Town of Norwood, Mass. v. Federal Energy Regulatory Commission
| Decision Date | 06 November 1978 |
| Docket Number | No. 77-1326,77-1326 |
| Citation | 190 U.S.App.D.C. 409,587 F.2d 1306 |
| Parties | TOWN OF NORWOOD, MASSACHUSETTS, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Boston Edison Company, Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Charles F. Wheatley, Jr., Washington, D. C., with whom Grace Powers Monaco and Robert A. O'Neil, Washington, D. C., were on the brief, for petitioner.
Joseph G. Stiles, Atty., Federal Energy Regulatory Commission, Washington, D. C., with whom Robert W. Perdue, Acting Gen. Counsel, and Philip R. Telleen, Atty., Federal Energy Regulatory Commission, Washington, D. C., were on the brief, for respondent.
George F. Bruder, Washington, D. C., with whom Carmen L. Gentile, Washington, D. C., was on the brief, for intervenor.
Before WRIGHT, Chief Judge, MacKINNON, Circuit Judge, and AUBREY E. ROBINSON, Jr., * District Judge.
Opinion for the court filed by Chief Judge J. SKELLY WRIGHT.
This is a petition for review of the Federal Power Commission's 1 resolution of a variety of disputes stemming from efforts by the Town of Norwood, Massachusetts, to discontinue purchasing wholesale power from the Boston Edison Company and commence purchasing it at a lower rate from the New England Power Company (NEPCO), while using Edison's transmission facilities to "wheel" 2 the power thus purchased. The most important issue raised concerns the intersection of the Supreme Court's Mobile-Sierra doctrine 3 and the nondiscrimination requirement of Section 205(b) of the Federal Power Act, 16 U.S.C. § 824d(b) (1976). For the reasons discussed below, we conclude that the case must be remanded to the FERC so that the record may be reopened and the issues reconsidered in light of this court's recent decision in Boroughs of Chambersburg et al. v. FERC, 188 U.S.App.D.C. 310, 580 F.2d 573 (1978) (Per curiam ), as well as the instant opinion. Because the result on remand may alter or moot some of the other issues raised before this court, we express no opinion as to those other issues. 4
In October 1972 the Town of Norwood informed Edison of its intention to cease purchasing its wholesale electricity requirements from the company "as soon as possible after January 1, 1973" and become an all-requirements customer of NEPCO, utilizing Edison transmission lines to wheel the NEPCO power. Joint Appendix (JA) 260. On December 8, 1972 Edison wrote back stating that it did not have on file a transmission rate appropriate for such wheeling, that it was studying the Town's plan but was as of then "unable to commit to any particular course of action," that were the Town to terminate its all-requirements contract with Edison as proposed the company would suffer revenue losses of about $4.75 million, and that it would expect to be compensated for those losses in view of the Town's failure to comply with advance notice requirements set forth in a tariff settlement to which the Town had been a party. JA 263-270.
In a March 8, 1973 letter to Edison the Town stated that NEPCO was willing to supply its needs commencing in November 1974, challenged the Edison figure for termination losses, sought ways of avoiding liability for those losses, and requested terms for the wheeling services it needed. JA 271-272. Edison responded briefly on April 10, JA 273, and more fully on June 26, JA 274-276. In the latter communication the company stated that it would be willing to file a wheeling rate with the Federal Power Commission "if we are definitely advised by Norwood * * * of the Town's committed plans for changes in the service it desires * * * ." JA 274. The letter went on to state that Edison intended to seek from the Commission an order defining any Edison obligation to provide wheeling services and to urge the Commission to determine that it would not be in the public interest for Edison to wheel power for the Town. 5 The company did pledge to provide interim wheeling services if the Commission had not resolved the matter by the time the Town was committed to begin taking power from NEPCO. JA 275. Several months later the company offered to ensure that the Town would not suffer any loss as a result of Edison's efforts to secure a Commission determination that it was not obligated to furnish wheeling services. In particular, the company indicated that were it successful before the Commission it would either wheel power voluntarily for Norwood until such time as the Town was able to terminate any contract with NEPCO without penalty or hold Norwood harmless against any such penalty. 6 Norwood did not follow up on this offer. Indeed, the parties never got much closer to the bargaining table perhaps because of the events detailed in the next paragraph.
Just after the Town of Norwood's first letter, Edison entered into an entirely unrelated agreement to wheel power for NEPCO, which had become the wholesale supplier for what is termed Quincy-Weymouth area. 7 The Edison-NEPCO agreement called for wheeling services substantially similar to those sought by the Town of Norwood at a price amounting to $6.36 per kw per year, JA 648, or about 30 percent less than the amount which Edison's correspondence suggested that Norwood would have to pay. 8 Although the Edison-NEPCO contract was executed on November 1, 1972, it was not placed on file with the Commission until May 7, 1973. Accordingly, it remained unknown to Norwood (and to the general public) until six months after its effective date. 9 In June 1973 Norwood sought to intervene in the Edison-NEPCO rate filing, arguing that to prevent undue discrimination it should be given the right to purchase wheeling services at the same rate. The Commission accepted the filing on August 24, 1973, and instituted an investigation of the rate under Section 206(a) of the Federal Power Act, 16 U.S.C. § 824e(a) (1976). Norwood was permitted to intervene, JA 457-461. Subsequently, NEPCO was permitted to intervene as well.
On March 5, 1974 Edison commenced a separate proceeding before the Commission this one relating directly to the Town of Norwood. JA 471-520. Edison sought a declaratory order that (1) it was not legally obligated to furnish wheeling services to the Town, (2) the Town had failed to give the required notice of its proposed change of suppliers, (3) Edison had properly computed the adverse financial impact that would result if the Town terminated its all-requirements contract without giving adequate notice to the company, and (4) Edison's method of calculating the wheeling rate that would apply to the Town was appropriate. JA 471-490.
In September 1974, over the objection of Norwood, the two Commission proceedings were consolidated. Joint hearings began shortly thereafter. An initial decision was issued on May 21, 1976 by an Administrative Law Judge. JA 575-588. The parties excepted to various portions of that decision, and on December 7, 1976 the Commission reversed in part and affirmed in part. JA 646-666. Specifically, it concluded (1) that the low wheeling rate in the Edison-NEPCO contract could not be increased without NEPCO's consent notwithstanding Edison's assertion that the rate was noncompensatory and unreasonable; (2) that Norwood had no right under the Federal Power Act to demand wheeling at a similarly low rate; (3) that Edison was willing to wheel power for Norwood, and therefore that the company's request for a declaratory order that it was not compelled to do so was moot; (4) that Norwood had failed to comply with the applicable notice requirements, that that failure was not excused by the difficulty of obtaining a wheeling commitment from Edison, and that Edison had neither waived those requirements nor discriminated unlawfully against Norwood by permitting prior customers to terminate on less notice; and (5) that Edison's calculations of adverse impact and wheeling rates were, with certain modifications, proper. Various motions for rehearing were filed, initially granted, and ultimately denied. JA 667-750. Thereafter, Norwood filed this appeal seeking a determination that the Commission erred (a) in failing to find that Edison had wrongfully discriminated against the Town; (b) in finding that the Town would be answerable for any adverse impact to Edison caused by its failure to give adequate notice of committed plans to terminate; and (c) in finding that Edison's methods of computing adverse impact and wheeling rates were just and reasonable. We deal here with only the discrimination issue. 10
The framework in which Norwood's discrimination claim must be resolved is set by two Supreme Court decisions and Section 205(b) of the Federal Power Act. The two decisions United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373 (1956), and FPC v. Sierra Pacific Power Co., 350 U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388 (1956) hold that, under parallel provisions of the Natural Gas and Federal Power Acts, regulated suppliers cannot unilaterally increase the rates charged to customers whose contracts specify fixed rates. In Mobile the Court emphasized the need for orderly planning and stable power supply arrangements and the role in meeting that need which can be played by fixed-price contracts. It concluded that denying to suppliers the right through unilateral action to alter contractually set rates would preserve the integrity and reliability of contracts without impairing the power of the Commission to modify rates whether contractually set or not where the public interest so requires. 350 U.S. at 344, 76 S.Ct. 373. In Sierra the Court went on to indicate three circumstances under which the Commission might conclude that a rate set by contract may be found contrary to the public interest and therefore revised. The mere fact that the rate produces less than a fair return is insufficient, the Court said. Rather "the...
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...may not "use a fixed-rate contract as a device to render unassailable an otherwise prohibited undue preference," see Town of Norwood v. FERC, 587 F.2d 1306 (D.C.Cir.1978), the Commission nevertheless found no undue discrimination under the circumstances. In support of this conclusion, the C......
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