Greenwood Utilities Com'n v. Mississippi Power Co.
| Decision Date | 07 February 1985 |
| Docket Number | 84-4009,Nos. 83-4786,s. 83-4786 |
| Citation | 751 F.2d 1484 |
| Parties | 1985-1 Trade Cases 66,404, 17 Fed. R. Evid. Serv. 790 GREENWOOD UTILITIES COMMISSION, Plaintiff-Appellant, v. MISSISSIPPI POWER COMPANY, Defendant-Appellee. GREENWOOD UTILITIES COMMISSION, Plaintiff-Appellee, v. MISSISSIPPI POWER COMPANY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Wheatley & Wollesen, Charles F. Wheatley, Jr., Don Charles Uthus, Washington, D.C., Whittington, Brock, Swayze, Dale & Calhoun, H. Donald Brock, Charles Swayze, Jr., Greenwood, Miss., for plaintiff-appellant in No. 83-4786.
Eaton, Cottrell, Galloway & Lang, Ben H. Stone, H. Rodger Wilder, Gulfport, Miss., Troutman, Sanders, Lockerman & Ashmore, Robert H. Forry, Robert P. Edwards, Jr., Atlanta, Ga., for defendant-appellee in No. 83-4786.
Ben H. Stone, H. Rodger Wilder, Gulfport, Miss., Troutman, Sanders, Lockerman & Ashmore, Robert H. Forry, Robert P. Edwards, Jr., Atlanta, Ga., for defendant-appellant in No. 84-4009.
Charles F. Wheatley, Jr., Washington, D.C., H.D. Brock, Whittington, Brock, Swayze, Dale & Calhoun, Charles J. Swayze, Jr., Greenwood, Miss., for plaintiff-appellee in No. 84-4009.
Appeals from the United States District Court for the Southern District of Mississippi.
Before GEE, POLITZ, and HIGGINBOTHAM, Circuit Judges.
The Greenwood Utilities Commission, of Laflore County, Mississippi, appeals from a summary judgment in its antitrust suit against Mississippi Power Company. Armed with the Sherman Act, Greenwood attacks the refusal to allocate electric power to it by the Southeastern Power Administration, a division of the Department of Energy. The power refused would have been transmitted over power lines owned by Mississippi Power and its sister companies. Greenwood asserts that SEPA's decision was a product of monopoly power held by Mississippi Power and its affiliates over the transmission of electricity from SEPA, and alleges that acts by these entities violated both Sections 1 and 2 of the Sherman Act. Putting aside acts protected by the First Amendment, we conclude that SEPA's decision not to allocate power to Greenwood and the SEPA-Mississippi Power contract incorporating that decision did not violate the antitrust laws. We affirm a magistrate's grant of summary judgment in favor of Mississippi Power.
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Greenwood is an agency of the City of Greenwood, Mississippi and supplies electricity to customers in that area. Until an interconnection agreement with Mississippi Power and Light Company in 1977, Greenwood generated its own electricity from two generating plants, and its transmission lines were not connected to the lines of any other utility. After the connection, its power was supplemented by bulk power purchased from Mississippi Power and Light and others and transmitted to Greenwood over the transmission lines of Mississippi Power and Light.
Mississippi Power Company is a Mississippi corporation, qualified under the Public Utility Act of Mississippi, and provides service to more than 135,000 residential, 23,500 commercial and 350 industrial customers in twenty-three northeast Mississippi counties. Its transmission lines are connected to the lines of four electric cooperatives to which it sells energy, but it owns no transmission lines in Laflore County, Mississippi and is not directly connected to Greenwood. However, by virtue of its interconnections with Mississippi Power and Light, Mississippi Power Company is indirectly connected to Greenwood.
Mississippi Power is also interconnected with its sister companies in the Southern group, the Alabama, Georgia and Gulf Power companies. All are wholly-owned subsidiaries of the Southern Company and together form the Southern Company electrical system. Another subsidiary of the Southern Company, Southern Company Services, Inc., acts as a central dispatcher of power and coordinates its allocation to provide to the operating companies on a continuous basis the power requirements of their respective service areas. By this pooling of power the Southern companies achieve economies of scale, optimum utilization of generation capacity and coordinated control, thus allowing each sister company to provide electric service at a cost lower than would be possible without the sharing.
The Southeastern Power Administration, SEPA, is a division of the Department of Energy, formerly under the Department of the Interior, with home offices in Elberton, Georgia. Congress charged SEPA in the Flood Control Act to market surplus hydro-electric power generated by federal dams constructed in the southeastern part of the United States. 1 See 16 U.S.C. Sec. 825s. Under the Flood Control Act, SEPA must market surplus power from the hydro-electric projects in its territory "in such a manner as to encourage its most widespread use at the lowest possible rates to consumers consistent with sound business principles ... [but giving preference] to certain public bodies and cooperatives." Id. These public bodies and cooperatives are known as "preference customers." SEPA owns no electric transmission lines, however, and depends upon utilities situated near the power sources for the transmission of electric power to its customers.
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In 1975 and 1976 new generating units at the West Point, Jones Bluff and Carters dams of the Alabama-Georgia system were completed. Before their addition, SEPA marketed power from its Alabama-Georgia system to the customers preferred under the Flood Control Act by transmission over the Alabama and Georgia companies' power lines. The wheeling contracts with those companies limited SEPA's rights to sell to preference customers to those located within the service areas of Georgia and Alabama Power. With the anticipated power from the three new dams, SEPA decided sometime in 1974 or 1975 to expand its Alabama-Georgia system sales to serve additional preference customers in southeast Mississippi and the panhandle of Florida. The proposed additional customers were to be those electrically connected to the Mississippi Power and Gulf Power electric systems, the idea being that Mississippi Power and Gulf Power respectively would wheel power to the preference customers for SEPA. Mississippi Power was initially hostile to SEPA's delivery of this power, but after extensive lobbying by SEPA and negotiations which we will discuss more fully infra, Mississippi Power Company contracted to wheel the power for SEPA.
It is this SEPA-Mississippi Power contract, executed August 1, 1976, that provides the immediate focus of our attention here. The specific provision in the contract which Greenwood challenges is Paragraph 4.1, which effectively reserves for Mississippi Power and preference customers within its territory all of the available power. Identical provisions were included in the contracts SEPA had previously executed with the Georgia and Alabama Power companies. The clause provides:
To be served as a preference customer of the Government under this contract, the customer shall be any of the following whose requirements or a portion thereof the Government shall have contracted to supply by delivery from Mississippi Power's system pursuant to this contract: A municipality located within Mississippi Power's service area, owning its own transmission or distribution system, and desiring to purchase capacity and energy from the Government for resale to the public in its territory, or an electric distribution or generation and transmission and cooperative operating under Chapter 184 of the Laws of Mississippi of 1936, as amended, located within Mississippi Power's service area desiring to purchase capacity and energy from the Government for resale under the provisions of said Act. (Emphasis supplied.)
Although Greenwood as a public agency qualifies as a "preference customer" under the Flood Control Act, the effect of the contract clause is that SEPA sells Greenwood no power, since it is located outside of Mississippi Power's service area.
The government's decision not to sell power to Greenwood, however, preceded the execution of the SEPA-Mississippi Power contract. On November 19, 1975, Charles Matthews, manager of Greenwood Utilities, wrote to SEPA's administrator reminding him that he had promised to notify Greenwood of the availability of additional federal power, pointing to the additions to the Georgia-Alabama system in 1975 of the West Point, Jones Bluff and Carters projects. He also wrote Jack Carlson, then Assistant Secretary of the Interior, requesting assistance in obtaining SEPA power. On January 20, 1976, some six months before the execution of the SEPA-Mississippi Power contract, Raymond Peck of SEPA responded to Greenwood's November inquiry explaining that SEPA did not plan to so extend its market area.
After the initial rejection of Greenwood's 1975 request and after the 1976 contract was executed, the government persisted in its refusal to allocate power to Greenwood. Greenwood then filed this suit against Mississippi Power alleging that SEPA's decision not to sell it power was the product of conspiracy and of a monopoly enjoyed by Mississippi Power and its affiliates over transmission and generating facilities needed by SEPA, and that Mississippi Power had used this leverage to keep the new power within the Southern system. 2 To put these allegations in context, we must first explain some of the technical and economic considerations involved in the marketing of federal hydropower as well as the history of SEPA's relationship with Mississippi Power and its affiliates.
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While hydroelectric power enjoys technical advantages over fossil fuels or other energy sources, if a hydrosystem operates alone, its limited water supply requires continuous release to the turbines and thereby reduces its ability to meet energy demands at peak periods. To generate its maximum output during peak periods, a hydrosystem must be able to...
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