Environmental Action, Inc. v. F.E.R.C., s. 89-1333
| Decision Date | 02 August 1991 |
| Docket Number | Nos. 89-1333,89-1338 and 89-1343,s. 89-1333 |
| Citation | 939 F.2d 1057 |
| Parties | , 1991-2 Trade Cases 69,576 ENVIRONMENTAL ACTION, INC., Salt Lake Community Action Program, Salt Lake Citizens Congress, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, PacifiCorp, Utah Associated Municipal Power Systems, Utah Division of Public Utilities, Council of Industrial Boiler Owners, Ad Hoc Committee for a Competitive Electric Supply System, Idaho Power Company, Public Service Commission of Wyoming, Washington City, Utah, Public Utility Commission of Oregon, American Iron and Steel Institute, American Paper Institute, Inc., Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review of Orders of the Federal Energy Regulatory Commission.
Daniel C. Kaufman, with whom Kenneth G. Hurwitz was on the brief, for petitioners Nucor Steel Div. of Nucor Corp. and Public Utilities Authority for the Town of Plymouth, Utah, in 89-1338 and 89-1343.
Scott Hempling for petitioners Environmental Action, Salt Lake Community Action Program and Salt Lake Citizens Congress in 89-1333.
Samuel Soopper, Atty., F.E.R.C., with whom William S. Scherman, Gen. Counsel, Jerome M. Feit, Sol., and Katherine Waldbauer, Atty., F.E.R.C., were on the brief, for respondent in 89-1333, 89-1338, and 89-1343.
William F. Young, with whom Robert W. Johnson, Arnold H. Quint, George M. Galloway, and Helen J. Edwards for PacifiCorp, Michael S. Gilmore, for Idaho Public Utilities Com'n, Michael Ginsberg, for Utah Div. of Public Utilities, W. Benny Won, for Oregon Dept. of Justice, and Roger C. Fransen and Milo M. Vukelich, for Wyoming Atty. General's Office, were on the joint brief, for intervenors PacifiCorp, et al., in all cases.
Earl H. O'Donnell, Robert F. Shapiro, and Lynn N. Hargis were on the brief for intervenor American Paper Institute, Inc., et al., in 89-1333, 89-1338, and 89-1343. Jan B. Vlcek also entered an appearance for intervenor.
Richard M. Sharp and Timothy K. Shuba were on the brief for intervenor Utah Associated Mun. Power Systems in all cases.
Roger C. Fran entered an appearance for intervenor, Public Service Com'n of Wyoming.
Kenneth G. Kieffer entered an appearance for intervenor, Public Power Counsel.
Sheryl S. Hendrickson, Charles M. Darling, IV, J. Patrick Berry and Drew J. Fossum entered appearances for intervenor, MAGCORP of America, Inc. Brian R. Gish entered an appearance for intervenor, Idaho Power Co.
W. Benny Won entered an appearance for intervenor, Public Utilities Com'n of Oregon.
Before EDWARDS, D.H. GINSBURG, and SENTELLE, Circuit Judges.
Opinion for the Court filed by Circuit Judge D.H. GINSBURG.
Several petitioners for review question whether the Federal Energy Regulatory Commission properly exercised its discretion under Sec. 203 of the Federal Power Act, 16 U.S.C. Sec. 824b, when it approved and set conditions for a merger between two companies that generate, sell, and transport electric power in the western states. The conditions require the merged company, upon request, to transmit (or "wheel," in the trade) power for other utilities. The petitioners maintain that the conditions are inadequate fully and fairly to remedy the anticompetitive effects of the merger.
In October 1988, the Commission approved the proposed merger of Utah Power and Light Co. and PacifiCorp Maine d/b/a Pacific Power and Light Co. into a combined entity that was subsequently renamed PacifiCorp. Utah Power and Light Co., 45 FERC p 61,095 (1988) (Opinion No. 318 ). Prior to the merger, UP & L had generated and sold, at both wholesale and retail, electricity in Utah and in southeastern Idaho and southwestern Wyoming. PP & L had generated and sold electricity, also at both wholesale and retail, in California, Idaho, Montana, Oregon, Washington, and Wyoming. Both companies owned extensive interstate transmission networks extending throughout their respective areas of business. Their merger was designed to achieve certain economies of scale and to take advantage of the complementary nature of the two companies' peak demand periods. (UP & L's demand peaked in the summer, PP & L's in the winter.)
When considering the merger application, the Commission's primary concern was with the possible anticompetitive effect of the merger in the bulk energy sales and transmission markets in the contiguous states west of the Rockies. Power is in surplus in the Northwest, while the Southwest and Rocky Mountain areas are energy-poor. The merger unites in PacifiCorp control of one of the two main transmission paths into the Southwest and 88.2 percent of the transmission capacity into the Rocky Mountain area.
The Commission found that
prior to the merger (even without the additional transmission control that would result from the merger) UP & L's transmission system constitutes an essential facility since: (1) UP & L's system is controlled by a monopolist; (2) competitors are unable to economically duplicate it; (3) its use has been denied to competitors; and (4) it is feasible to make the facilities available to competitors.
* * * * * *
Following the merger, [PacifiCorp] would control the essential facilities previously owned by UP & L, as well as PP & L's transmission facilities. As a result, [PacifiCorp] would have enhanced ability to exercise monopoly power over transmission in the relevant geographic markets. This increased control of transmission between the Northwest and the Southwest, as well as the Rocky Mountain area, enhances the merged company's ability to foreclose competition for sales of bulk power.
Opinion No. 318, 45 FERC at 61,287-88. More specifically, the agency foresaw two distinct types of competitive harm from the merger, monopsony and monopoly:
First, by refusing to wheel low-cost power from the Northwest, the merged company could instead buy the power, and, in reselling [a/k/a brokering] it, extract [monopsony] profits. Second, the merged company could give preference to its own generation over that of competitors for sales into [monopolized] southwestern markets (even when the latter is cheaper).
Accordingly, the Commission found, in terms echoing those of Section 7 of the Clayton Act, 15 U.S.C. Sec. 18, that "the proposed merger is likely to result in a substantial lessening of competition in the relevant product and geographic markets." Id. at 61,284. The agency therefore attached to its approval of the merger a number of conditions "designed to provide a long-term remedy to [its] likely anticompetitive effects." Id. at 61,290.
First, PacifiCorp must provide firm (i.e., uninterruptible) wholesale transmission service at cost-based rates to any "utility" that requests it. For present purposes, the significant aspect of this condition is that small power producers and cogenerators--so-called Qualifying Facilities (QFs in the parlance of the Public Utility Regulatory Policies Act (PURPA), 16 U.S.C. Sec. 824a-3)--are excluded from the definition of "utility." Second, for a period of five years a percentage of the company's transmission capacity must be reserved for use by so-called Transmission Dependent Utilities (TDUs), which are dependent upon PacifiCorp's transmission lines for access either to their sources of power or to their retail customers. Here the significant point is that only a TDU in existence as of the date of the merger application is eligible to use this reserved capacity. Third, if PacifiCorp chooses to provide a non-firm (i.e., interruptible) transmission service, then the maximum rate it may charge must be based upon "an equal three-way sharing of benefits" among the energy buyer, the energy seller, and PacifiCorp as the transmitting entity. (The benefit to be divided is the difference between the energy buyer's decremental cost and the seller's incremental cost.) Opinion No. 318, 45 FERC at 61,290, 61,295. PacifiCorp accepted these conditions.
A multitude of intervenors, including citizens groups, labor unions, industrial end users, and competing energy producers requested rehearing, and in Opinion No. 318-A, 47 FERC p 61,209 (1989), the Commission rejected their various arguments for changing the conditions. In particular, it declined to drop its exclusion of QFs from the group of utilities entitled to wholesale transmission service from PacifiCorp. Without such transmission access, a QF may, by reason of the PURPA, force its native (i.e., local) utility to purchase its power. 18 C.F.R. Sec. 292.303. With transmission access over PacifiCorp's system, a QF could also force a distant utility to buy its power, which the FERC deemed an unfair advantage over competing sellers. The Commission similarly stood fast against the request of Nucor Steel, an industrial end user served by UP & L before the merger (though now served by a newly formed municipal utility), that PacifiCorp be required to transmit power for retail customers, such as itself.
In both Opinion No. 318-A and in a further supplemental opinion, No. 318-B, 48 FERC p 61,035 (1989), the Commission also refused to extend TDU status to utilities that did not exist as of the date of the merger application, expressing special concern for existing TDUs, which "had been competitively disadvantaged in the past," and fear that extending their access remedy to others "would dilute or negate the effectiveness of the short-term [i.e., five-year] conditions." Opinion No. 318-B, 48 FERC at 61,181-82. Finally, the Commission refused the request of the United Mine Workers of America and several citizens groups that it require PacifiCorp to provide non-firm transmission service, stating that "[o]n this record, we are not willing to conclude that the merged company will be able to exercise market power in the non-firm market on a sustained basis." Opinion No. 318-A, 47 FERC at 61,738. Various parties filed...
To continue reading
Request your trial
-
Northeast Utilities Service Co. v. F.E.R.C.
...See also, Consolo v. FMC, 383 U.S. 607, 620-21, 86 S.Ct. 1018, 1026-27, 16 L.Ed.2d 131 (1966); Environmental Action, Inc. v. FERC, 939 F.2d 1057, 1064 (D.C.Cir.1991); Boston Edison Co. v. FERC, 856 F.2d 361, 371 (1st Cir.1988). We hold that FERC's exercise of its discretion was not inapprop......
-
Appalachian Power Co. v. Environmental Protection Agency
...prediction deserves our deference notwithstanding that there might also be another reasonable view." Environmental Action, Inc. v. FERC, 939 F.2d 1057, 1064 (D.C. Cir. 1991). MW & SE State Petitioners may believe their projections are superior to the EPA's--and they may even be correct--but......
-
S.C. Pub. Serv. Auth. v. Fed. Energy Regulatory Comm'n
...Energy Commodities Grp., Inc. v. FERC, 457 F.3d 14, 24 (D.C.Cir.2006) (ellipses in original) (quoting Envtl. Action, Inc. v. FERC, 939 F.2d 1057, 1064 (D.C.Cir.1991)). The evidence that Edison cites for the proposition that nonpublic utilities will not participate does not “flatly contradic......
-
Wisconsin Public Power, Inc. v. F.E.R.C.
...Inc. v. FCC, 462 F.3d 1, 12 (D.C.Cir.2006) (internal quotation marks omitted and emphasis altered); see Envtl. Action, Inc. v. FERC, 939 F.2d 1057, 1064 (D.C.Cir.1991) ("[I]t is within the scope of the agency's expertise to make . . . a prediction about the market it regulates, and a reason......