Florida Power & Light Co. v. FEDERAL POWER COM'N

• Decision Date: 13 July 1970
• Docket Number: No. 24956.,24956.
• Citation: 430 F.2d 1377
• Parties: FLORIDA POWER & LIGHT COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

430 F.2d 1377 (1970)

FLORIDA POWER & LIGHT COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.

No. 24956.

United States Court of Appeals, Fifth Circuit.

July 13, 1970.

COPYRIGHT MATERIAL OMITTED

Richard L. McGraw, Leon Jaworski, Houston, Tex., Harry A. Poth, Jr., New York City, Richard M. Merriman, Washington, D.C., for petitioner.

James L. Graham, Jr., Tallahassee, Fla. (now deceased), Prentice P. Pruitt, Tallahassee, Fla., for intervenor: (Florida Pub. Serv. Comm.)

Peter H. Schiff, Sol., F.P.C., Richard A. Solomon, Gen. Counsel, F.P.C., Israel Convisser, Atty., F.P.C., Washington, D.C., for respondent.

George Spiegel, Washington, D.C. (amicus curiae).

Before BELL, AINSWORTH and GODBOLD, Circuit Judges.

GODBOLD, Circuit Judge:

Florida Power & Light Company (FPL) petitions for review of a determination,¹ reached by the Federal Power Commission on a 3-2 vote, that it is a public utility within the meaning of § 201 of the Federal Power Act, 16 U.S. C. § 824(e). We reverse the Commission and set aside its order.

The term "public utility" means "any person who owns or operates facilities subject to the jurisdiction of the Commission under sections 824-824h of this title." 16 U.S.C. § 824(e). "The provisions of sections 824-824h of this title shall apply to the transmission of electric energy in interstate commerce and to the sale of electric energy at wholesale in interstate commerce * * *. The Commission shall have jurisdiction over all facilities for such transmission or sale of electric energy." 16 U.S.C. § 824(b).

The Commission asserts jurisdiction on the ground that FPL owns and operates facilities for the transmission of electric energy in interstate commerce. Jurisdiction over interstate wholesale sales under § 824(b) is not involved.

1. Background.

FPL's facilities are located wholly within the State of Florida. It has no connections at the state line with any out of state system. Commission jurisdiction is predicated on transmission interstate of FPL-generated power through its interconnection with other electric systems outside of and within Florida, and receipt by FPL, through these interconnections, of power generated outside of Florida.

Congress exercised its power under the Commerce Clause and undertook federal regulation in the interstate electric field as a result of the decision of the Supreme Court in Public Utilities Commission of Rhode Island v. Attleboro Steam & Electric Co., 273 U.S. 83, 47 S. Ct. 294, 71 L.Ed. 549 (1927), holding that neither Massachusetts nor Rhode Island had power to regulate the sale by a Rhode Island utility of electric energy to a Massachusetts utility because the sale was in interstate commerce. There being at that time no federal regulation of interstate sales by electric utilities, Congress acted to close this gap in effective utility regulation, the "Attleboro gap," by enacting Part II of the Federal Power Act in 1935.

Jurisdiction of the FPC is not based upon a test of effect on interstate commerce but upon interstate transmission of electric energy (or wholesale sales in interstate commerce, not here applicable). 16 U.S.C. § 824(b). To make clear that Commission jurisdiction extends only to transmission or sales "in interstate commerce," the Congress wrote several specific exclusions into the Act.

* * * such Federal regulation, however, to extend only to those matters which are not subject to regulation by the States.

16 U.S.C. § 824(a). This caveat and the directive that the Act

shall not apply to any other sale of electric energy or deprive a State or State commission of its lawful authority now exercised over the exportation of hydroelectric energy which is transmitted across a State line * * *,

16 U.S.C. § 824(b), extend Commission jurisdiction to the limits of but no further than the Attleboro gap. Connecticut Light & Power Co. v. FPC, 324 U.S. 515, 65 S.Ct. 749, 89 L.Ed. 1150 (1945); Jersey Central Power & Light Co. v. FPC, 319 U.S. 61, 63 S.Ct. 953, 87 L.Ed. 1258 (1943).

Likewise, the Commission shall not have jurisdiction, except as specifically provided * * * over facilities used for the generation of electric energy or over facilities used in local distribution or only for the transmission of electric energy in intrastate commerce, or over facilities for the transmission of electric energy consumed wholly by the transmitter.

16 U.S.C. § 824(b). Exemptions are also provided for governmental units and corporations, 16 U.S.C. § 824(f), for one engaged in transmission or sale of electric energy but not otherwise subject to the Act who makes a temporary emergency connection with a public utility subject to the jurisdiction of the Commission, 16 U.S.C. § 824a(d), and for certain international exports, 16 U.S.C. § 824a(f).

Congress defined interstate transmission as follows:

Electric energy shall be held to be transmitted in interstate commerce if transmitted from a State and consumed at any point outside thereof.

16 U.S.C. § 824(c). The Supreme Court has credited the Congress with determining that "federal jurisdiction was to follow the flow of electric energy, an engineering and scientific, rather than a legalistic or governmental test." Connecticut Light & Power Co. v. FPC, supra.

Commission power does not extend over all connecting transmission facilities but only those which transmit energy actually moving in interstate commerce. Mere connection determines nothing.

Jersey Central Power & Light Co. v. FPC, supra, 319 U.S. at 72, 63 S.Ct. at 959, 87 L.Ed. at 1269.

The concept of following the flow of electric energy from one state to the other was easy to apply in Attleboro. A Rhode Island electric company delivered energy over its Rhode Island transmission lines to the facilities of a Massachusetts electric company which had no generating capacity. Now generating companies are interconnected with each other nationwide. Companies have formed area and regional power pools, with varying degrees of integration and centralized management. The Commission itself has power to establish regional districts for voluntary interconnection and coordination of facilities and to promote such interconnection and coordination. 16 U.S.C. § 824a(a). Interconnection has become a fact of life to meet needs, scheduled and emergency, of localized areas and large regions.²

2. The instant case.

FPL produces and sells electric energy in eastern and southern Florida. But it is a major electric company.³

The Commission opinion describes FPL's interconnections:

FPL is directly interconnected with four other Florida electric systems, as follows: Florida Power Corporation (Corp), Tampa Electric Company (Tampa), Orlando Utilities Commission (Orlando), and the City of Jacksonville (Jacksonville). FPL, Corp, and Tampa form the Florida Operating Committee (Florida Pool) with Jacksonville and Orlando as associate members. The Florida Pool meets several times a year to consider mutual problems relating to the interconnected operation of the systems, including the coordination of spinning reserves, the arrangement of compatible plant maintenance schedules, and the coordination of plans for the construction of transmission lines and the staggered construction of generating units.

* * *

Corp, which is interconnected with Tampa and Orlando as well as with FPL, is also interconnected with power companies outside of the State of Florida. Thus, it is directly interconnected with Georgia Power Company (Georgia), a subsidiary of The Southern Company (Southern). Southern is a holding company whose other subsidiaries are Gulf Power Company (Gulf) which operates in northwestern Florida, Alabama Power Company (Alabama), and Mississippi Power Company (Mississippi). Corp is also directly interconnected with Gulf, and Gulf is interconnected with Georgia and Alabama. Corp has an agreement with the subsidiaries of Southern whereby Corp makes 100,000 kw available to these subsidiaries during the summer, and in return, the subsidiaries make 100,000 kw available to Corp during the winter. During 1964 Southern delivered 167,476,000 kwh to Corp, and Corp delivered 157,324,000 kwh to Southern. Of these totals, approximately 97,000,000 kwh represented deliveries from Georgia to Corp, and 82,000,000 kwh represented deliveries from Corp to Georgia. In addition, 3.9 million kwh were wheeled for the Southwestern Power Administration over Southern\'s lines across the Georgia-Florida state line to Corp. Georgia is also interconnected with Duke Power Company, Tennessee Valley Authority, and Southeastern Power Administration. These systems operate in states beyond Georgia.

FPL and the other members of the Florida Pool are also members of a multi-state electric network, the Southeast Region of the Interconnected Systems Group (ISG) which covers the southeastern and central portions of the United States. FPL\'s membership in the ISG provides acceptable frequency control and also automatic assistance during emergencies in the event of any generation outage of less than 100 mw on its system. In this connection it may be noted that 12 of FPL\'s 24 generating units generate 75 mw or less. An outage of any of these units would lead to almost instantaneous assistance to FPL. FPL, in turn, operates in synchronism with the 140 members of ISG and is ready to assist them in case of emergency. Thus, FPL contributed 8 mw to ISG to assist a midwestern utility which had sustained a 580-mw generator loss.

The Commission position is best explained by quoting from its opinion:

The testimony and evidence of record support the examiner\'s findings that the electric power on all the interconnected systems in which FPL, Corp, and Georgia participate is supplied as alternating current at a frequency of 60 cycles; that the frequency of each system is in synchronism with that of all the others in the interconnection; that there is a tie-line bias with frequency control on the interconnected systems which permits

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