FLORIDA MUN. POWER v. Florida Power & Light

• Decision Date: 16 December 1993
• Docket Number: No. 92-35-CIV-ORL-22.,92-35-CIV-ORL-22.
• Citation: 839 F. Supp. 1563
• Parties: FLORIDA MUNICIPAL POWER AGENCY, Plaintiff, v. FLORIDA POWER AND LIGHT COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Florida

839 F. Supp. 1563

FLORIDA MUNICIPAL POWER AGENCY, Plaintiff, v. FLORIDA POWER AND LIGHT COMPANY, Defendant.

No. 92-35-CIV-ORL-22.

United States District Court, M.D. Florida, Orlando Division.

December 16, 1993.

L. Lee William, Jr., Frederick M. Bryant, Moore, Williams, Bryant, Peebles & Gautier, P.A., Tallahassee, FL, Robert A. Jablon, Bonnie S. Blair, Cynthia S. Bogorad, David E. Pomper, Spiegel & McDiarmid, Washington, DC, for plaintiff.

James M. Grippando, Alvin B. Davis, Steel, Hector & Davis, Miami, FL, J.A. Bouknight, Jr., Edward J. Twomey, Steve Ross, Newman & Holtzinger, P.C., Washington, DC, for defendant.

MEMORANDUM DECISION AND ORDER

CONWAY, District Judge.

This cause comes before the Court on the parties' cross-motions for summary judgment. On May 1, 1992, Plaintiff Florida Municipal Power Agency ("FMPA") filed a Motion for Partial Summary Judgment on Count I of the Amended Complaint (Dkt. 28). On April 15, 1993, Defendant Florida Power and Light Company ("FPL") filed a Motion for Summary Judgment (Dkt. 140), and FMPA filed a Motion for Partial Summary Judgment on Essential Facilities and Transmission Market Issues and on FPL's Waiver and Estoppel Defenses (Dkt. 145). The Court heard oral argument on these motions on November 22, 1993.

Summary judgment is appropriate only when the Court is satisfied "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In making this determination, the Court must view all of the evidence in a light most favorable to the non-moving party. Samples ex rel. Samples v. Atlanta, 846 F.2d 1328, 1330 (11th Cir.1988).

The Court finds that the "filed rate" doctrine, as it has evolved through a line of Supreme Court cases, is critical to the disposition of this case. Under the filed rate doctrine, the Federal Energy Regulatory Commission ("FERC") has exclusive authority to determine the reasonableness of wholesale rates for power. This principle binds both state and federal courts. FERC's exclusive jurisdiction applies not only to rates but also to other decisions within the jurisdiction of FERC, such as power allocations, that affect wholesale rates. Mississippi Power & Light Co. v. Moore, 487 U.S. 354, 371, 108 S.Ct. 2428, 2438, 101 L.Ed.2d 322 (1988).

I. Facts

FMPA contends that FPL has refused to sell it transmission services on a fair basis, in violation of FPL's contractual obligations as well as federal and state antitrust laws. Except as noted, all facts set forth below are culled from documents filed by FMPA.

a. Parties:

FPL is one of the largest electric utilities in the United States and serves approximately one-half of Florida's electric load. It operates throughout most of Southern and Eastern Florida, and its area of operation extends up the east coast of Florida to the Georgia border. Its area of retail service covers approximately 36 counties, 27,659 square miles, and 700 communities. It serves approximately three million customers. FPL sells electricity both at wholesale to other electric utilities and at retail to ultimate users. FPL provides both high voltage electricity, (i.e., transmission voltage electricity) at the wholesale level to its own and others' distribution systems throughout its area of operation, and low voltage electricity (i.e., subtransmission and distribution voltage electricity) directly to retail customers throughout a large portion of its area of operation.

FMPA is a municipally-owned agency, established pursuant to state law. It sells electricity and performs other services for its member, municipally-owned electric utilities. Throughout Florida there are many cities which own and operate electric systems for the benefit of their residents. FMPA was established to enable these cities to buy affordable and reliable electricity, using FMPA's ability to finance, negotiate for power supply and coordinate resources. FMPA's members compete with FPL in the provision of low voltage electricity to consumers, and FMPA and FMPA members compete or attempt to compete with FPL in the provision of high voltage electricity to certain distribution systems and to other utilities.

b. Transmission Service:

There are three basic functions, or levels of production, in the sale of electricity: generation, transmission and distribution. All three functions are necessary for delivery of electricity to ultimate consumers. A vertically integrated utility, such as FPL, performs all three functions. Other entities in the electric utility industry may perform only one or two. FMPA, for example, engages in the generation of electricity and in purchases and sales of bulk power or electricity at the wholesale level. All of FMPA's member cities engage in distribution of electricity to retail customers, and some of FMPA's members also generate electricity. However, because many of FMPA's power supply resources and many of its member cities are located within the FPL-owned transmission area, FMPA and its members must depend upon FPL for transmission services.

Transmission is necessary for virtually every purchase and sale transaction among utilities, as well as for delivering electricity efficiently to ultimate consumers. Transmission over the FPL network involves the receipt of a quantity of electricity by the FPL network at one or more locations coupled with delivery of a like quantity of electricity from the FPL network at one or more other locations. FPL currently sells transmission to FMPA on a "point-to-point" basis. Under this system, FPL assesses a charge for transmission between pairs of FMPA receipt and delivery points (points at which electricity would be delivered to and/or from the FPL network). With limited qualifications, FMPA typically has rights to transmission only between one designated resource and one city. If it desires to supply this city from another power source, it must pay a separate duplicative transmission charge.

By contrast, FPL uses a transmission network to integrate its generation and purchased power resources. As the level of electricity use changes during the day (and during various time periods within a year), FPL uses electricity from different power supply sources to have the optimal electricity mix to serve its customers' electricity needs at a reasonable price. FPL uses its transmission system to integrate its power supply resources located throughout Florida with additional power supply from Georgia and power which is purchased from other utilities.

FMPA wants to be able to purchase transmission services on FPL's transmission network to integrate FMPA's resources in the same way. Specifically, FMPA has requested access to the FPL-owned transmission network for FMPA's Integrated Dispatch and Operations project ("IDO"). Through this project, FMPA and its members hope to obtain savings from jointly planning and operating their power supply resources. Access to a transmission network would enable them to operate their available resources more efficiently, obtain economies in power supply planning and purchasing, and be better able to plan for new generation and power supply resources. FMPA does not want to be restricted to buying transmission services on a "point-to-point" basis which limits FMPA to transmission between specific delivery and receipt points. An effort to "network" with "point-to-point" charges in effect would result in multiple transmission charges. Because FPL has refused to sell FMPA transmission on a network basis, FMPA cannot implement its IDO project.

c. History of the Case:

During the 1970s and early 1980s, a number of Florida cities that are now FMPA members brought legal actions against FPL, which included the filing of antitrust and other claims in the Southern District of Florida, and petitions and interventions before the Atomic Energy Commission and its successor, the Nuclear Regulatory Commission ("NRC"). During this time, FPL was seeking approval for its St. Lucie Unit 2 nuclear plant. In proceedings before the NRC, the Department of Justice ("DOJ") and the staff of the NRC, as well as the Florida cities, attempted to attach antitrust conditions to the St. Lucie Plant Unit 2 nuclear license.

The antitrust issues raised by DOJ and the NRC staff were resolved in an amendment to the construction permit which was issued to FPL on May 26, 1981. The permit, in a section identified as Article X, "Transmission Services," sets forth the antitrust conditions to which FPL agreed. The parties refer to this section as either the "Antitrust Conditions" or the "License Conditions".¹ Thereafter, FPL entered into settlement agreements with various cities that had brought legal actions against FPL. These settlement agreements are detailed in paragraph 15 of FMPA's Amended Complaint.

As set forth above, FPL is currently selling FMPA "point to point" transmission service. This service is rendered pursuant to five existing transmission service agreements ("TSAs") between FPL and FMPA: 1) the St. Lucie Delivery Service Agreement dated June 27, 1983; 2) the Stanton Transmission Agreement dated November 25, 1986; 3) the Stanton Tri-City Transmission Agreement dated November 25, 1986; 4) the Restated and Revised Transmission Service Agreement; and 5) the Agreement to Provide Specified Transmission Service dated April 24, 1986. The TSAs have been filed with FERC.

In 1989 FMPA began negotiating for transmission network service. The negotiations were unsuccessful. FMPA then filed this suit in state court on December 13, 1991. FPL removed the case to federal court on January 13, 1992. FMPA's Amended Complaint (Dkt. 14), filed on February 13, 1992, contains three counts. In Count I, FMPA asserts that the various settlement agreements to which FPL was a party and the construction permit, collectively, constitute a contract between FMPA and FPL, which contract FPL breached by refusing to sell FMPA the...