City of Groton v. Federal Power Commission, DC-13.

• Decision Date: 30 October 1973
• Docket Number: No. DC-13.,DC-13.
• Citation: 487 F.2d 927
• Parties: CITY OF GROTON et al., Plaintiff-Petitioner-Appellants, v. FEDERAL POWER COMMISSION, Defendant-Respondent-Appellee, and The Connecticut Light and Power Company, Intervenor-Respondent.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

487 F.2d 927 (1973)

CITY OF GROTON et al., Plaintiff-Petitioner-Appellants, v. FEDERAL POWER COMMISSION, Defendant-Respondent-Appellee, and The Connecticut Light and Power Company, Intervenor-Respondent.

No. DC-13.

Temporary Emergency Court of Appeals.

October 30, 1973.

Grace Powers Monaco, Washington, D. C., Charles F. Wheatley, Washington, D. C., on the brief for appellants.

Charles J. McClees, Atty., Washington, D. C., for F. P. C., Leo E. Forquer, Gen. Counsel, George W. McHenry, Jr., F.C.C., on the brief for appellee.

James R. McCotter, Jerome Ackerman, Covington & Burling, Washington, D. C., James R. McIntosh, Paul F. McAlenney, Day, Berry & Howard, Hartford, Conn., on the brief for intervenor.

Before TAMM, Chief Judge, and VAN OOSTERHOUT and HASTINGS, Judges.

TAMM, Chief Judge.

The City of Groton et al. hereinafter "Cities" sought review in the United States District Court for the District of Columbia of Federal Power Commission hereinafter "Power Commission" Order No. 437A-12 of October 12, 1972. Cities brought their action pursuant to §§ 211(a), (d)(1), and (e)(1) of the Economic Stabilization Act of 1970, 12 U.S.C. § 1904 (Supp. II, 1972). Defendants below were the Price Commission now Cost of Living Council¹ and the Power Commission. The motion of Connecticut Light & Power Co. hereinafter "CL&P" to intervene as of right was granted.

In the course of proceedings in the trial court, all parties moved for summary judgment with the Cost of Living Council additionally moving to dismiss as to the Council. Following oral argument, the trial court granted the Power Commission's and CL&P's motions for summary judgment, granted the Cost of Living Council's motion to dismiss, and denied the Cities' motion for summary judgment.² Formal findings of fact and conclusions of law were filed on July 9, 1972, and this appeal³ followed. For the reasons stated below, we affirm.

I.

The chronology of this rather complex situation must be clearly understood and so is set out at length. Plaintiff-appellants City of Groton, Borough of Jewett City, Second and Third Taxing Districts of City of Norwalk, City of Norwich and Town of Wallingford are public agencies organized and existing under the laws of the State of Connecticut. The aforesaid appellants own and operate their own electric systems and purchase electricity at wholesale prices from CL&P. Appellee CL&P is a public electric utility company engaged principally in the generation, transmission and sale of electricity in the State of Connecticut. In this regard, CL&P is subject to the regulation of the Power Commission pursuant to subchapter II of the Federal Power Act, 16 U.S.C. § 824 et seq. (1970).

On January 1, 1963, CL&P and Cities entered into contracts for the sale and purchase of electricity. These contracts were filed with the Power Commission on July 29, 1964, as CL&P's rate schedules pursuant to Section 205 of the Federal Power Act, 16 U.S.C. § 824d (1970). These rate schedules became effective pursuant to the provisions of the Federal Power Act and remained so at all times relevant to this case.⁴ Each of these contracts contained an identical fuel adjustment clause.⁵ Basically, this clause permitted CL&P to increase the rates charged its wholesale customers, including Cities, to reflect increases in the cost of fuels used to generate electricity.⁶

On August 15, 1971, the President issued Executive Order No. 11615, 3 C.F. R. 199 (1972) exercising his authority under the Economic Stabilization Act of 1970, 12 U.S.C. § 1904 (Supp. II, 1972), to issue appropriate orders for the stabilization of prices, rents, wages and salaries. This executive order Phase I froze prices for 90 days at the highest level charged during the previous 30-day period. In compliance with this order and implementing regulations issued by the Power Commission,⁷ CL&P did not increase its rates to Cities pursuant to the fuel adjustment clause during the 90-day freeze from August 15, 1971 to November 14, 1971. Nothing done during this period is in issue in the instant case.

On October 15, 1971, the President issued Executive Order No. 11627, 3 C.F. R. 218 (1972), Phase II which created the Price Commission to exercise such control over prices and rents as the Cost of Living Council delegated to it. Pursuant to authority subsequently delegated to it,⁸ the Price Commission issued regulations to govern all changes in prices on or after November 14, 1971. 36 Fed.Reg. 21953-55 (1971). Section 300.016 of said regulations specifically governed rate increases by regulated public utility companies. Section 300.016(a) provided generally that public utilities such as CL&P, could increase their rates provided "such increase had been approved by a regulatory agency." The utility was required to notify the Price Commission of the agency's approval or authorization.⁹ Section 300.016(b)¹⁰ was a special rule, governing utility rate increases which "were approved" by a regulatory agency before November 14, 1971, but which were not permitted to take effect due to Phase I. It required the regulatory agency to review such increases to insure consistency with the Economic Stabilization Act before the increases could become operative. In the case of CL&P, the "regulatory agency" referred to in these Price Commission regulations is the Federal Power Commission.

In order to implement these Price Commission regulations, the Power Commission issued Order No. 437A, 18 C.F. R. § 2.90a on November 16, 1971. Order 437A did not deal specifically with rate increases under a fuel adjustment clause, but rather concerned itself with future general rate increases. On December 10, 1971, the Power Commission issued Order No. 437A-5¹¹ specifically establishing review procedures for existing fuel adjustment clauses. This order identified all public utility companies, including CL&P, having rate schedules on file with the Power Commission containing fuel adjustment clauses, the operation of which was suspended by Phase I and Order No. 437. This order required that each public utility review its fuel adjustment clauses and certify to the Power Commission that any increase in rates resulting from the operation of a fuel adjustment clause was in compliance with section 35.14 of the Commission's Regulations.¹² Utilities so certifying were directed to include supporting data in accordance with the various sub-parts of section 35.14. Further, ordering paragraph (B) of Order 437A-5 provided as follows:

(B) Each public utility, upon the filing of that certification, which meets the requirements of Section 35.14 of the Commission\'s Regulations under the Federal Power Act, will be so notified by the Commission\'s Secretary and thereupon shall be deemed to have satisfied the purposes of paragraph (d) of Section 2.90a of the Commission\'s General Policy and Interpretations, so as to permit the affected fuel clauses to be operative, but in no event earlier than 12:01 a.m., November 14, 1971.

J.A. at 4.

In response to Order 437A-5, CL&P certified in writing to the Power Commission that any increases in rates arising from operation of its fuel adjustment clauses would be in compliance with Section 35.14 of the Power Commission's Regulations. This letter of December 23, 1971,¹³ also included supporting data by which it intended to be in compliance with the subparts of Section 35.14. CL&P informed the Power Commission that if notification was received from the Power Commission, it intended to make increases resulting from its fuel adjustment clauses operative as of 12:01 a.m., November 14, 1971, in accordance with Commission Order 437A-5.¹⁴

On January 14, 1972, the Price Commission promulgated revised regulations covering public utilities to be effective January 17, 1972. 37 Fed.Reg. 652-54. Section 300.16(c) provided:

(c) Price increases to which reporting and certification requirements do not apply. The reporting and certification requirements of this section do not apply to any price increase resulting from the pass-through of specific allowable costs, including taxes (except income taxes) and fuel costs, but not including labor costs, if the increase is not objected to by the appropriate regulatory agency and is authorized by statute, regulation, or order of the appropriate regulatory agency, or by an approved tariff provision.

37 Fed.Reg. 653.

The Price Commission, on September 16, 1972, again revised its public utility regulations. Section 300.308(e) of these regulations provided as follows:

Certain allowable costs. A public utility may place in effect, without regard to the reporting and certification requirements of this section, any price increase resulting from the passthrough of specific allowable costs, including taxes (except income taxes) and fuel costs, but not including labor costs, if the increase is authorized by statute, regulation, or order of the appropriate regulatory agency, or by an approved tariff provision (e. g., a fuel adjustment clause).

6 C.F.R. § 300.308(e) (1973).

During the period from December 23, 1971 to June 23, 1972, there occurred correspondence between the Secretary of the Power Commission and CL&P in connection with the substantiating data required by § 35.14 of the Regulations.¹⁵ Finally, it appears that the Power Commission was satisfied, and on October 12, 1972, the Power Commission issued Order No. 437A-12.¹⁶ In its order, the Power Commission ruled that CL&P's fuel adjustment clause was in conformity with Section 35.14 of the regulations, and consistent with the Economic Stabilization Act. Order 437A-12 provided in relevant part:

In accordance with Section 2.90a(d) of our General Policy and Interpretations, as quoted above CL&P\'s fuel adjustment clause shall become effective as of 12:01 a.m., November 14, 1971. In our opinion municipal customers in their briefs, have not set forth sufficient reasons to justify an effective date other than November 14, 1971. This date,

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