Appeal of New England Power Co.

• Decision Date: 23 December 1980
• Docket Number: No. 80-396,80-396
• Citation: 120 N.H. 866,424 A.2d 807
• Parties: Appeal of NEW ENGLAND POWER COMPANY (Public Utilities Commission).
• Court: New Hampshire Supreme Court

Page 807

424 A.2d 807

120 N.H. 866

Appeal of NEW ENGLAND POWER COMPANY (Public Utilities Commission).

No. 80-396.

Supreme Court of New Hampshire.

Dec. 23, 1980.

Orr & Reno, Concord (Richard B. Couser, Concord, orally), for New England Power Company.

Francis X. Bellotti, Atty. Gen., Boston, Mass. (Alan B. Sherr, Asst. Atty. Gen., Boston, Mass., orally), for Commonwealth of Massachusetts.

Dennis J. Roberts, II, Atty. Gen., Providence, R. I. (John R. McDermott, Sp. Asst. Atty. Gen., Providence, R. I., orally), for State of Rhode Island.

Edward F. Burke, Administrator, Providence, R. I. (John R. McDermott, Sp. Asst. Atty. Gen., Providence, R. I., orally), for Rhode Island Division of Public Utilities and Carriers.

Steven D. Stark, for amicus curiae Conservation Law Foundation of New England.

Barto & Gfroerer, Concord, and Spiegel & McDiarmid, Washington, D. C., for amicus curiae Unaffiliated Massachusetts Municipal Wholesale Customers of New England Power Co.

Gregory H. Smith, Acting Atty. Gen. (David W. Jordan, Asst. Atty. Gen., orally), for State of New Hampshire.

William L. Shaine, Concord, by brief and orally, for Legislative Utilities Consumers' Council.

Sulloway, Hollis & Soden, Concord, for amicus curiae Public Service Company of New Hampshire.

DOUGLAS, Justice.

This case involves the validity of an order of the New Hampshire Public Utilities Commission (hereinafter "PUC") pursuant to RSA 374:35 withdrawing from the New England Power Company (hereinafter "NEPCO") permission to transmit hydroelectricity generated in New Hampshire to other States. We affirm the order and remand.

On November 21, 1979, the PUC instituted an investigation under RSA 374:35 to determine whether it should revoke its earlier approval of the exportation of electric power generated by hydroelectric facilities located in New Hampshire. RSA 374:35 provides:

"Transmitting Electricity Out of the State Permission Required. No corporation engaged in the generation of electrical energy by water power shall engage in the business of transmitting or conveying the same beyond the confines of the state, unless it shall first file notice of its intention so to do with the public utilities commission and obtain an order of said commission permitting it to engage in such business. Any such corporation engaged in the business of transmitting or conveying such electrical energy beyond the confines of this state pursuant to such order shall discontinue such business in whole or in part, to such extent and under such conditions as the commission may order, whenever, after notice to such corporation and hearing thereon, the commission shall find that such electrical energy or the portion thereof affected by said order is reasonably required for use within this state and that the public good requires that it be delivered for such use."

NEPCO moved to dismiss the proceedings for lack of subject matter jurisdiction. The PUC denied the motion. On September 19, 1980, after several hearings, the PUC issued the order in controversy, and NEPCO filed a timely appeal to this court. The order reads as follows:

"ORDERED, that the permission granted New England Power Company (NEPCO) to transmit hydroelectric energy from within the boundaries of the State to outside the State is hereby withdrawn as of thirty (30) days from the date of this Order; and it is

FURTHER ORDERED, that NEPCO make arrangements to sell the previously exported hydroelectric energy to persons, utilities and municipalities within the State of New Hampshire within thirty (30) days of the date of this Order; and it is

FURTHER ORDERED, that upon the completion of both units at Seabrook the Commission will again re-examine the issue of exportation."

We granted a stay of the order to preserve the status quo ante pending our decision on the merits.

I. Background.

NEPCO is a public utility predominantly engaged in the generation of electricity for sale in the wholesale market. As part of its generating mix, NEPCO owns and operates six hydroelectric generating stations comprised of twenty-seven units along the Connecticut River in New Hampshire and Vermont. All six stations are federally licensed under Part I of the Federal Power Act, 16 U.S.C. §§ 792-823. The twenty-one units located in New Hampshire have a capacity of 420 megawatts.

NEPCO sells the power produced by these stations to wholesale customers in New Hampshire, Massachusetts, and Rhode Island. The energy is dispatched through a regional power-pooling system composed of sixty utilities in New England (NEPOOL), comprising ninety-eight per cent of the generating capacity in New England. NEPCO sells seventy-five per cent of its power in Massachusetts. Less than six per cent of New Hampshire's population presently receives energy from NEPCO's regular wholesale customers.

Uniquely, while the Connecticut River separates the States of Vermont and New Hampshire, the river up to the low water mark on the Vermont side lies within the State of New Hampshire. Vermont v. New Hampshire, 289 U.S. 593, 619-20, 53 S.Ct. 708, 717-18, 77 L.Ed. 1392 (1933); see RSA 1:1 to :8. The northern part of the Connecticut River is, therefore, owned by the people of the State of New Hampshire. See McGilvra v. Ross, 215 U.S. 70, 79, 30 S.Ct. 27, 31, 54 L.Ed. 95 (1909). The right of private parties to use it to produce electricity for use outside New Hampshire has been limited by RSA 374:35, :36, with the PUC, in effect, the citizens' legislatively delegated "trustee."

Pursuant to its statutory authority, the PUC has, from time to time, approved NEPCO's requests to export hydroelectric power. See, e. g., Connecticut River Power Co. & New England Power Company, 36 N.H.P.U.C. 302, 311-12 (1954); Grafton Power Company, 12 N.H.P.S.C. 194, 201 (1929). NEPCO concedes that since 1926 it or a predecessor company has obtained permission from the PUC to export electricity from all plants in New Hampshire except Vernon Station, which was constructed prior to 1913.

According to the PUC, the surplus of power produced in New Hampshire during the first half of this century justified the PUC's grants of permission to export in those years. In the late 1920's hydroelectricity provided forty-five per cent of New Hampshire's energy and, with the exception of Maine, this was the highest percentage of electricity so produced anywhere in the country. In 1951 the percentage had risen to forty-nine per cent. Today, the biggest retail seller of electricity in the State, Public Service Company of New Hampshire, serves eighty-three per cent of the population, but its generating mix includes only 4.6 per cent produced by hydroelectric stations, according to the PUC. NHPUC Report accompanying Order 14,492 at 6 (Sept. 19, 1980).

II. The Federal Power Act.

NEPCO argues that Parts I and II of the Federal Power Act, 16 U.S.C. §§ 792-824k, preempt RSA 374:35. Traditionally, the regulation of electric utilities was a function performed by State governments under their police power. Federal legislation may supersede such State regulation, but only if Congress expressly so provides or if federal and State laws conflict. Jones v. Rath Packing Co., 430 U.S. 519, 525-26, 97 S.Ct. 1305, 1309-10, 51 L.Ed.2d 604 (1977). When it enacted Parts I and II of the Federal Power Act, Congress did not expressly preempt State law as it has in other statutes. See, e. g., Depository Institutions Deregulation and Monetary Control Act of 1980 § 511(a), Pub.L.No.96-221, 94 Stat. 132 (to be codified in 12 U.S.C. § 86a); Act of December 28, 1979 § 202, amending the Federal Deposit Insurance Act (12 U.S.C. § 1811-1831), Pub.L.No.96-161, 93 Stat. 1233 (to be codified in 12 U.S.C. § 1831a). Our inquiry, therefore, must be whether the federal law so conflicts with State law as to preempt it.

Congress's primary objective in enacting Part I of the Federal Power Act, 16 U.S.C. §§ 792-823, was to control comprehensively the development of water power along the nation's navigable waterways through the issuance of licenses to construct and operate dams and reservoirs. Chemehuevi Tribe of Indians v. FPC, 420 U.S. 395, 400-05, 95 S.Ct. 1066, 1070-73, 43 L.Ed.2d 279 (1975). Congress did not preempt the entire field of electric utility regulation when it enacted Part I, which left the States with their traditional jurisdiction over electric utilities, except for matters relating to the issuance of licenses. See First Iowa Coop. v. Power Comm'n, 328 U.S. 152, 171, 66 S.Ct. 906, 915, 90 L.Ed. 1143 (1946). For example, State regulation of intrastate sales of electricity to ultimate consumers, such as the retail customers of Public Service Company of New Hampshire, remains in State hands. 16 U.S.C. § 813.

NEPCO argues that the PUC's interpretation and application of RSA 374:35 conflicts with the licensing power of the federal government under Part I. We disagree. The PUC's order does not require compliance with RSA 374:35 as a condition precedent to securing a federal license under Part I. See First Iowa Coop. v. Power Comm'n, supra at 170, 66 S.Ct. at 914. New Hampshire has not sought to stop hydroelectric development of the Connecticut River and does not challenge the licenses granted to NEPCO over the years under Part I of the Federal Power Act. Because we find that there is no conflict between RSA 374:35 and Part I, we conclude that the federal statute does not preempt the State law.

The more difficult question is whether Part II of the Federal Power Act, 16 U.S.C. §§ 824-824k, preempts RSA 374:35. Seven years after the enactment of Part I, Rhode Island sought to regulate the rates at which a utility within that State sold power to a wholesale customer in Massachusetts. The Supreme Court of the United States held that such rate regulation was an impermissible burden on interstate commerce. Pub. Util. Comm'n v. Attleboro Co., 273 U.S. 83, 90, 47 S.Ct. 294, 296, 71 L.Ed. 549 (1927).

As a result of the Attlebo...