Indiana & Michigan Electric Company v. FPC

• Decision Date: 05 December 1966
• Docket Number: No. 15285.,15285.
• Citation: 365 F.2d 180
• Parties: INDIANA & MICHIGAN ELECTRIC COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

365 F.2d 180 (1966)

INDIANA & MICHIGAN ELECTRIC COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.

No. 15285.

United States Court of Appeals Seventh Circuit.

July 13, 1966.

Certiorari Denied December 5, 1966.

Richard M. Dicke, Rolon W. Reed, New York City, Simpson Thacher & Bartlett, New York City, Anthony L. Fletcher, New York City, of counsel, for petitioner.

John J. Dillon, Indianapolis, Ind., amicus curiae.

Richard A. Solomon, Asst. Gen. Counsel, Israel Convisser, Attorney, Federal Power Commission, Washington, D. C., Howard E. Wahrenbrock, Sol., Ernst Liebman, Federal Power Commission, Washington, D. C., for respondent.

Before DUFFY, KNOCH and KILEY, Circuit Judges.

Certiorari Denied December 5, 1966. See 87 S.Ct. 509.

DUFFY, Circuit Judge.

The orders of the Federal Power Commission here under review (Opinion No. 458) issued April 14, 1965 and Opinion No. 458-A issued June 11, 1965, 33 FPC ___), require the Indiana & Michigan Electric Company (I&M) to file with the Commission its rate schedules covering wholesale sales to fourteen municipal electric systems and seven rural electric cooperative systems located in Indiana, and two municipal electric systems and one rural electric cooperative system located in Michigan, all of which sales were found by the Commission to be in interstate commerce.

Petitioner appeals from the above orders claiming there is no basis in law or in fact for the finding below that the Federal Power Commission has jurisdiction over the sales here in issue. The Federal Power Commission has jurisdiction over the wholesale sale of electric energy only if the sale is in interstate commerce. 16 U.S.C. § 824. Petitioner also claims it did not receive a fair hearing in accordance with due process of law.

Indiana & Michigan Electric Company, together with five other operating companies, is an integral part of the American Electric Power System (AEP), a single coordinated power system operating as an integrated unit in Michigan, Indiana, Ohio, Kentucky, West Virginia, Virginia and Tennessee, with generating facilities combined by an inter-connected transmission grid. The System's dispatching center at Canton, Ohio, directs the dispatch and utilization of energy on a continuous basis to provide the capacity and energy required to carry all the customer demands in the seven-state area at maximum economy.

The proof shows that I&M realizes substantial advantages from its participation in the integrated operations including savings in capital outlay for generating facilities, savings in the cost of generating and transmitting energy, better control and maintenance of voltage levels and greater reliability of service.

The System serves more than 5,400,000 people, and is tied together by a network of 14,000 circuit miles of 345,000 volt line, the highest voltage in general use in the United States. The System is interconnected with nineteen other electric power systems at sixty-six locations, including thirty-nine major, high-voltage interconnections.

The electric load of every customer of every operating company in the System is supplied with electric energy from the entire AEP pool.

AEP makes no attempt to control energy flows on individual lines because electric energy flows freely and automatically as determined by the electric characteristics of the network and operations of the System. Only the net of flows over all interconnections is controlled by increasing or decreasing generation so as to maintain interconnection schedules and to maintain frequencies at 60 cycles.

I&M daily transmits electric energy across the Indiana-Michigan border. The proof showed that I&M's total annual generation in Michigan is insufficient to supply the annual demand of its Michigan wholesale customers, and the additional amounts of energy needed are provided by I&M from sources outside the state of Michigan.

The Commission found that the evidence in the record clearly showed the receipt of out-of-state energy by I&M's wholesale customers. The Commission said: "Moreover, while it is not practicable to trace the energy flows precisely from specific generating plants to specific loads, the company records show conclusively that energy generated outside Indiana and Michigan pervades I&M's facilities and is delivered to those portions of I&M's system serving the municipals and cooperatives, and we so find. Thus, I&M receives electric energy from Ohio Power Company, The Cincinnati Gas and Electric Company, Commonwealth Edison Company, Ohio Valley Electric Corporation, and probably, Illinois Power Company, all of whose generation is located outside of Indiana or Michigan, and transmits this energy on its high voltage transmission network. For instance, the energy from Commonwealth Edison is received at I&M's Olive Substation in northern Indiana, and, when the I&M generating units at the Twin Branch station are not operating, commingled energy through Olive supplies practically all of the electric needs of north central Indiana and Michigan area. * * *"

Petitioner insists that Federal Power Commission sales jurisdiction must be proved by substantial scientific and engineering evidence that out-of-state energy flows to each sale in issue and that these sales are not made over facilities used in local distribution. I&M insists that the AEP system is too complex to permit ascertainment that out-of-state energy did or did not reach I&M's wholesale customers.

I&M contends that the most that can be said for the evidence produced by the Federal Power Commission in this case is that there does exist a hypothetical possibility that any particular load of an electric system connected to an interstate system could, in fact, be receiving energy at any given moment solely from an in-state source; solely from an out-of-state source; or from a combination of both.

Electric energy moves at approximately 186,000 miles per second — the speed of light. It cannot be stored and is generated as needed. The loads which are usually supplied by various generating sources on a network, change from moment to moment, being added to, increased, decreased, or cut off at the discretion of the customer. Every change affects every other generating unit connected with the network because they are interlocked electromagnetically.

The amount of system generation is constantly changing and system frequency, which is an indication of the speed of the generators, also fluctuates continually, usually a bit above or a bit below 60 cycles.

Every connected generator in AEP's seven-state system, contributes energy to the system in order to supply part of the increment of an additional load and to maintain the balance in the system between generation and load.

American Electrical Power Service Corporation (AEP), pursuant to a contract between itself and the operating subsidiaries, renders centralized management, engineering and supervisory service, and...