the filing of, rather than
upon approval of, a transmission tariff; (2) adopted
____________________
25 Joint petitioners and intervenors include: Central
Maine Power Company; Boston Edison Company; Bangor Hydro-
Electric Company; the Towns of Concord, Norwood and
Wellesley, Massachusetts; Maine Public Utilities Commission;
Massachusetts Department of Public Utilities; Vermont
Department of Public Service; Vermont Public Service Board;
Rhode Island Attorney General; Rhode Island Division of
Public Utilities and Carriers; Massachusetts Municipal
Wholesale Electric Company; and, City of Holyoke Gas &
Electric Department.
26 This group of petitioners and intervenors includes the
joint petitioners and intervenors listed in n.1, supra (with
_____
the exception of Central Maine Power Company), and: The
American Paper Institute, Inc.; American Public Power
Association; Canal Electric Company; Commonwealth Electric
Company; Cambridge Electric Light Company; Massachusetts
Attorney General; and, Montaup Electric Company.
-6-
transmission access conditions that gave "native load"
customers a priority over other customers; and (3) endorsed
"opportunity cost" pricing principles. The Holyoke Gas &
Electric Department ("Holyoke") argues that FERC erred when
it failed to: (1) conduct an appropriate review of the
environmental impact of the proposed merger; and, (2) make
findings regarding allegations of anticompetitive
consequences of the merger that were unique to Holyoke.
Finally, Northeast Utilities Service Company ("NUSCO")
asserts that FERC's orders changing the terms of three rate
schedules filed in conjunction with its merger application
were arbitrary, capricious, and an abuse of discretion.
For the reasons which follow, we reject
petitioners' arguments and affirm the Commission's decisions
with the exception of the Commission's decision to change the
terms of the Seabrook Power Contract which we remand for
consideration under the "public interest" standard.
I. BACKGROUND.
I. BACKGROUND.
A. Parties to the Approved Merger.
A. Parties to the Approved Merger.
Northeast Utilities ("NU") is a registered holding
company under the Public Utility Holding Company Act of 1935
(PUHCA). 15 U.S.C. 79 et seq. (1988). Northeast Utilities
__ ____
Service Company ("NUSCO") is a service company subsidiary of
-7-
NU and supplies centralized administrative and support
services to NU's operating companies.27
Prior to the merger, Public Service Company of New
Hampshire ("PSNH") was the largest electric utility in New
Hampshire, supplying electric service to some 375,000 retail
customers, approximately three-quarters of the State's
population, in every county in the State. PSNH also provided
wholesale service to the New Hampshire Electric Cooperative,
three New Hampshire municipalities, and one investor-owned
utility, Vermont Electric Power Company. PSNH had the
largest ownership share, approximately 35.6 percent, of
Seabrook Unit No. 1, a nuclear generating facility declared
to be available for service on June 30, 1990.
B. The Merger Proposal.
B. The Merger Proposal.
On January 28, 1988, PSNH filed a voluntary
petition in the United States Bankruptcy Court for the
District of New Hampshire for reorganization under Chapter 11
of the Bankruptcy Code. 11 U.S.C. 1101 et seq. (1988).
__ ____
PSNH alleged that it was unable to recover in its rates the
outlays it had made in the construction and operation of the
Seabrook nuclear power plant. On April 20, 1990, after
____________________
27 NU's operating companies are Connecticut Light and Power
Company (CL&P), Western Massachusetts Electric Company,
Holyoke Water Power Company (HWP) and HWP's wholly-owned
subsidiary, Holyoke Power and Electric Company (HP&E). These
companies are wholly-owned subsidiaries of NU and are public
utilities supplying retail and wholesale electric service in
Connecticut and Massachusetts.
-8-
sifting through several competing reorganization plans, the
bankruptcy court approved NU's proposal to merge with PSNH
and to acquire and operate all of PSNH's power facilities.
See In re Public Service Co. of New Hampshire, 963 F.2d 469,
___ _________________________________________
470 (1st Cir.), cert. denied, Rochman v. Northeast Utilities
_____ ______ _______ ___________________
Service Co., 113 S. Ct. 304 (1992).
___________
NU's proposal contained a two-step process: first,
PSNH would emerge from bankruptcy as a stand-alone company
bound to a merger agreement with NU; second, PSNH would be
merged with an NU subsidiary created solely for the
acquisition (NU Acquisition Corporation), with PSNH emerging
as the surviving entity. After the merger, PSNH would be a
wholly-owned subsidiary of NU and would transfer its
ownership interest in Seabrook to a newly formed NU
subsidiary, North Atlantic Energy Corporation ("North
Atlantic"). The second step would occur only after all
necessary approvals were received from the relevant
regulatory agencies.
C. Procedural History.
C. Procedural History.
On January 8, 1990, NUSCO, on behalf of NU and NU's
operating subsidiaries, filed an application with FERC under
section 203 of the Federal Power Act ("FPA"), 16 U.S.C.
824b (1988), seeking authorization for PSNH to dispose of all
of its jurisdictional facilities and concurrently to merge
with, and become a subsidiary of, NU. In connection with
-9-
this application, NUSCO filed four rate schedules with FERC
pursuant to 205 of the FPA: the Seabrook Power
Contract,28 the Sharing Agreement29 and two Capacity
Interchange Agreements.30
The Commission consolidated consideration of the
merger application and rate schedules, accepted the rate
schedules for filing and suspended their effectiveness, and
set for hearings before an administrative law judge ("ALJ")
the questions of whether the Commission should grant the
203 application and approve the rate schedules. See
___
Northeast Utilities Service Co., 50 F.E.R.C. 61,266, reh'g
_______________________________ _____
granted in part and denied in part, 51 F.E.R.C. 61,177
_____________________________________
(1990). In its order, the Commission directed the parties to
____________________
28 The Seabrook Power Contract is a life-of-the-unit power
sales agreement between PSNH and North Atlantic entered into
concurrently with NU's acquisition of PSNH and the transfer
of PSNH's share of Seabrook to North Atlantic. Under the
contract, PSNH agreed to purchase North Atlantic's entire
share of Seabrook capacity and energy, according to a cost-
of-service formula rate. The contract was intended to ensure
that North Atlantic would recover all of its costs from PSNH
regardless of whether or not Seabrook actually operated.
29 The Sharing Agreement allocates the benefits and obliga-
tions from the integrated operation of PSNH and the current
NU system, as well as the joint planning and operations of
these systems. This agreement established a formula for
sharing the expected post-merger benefits that would accrue
to NU and PSNH operating companies as a result of operating
efficiencies and the ability to take single participant
status under the NEPOOL agreement.
30 The two Capacity Interchange Agreements provide for the
sale and purchase of energy between PSNH and Connecticut
Light & Power Company (CL&P) over a ten-year term.
-10-
address the effect of the proposed merger on NU's market
power and "whether any transmission conditions are necessary
to eliminate any adverse effect of the proposed merger and,
if so, what specific conditions should be imposed." 50
F.E.R.C. at 61,834-35.
On December 20, 1990, the ALJ issued its Initial
Decision approving the 203 application and the rate
schedules with certain modifications and conditions.
Northeast Utilities Service Co., 53 F.E.R.C. 63,020 (1990).
_______________________________
The Commission, in Opinion No. 364, issued on August 9, 1991,
affirmed in part and reversed in part the ALJ's decision,
conditionally approving the 203 application and the rate
schedules. Northeast Utilities Service Co., 56 F.E.R.C.
________________________________
61,269 (1991). On January 29, 1992, after considering
additional filings by the parties and oral argument on
transmission pricing issues, the Commission issued Opinion
No. 364-A, affirming its conditional approval of the 203
application and rate schedules. Northeast Utilities Service
___________________________
Co., 58 F.E.R.C. 61,070 (1992).
___
Petitions for review of Opinions No. 364 and 364-A
were filed in this court and in the District of Columbia
Circuit Court. The Judicial Panel on Multidistrict
Litigation consolidated these petitions for review in this
court, where further petitions for review were filed. 28
U.S.C. 2112(a) (1988). Subsequently, in Opinion No. 364-B,
-11-
the Commission denied a request for rehearing of Opinion No.
364-A. Northeast Utilities Service Co., 59 F.E.R.C. 61,042
_______________________________
(1992). A petition for review of Opinions No. 364-A and 364-
B was filed in this court, where it was consolidated with the
earlier filed petitions. We review the Commission's orders
under the jurisdiction established by 16 U.S.C. 825l.
II. STANDARD OF REVIEW.
II. STANDARD OF REVIEW.
On review, we give great deference to the
Commission's decision. U.S. Dep't of Interior v. FERC, 952
______________________ ____
F.2d 538, 543 (D.C. Cir. 1992). FERC's findings of fact are
reviewed under the "substantial evidence" standard of review.
16 U.S.C. 825l ("The finding of the Commission as to the
facts, if supported by substantial evidence, shall be
conclusive."). Therefore,
[w]e defer to the agency's expertise,
particularly where the statute prescribes
few specific standards for the agency to
follow, so long as its decision is
supported by "substantial evidence" in
the record and reached by "reasoned
decisionmaking," including an examination
of the relevant data and a reasoned
explanation supported by a stated
connection between the facts found and
the choice made.
Electricity Consumers Resource Council v. FERC, 747 F.2d
________________________________________ ____
1511, 1513 (D.C. Cir. 1984). "Pure" legal errors require no
deference to agency expertise, and are reviewed de novo.
__ ____
Questions involving an interpretation of the FPA involve a de
__
novo determination by the court of Congressional intent; if
____
-12-
that intent is ambiguous, FERC's conclusion will only be
rejected if it is unreasonable. Chevron USA v. Natural
___________ _______
Resources Defense Council, 467 U.S. 837, 842-45 (1984);
___________________________
Boston Edison Co. v. FERC, 856 F.2d 361, 363 (1st Cir. 1988).
_________________ ____
III. DISCUSSION.
III. DISCUSSION.
A. Conditional Approval of the Merger.
A. Conditional Approval of the Merger.
1. Background.
__________
In reaching his decision to approve the NU-PSNH
merger, the ALJ found that the merger would produce
significant benefits. Specifically, he found that: (1) PSNH
would emerge from bankruptcy as a viable utility on a solid
financial footing, 53 F.E.R.C. at 65,211; (2) improved
management techniques and economies of scale would reduce the
operating costs of Seabrook by some $527 million,31 id. at
___
65,212; (3) application of NU operating procedures to PSNH's
fossil steam plants would save $100 million, id. at 65,213;
___
(4) reductions in administrative and general expenses would
save $124 million, id.; (5) NU's record of buying lower-
___
priced coal on the spot market would save $39 million, id.;
___
and (6) the merger would yield $360 million in savings for NU
because of its ability to elect "single participant status"
____________________
31 This, and all other dollar amounts are net present
values unless otherwise noted.
-13-
in the New England Power Pool (NEPOOL), a power pool
comprised of most of the utilities in New England. Id.
___
The ALJ also found that unless several conditions
were imposed, the merger would have short- and long-term
anticompetitive consequences because of the merged company's
increased market power over key transmission facilities in
both the New England region and the Rhode Island and Eastern
Massachusetts submarket ("Eastern REMVEC"). 53 F.E.R.C. at
65,214-19. Under the authority of 203(b) of the FPA, 16
U.S.C. 824b(b), the ALJ approved the merger subject to
several conditions, including the following: (1) the merged
company must offer firm (non-interruptible) transmission
service for a minimum of 30 days and a maximum of 20 years,
53 F.E.R.C. at 65,220-21; (2) non-firm service must be
offered for a one-day minimum term, id. at 65,220; (3) the
___
merger would be consummated concurrently with the filing of a
compliance tariff which fully reflects all of the terms and
conditions set out in the ALJ's Initial Decision, id. at
___
65,221; (4) NU must implement its New Hampshire Corridor
Proposal,32 thereby making available 400 MW of transmission
____________________
32 The New Hampshire Corridor Transmission Proposal allows
New England utilities to purchase long-term transmission
rights from NU-PSNH in order to connect with power sources in
northern New England and Canada. See 53 F.E.R.C. at 65,225.
___
-14-
capacity for wheeling33 by utilities in both northern and
southern New England, id. at 65,225-27; and (5) the merged
___
company's veto power on NEPOOL's Management Committee would
be restricted for the ninety day period immediately following
consummation of the merger, id. at 65,230-31.
___
In Opinion No. 364, the Commission affirmed the
ALJ's finding that the merger, with appropriate conditions,
was consistent with the public interest. 56 F.E.R.C. at
62,011. It held, however, that the $364 million cost-shift
between NU-PSNH and other NEPOOL members should not have been
counted as a benefit of the merger because it simply shifted
costs dollar-for-dollar among the membership without any net
savings.34 56 F.E.R.C. at 61,997. The Commission also
held that, in evaluating the costs and benefits of the
merger, the ALJ correctly attributed the benefits resulting
from the merger to the merger even if those benefits could
have been achieved by other means.35 Id. at 61,994-96.
___
This conclusion was reiterated on rehearing in Opinion No.
364-A. 58 F.E.R.C. at 61,186-87.
____________________
33 "Wheeling" is defined as the "transfer by direct trans-
mission or displacement [of] electric power from one utility
to another over the facilities of an intermediate utility."
Otter Tail Power Co. v. U.S., 410 U.S. 366, 368 (1973).
____________________ ____
34 This issue is discussed in Part III(B), infra.
_____
35 This issue is discussed in Part III(A)(3), infra.
_____
-15-
Petitioners and intervenors argue that FERC erred,
as a matter of law, in holding that the benefits of the
merger outweighed its costs.
-16-
2. The Statutory Standard.
______________________
FERC's authority to consider the merger
applications of utilities is set forth in 203(a) of the
FPA, 16 U.S.C. 824b(a): the Commission "shall approve" a
proposed merger of utility facilities if, "[a]fter notice and
opportunity for hearing, . . . the Commission finds that the
proposed disposition, consolidation, acquisition, or control
will be consistent with the public interest." Id. The
___
Commission has the additional authority to grant approval for
such transactions "upon such terms and conditions as it finds
necessary or appropriate to secure the maintenance of
adequate service and the coordination in the public interest
of facilities subject to the jurisdiction of the Commission."
16 U.S.C. 824b(b). As the Commission noted when it
reviewed the Initial Decision of the ALJ,
[m]erger applicants need not show that a
positive benefit will result from a
proposed merger. The applicant must
fully disclose all material facts and
show affirmatively that the merger is
consistent with the public interest. It
is sufficient if the "probable merger
benefits . . . add up to substantially
more than the costs of the merger."
56 F.E.R.C. at 61,994 (quoting Utah Power & Light Co., 47
_______________________
F.E.R.C. at 61,750 (1989) (footnotes omitted); see also
_________
Pacific Power & Light Co. v. Federal Power Commission, 111
__________________________ _________________________
F.2d 1014, 1016 (9th Cir. 1940). We review the record,
therefore, to determine whether the Commission's finding that
-17-
the probable benefits of the NU-PSNH merger were
substantially more than its costs was supported by
substantial evidence.
3. Discussion.
__________
Petitioners make two claims with regard to FERC's
evaluation of the costs and benefits of the NU-PSNH merger.
First, they argue that the Commission should not have
included resolution of PSNH's bankruptcy as a benefit of the
merger because: (1) PSNH actually emerged from bankruptcy on
May 16, 1991, the effective date of the Reorganization Plan
("RP"); and (2) prior to gaining the bankruptcy court's
approval of the two-step RP, PSNH had to show that it would
be financially viable as a stand-alone entity because
regulatory approval for the second step of the RP (merger
with and into NU) was not assured. These two facts, however,
do not imply that it was error for FERC to consider the
"resolution of PSNH's bankruptcy" as a benefit, indeed as a
principal benefit, of the merger.
It is true that PSNH, as a technical matter,
"emerged" from bankruptcy prior to FERC's consideration of
the proposed merger. The ALJ and the Commission did not hold
otherwise. The ALJ stated, and the Commission summarily
affirmed the fact that "[t]he merger is part of a plan which
__________________
enables a reorganized PSNH to emerge from bankruptcy." 53
F.E.R.C. at 65,211 (emphasis added); see also 56 F.E.R.C. at
___ ____
-18-
61,993. Like the state regulators who approved the two-step
merger plan, the Commission evaluated the plan as a whole,
anticipating "the merger not `stand alone' PSNH as the
ultimate destiny for the reorganized company." 53 F.E.R.C.
at 65,211. "All parties to the reorganization contemplated
[stand alone] status as an interim step en route to the
merger." Id. It was the entire plan, which admittedly had
___
two sequential and severable steps, that allowed PSNH to
emerge from bankruptcy. There is no evidence that the state
regulators would have approved a plan to allow PSNH to emerge
from bankruptcy that included only the first "stand alone"
step. Indeed, there is evidence to the contrary.
FERC also found that "resolving" PSNH's bankruptcy
meant more than simply the emergence of PSNH from the
protection of bankruptcy court. FERC held that the final
resolution of PSNH's bankruptcy included the treatment of its
creditors and stockholders who stood to lose approximately
$250 million in the absence of the merger. As the ALJ
observed, the Commission "regard[s] the right of these public
bondholders as of primary importance after the consumers have
been protected." 53 F.E.R.C. at 65,211 (quoting In re Evans,
_______ ___________
1 F.P.C. 511, 517 (1937) (approving an acquisition involving
the reorganization of a bankrupt utility)). The Commission
also held that it was in the public interest to approve the
creation of a stronger, more viable merged entity, rather
-19-
than leaving PSNH in a "weakened", "stand alone" state. This
holding was sufficiently supported by evidence in the record.
Petitioners also claim that, given the bankruptcy
court's "feasibility finding" required by 11 U.S.C.
1129(a)(11),36 the Commission was estopped from reaching
the conclusion that a "stand alone" PSNH would be "weak."
We disagree. The bankruptcy court and FERC evaluated the
merger proposal under different standards. The bankruptcy
court was required to determine the likelihood of further
liquidation or reorganization proceedings were the plan to be
approved. FERC was obliged to determine whether the plan was
"consistent with the public interest." It was not
inconsistent for FERC to find that although PSNH was capable
of surviving as a stand alone entity, it would not be
"consistent with the public interest" to prevent a merger
that would result in an even stronger utility. The
principles of estoppel simply do not apply in a case such as
this, where the issues litigated and the standards applied in
the two proceedings are so different.
____________________
36 The Bankruptcy Code provides that:
(a) The court shall confirm a plan [of
reorganization] only if all of the following
requirements are met:
(11) confirmation of the plan is not likely to be
followed by the liquidation, or the need for
further financial reorganization, of the debtor or
any successor to the debtor under the plan, unless
such liquidation or reorganization is proposed in
the plan.
11 U.S.C. 1129(a)(11).
-20-
Even were petitioners correct in their asseveration
that FERC improperly counted the resolution of PSNH's
bankruptcy as a benefit of the merger, "the Commission's
error would be immaterial in light of the overwhelming excess
of other benefits ($791 million) over the costs (0) still
attributable . . . to the acquisition." City of Holyoke Gas
___________________
& Elec. Dep't v. S.E.C., 972 F.2d 358, 362 (D.C. Cir. 1992).
_____________ ______
Second, petitioners argue that FERC erred as a
matter of law in weighing as merger benefits results or
alleged savings that were, or could be, achieved by
"alternate means." Specifically, petitioners contend that
FERC's failure to apply the "alternate means" test
contradicted general agency policy and general antitrust
principles.
It is undisputed that utilities are "not immune"
from antitrust laws. Otter Tail Power Co. v. U.S., 410 U.S.
____________________ ____
366, 372-75 (1973); Town of Concord v. Boston Edison, 915
________________ ______________
F.2d 17 (1st Cir. 1990), cert. denied, 111 S. Ct. 1337
_____________
(1991). At issue in this case is whether FERC is required by
statute, or otherwise, to engage in "standard" antitrust
analysis before passing on 203 merger applications. In
claiming that FERC has such an obligation, petitioners rely
on a statute governing agency approval of bank mergers (the
-21-
"Bank Merger Act") which states that the agency with
jurisdiction over a proposed bank merger,37
shall not approve
(A) any proposed merger transaction
which would result in a monopoly, or
which would be in furtherance of any
combination or conspiracy to monopolize
or to attempt to monopolize the business
of banking in any part of the United
States, or
(B) any other proposed merger
transaction whose effect in any section
of the country may be substantially to
lessen competition, or to tend to create
a monopoly, or which in any other manner
would be in restraint of trade, unless it
finds that the anticompetitive effects of
the proposed transaction are clearly
outweighed in the public interest by the
probable effects of the transaction in
meeting the convenience and needs of the
community to be served. . . .
(6) The responsible agency shall
immediately notify the Attorney General
of any approval by it pursuant to this
subsection of a proposed merger
transaction.
12 U.S.C. 1828(c)(5)-(6). The Supreme Court, interpreting
the Bank Merger Act, has held that before a bank merger which
is injurious to the public interest may be approved, "a
showing [must] be made that the gain expected from the merger
cannot reasonably be expected through other means." U.S. v.
____
Phillipsburg Nat. Bank & Trust Co., 399 U.S. 350, 372 (1970).
__________________________________
Petitioners claim that the language of the Bank Merger Act is
sufficiently similar to the statute governing FERC's approval
____________________
37 Jurisdiction varies depending on whether the resulting
entity is a national bank, a state member bank, a state
nonmember bank, or a savings association.
-22-
of proposed mergers, 16 U.S.C. 824b(a), because both
contain a "public interest" standard, to require FERC to use
the "alternate means" test which bank regulators must use in
evaluating proposed bank mergers. We disagree.
As with any matter of statutory construction, we
first examine the language of the statute. Under 16 U.S.C.
824b(a), the Commission is required, after notice and
opportunity for hearing, to approve a proposed merger of
utility facilities if it finds that the proposal "will be
consistent with the public interest." That is all the
statute says. There is no explicit reference to antitrust
policies or principles. There is no evidence that Congress
sought to have the Commission serve as an enforcer of
antitrust policy in conjunction with the Department of
Justice and the Federal Trade Commission. The Bank Merger
Act reveals a quite different intention. There, Congress
explicitly set out standards for approval of bank mergers
that incorporate principles embodied in the Sherman and
Clayton Acts. 12 U.S.C. 1828(c)(5). By requiring the
reviewing agency to notify the Attorney General of any
decision to approve a proposed bank merger, 12 U.S.C.
1828(c)(6), Congress expressed its desire to have bank
regulators serve as pre-screening bodies of mergers which,
because of their importance or character, in most cases also
deserve the attention of the Department of Justice.
-23-
The Bank Merger Act carries with it the implicit
presumption that mergers are to be disapproved (the agency
"shall not approve" a bank merger "unless it finds that the
anticompetitive effects are clearly outweighed in the public
interest" by the benefits of the merger, 12 U.S.C.
1828(c)(5)). The FPA, on the other hand, requires the
Commission to approve any merger that is "consistent with the
public interest." 16 U.S.C. 824b(a). Antitrust
considerations are, of course, relevant in FERC's
consideration of the "public interest" in merger proposals.
The statute, however, does not require FERC to analyze
proposed mergers under the same standards that the Department
of Justice or bank regulators must apply.
Although the Commission must include antitrust
considerations in its public interest calculus under the FPA,
it is not bound to use antitrust principles when they may be
inconsistent with the Commission's regulatory goals. See
___
Otter Tail, 410 U.S. at 373 ("[a]lthough antitrust
___________
considerations may be relevant [in determining the public
interest], they are not determinative"). In Town of Concord,
_______________
this court observed that indiscriminate incorporation of
antitrust policy into utility regulation "could undercut the
very objectives the antitrust laws are designed to serve."
915 F.2d at 22. Therefore, "antitrust analysis must
sensitively `recognize and reflect the distinctive economic
-24-
and legal setting' of the regulated industry to which it
applies." Id. (quoting Watson & Brunner, Monopolization by
___ _______ _________________
Regulated "Monopolies": The Search for Substantive
_____________________________________________________________
Standards, 22 Antitrust Bull. 559, 565 (1977)).
_________
Petitioners may rest assured that were FERC to
approve a merger of utilities which ran afoul of Sherman Act
or other antitrust policies, the utilities would be subject
to either prosecution by government officials responsible for
policing the antitrust laws, or to suit by private citizens
meeting the requirements of standing. See Otter Tail, 410
___ __________
U.S. at 374-5.
B. FERC's Failure to Condition Merger on NU's Waiver
B. FERC's Failure to Condition Merger on NU's Waiver
of Single Participant Status.
of Single Participant Status.
Petitioners argue that the Commission erred in
failing to condition the merger on waiver by NU and PSNH of
"single participant status" ("SPS") in the New England Power
Pool ("NEPOOL"), thereby preventing the imposition of a $364
million cost shift from NU and PSNH to the other members of
NEPOOL.
1. Background.
__________
NEPOOL is a power pool comprised of most of the
utilities in New England. The association is governed by the
New England Power Pool Agreement ("the Agreement") which
establishes a "comprehensive interconnection and coordination
arrangement" among its members in order "to achieve greater
-25-
reliability and economies in the production of electricity."
Groton v. FERC, 587 F.2d 1296, 1298 (D.C. Cir. 1978).
______ ____
Section 202(a) of the Federal Power Act encourages such
voluntary interconnection and coordination of electricity
generating facilities in order to achieve economies of scale.
16 U.S.C. 824a; see also 16 U.S.C. 824a-1 (regarding
___ ____
pooling agreements). The Agreement was approved as a filed
rate schedule by FERC's predecessor, the Federal Power
Commission. 53 F.E.R.C. at 65,213. Under its terms, each
member is required to supply the pool with resources
("Capacity Responsibility") according to a formula based upon
the relationship of the member's peak load to an estimate of
aggregate peak load of all members.
NU experiences its peak load in the summer, and
PSNH experiences its peak load in the winter. By aggregating
these two, complementary, peak loads, NU-PSNH can achieve a
lower Capacity Responsibility than would be the case if the
two utilities remained separate. Because the overall
capacity requirements of NEPOOL will not change as a result
of the merger, the Capacity Responsibilities of other members
must rise to make up for the savings accruing to NU-PSNH.
The ALJ accepted the "undisputed" estimate that "single
participant status" (SPS) will result in a shifting of some
$360 million in costs from NU-PSNH to other members of the
pool. Id.
___
-26-
-27-
2. Discussion.
__________
Petitioners offer six arguments to support their
claim that FERC erred in failing to condition the merger on
waiver of SPS by NU and PSNH. First, petitioners claim that
the Commission did not properly interpret the provision of
the NEPOOL Agreement which governs the election of SPS. We
agree with the Commission's finding that the Agreement both
specifically allows for the election by NU-PSNH of SPS, and
encourages such elections. Section 3.1 of the Agreement
provides in relevant part that:
All Entities which are controlled by a
single person (such as a corporation or a
common law business trust) which owns at
least seventy-five percent of the voting
shares of each of them shall be
_____
collectively treated as a single
Participant for purposes of this
Agreement, if they elect such treatment.
They are encouraged to do so. Such an
______________________________
election shall be made by signing the
appropriate form at the end of a
counterpart of this Agreement.
(Emphasis supplied.) Both the ALJ and the Commission
interpreted section 3.1 to be an explicit endorsement of the
election of SPS by NU-PSNH. The ALJ stated that "[i]t is
undisputed that NU and PSNH qualify for such [single
participant] status under the Agreement." 53 F.E.R.C. at
65,213. The Commission gave great weight to the unrebutted
testimony of witness Bigelow, who participated in the
negotiation of the NEPOOL Agreement regarding the intent of
the original signatories to the Agreement and their
-28-
recognition of such potentially large cost-shifts among
NEPOOL members. Bigelow stated:
[W]hen we put NEPOOL together 20 years
ago, we recognized that these things
might happen. This is not something that
snuck up on people. . . . And we did
discuss at length what would happen
because . . . we were then coming up to a
potential merger of Boston Edison,
Eastern Utilities, New England Power. It
was recognized that these kinds of things
could happen in the future and we spelled
out the ground rules and recognized that
that would happen when it happened. And
the people who didn't like it got
something else for it.
53 F.E.R.C. at 65,214. Both the ALJ and the Commission
rejected petitioners' claim on the basis of both the language
of the Agreement, and Bigelow's unrebutted testimony that not
only had the signatories been aware of such a potentially
large savings shift, but that those utilities that were
dissatisfied with this risk received additional concessions
as compensation. We will not disturb the Commission's
findings.
Second, petitioners claim that the Agreement, as
interpreted in NEPOOL Power Pool Agreement, 56 F.P.C. 1562,
___________________________
1580 (1976), aff'd sub nom. Municipalities of Groton v. FERC,
______________ ________________________ ____
587 F.2d 1296 (D.C. Cir. 1978), prohibits utilities with peak
loads in different seasons from electing SPS. As the
Commission explained, this argument mischaracterizes the
Agreement and the decision of the Federal Power Commission
("FPC") in NEPOOL.
______
-29-
The NEPOOL Agreement, as initially filed
and as approved, allowed single
participant status for utilities
controlled by a single "person" owning at
least 75 percent of the voting shares of
each utility. An exception was expressly
allowed in the filed agreement for any
Vermont utility which elected to be
grouped with Vermont Electric Power
Company. This exception was approved for
essentially two reasons: (1) the Vermont
utilities had long acted as a single
contiguous integrated electric entity;
and (2) since they all experienced their
peak loads in winter, single participant
status would not give them a lower NEPOOL
Capability Responsibility (and consequent
savings). A broader exception was
denied, however, for a group of municipal
utilities (represented by MMWEC) that was
not entitled to single participant status
and that lacked the two cited attributes
of the Vermont utilities. The basis for
the denial was that allowing such status
for "any group of systems, such as MMWEC,
could well be detrimental to the
functioning of NEPOOL."
The NEPOOL decision, thus, does not
stand for the proposition that single
participant status is available only to
utilities having their peak loads in the
same season. Instead, another way,
indeed the primary way, in which
utilities may qualify is if they are
controlled by a single person with a
least 75-percent common ownership. That
is the basis upon which NU and PSNH will
presumably seek to qualify if the merger
is approved. Such status is expressly
allowed under the NEPOOL Agreement
regardless of when NU and PSNH experience
their peak loads.
56 F.E.R.C. at 61,996-97. The reasons offered by the FPC in
its decision to grant a special exception for Vermont
utilities seeking SPS were not intended to be, and are not,
conditions, in addition to those set out in the Agreement,
-30-
which must be satisfied to elect SPS. The FPC did not narrow
the scope of Section 3.1 to apply only to utilities sharing
the same peak load season; rather, it created a special
exception to the 75 percent rule to accommodate the unique
situation faced by Vermont utilities.
Third, petitioners claim that FERC failed to give
proper consideration to Section 4.2 of the Agreement, "the
interests of other pool members, and the purpose of the
Agreement as a whole." Essentially, petitioners argue that
allowing NU-PSNH to elect SPS would violate a general
provision of the Agreement, which states that participants
"shall not . . . take advantage of the provisions of this
Agreement so as to harm another Participant or to prejudice
the position of any Participant in the electric utility
business." We reject this argument for the same reasons
expressed by the Commission in its decision denying
petitioners' request for a rehearing:
[W]e find more relevance in the NEPOOL
Agreement's explicit endorsement of
single participant status than in the
agreement's general goal of "equitable
sharing" and prohibition on members
"taking advantage" of the agreement to
harm or prejudice other members. The
NEPOOL Agreement specifically encourages
eligible parties to seek single
participant status; the provisions cited
by the intervenors are general, not
specific. Construing the general
consistent with the specific, we find
single participant status for the merged
company consistent with an equitable
sharing, as envisioned by the NEPOOL
-31-
Agreement, and not violative of the ban
on taking advantage of the agreement's
provisions to harm or prejudice other
members.
58 F.E.R.C. at 61,189. We agree with FERC's interpretation
of the Agreement. The NEPOOL signatories explicitly
encouraged qualified members to seek SPS, indeed they
contemplated that members that merged might choose to do just
that. We agree with the Commission's construction of the
Agreement which avoids a direct conflict between Sections 3.1
and 4.2, and instead gives both provisions reasonable effect.
Fourth, petitioners argue that failure to condition
the merger on waiver of SPS would create "serious
disincentives" for current members to continue their
membership in NEPOOL, and that the breakup of NEPOOL is
contrary to the public interest. Petitioners imply that FERC
did not take seriously their complaints about SPS, but rather
rested its decision not to require a waiver solely on the
fact that the Agreement allowed the election of SPS. This is
simply not so.
The Commission reversed the ALJ on the issue of
whether SPS savings should be counted as a benefit of the
merger. The Commission found that because the cost shift
amounted to a zero-sum transaction, with NU and PSNH
benefitting and the other members burdened dollar-for-dollar,
the shift could not be counted as a benefit of the merger.
-32-
56 F.E.R.C. at 61,997. Thus, the Commission did not dismiss
petitioners' claims regarding SPS without thought.
Also, the ALJ found, and the Commission agreed,
that SPS was essential to the merger, and that the merger, as
conditioned, was in the public interest. FERC must approve a
proposed merger if it is consistent with the public interest.
16 U.S.C. 824b(a). FERC has the discretion to add
conditions to a proposed merger to ensure that the merger
will, taken as a whole, be in the public interest. 16 U.S.C.
824b(b). FERC need not, however, explain why every
condition, or failure to establish a condition is consistent
with the public interest when considered separately and apart
from the entire transaction. Petitioners seem to argue that
FERC was required by law to state why it was consistent with
the public interest to follow the explicit terms of the
approved fifteen year-old NEPOOL Agreement rather than to
condition the merger on waiver of a membership right
established by the Agreement. FERC had no such obligation.
It need not have explained why it failed to add a particular
condition prior to approving a merger. The statute simply
provides that "[t]he Commission may grant any application for
an order under this section in whole or in part and upon such
terms and conditions as it finds necessary or appropriate to
secure the maintenance of adequate service and coordination
in the public interest of facilities subject to the
-33-
jurisdiction of the Commission." 16 U.S.C. 824b(b). In
this case, the Commission set forth a reasonable basis for
approving the merger as consistent with the public interest
in light of the supplementary conditions the Commission found
necessary. FERC need not have gone further than this to
explain why it failed to place further conditions on the
merger.
Fifth, petitioners allege that FERC acted
inconsistently in its treatment of the NEPOOL Agreement's
provisions regarding voting rights and SPS. The Commission
adopted a condition limiting the merged company's NEPOOL
voting rights to prevent PSNH and NU from gaining a veto
power in NEPOOL. 56 F.E.R.C. at 62,043-45. FERC reasoned
that, while there was evidence that the signatories
anticipated that large cost-shifts would accompany the
election of SPS in merger situations, there was no evidence
that they anticipated the voting rights implications of such
mergers. 58 F.E.R.C. at 61,189. It was not, contrary to
petitioners' argument, inconsistent as a matter of logic to
condition voting rights where the Agreement was silent on the
need or lack of need to do so, while failing to condition SPS
where the Agreement explicitly favored the election of SPS.
Furthermore, it was not an error of law to condition voting
rights while leaving SPS rights untouched. Petitioners do
not contest the Commission's decision to condition NU-PSNH's
-34-
voting rights. We will uphold whatever conditions the
Commission imposes on a proposed merger so long as their
necessity is supported in the record by substantial evidence.
Finally, petitioners contend that the Commission
"failed to explain why burdening other NEPOOL members with
$364 million in additional costs with no offsetting benefits
to them is consistent with the public interest." In making
this argument, petitioners imply that each and every piece of
a complex package of merger agreements and conditions must be
able to withstand "public interest" analysis without regard
to other pieces of the package or to other conditions imposed
by the Commission. Petitioners also imply that if any
individual or group is harmed by a piece of the package, that
provision is not in the public interest and must therefore be
stricken or modified. Both implicit arguments are deeply
flawed.
In evaluating a transaction such as the one at
issue here, the Commission is required to find that the
entire transaction, taken as a whole, is consistent with the
public interest. 16 U.S.C. 824b(a). Each element of the
transaction need not benefit every utility or individual
which might be affected; rather, the whole transaction must
be consistent with the interest of "the public." There is no
reason to think that the interest of individual NEPOOL
members is synonymous with the "public" interest. As has
-35-
already been noted, FERC may add conditions to a proposed
merger before granting approval. 16 U.S.C. 824b(b). The
statute does not require, however, that FERC establish
conditions so that every effect of an approved merger could
withstand the "public interest" test.
At a less theoretical level, the ALJ determined
that the NEPOOL savings "were a vital part of the long and
strenuous negotiations which culminated in the resulting PSNH
reorganization plan," and the particular savings of $146
million for New Hampshire consumers were relied on
specifically by the State of New Hampshire in approving the
merged company's rate package. 53 F.E.R.C. at 65,213. The
Commission accepted this finding of the ALJ, while, at the
same time, it reversed the ALJ's decision to count the $360
million as a benefit of the merger. 58 F.E.R.C. at 61,997.
The fact that the cost-shift was not a benefit to be counted
in weighing the benefits and costs of the merger does not
mean that the election of SPS and the concomitant cost-shift
is not in the public interest. Election of SPS is in the
public interest because it is a central element of the merger
plan which, viewed as a whole, was found by FERC to be
consistent with the public interest based on substantial
evidence in the record. We approve the Commission's decision
not to condition the merger on waiver by NU of SPS.
C. Timing of Merger's Consummation.
C. Timing of Merger's Consummation.
-36-
In the proceedings before the ALJ, NU proposed
filing a transmission tariff within 60 days following the
merger. Intervenors and Commission staff proposed the filing
and approval of an interim transmission rate. The ALJ
rejected both proposals and instead held that the merger
would be consummated upon the filing of NU's compliance
___________
tariff. He reasoned as follows:
I see no need for requiring one tariff
(with potential for controversy, charges,
collections and refunds) to be followed
by yet another tariff, with its own
potential for still other disputes.
Avoiding a transitional period will
make it unnecessary to require a
transitional tariff. To achieve this
result, consummation of the merger must
be conditioned on the concurrent filing
of a compliance tariff which fully
reflects all of the terms and conditions
set out in this Initial Decision. Such a
condition should encourage a prompt and
fair compliance filing because NU could
not begin to reap the merger benefits
without it.
53 F.E.R.C. at 65,221. The Commission concurred:
We believe the GTC [General
Transmission Conditions] and the NH
Corridor Proposal, as modified herein,
adequately mitigate the merger's
anticompetitive effects without requiring
the adoption of the Merger Tariff. Trial
Staff stated that the Merger Tariff would
make service available immediately upon
approval of the merger. We believe that
the presiding judge accomplished the same
result by allowing consummation of the
merger when NU submits its compliance
filing.
We further believe that delaying the
merger's consummation until the
Commission accepts NU's compliance
-37-
submittal for filing would be
inappropriate given the uncertainty
surrounding issues which may be
challenged and subject to further
litigation in the compliance proceeding
and given our commitment to act before
the Merger Agreement's December 31, 1991
termination date. We believe that NU and
PSNH are entitled to a prompt and fair
resolution of this proceeding. At the
same time the intervenors are entitled to
have service begin as soon as practical,
together with a fair resolution of any
disputes raised regarding NU's compliance
filing. Accordingly, we believe that it
is in the best interests of all parties
to allow NU to consummate the merger when
it submits its compliance filing. We
shall also require NU to begin honoring
such requests for transmission service
under the GTC, as modified herein, at
that time. Such transmission service
will be provided at either the firm or
non-firm transmission rates proposed in
NU's compliance filing, subject to
refund, and without a refund floor. In
reviewing NU's filing to ensure
compliance with this Opinion, we will
hold NU to a very high standard. As NU
itself states, "[i]f NU fails to comply
with the letter or spirit of such
[Commission] requirement, NU would be
subject to summary judgment with respect
to any aspect of its compliance filing."
56 F.E.R.C. at 62,025.
Petitioners' stated concern is that, by allowing
the merger to be consummated prior to FERC's approval of the
compliance tariff, FERC did not provide a sufficient guaranty
that NU would provide transmission access that would mitigate
-38-
the merger's anticompetitive effects.38 Petitioners do
not, however, seek to unravel the merger. Rather, they
propose that any cost shift under the NEPOOL Agreement, see
___
discussion in Part III(B), supra, be postponed until after
_____
the compliance tariff is approved. Petitioners complain that
the course chosen by FERC creates an incentive on the part of
NU to delay proceedings on the compliance tariff, thereby
maximizing competitive advantage. Petitioners do not, of
course, point out that their proposal would create an
incentive on their part to delay final approval of the
compliance tariff, thereby postponing the day when the NEPOOL
cost shift will take effect.
The ALJ and the Commission carefully considered the
alternatives before reaching their decisions. The Commission
held that the anticompetitive effects of the merger would be
adequately mitigated by the dual requirements that NU
immediately provide transmission access upon the filing of
its compliance tariff, and that any fees collected by NU
would be subject to refund without a refund floor. Because
NU accepted these merger conditions, the Commission can
enforce NU's promise to pay such refunds if the Commission
finds them to be appropriate. See Distrigas of Massachusetts
___ __________________________
Corp. v. FERC, 737 F.2d 1208, 1225 (1st Cir. 1984). FERC
_____ ____
____________________
38 We note that, at oral argument, petitioners conceded
that no one had as yet sought access to NU's transmission
facilities.
-39-
explicitly warned NU that "[i]n reviewing NU's filing to
ensure compliance with this Opinion, we will hold NU to a
very high standard." 56 F.E.R.C. at 62,025.
The Commission balanced the merging companies' need
for a "prompt and fair resolution" of the merger proceeding
against the intervenors' need "to have [transmission] service
begin as soon as practical, together with a fair resolution
of any disputes raised regarding NU's compliance filing." 56
F.E.R.C. at 62,025. An agency's discretion is at its
"zenith" when it fashions remedies to effectuate the charge
entrusted to it by Congress. Niagra Power Corp. v. FPC, 379
__________________ ___
F.2d 153, 159 (D.C. Cir. 1967). See also, Consolo v. FMC,
___ ____ _______ ___
383 U.S. 607, 620-21 (1966); Environmental Action, Inc. v.
___________________________
FERC, 939 F.2d 1057, 1064 (D.C. Cir. 1991); Boston Edison Co.
____ _________________
v. FERC, 856 F.2d 361, 371 (1st Cir. 1988). We hold that
____
FERC's exercise of its discretion was not inappropriate in
these circumstances. FERC did not defer, as petitioners
suggest, consideration of the anticompetitive effects of the
merger which FERC itself identified. The Commission
recognized the effects, and dealt with them in a reasoned way
which balanced the competing interests of all parties.
FERC's remedy is not unreasonable, and we therefore affirm
its order.
D. Protection of Native Load Customers.
D. Protection of Native Load Customers.
1. Priority of Services.
____________________
-40-
a. Background.
__________
In its merger application, NU made a voluntary
commitment to provide wholesale transmission service,
including third party wheeling service,39 for any utility
over its existing transmission system. At the same time, NU
sought to limit this obligation by reserving an absolute
priority for power purchases on behalf of native load
customers (whose power needs NU is bound by franchise or
contract to meet). The ALJ held that although NU may
reasonably give native load service priority over wheeling
service if NU's transmission system had insufficient capacity
to serve both, 53 F.E.R.C. at 65,221-222, NU could not deny
firm wheeling requests based upon the reservation of
transmission capacity for its own non-firm sales, id. at
___
65,225.
In Opinion No. 364, the Commission balanced the
interests of native load customers and third party wheeling
customers and affirmed the ALJ's denial of an absolute
priority:
we . . . deny NU's proposal to give
higher priority to its own non-firm use
than to third party requests for firm
wheeling in allocating existing
transmission capacity. In no event,
however, will NU be required to provide
firm third party wheeling service out of
existing transmission facilities if
____________________
39 For a definition of "wheeling" see n.9, supra.
___ _____
-41-
reliability of service to native load
customers would be adversely affected.
56 F.E.R.C. at 62,021 (footnote omitted). The Commission
found it "reasonable to allow NU to reserve firm transmission
capacity to provide reliable service to its native load
________
customers." Id. (Emphasis in original.)
___
On rehearing, NU asked the Commission to clarify
the scope of the "reliability" criterion. The Commission
"reiterate[d] that under no circumstances will NU be required
to provide firm wheeling service out of existing transmission
capacity where doing so would impair or degrade reliability
of service to native load customers." 58 F.E.R.C. at 61,199
(emphasis removed). The Commission held the concept of
reliability generally encompasses the: (1) reservation of
transmission capacity to back up large generating units; (2)
provision of generation reserves; and (3) coverage of certain
future needs. As to the coverage of future demand
requirements, the Commission specifically ordered that "any
capacity needed for reliability purposes within a reasonable
planning horizon must be offered for wheeling use until NU
expects to need the capacity for reliability reasons." Id.
___
at 61,199-200.
Petitioners assert that the decision to accord a
priority to native load over transmission load is arbitrary,
discriminatory, and anticompetitive. They argue that FERC
neither defined nor justified the priority granted by
-42-
allowing reservation of transmission capacity for native load
service and that any such priority creates competitive
advantages for NU. We hold that the Commission adequately
defined and reasonably justified its decision to allow such a
reservation and properly addressed the anticompetitive
concerns raised by the intervenors.
b. Discussion.
__________
Although the Commission reaffirmed the general rule
that firm transmission service should be accorded priority
over non-firm service, even if the latter would benefit
native load, it nonetheless allowed NU to reserve firm
transmission capacity needed to ensure reliability of native
load service and allowed the use of this capacity for non-
firm transactions. 58 F.E.R.C. at 61,196. Thus, native load
service will receive a "priority" over third-party wheeling
service in allocating existing transmission capacity when
reliability of service to native load would be adversely
affected. The Commission specifically qualified this
priority by requiring NU to offer the capacity for wheeling
use until NU needed it to assure reliability to native load
customers.
There is nothing arbitrary or discriminatory about
FERC's decision. It struck a reasonable balance between the
competing interests of native load customers and third-party
wheeling customers. NU-PSNH is obligated to serve its native
-43-
load customers. In return for this obligation to serve, the
native load customers regularly bear the cost of transmission
facilities; native load customers pay for them, use them,
plan on them, and rely on them. As the ALJ noted, "[e]very
New England utility favors its own native load. Nothing in
the NEPOOL agreement requires its members to surrender their
native load preference, and none do." 53 F.E.R.C. at 65,222.
Thus, "NU should be allowed to give priority over safe and
reliable service to its native load customers using existing
transmission capacity built to serve those customers." 58
F.E.R.C. at 61,199. FERC explicitly defined and justified
the challenged native load "priority."
2. Transmission Upgrades Pricing.
______________________________
a. Background.
__________
NU's commitment to provide third-party transmission
service includes the obligation to build additional
transmission facilities as necessary to relieve transmission
constraints on its system. 58 F.E.R.C. at 61,204-10; 56
F.E.R.C. at 62,021-24. The issue then becomes, how should
the cost of constructing such transmission upgrades be
allocated. The ALJ stated that questions of cost allocation
are best addressed in future proceedings regarding the
particular responsibilities for particular facilities.
Nevertheless, the ALJ adopted the "but for" analysis for
determining responsibility proposed by NU witness Schultheis:
-44-
[W]heeling customers must make a pro rata
contribution whenever the facilities
would not have been needed but for the
wheeling transfers across a constrained
interface. This means that NU's native
load customers pay for the new facilities
they create the need for and wheeling
customers pay for the facilities they
create the need for.
53 F.E.R.C. at 65,223. The ALJ also noted that the financial
exposure of transmission customers was limited by the cost
caps to which NU was committed.40 Id. at 65,224. The
___
Commission agreed that cost questions should be litigated in
the context of a specific proposal, and accepted the concept
of the "but for" test as a framework for ascertaining cost
responsibility and the use of the proposed cost caps as a
reasonable means of limiting the transmission customers'
responsibility for future upgrades. 56 F.E.R.C. at 62,028-
030. The Commission reaffirmed that decision on rehearing.
58 F.E.R.C. 61,204-207.
Petitioners contend that the Commission failed to
adequately explain the pricing policy it will employ in
pricing transmission upgrades. Basically, petitioners claim
the ruling is too ambiguous to determine whether, or how, the
____________________
40 NU committed to cap cost responsibility to "(1) those
specific facilities identified by NU at the time of the
wheeling request as needing to be built or upgraded either at
the time of the request or in the future; and (2) the maximum
dollar amount contained in NU's initial estimate of a
wheeling customer's pro rata share of the costs of future
upgrades needed to accommodate a request for wheeling
service."
56 F.E.R.C. at 62,031-32.
-45-
Commission changed its policy from the traditional "rolled-
in" approach used in pricing transmission service. We hold
that the Commission provided a clear and reasoned
justification for the principles that will guide its future
determinations of transmission upgrade pricing. We affirm
the Commission's decision not to modify the basic principles
adopted in its order.
b. Discussion.
__________
In accepting as reasonable the "but for" test, the
Commission has done no more than approve a framework for
determining cost responsibility which furthers the general
principle that transmission costs should be born by those
entities responsible for the cost. 58 F.E.R.C. 61,205.
Under this test, incremental cost pricing could be found
appropriate when firm wheeling across a particular interface
would degrade reliability absent upgrades. The Commission
specifically declined, however, to answer the requests of the
intervenors to decide the "rolled-in versus incremental"
rate41 issue in the abstract and chose instead to evaluate
it only within the context of a particular rate proposal or
upgrade. Id. The Commission articulated how it envisioned
___
____________________
41 Under "rolled in" pricing principles, the upgrade costs
would be rolled in with other company costs and charged to
all ratepayers as part of NU's general rate structure; while
administratively simple, it ignores any concept of
responsibility. Thus, incremental pricing principles look to
hold parties responsible for their share of upgrade costs.
-46-
pricing transmission upgrades and adopted a condition
limiting the amount NU may propose to collect from a
transmission customer to the greater of
(1) the incremental cost of new network
facilities required at the time the
customer's new transmission load is added
or (2) the rolled-in cost of all network
facilities required to serve the combined
transmission loads of [NU], including any
required transmission additions.
Id. at 61,206. Thus, a wheeling customer may be charged the
___
greater of rolled-in cost rates or incremental cost rates.
The Commission acknowledged that the introduction
of incremental cost pricing principles is a departure from
its traditional pricing policies42 and justified this new
policy on NU's unprecedented obligation to provide third
party transmission service. Id. The Commission noted that
___
incremental cost pricing may be appropriate in certain
circumstances, but decided to leave the details of cost
responsibility questions to a future specific section 205
rate case. When such a case arises, NU will bear the burden
of justifying "any direct assignments of costs and
support[ing] any arguments that reliability is degraded by a
particular firm transmission service. No presumption is
____________________
42 The Commission generally has adhered to rolled in
pricing, but has never precluded particularized cost
allocations to specific customers where appropriate. See
___
Utah Power & Light Co., 45 F.E.R.C. 61,095, at 61,291 n.163
______________________
(1988); Public Service Co. of Indiana, 51 F.E.R.C. 61,367,
_____________________________
at 62,203 (1990).
-47-
created by NU's `but for' criterion that firm wheeling
customers always cause the need for upgrades." Id. at 61,207
___
(quoting 56 F.E.R.C. at 62031). The Commission also allowed
that any reliance by NU upon the "but for" test may be
challenged in future actions. The Commission sufficiently
explained and justified the principles that will guide its
transmission upgrade pricing.
E. Opportunity Cost Pricing.
E. Opportunity Cost Pricing.
As has already been discussed, the Commission found
it necessary to impose a number of conditions on the proposed
NU-PSNH merger to mitigate the merged company's market power
in the markets for transmission and short-term bulk power.
58 F.E.R.C. at 61,195. Specifically, the Commission held
that NU must provide firm transmission service out of
existing capacity for any utility, subject only to a
reservation of sufficient capacity to maintain reliable
service to its native load customers and to honor existing
contractual obligations. NU was prohibited, however, from
denying a request for firm transmission service by reserving
capacity for non-firm transactions that would enable it to
provide more economical service to its native load customers.
56 F.E.R.C. at 62,014-21; 58 F.E.R.C. at 61,196-200. FERC
also held that NU must build additional transmission
facilities as needed to provide transmission where
insufficient capacity exists. 56 F.E.R.C. at 62,021-24; 58
-48-
F.E.R.C. at 61,204-10. The Commission found that these and
other conditions would "adequately mitigate" the merger's
anticompetitive effects. 58 F.E.R.C. at 61,213.
On rehearing, NU and the States of Connecticut and
New Hampshire argued that the Commission should address the
issue of firm transmission pricing because, in Opinion No.
364, FERC had established principles governing the related
issue of firm transmission priority which made NU's ability
to purchase inexpensive power (which would lower its cost of
serving its native load customers) subordinate to its
obligation to provide firm transmission for third parties.
58 F.E.R.C. at 61,201-02. The Commission agreed, but
declined to approve "opportunity cost pricing"43 outside
the context of a specific tariff proposal. Instead, the
Commission announced three "basic goals" to guide its future
decisions on the pricing of firm transmission service on the
merged company's existing capacity, and left the door open to
NU to propose a tariff based on opportunity costs or any
____________________
43 As the Commission explained, opportunity costs
are the revenues lost or costs incurred
by a utility in providing third-party
transmission service when transmission
capacity is insufficient to satisfy both
a third-party wheeling request and the
utility's own use. For example,
opportunity costs might include the
revenues lost or costs incurred because a
utility must reduce its own off-system
purchases or sales in order to overcome a
constraint on the [transmission] grid.
58 F.E.R.C. at 61,200-201.
-49-
other methodology that would meet the three goals. The
Commission explained its decision as follows:
We are now confronted with the need to
provide NU with enough specificity
regarding what it will be allowed to
propose for the pricing of future third-
party wheeling service, so that the
company can decide whether to proceed
with the merger. We also cannot ignore
the need to act as expeditiously as
possible given the commercial realities
and time pressures presented in corporate
matters subject to our jurisdiction, and
in particular the need to resolve a
bankruptcy situation. At the same time
we are confronted with the need to ensure
an adequate record on pricing issues and
to afford all parties an adequate
opportunity to voice their objections.
Balancing these respective needs, we
conclude that the best course is to
provide guidance on pricing issues, but
to defer specific pricing issues to the
compliance phase of this proceeding, or
to subsequent cases where the Commission
may consider specific proposals from NU
in a concrete, factual setting and with a
more developed record.
. . . .
First, the native load customers of the
_________________________________________
utility providing transmission service
_________________________________________
should be held harmless. Second,
_________________________________________
transmission customers should be charged
_________________________________________
the lowest reasonable cost-based rate for
_________________________________________
third-party transmission service. Third,
_________________________________________
the pricing should prevent the collection
_________________________________________
of monopoly rents by the transmission
_________________________________________
owner and promote efficient transmission
_________________________________________
decisions. In ruling on specific
_________
proposed rates, we will balance these
three goals in light of the facts and
circumstances presented at that time.
58 F.E.R.C. at 61,203 (emphasis added) (footnotes omitted).
FERC was careful to point out that it endorsed
opportunity cost pricing only insofar as NU could show that
-50-
it could "propose rates which include legitimate, verifiable
opportunity costs." Id. The Commission warned NU that any
___
such proposal would be carefully scrutinized and would be
subject to challenge. Id. at 61,203-04. Specifically, FERC
___
stated that NU would have to address the following issues
should it seek recovery of opportunity costs:
(1) whether opportunity costs should be
capped by incremental expansion costs or
any other cap; (2) whether current
wheeling and wholesale requirements
customers should be treated differently
from future wheeling and wholesale
requirements customers, e.g., by
____
receiving "grandfather" rights to
embedded cost rates for the amount of
transmission capacity they already use;
(3) how NU will identify those customers
responsible for growth on its system and
what particular new facilities are
necessary to accommodate that growth; (4)
whether and how third parties should be
protected from uncertainty regarding
fluctuations in opportunity costs; (5)
how the proposed rates will prevent the
collection of monopoly rents; and (6) how
the proposed opportunity costs will be
verified.
Id. The Commission expressly postponed consideration of
___
whether opportunity cost pricing would be inconsistent with
nondiscriminatory pricing and nondiscriminatory terms and
conditions of service until those issues were raised in a
concrete factual context. Id. at 61,204, n.118.
___
Petitioners claim that FERC's decision amounted to
an arbitrary endorsement of opportunity cost pricing that was
not supported by evidence in the record, was inherently
-51-
discriminatory, and contrary to FERC's regulation of natural
gas pipelines. Petitioners' underlying concern seems to be
that when the issue arises next in the context of the
Commission's review of NU's compliance tariff, FERC will
simply approve the tariff and dismiss petitioners' objections
on the ground that opportunity cost pricing principles had
already been endorsed by the Commission. Although we
understand petitioners' concerns, we believe that they are
misplaced and that FERC did not go as far as petitioners fear
in endorsing opportunity cost pricing.
Petitioners will have an opportunity to contest any
compliance tariff proposed by NU. The Commission itself laid
out a number of issues which NU would have to address were it
to propose a tariff based on opportunity costs. 58 F.E.R.C.
at 61,203. Only after carefully considering the competing
interests of providing guidance to NU as to what kinds of
tariffs it would consider, and the need to endorse specific
methodologies only on the basis of a fully-developed record,
did the Commission decide to outline broad pricing goals
which would allow for a number of pricing schemes including
opportunity cost pricing. Id. It was squarely within the
___
Commission's power to defer consideration of petitioners'
assertions until after NU filed its compliance tariff. As
the Supreme Court has held, "[a]n agency enjoys broad
discretion in determining how to handle related yet discrete
-52-
issues in terms of procedures, and priorities." Mobil
_____
Exploration & Producing Southeast, Inc. v. United
_______________________________________________ ______
Distribution Cos., 111 S. Ct. 615, 627 (1991) (citations
__________________
omitted). Petitioners argue that deferral was inappropriate
in this case because their objections went "to the heart of
the public interest determination to be made." Maryland
________
People's Counsel v. FERC, 761 F.2d 768, 778 (D.C. Cir. 1985).
________________ ____
We disagree.
The Commission announced pricing goals and
conditions that it determined would keep the merger
consistent with the public interest, and would result in
"just and reasonable rates." Until NU proposed a specific
tariff regime, the Commission did not have a developed record
to evaluate on the merits. The Commission remains free to,
and we expect it will, invite objections to NU's compliance
tariff from affected parties, and will reject any proposed
tariff that conflicts with its statutory responsibility to
approve rates that are "just and reasonable," and to approve
mergers that are, as conditioned, "consistent with the public
interest."
F. Environmental Impact Statement.
F. Environmental Impact Statement.
The City of Holyoke Gas & Electric Department
("HG&E") alleges that FERC's refusal to examine the potential
environmental impacts of its approval of the merger was
arbitrary and capricious. We disagree.
-53-
The National Environmental Policy Act of 1969, 42
U.S.C. 4321 et seq., ("NEPA") requires federal agencies to
__ ____
consider the potential environmental effects of a proposed
major federal action that may significantly affect the
quality of the human environment. Section 102(2)(C) of NEPA
states:
The Congress authorizes and directs that,
to the fullest extent possible: . . .
(2) all agencies of the Federal
Government shall
. . . .
(C) include in every recommendation or
report on proposals for legislation and
other major Federal actions significantly
affecting the quality of the human
environment, a detailed statement by the
responsible official on
(i) the environmental impact of the
proposed action,
(ii) any adverse environmental effects
which cannot be avoided should the
proposal be implemented,
(iii) alternatives to the proposed
action,
(iv) the relationship between local
short-term uses of man's environment and
the maintenance and enhancement of long-
term productivity, and
(v) any irreversible and irretrievable
commitments of resources which would be
involved in the proposed action should it
be implemented.
42 U.S.C. 4332(2)(C). Agencies were authorized, under
guidelines promulgated by the Council on Environmental
Quality ("CEQ"), to create categorical exclusions for actions
which do not individually or cumulatively have a significant
effect on the human environment. 40 C.F.R. 1507.3,
1508.4. FERC adopted such a category of exclusions,
-54-
including one for merger approvals such as the one at issue
in this case. That regulation states in pertinent part:
(a) General rule. Except as stated in
paragraph (b) of this section, neither an
environmental assessment nor an
environmental impact statement will be
prepared for the following projects or
actions:
. . . .
(16) Approval of actions under sections
4(b), 203, 204, 301, 304, and 305 of the
Federal Power Act relating to issuance
and purchase of securities, acquisition
or disposition of property, merger,
interlocking directorates, jurisdictional
determinations and accounting orders.
18 C.F.R. 380.4(a)(16). An agency need not issue a
"finding of no significant impact" in cases concerning
matters that fall into a categorical exclusion. 40 C.F.R.
1501.3, 1501.4, 1508.13.
CEQ guidelines also required agencies adopting
categorical exclusions to "provide for extraordinary
circumstances in which a normally excluded action may have a
significant environmental effect." 40 C.F.R. 1508.4. FERC
made such provision in its regulations:
(b) Exceptions to categorical
exclusions. (1) In accordance with 40 CFR
1508.4, the Commission and its staff will
independently evaluate environmental
information supplied in an application
and in comments by the public. Where
circumstances indicate that an action may
be a major Federal action significantly
affecting the quality of the human
environment, the Commission:
(i) May require an environmental report
or other additional environmental
information, and
-55-
(ii) Will prepare an environmental
assessment or an environmental impact
statement.
(2) Such circumstances may exist when
the action may have an effect on one of
the following:
(i) Indian lands;
(ii) Wilderness areas;
(iii) Wild and scenic rivers;
(iv) Wetlands;
(v) Units of the National Park System,
National Refuges, or National Fish
Hatcheries;
(vi) Anadromous fish or endangered
species; or
(vii) Where the environmental effects
are uncertain.
However, the existence of one or more of
the above will not automatically require
the submission of an environmental report
or the preparation of an environmental
assessment or an environmental impact
statement.
18 C.F.R. 380.4(b).44 HG&E argues that the NU-PSNH
merger might "alter mixes of generation in New England by
constraining the locations for new plants." HG&E points to
the language of 18 C.F.R. 380.4(b)(1)(ii) in support of its
position that FERC was compelled, at the least, to explain
why it was not obliged to perform the analysis of
environmental effects required by NEPA. HG&E also cites
FERC's decision in Southern California Edison Co., 49
__________________________________
F.E.R.C. 61,091 (1989) (holding that 380.4(b) was
triggered when approved merger would result in the dumping of
____________________
44 HG&E does not challenge the validity of any of the
applicable regulations cited above.
-56-
hundreds of tons of additional air contaminants into the most
polluted air in the United States).
There was no evidence in the record of identifiable
environmental harms that would likely result from the NU-PSNH
merger. The fact that new generating facilities might wind
up in different locations than would have been the case in
the absence of the merger does not approach in significance,
because its significance is not quantifiable, the known
effects of the merger between Southern California Edison
Company and San Diego Gas & Electric Company. Thus, the
factual situation presented in Southern California Edison is
__________________________
completely distinguishable from that of this case.
The character and location of the future
environmental effects of the NU-PSNH merger are so uncertain
that no meaningful environmental review would have been
possible, even had FERC made the effort. Here, FERC was not
approving a regional development plan. It was merely
approving a merger between utility companies, albeit a merger
involving two of the largest utilities in New England.
Energy demand may increase in New England over the following
decades, and the fact of the merger may influence how those
needs are met. Nevertheless, any attempt by FERC to prepare
an EIS would have involved little more than spinning out
multiple hypothetical development forecasts, with multiple
options for the type, amount and location of future
-57-
generating facilities. See Kleppe v. Sierra Club, 427 U.S.
___ ______ ___________
390, 401-2 (1976). Once concrete plans have been established
for the construction of transmission or generating
facilities, those proposals will be reviewed under NEPA or
the applicable state environmental review procedures.
FERC was justified in deciding that neither an
environmental assessment nor an environmental impact
statement was required prior to approving the NU-PSNH merger.
G. HG&E's "Unique" Harm.
G. HG&E's "Unique" Harm.
HG&E also contends that because it relied on PSNH
New Hampshire Corridor facilities for over one-third of its
electricity supply, it would be "uniquely threatened" by NU
in head-to-head competition for large, industrial loads. To
protect itself, HG&E requested that FERC either:
(1) disapprove the merger; (2) require the divestiture or
restructuring of NU's retail business in Holyoke (HWP); or
(3) grant HG&E grandfather rights to PSNH New Hampshire
Corridor transmission. The ALJ rejected the "drastic remedy"
of divestiture of HWP, stating that it was "wholly uncalled-
for by anything in this record," and holding that HG&E would
be adequately protected by the conditions to the merger
designed to address the anticompetitive effects on
transmission dependent utilities ("TDUs"). 53 F.E.R.C. at
65,232.
As the ALJ described,
-58-
[t]he Transmission Dependent Utilities
(TDUs) are "entirely dependent on NU or
PSNH for their bulk power transmission
needs." These companies (most of which
involve municipal ownership) are not big
enough to own or construct sufficient
generation to meet their loads. As their
brief states, they "are physically unable
to engage in any bulk power transaction
___
without using the NU or PSNH transmission
systems. Absent economic access to NU's
or PSNH's transmission facilities, the
TDU cannot survive as an independent
entity." The TDUs compete with NU and
PSNH in the wholesale bulk power market;
each TDU, like NU/PSNH, seeks out
attractive sources of supply. TDUs thus
"are in the uneasy position of having
their only source of essential
transmission service in the hands of
their principal competitor." These small
companies, uniquely vulnerable to
possible anticompetitive conduct, are
entitled to some measure of protective
assurance regarding NU/PSNH's post merger
conduct.
53 F.E.R.C. at 65,232-33. The ALJ held that "[a]ll rates,
terms and conditions of NU/PSNH transmission service to the
TDUs in effect on this date shall . . . be maintained after
the merger, unless and until changes are either agreed upon
by the merged company and the TDUs, or authorized by the
Commission." 53 F.E.R.C. at 65,233. In short, while finding
that TDUs were "uniquely vulnerable" to anticompetitive
conduct by NU-PSNH, the ALJ found that HG&E had not shown
that it was entitled to protections beyond those given to
TDUs generally. The Commission agreed, 56 F.E.R.C. at
62,049, but bolstered the protection for TDUs ordered by the
-59-
ALJ by imposing the additional condition that NU establish a
special tariff for TDUs. Id. at 62,050.
___
HG&E points to no evidence in the record to
indicate that it faced anticompetitive consequences of the
merger sufficiently different in character or magnitude to
warrant greater protections than those given to other TDUs.
We therefore affirm the Commission's actions to protect TDUs,
which were adequately explained and supported in the record.
H. Modifications to the Filed Rate Schedules.
H. Modifications to the Filed Rate Schedules.
The Commission analyzed the Seabrook Power Contract
and Capacity Interchange Agreements filed by NUSCO under the
"just and reasonable" standard of 206 of the FPA,45 and
ordered the following modifications to the rate schedules:
(1) deletion of the automatically adjusting rate of return on
equity provision in the Seabrook Power Contract; (2)
reduction of the rate of return on equity in the Seabrook
Power Contract from 13.75 percent to 12.53 percent;46 (3)
____________________
45 Section 206(a) of the FPA, 16 U.S.C. 824(e)(a)
provides:
Whenever the Commission, after hearing
had upon its own motion or upon
complaint, shall find that any rate . . .
collected by any public utility . . . is
unjust, unreasonable, unduly
discriminatory or preferential, the
Commission shall determine the just and
reasonable rate . . . to be thereafter
observed and in force, and shall fix the
same by order.
46 NUSCO did not appeal this modification.
-60-
North Atlantic's decommissioning expenses under the Seabrook
Power Contract and any subsequent changes thereto were made
subject to review by the Commission; (4) reduction in the
rate of return on equity specified in the two Capacity
Interchange Agreements from 14.50 percent to 13.17 percent
for the period from July 27, 1990 through August 8, 1991, and
thereafter to 12.93 percent; and (5) the Seabrook Power
Contract could be modified by the Commission in the future
under the "just and reasonable" standard of 206 of the FPA,
rather than the "public interest" standard agreed to by the
parties. 56 F.E.R.C. at 61,993; 58 F.E.R.C. at 61,185.
Each of the three parties to the Seabrook Power
Contract ("SPC"), NU, PSNH and the State of New Hampshire,
waived its right to file a complaint under 206 regarding
the rates contained in the agreement. Section 12 of the SPC
also provided that:
[E]ach [party] further agrees that in any
proceeding by the FERC under Section 206
the FERC shall not change the rate
charged under this Agreement unless such
rate is found to be contrary to the
public interest.
NU argues that the Commission violated the "Mobile-Sierra"
_____________
doctrine47 when it modified the SPC in disregard of the
intent of the parties.
____________________
47 This doctrine is based on the companion cases of United
______
Gas Pipe Line Co. v. Mobile Gas Service Co., 350 U.S. 332
__________________ _______________________
(1956) and FPC v. Sierra Pacific Power Co., 350 U.S. 348
___ __________________________
(1956).
-61-
Under the Mobile-Sierra doctrine, the Commission
_____________
must respect certain private contract rights in the exercise
of its regulatory powers. Parties to a contract may: (1)
waive their rights to file a complaint challenging that
contract, and (2) restrict the power of the Commission to
impose rate changes under 206 to cases in which it finds
the rates contrary to the public interest a more difficult
standard for the Commission to meet than the statutory
"unjust and unreasonable" standard of 206. See Papago
___ ______
Tribal Utility Authority v. FERC, 723 F.2d 950, 953 (D.C.
________________________ ____
Cir. 1983), cert. denied, 467 U.S. 1241 (1984). In Papago,
____________ ______
the court held that, regardless of the parties' intent, the
Commission retained, in any event,
the indefeasible right . . . under 206
to replace rates that are contrary to the
public interest, "as 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, 723 F.2d at 953, (quoting Sierra, 350 U.S. at 355).
______ ______
The court went on to note that "unduly discriminatory" in
this context "apparently means unduly discriminatory or
preferential to the detriment of purchasers who are not
parties to the contract." Papago, 723 F.2d at 953 n.4.
______
In this case, seemingly for the first time, the
Commission held that it also had the
-62-
authority under the public interest
standard to modify a contract where: it
__
may be unjust, unreasonable, unduly
________________________________
discriminatory or preferential to the
detriment of purchasers that are not
parties to the contract; it is not the
______________
result of arm's length bargaining; or it
_________________________________________
reflects circumstances where the seller
_________________________________________
has exercised market power over the
_________________________________________
purchaser.
_________
50 F.E.R.C. at 61,839 (emphasis added). The ALJ interpreted
that holding as follows:
The Commission made clear that in the
particular circumstances surrounding the
Seabrook contract, it retains power
through the "public interest" language
to make modifications under the
traditional just and reasonable and
nondiscrimination standards.
53 F.E.R.C. at 65,235. The standard established by the
Commission, and subsequently applied by the ALJ, conflates
the "just and reasonable" and "public interest" standards,
thereby circumventing the Mobile-Sierra doctrine. The
_____________
distinction between the "just and reasonable" and "public
interest" standards loses its meaning entirely if the
Commission may modify a contract under the public interest
standard where it finds the contract "may be unjust [or]
unreasonable." The parties' express intent was to avoid
review of rate schedules under the just and reasonable
standard. Mobile-Sierra protects their right to do so,
_____________
leaving the Commission with the power to modify rates only
when required by the public interest.
-63-
The Commission found that the SPC might unduly
discriminate against entities not parties to the contract,
and that there was no genuine arm's-length bargaining because
NU and PSNH negotiated the agreement at a time when they knew
they were about to merge and have identical interests. The
Commission held that, in this context, it could "carefully
scrutinize the rates, terms and conditions of the contract"
to determine if they were just. Id.
___
The Commission's explanation for employing a just
and reasonable standard seems to us inadequate. To the
extent the Commission is relying on NU's prospective
ownership of PSNH, it is unclear why the Commission should be
concerned about protecting PSNH from a perceived
disadvantageous arrangement imposed by its prospective owner
since any disadvantage visited on the prospective subsidiary
will be borne by its owner. If NU chooses to allocate risks
among its operating subsidiaries and one of its subsidiaries
is disfavored in this calculation, there would seem to be
little justification for the Commission stepping in on behalf
of the disfavored subsidiary absent some threat to the public
interest.
As for the seller's market power, reliance on this
factor threatens to erode the Mobile-Sierra doctrine so
_____________
substantially that a fuller explanation from the Commission
is required before proceeding down this route. After all,
-64-
some measure of market 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 element 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 dominant seller.
The most attractive case for affording additional
protection, despite the presence of a contract, is where the
protection is intended to safeguard the interests of third
parties, notably the buyer's customers. The Mobile-Sierra
_____________
doctrine itself allows for intervention by FERC where it is
shown that the interests of third parties are threatened.
Mobile, 350 U.S. at 344-45; Sierra, 350 U.S. at 355.
______ ______
However, the standard to be applied, as formulated by the
Supreme Court, is the protection of outside parties from
"undu[e] discriminat[ion]" or imposition of an "excessive
burden." Sierra, 350 U.S. at 355. If there is some reason
______
for departing from this public interest standard as framed by
the Supreme Court, the Commission has not supplied it.
We assume, without deciding, that: (1) FERC is
correct in its assertion that the State of New Hampshire did
not adequately represent the interests of non-parties to the
contract, and that, therefore, the SPC may have unduly
discriminated against those non-parties; and (2) the alleged
-65-
lack of arms'-length bargaining among NU, PSNH and the State
of New Hampshire gave the Commission the right to evaluate
the SPC. We hold, however, that the Commission was bound to
follow the Mobile-Sierra doctrine as explicated by Papago,
_____________ ______
and therefore should have evaluated the SPC under the public
interest standard, not the just and reasonable standard.
We therefore remand this issue for reconsideration
______
by FERC under the public interest standard.48
IV. SUMMARY.
IV. SUMMARY.
We affirm the Commission's orders in all respects
We affirm the Commission's orders in all respects
___________________________________________________
with the exception of its modifications of the Seabrook Power
with the exception of its modifications of the Seabrook Power
_____________________________________________________________
Contract filed with the merger proposal which we remand for
Contract filed with the merger proposal which we remand for
_____________________________________________________________
consideration under the public interest standard.
consideration under the public interest standard.
_________________________________________________
____________________
48 We have considered, but find unpersuasive, NU's argument
that FERC committed error when it disrupted the bankruptcy
settlement by modifying the Capacity Interchange Agreements.
-66-
Related
United Gas Pipe Line Co. v. Mobile Gas Service Corp.
350 U.S. 332 (Supreme Court, 1956)
Federal Power Commission v. Sierra Pacific Power Co.
350 U.S. 348 (Supreme Court, 1956)
Consolo v. Federal Maritime Commission
383 U.S. 607 (Supreme Court, 1966)
United States v. Phillipsburg National Bank & Trust Co.
399 U.S. 350 (Supreme Court, 1970)
Otter Tail Power Co. v. United States
410 U.S. 366 (Supreme Court, 1973)
Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc.
467 U.S. 837 (Supreme Court, 1984)
Mobil Oil Exploration & Producing Southeast, Inc. v. United Distribution Cos.
498 U.S. 211 (Supreme Court, 1991)
Municipalities of Groton v. Federal Energy Regulatory Commission, Nepool Executive Committee, Intervenor. Nepool Executive Committee v. Federal Energy Regulatory Commission, Municipalities of Groton, Intervenor
587 F.2d 1296 (D.C. Circuit, 1978)
Papago Tribal Utility Authority v. Federal Energy Regulatory Commission, Arizona Public Service Company, Intervenor
723 F.2d 950 (D.C. Circuit, 1983)
Boston Edison Company v. Federal Energy Regulatory Commission, City of Holyoke Gas and Electric Department, Intervenors
856 F.2d 361 (First Circuit, 1988)
Bankr. L. Rep. P 74,609 in Re Public Service Company of New Hampshire, Debtor. Martin Rochman v. Northeast Utilities Service Group
963 F.2d 469 (First Circuit, 1992)
Rochman v. Northeast Utilities Service Co.
113 S. Ct. 304 (Supreme Court, 1992)
Cite This Page — Counsel Stack
Bluebook (online)
Vermont Department v. FERC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vermont-department-v-ferc-ca1-1993.