Greensboro Lumber Co. v. Georgia Power Co.
| Decision Date | 29 August 1986 |
| Docket Number | Civ. A. No. C84-2022A. |
| Citation | 643 F. Supp. 1345 |
| Parties | GREENSBORO LUMBER COMPANY, Plaintiff, v. GEORGIA POWER COMPANY, et al., Defendants. |
| Court | U.S. District Court — Northern District of Georgia |
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Jack H. Watson, Jr., Phillip A. Bradley, Long & Aldridge, Strickland Holloway, Jr., Atlanta, Ga., for plaintiff.
Robert H. Forry, Robert Edwards, Troutman, Sanders, Lockerman & Ashmore, Dorothy Y. Kirkley, Mark L. Gerchick, James A. Orr, Paul, Hastings, Janofsky & Walker, Emmet J. Bondurant, Bondurant, Miller, Hishon & Stephenson, Atlanta, Ga., James C. Brim, Jr., Camilla, Ga., L. Clifford Adams, Heard, Leverett & Adams, Atlanta, Ga., James V. Davis, Landau and Davis, Robert B. Langstaff, Langstaff, Campbell & Plowden, Albany, Ga., Carlton C. McCamy, McCamy, Phillips, Tuggle, Rollins & Fordham, Dalton, Ga., John T. Miller, Jr., Washington, D.C., Richard G. Tisinger, Tisinger, Tisinger, Vance & Greer, Carrollton, Ga., C. Saxby Chambliss, Moore & Chambliss, Moultrie, Ga., for defendants.
Christopher Kerosky, U.S. Dept. of Justice, Washington, D.C., amicus curiae for U.S.
ORDER OF COURT
This antitrust action is brought by the Greensboro Lumber Company ("Greensboro") against the Georgia Power Company ("Georgia Power"), the Municipal Electric Authority of Georgia ("MEAG"), the participants in MEAG comprised of 46 Georgia municipalities and one county ("Participants"), the Oglethorpe Power Corporation ("Oglethorpe"), the members of Oglethorpe comprised of 39 rural electric membership cooperatives ("EMCs"), and the City of Dalton ("Dalton"). The suit challenges various practices and arrangements among these defendants in the electric service industry in a service area which encompasses most of the State of Georgia. The only areas excluded are relatively small areas served by the Savannah Electric and Power Company (Chatham and Effingham Counties) and certain rural cooperatives in North Georgia (Fannin, Union, and Towns Counties) which purchase their full power requirements from the Tennessee Valley Authority.
The provision of electric service involves several different levels of activity. The supply of electricity to the end-users, agricultural, industrial and residential consumers, is called the "retail distribution" of electricity. Retail electric service in Georgia is supplied by the Savannah Electric & Power Company, the distributors of the Tennessee Valley Authority, Georgia Power, the EMCs, the Participants, two political subdivisions that elected not to join MEAG, and Dalton.
The entities supplying electricity at retail need, in turn, to buy electricity at "wholesale", except to the extent they generate their own power. Electric energy supplied to electric utilities or to public authorities for resale or distribution is referred to as "wholesale electric energy" or "sales for resale."
The generation of electric power in Georgia takes place at a number of central electric generating stations located throughout the state. The output of such stations, together with power supplied from federal hydroelectric facilities provided by the Southeastern Power Administration ("SEPA"), is transmitted over a network of transmission lines and other facilities to "delivery point substations" at which the suppliers of retail electric service receive the power. Such transmission facilities are interconnected through a number of interchange agreements to the transmission systems of utilities outside Georgia, including those in Florida, Alabama, Tennessee, North Carolina and South Carolina. Power sales and purchases made over these transmission interconnections provide additional sources of electric power supply to the wholesale power suppliers in Georgia. As will be discussed later in this opinion, MEAG, Oglethorpe, Georgia Power and Dalton have agreed to operate the transmission lines owned individually by each of them as an "integrated" system.
Electrical power is viewed as having two components, capacity and energy. "Capacity" refers to the capability of a generating unit to produce a specified amount of electrical energy at an instant in time. Capacity is measured in multiples of watts (kilowatts or megawatts) and is analogous to the horsepower of an engine. "Energy" is the electricity actually delivered to customers. It is measured in terms of volume (watts) and time (hours) and is often expressed in kilowatt-hours.
While rate structures may vary, payments for "energy" generally depend upon the amount of electric energy actually taken by the buyer, and are based on the variable costs of generating the energy (fuel and certain operating expenses). When, on the other hand, a buyer pays for "capacity", it makes a payment based on the fixed costs of the capacity committed and not otherwise included as a variable cost (typically including principal and interest payments on debt, certain operation and maintenance expenses and certain other costs). In consideration for this, a specified amount of capacity is reserved for, and dedicated to, the buyer's use. Accordingly, if capacity is to be paid for, it must be dependable and available for the generation of energy if, as, and when needed by the buyer.
Georgia Power, a subsidiary of the Southern Company, is an investor-owned, vertically-integrated business corporation engaged in the generation, transmission, and retail and wholesale sale of electricity in Georgia. Georgia Power operates on an integrated and pooled basis with other corporate affiliate members of the Southern electric system pursuant to the integration standards of the Public Utility Holding Company Act of 1935, 15 U.S.C. §§ 79k, 79b(a)(29)(A) (1980). Prior to 1976, Georgia Power owned the vast majority of Georgia's electrical bulk power generation and transmission facilities.
In 1971, Georgia Power applied to the Atomic Energy Commission ("AEC"), now the Nuclear Regulatory Commission ("NRC"), for a license to construct the Edwin I. Hatch Nuclear Plant, Unit No. 2 ("Plant Hatch") and the Vogtle Nuclear Plant, Units 1, 2, 3 and 4 ("Plant Vogtle"). Pursuant to Section 105(c) of the Atomic Energy Act, 42 U.S.C. § 2135, the AEC was required to review Georgia Power's license applications to determine whether the issuance of the requested license to Georgia Power "would create or maintain a situation inconsistent with the antitrust laws." This statutory provision also obligates the United States Attorney General to review each license application and to advise the AEC of the need for a hearing to consider potential antitrust objections to the proposed license.
On August 2, 1972, the Antitrust Division of the Department of Justice notified the AEC that the licensing of Plants Hatch and Vogtle raised potential antitrust problems. The Attorney General informed the AEC that the Justice Department's review suggested that Georgia Power had, among other things, exercised its monopoly power to prevent the establishment of alternative bulk power supply systems in Georgia.
As a result of this advice, notice was given to the public and a hearing was scheduled regarding the antitrust implications of Georgia Power's application. The EMCs (through their trade association, the Georgia Electric Membership Corporation), the Participants (through their trade association, the Power Section of the Georgia Municipal Association), and Dalton petitioned to intervene before the AEC in opposition to Georgia Power's application. The AEC set the Hatch application for hearing. At this juncture, a slight digression is appropriate in order to give some background information about these intervenors.
The 39 EMCs are all rural electric membership corporations organized between 1936 and 1945 pursuant to the Georgia Electric Membership Corporation Act, O.C. G.A. §§ 46-3-170 through 46-3-541, and/or its predecessor, the Electric Membership Corporation Act of 1934, O.C.G.A. §§ 46-3-70 through 46-3-97. The EMCs engage exclusively in the retail distribution of electricity to consumers in relatively sparsely-populated rural areas. These consumers automatically become members of the respective corporation. Each customer/"member" of the corporation is entitled to one vote, regardless of the size of its purchase of electricity. Each corporation is governed by a board of directors elected by its members each year at the equivalent of a town meeting. Prior to the creation of Oglethorpe in 1974, the EMCs relied on Georgia Power and, to a limited degree, SEPA for their power and energy.
The Participants consist of 47 Georgia political subdivisions (46 cities and one county, Crisp County). Each Participant engages in the retail distribution of electricity to the consumers living in the area assigned to it by the Georgia Public Service Commission ("PSC"). Prior to the formation of MEAG in 1975, each of the Participants, except Crisp County, was dependent upon Georgia Power and, to a limited degree, SEPA for its wholesale electric requirements. Crisp County owned and continues to own its own generation and transmission facilities.
The City of Dalton engages in the retail distribution of electricity to consumers living in Dalton. Dalton declined to join MEAG when MEAG was formed.
Prior to the hearing, Georgia Power, the EMCs, some of the Participants, Dalton, the AEC staff, and the Justice Department negotiated a proposed settlement ("Settlement") in which Georgia Power agreed to sell a portion of certain nuclear-fueled units and of certain coal-fired generation facilities to the EMCs, the Participants, and Dalton. It is worth noting, however, that neither the EMCs nor the Participants have any direct ownership interests in any of these facilities; their interests are held by Oglethorpe and MEAG, respectively. The Settlement also provided that Georgia Power would provide transmission services with respect to the "project power"...
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