City of Oglesby v. Federal Energy Regulatory Commission
| Decision Date | 10 January 1980 |
| Docket Number | No. 76-1585,76-1585 |
| Citation | 610 F.2d 897 |
| Parties | CITY OF OGLESBY, Village of Ladd, and the Cedar Point Light and Water Company, Illinois, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Illinois Power Company, Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Charles F. Wheatley, Jr., Washington, D. C., with whom Grace Powers Monaco, Washington, D. C., was on the brief, for petitioners.
Philip R. Telleen, Atty., Federal Power Commission, Washington, D. C., with whom Drexel D. Journey, Gen. Counsel, Robert W. Perdue, Deputy Gen. Counsel, and Allan Abbot Tuttle, Sol., Federal Power Commission Washington, D. C., were on the brief, for respondent.
William T. Hart, Chicago, Ill., with whom David C. Wheeler, was on the brief, for intervenor.
Before WRIGHT, Chief Judge, and ROBINSON and MacKINNON, Circuit Judges.
Opinion for the Court filed by SPOTTSWOOD W. ROBINSON, III, Circuit Judge.
Illinois Power Company, the intervenor, supplies electric energy to petitioners, the City of Oglesby, the Village of Ladd, and Cedar Point Light and Water Company, pursuant to separate contracts. The present controversy arose when Illinois Power lodged with the Federal Power Commission 1 a new rate schedule purporting to increase the charges for service. Petitioners, resisting its filing, contended that Illinois Power lacked any contractual prerogative to change rates unilaterally, and that the rates designated by the parties' agreements were unalterable unless and until modified by order of the Commission itself.
The Commission construed Illinois Power's compacts with Oglesby and Ladd as contemplating rate readjustments in the manner prescribed by Illinois law, and on that basis as unconditionally authorizing rate elevations by Illinois Power. By a more direct route, the Commission interpreted the agreement with Cedar Point as likewise tolerating rate revisions on Illinois Power's initiative. Resultantly, the Commission refused to deny Illinois Power the benefit of the proposed rate hike pending investigation and affirmative endorsement by the Commission. 2
We are unable to agree that the Oglesby and Ladd contracts incorporate Illinois law. 3 We hold that the terms of those agreements bar effectuation of rate increases until they are finally approved by the Commission. 4 We concur, however, in the Commission's view that Illinois Power and Cedar Point fashioned a going-rate contract interposing no obstacle to supplier-inaugurated rate changes. 5 Accordingly, we reverse the Commission's order insofar as it pertains to Oglesby and Ladd, and affirm it in its application to Cedar Point.
The City of Oglesby and the Village of Ladd maintain and operate their own electric-power distribution systems. Cedar Point Light and Water Company, a privately-owned utility, furnishes energy to about 150 retail customers. All three purchase their requirements exclusively from Illinois Power, a public electric utility subject to the Federal Power Act. 6
On June 27, 1975, Illinois Power tendered for filing with the Commission a new schedule raising its service rates. In response, petitioners, on July 28, submitted a "motion to reject, protest and petition to intervene" alleging, Inter alia, that their contracts 7 with Illinois Power are of the fixed-rate variety governed by the Mobile-Sierra doctrine, 8 and hence are not subject to modification at Illinois Power's behest but only by order of the Commission predicated upon a determination of public necessity therefor.
On October 29, 1975, the Commission accepted Illinois Power's filing, suspended the new rates until January 1, 1976, authorized petitioners' intervention and directed a hearing. 9 On March 8, 1976, after that rate had automatically gone into effect, 10 the Commission denied petitioners' motion to reject the controverted increases. 11 It held that a reference to the Illinois Commerce Commission in the Oglesby and Ladd agreements 12 necessitated resort to Illinois law to glean the parties' intentions. 13 Pursuing that course, the Commission surmised that if the Illinois agency elects to suspend rates pending a hearing, under state law the suspension can endure until a final decision is reached. 14 Thus, on the premise that Illinois Power had contracted with Oglesby and Ladd with calculated reference to these procedures, the Commission concluded that operation of the new rates before completion of its investigation would be inconsistent with the parties' understanding. 15 Illinois Power was thus ordered to refund all revenues collected from Oglesby and Ladd after January 1, 1976, in excess of the contract rates. 16 Contrastingly, the Commission read the Cedar Point agreement as a going-rate contract 17 entitling Illinois Power to change the rates unilaterally. Accordingly, a final decisional order by the Commission was not deemed a prerequisite to implementation of the increase affecting Cedar Point. 18
Both Illinois Power and petitioners sought rehearing of the March 8 order. Illinois Power argued that, contrary to the Commission's belief, Illinois law provides for the immediate operation of a rate increase if no agency decision has been reached at the expiration of the limited statutory suspension period. By this construction, Illinois Power's attempt to secure the rate hike would have been sanctioned by Illinois regulatory procedures resembling those delineated in Section 205 of the Federal Power Act. 19 In their petition, the customer group took issue with any utilization of a more lenient burden of proof than that announced in Sierra 20 in determining whether the circumstances warranted a rate increase. Petitioners further objected to the Commission's treatment of the Cedar Point agreement as a going-rate contract.
On May 7, 1976, the Commission issued an order rejecting petitioners' bid for rehearing but granting Illinois Power's application therefor. 21 Reversing its March 8 order, the Commission agreed with Illinois Power that the state regulatory agency could put a rate increase into effect prior to final decision on the merits, and that upon lapse of the statutory suspension period without rendition of such a decision that body would have no choice but to permit the increase to become operative. 22 In consequence, the Commission ruled that it had properly permitted Illinois Power's new rate to commence prior to final decisional order. 23
Petitioners, on May 25, 1976, moved for reconsideration and rehearing of the May 7 order, insisting that the contracting parties never intended that Illinois law should dictate whether rates can be increased unconditionally by Illinois Power or, instead, only by a regulatory agency after resolution on the merits. They maintained that the language of their service agreements made clear that the parties contemplated no rate change unless and until finally ordered by the Commission; and that, even if Illinois law applied, in actual practice the Illinois agency had always promulgated a final rate order within the statutory suspension period. On June 25, 1976, the Commission rebuffed petitioners' contentions, denied their request for rehearing and reaffirmed its ruling of May 7. 24 Petitioners then resorted to this court. 25
The ability of contracting parties to determine for themselves whether and under what conditions rates may be altered subject, of course, to the overriding regulatory power of the Commission to adjust rates in the public interest 26 has been delineated in three decisions of the Supreme Court. In Mobile, 27 dealing with provisions of the Natural Gas Act 28 "substantially identical to the equivalent provisions" 29 of the Federal Power Act, 30 the Court held that that legislation does not itself confer upon a natural gas company authority to increase unilaterally a contractually-fixed rate, and that a newly-filed schedule is a nullity insofar as it deviates from the rate previously selected by the parties. On the same day, the Court expressly extended this ruling to the Federal Power Act in Sierra. 31 Mobile was later distinguished, however, in Mem phis, 32 which involved a going-rate agreement providing for payment for gas delivered by a pipeline "under Seller's Rate Schedule . . ., Or any effective superseding rate schedules, on file with the Federal Power Commission." 33 This language was held to authorize unilateral changes in the pipeline's rates "subject to the procedures and limitations of the Natural Gas Act." 34
So, in resolution of the rate-increase disputes, the Mobile-Sierra-Memphis trilogy assigns the preeminent role to the intent of the contracting parties. Although, as is evident, the parties may stipulate the extent to which and the manner in which contract rates may be revised if at all we have recognized that alternatively they "are free to forge a going-rate agreement by a reference to state-law principles which impart that effect." 35 We now are called upon to determine whether Illinois Power, under its contracts with Oglesby, Ladd and Cedar Point, has the ability unilaterally to initiate rate increases by virtue of either the provisions of those contracts or state law incorporated therein.
Petitioners Oglesby and Ladd assert that their service agreements with Illinois Power envision rate modifications only by the Commission after investigation of any proposed change. The pertinent provision in each of these two contracts states:
That Municipality hereby agrees to pay Company monthly for electric service rendered during the preceding month, at the rate and charges due and payable therefor, pursuant to Company's Electric Price Schedule, Ill.C.C. No. 5, Sheet No. 47, Service Classification No. 40, as now...
To continue reading
Request your trial
-
Pacific Power & Light Co. v. Duncan
...Astoria, Oregon, 595 F.2d at 474, 479. See also Papago Tribal Utility Authority v. FERC, 610 F.2d 914 (D.C.Cir. 1980); City of Oglesby v. FERC, 610 F.2d 897 (D.C.Cir.1980) ("enforcing" contract provisions against FERC under Federal Power Act (FPA)). II. Authority to Approve Interim Rates Pl......
-
Pennzoil Co. v. F.E.R.C.
...statute or a regulation, but instead the meaning of a contract.56 The following cases are not contrary to this result: City of Oglesby v. FERC, 610 F.2d 897 (D.C.Cir.1979); Public Service Co. v. FPC, 557 F.2d 227 (10th Cir. 1977); Appalachian Power Co. v. FPC, 529 F.2d 342 (D.C.Cir.), cert.......
-
Papago Tribal Utility Authority v. Federal Energy Regulatory Commission
...of this case initially awaited City of Kaukauna v. FERC, 189 U.S.App.D.C. 215, 581 F.2d 993 (1978). See also City of Oglesby v. FERC, 197 U.S.App.D.C. ---, 610 F.2d 897, No. 76-1585, decided today.56 See text Supra at note 48.57 Arizona Pub. Serv. Co., supra note 10, at 4-5, J. App. 36-36a.......
-
Kansas Cities v. F.E.R.C., 81-2248
...Mexico v. FPC, 557 F.2d 227, 232-33 (10th Cir.1977). We have acknowledged the possible validity of that holding. City of Oglesby v. FERC, 610 F.2d 897, 901 n. 20 (D.C.Cir.1979) (dictum). Preliminary orders determining the availability of a Sec. 205 proceeding are different, in that they res......