Connecticut Light Power Co v. Federal Power Commission, 189

Citation324 U.S. 515,65 S.Ct. 749,89 L.Ed. 1150
Decision Date26 March 1945
Docket NumberNo. 189,189
CourtUnited States Supreme Court

[Syllabus from pages 515-517 intentionally omitted] Messrs. Claude R. Branch, of Boston, Mass., and Gay H. Brown, of Albany, N.Y., for petitioner.

Mr. Francis M. Shea, Asst. Atty. Gen., for respondent.

Mr. John E. Benton, of Washington, D.C., for Public Utilities Commission of Connecticut, and others as amici curiae by special leave of court.

Mr. Justice JACKSON delivered the opinion of the Court.

The Federal Power Commission has asserted jurisdiction to regulate the accounting practices of the Connecticut Light and Power Company. The Federal Power Act as amended in 1935, 49 Stat. 838, 16 U.S.C. § 792 et seq., 16 U.S.C.A. § 792 et seq., declares a congressional policy concerning the business of transmitting and selling electric energy for ultimate distribution to the public, and state that regulation of 'that part of such business which consists of the transmission of electric energy in interstate commerce and the sale of such energy at wholesale in interstate commerce is necessary in the public interest, such Federal regulation, however, to extend only to those matters which are not subject to regulation by the States.' § 201(a), 49 Stat. 847, 16 U.S.C. § 824(a), 16 U.S.C.A. § 824(a).

The Company, incorporated by Connecticut, serving customers only in Connecticut and owning no utilities property outside of that state, is comprehensively regulated by the Connecticut Public Utilities Commission in accounting practices as in many other matters, and it challenges the jurisdiction of the Federal Power Commission.

The State of Connecticut, appearing amicus curiae, through its Attorney General avers that this assumption of jurisdiction by the Federal Commission 'represents an unwarranted and illegal invasion of the powers of the State to regulate its local distributing company, which powers were clearly to be preserved to the State under the provisions of the Federal Power Act.' The Connecticut Public Utilities Commission joins with the National Association of Railroad and Utilities Commissioners also appearing as amicus curiae, and they contend that the Federal Power Commission's order regulating accounting practices exceeds any authority given by the Federal Power Act and intrudes upon the field which that Act expressly reserved to local regulation.

The basic facts are not seriously in dispute. The Company for sometime prior to August 26, 1935, the effective date of the Federal Power Act, operated as a member of the Connecticut Valley Power Exchange, an interstate power pool which interchanged energy among certain systems in New York, Massachusetts, and Connecticut. Had such operation continued, the Company would be subject to the Act and to the Commission's order. Two days before its effective date and frankly for the purpose of avoiding federal regulation the Company rearranged its operations with intent to cut every connection and discontinue every facility whose continued operation would render it subject to the Federal Power Commission's control. The Commission conceded in its opinion and the Government admits here the Company's right to do so.1 But the Commission said petitioner's effort was 'only a gesture' for while it cut certain connections 'it did not cut other interconnections over which interstate energy flowed.' Of those facilities which the Commission held subjected the Company to the Power Act at the time it became effective the Company has since divested itself of all but one, and on that one the Commission rests its present jurisdiction to control petitioner's accounting. But it also claims that its accounting orders were entitled to obedience up to the time of the abandonment of the other facilities and because of them.

The facilities on which jurisdiction is predicated are for two general types of operation, one being used in receipt of interstate power, the other for transmission of energy sold to a municipality which in turn sold some part of it for export from the state.

The only presently existing facilities said to confer jurisdiction are at Bristol. Here the petitioning company purchases energy from the Connecticut Power Company, which despite a confusing similarity of name is an entirely separate and unaffiliated concern. The petitioning company receives power at 66,000 volts from the lines of the Connecticut Power Company over a short tap line, owned by the Connecticut Power Company, which leads to petitioner's substation. There the energy is stepped down to 4,600 and 13,800 volts and transmitted thence over many circuits to consumers in and around Bristol. The substation includes all of the usual equipment, lightning arrestors, disconnects, oil circuit breakers, busses, stepdown transformers, and appurtenant structures of an outdoor substation; and in the substation building a synchronous condenser is owned and operated, as required by the supply contract, to maintain the power factor.

What is called the East Hampton connection, severed July 1, 1939, consisted of facilities by which the petitioner received energy from the Connecticut Power Company at 13,800 volts and transmitted it several miles to its Leesville substation where it was reduced to 4,600 volts and to other substations where it was reduced to 2,300 volts and supplied to customers. What is referred to as the Torrington-Winsted District connection, discontinued in June of 1941, was differently operated. Energy was purchased from the Torrington Electric Light Company, which in turn had purchased it from the Connecticut Power Company. Delivery was accepted by petitioner at the bus bar of the Torrington Company at low voltage, 2,300 volts, petitioner maintained a substation which stepped this voltage up to 27,600, at which it was transmitted about ten miles over its lines to a substation at Winsted where facilities were operated to lower the voltage to 4,600, whence it was put on distribution lines.

The Commission held in all three instances that such facilities of petitioner were 'for the transmission of electric energy * * * as distinguished from local distribution thereof.' It found that the energy received from the Connecticut Power Company and Torrington Company 'regularly, frequently and for substantial periods of time included electric energy in substantial amounts transmitted from Massachusetts.' Hence it concluded petitioner owned facilities for transmission of energy in interstate commerce and was a 'public utility' under its jurisdiction by virtue of the Act.

The other type of operation on which it predicated jurisdiction was terminated in February 1941. It consisted of sale of energy at wholesale to the Borough of Groton, which operated a municipal distribution plant. The Borough, with knowledge of the Company, resold a portion of this energy to a corporation which transmitted it to Fishers Island, a small island off Connecticut shore but territory of New York. There it was distributed to that small community at retail. When the Groton contract expired in 1940 petitioner refused to renew it unless the Borough discontinued sales of energy destined for Fishers Island. This change was required by the Company avowedly to eliminate flow of its energy to New York and thus to remove one of the grounds on which the Commission has asserted jurisdiction.

The Commission held that from the effective date of the Act to February 28, 1941, facilities owned by the Company were used to convey electric energy to the Borough of Groton 'for the transmission and sale at wholesale of electric energy in interstate commerce' and that such facilities were for transmission of such energy 'as distinguished from local distribution thereof.' Hence the Company was held to have been a public utility during the period of such operation and subject for that period to the jurisdiction of the Commission.

It is not denied, although the Commission's findings and opinion make no mention of the fact and appear to have given it no weight, that the predominant characteristic of the company's over-all operation is that of a local and intrastate service. It serves one hundred seven towns, cities, and boroughs of Connecticut with a total population of about 660,000 and in addition supplies substantially all the power used by local companies which serve communities of Connecticut having a population of 130,000. It owns no lines crossing the Connecticut boundary and does not connect with any other company at the boundary. It has no business other than Connecticut service for which it needs any facilities whatever, and if local distribution service were terminated, no remaining pur- pose or use of any kind is suggested for the facilities in question. Its purchases and sales, its receipts and deliveries of power, are all within the state. Its rates and its fiscal and accounting affairs are fully and so far as appears effectively regulated by the State of Connecticut.

The Federal Power Commission on January 7, 1941 issued its order requiring petitioner to show cause why it should not be held to be a 'public utility' subject to the Act and why it should not reclassify and keep its accounts according to the Federal Commission's uniform system. On May 15, 1942 it issued findings and decision. Rehearing was denied. The Company then applied for the review by the Court of Appeals of the District of Columbia to which the statute entitles it. § 313(b) of the Act, 49 Stat. 860.

The Court of Appeals sustained the orders. 78 U.S.App.D.C. 356, 141 F.2d 14, 17. It held that 'The Federal Power Act obviously intends to confer Federal jurisdiction upon electric distribution systems which normally would operate as interstate businesses.' It construed the 'but clause' of the Act, which we shall later consider, as 'intended to make it clear that this (the Commission's) jurisdiction extends even to local...

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