Northeast Utilities Service Co. v. F.E.R.C.
| Decision Date | 08 December 1992 |
| Docket Number | 92-1261,Nos. 92-1165,s. 92-1165 |
| Citation | 993 F.2d 937 |
| Parties | , Util. L. Rep. P 13,935 NORTHEAST UTILITIES SERVICE COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. VERMONT DEPARTMENT OF PUBLIC SERVICE, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC COMPANY, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. TOWNS OF CONCORD, NORWOOD AND WELLESLEY, MASSACHUSETTS, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. CENTRAL MAINE POWER CO., et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. CITY OF HOLYOKE GAS & ELECTRIC DEPARTMENT, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. CANAL ELECTRIC COMPANY, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. The AMERICAN PAPER INSTITUTE, INC., et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. BOSTON EDISON COMPANY, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. VERMONT DEPARTMENT OF PUBLIC SERVICE, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Respondents. to 92-1264, 92-1316, 92-1328, 92-1336, 92-1340 and 92-1510. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Gerald M. Amero, with whom Catherine R. Connors, Portland, ME, and Pierce, Atwood, Scribner, Allen, Smith & Lancaster and Arthur W. Adelberg, and Anne M. Pare, Augusta, ME, were on brief, for petitioner Cent. Maine Power Co.
Harvey L. Reiter, with whom William I. Harkaway, Kathleen L. Mazure, and McCarthy, Sweeney & Harkaway, Washington, DC, were on brief, for petitioners VT Dept. of Public Service, VT Public Service Bd., RI Atty. Gen., RI Div. of Public Utilities and Carriers, ME Public Utilities Com'n and MA Dept. of Public Utilities.
George H. Williams, Jr., with whom Morley Caskin, Washington, DC, was on brief, for petitioners Canal Elec. Co., Com. Elec. Co. and Cambridge Elec. Light Co.
J.A. Bouknight, Jr., with whom David B. Raskin, David L. Schwartz, and Newman & Holtzinger, P.C., Washington, DC, and Robert P. Wax, Gen. Counsel, Hartford, CT, were on brief, for petitioner Northeast Utilities Service Co.
Randolph Elliott, with whom William S. Scherman, Gen. Counsel, Jerome M. Feit, Sol., Katherine Waldbauer, and Eric Christensen, Washington, DC, were on brief, for respondent F.E.R.C.
Alan J. Roth, Scott H. Strauss, William S. Huang, Spiegel & McDiarmid, Washington, DC, Nicholas J. Scobbo, Ferriter, Scobbo Sikora, Caruso & Rodophele, Boston, MA, Wallace L. Duncan and Duncan, Weinberg, Miller & Pembroke, Washington, DC, on brief, for petitioner MA Mun. Wholesale Elec. Co.
Charles F. Wheatley, Jr., Peter A. Goldsmith and Wheatley & Ranquist, Annapolis, MD, on brief, for petitioners Towns of Concord, Norwood & Wellesley, MA.
David J. Bardin, Noreen M. Lavan, Eugene J. Meigher, Steven R. Miles, and Arent, Fox, Kintner, Plotkin & Kahn, Washington, DC, on brief, for petitioner City of Holyoke Gas & Elec. Dept.
James T. McManus, Michael E. Small, Wright & Talisman, P.C., Washington, DC, and Frederick S. Samp, General Counsel, Hampden, on brief, for petitioner Bangor Hydro-Electric Co.
Steven Halpern, Boston, MA, on brief, for petitioner MA Dept. of Public Utilities.
Alan H. Richardson, Alexandria, VA, on brief, for petitioner American Public Power Ass'n.
Mitchell Tennenbaum, Sr. Staff Atty., Augusta, ME, on brief, for petitioner ME Public Utilities Com'n.
Edward G. Bohlen, Asst. Atty. Gen., Boston, MA, and Scott Harshbarger, Atty. Gen., Cambridge, MA, on brief, for petitioner MA Atty. Gen.
Julio Mazzoli, Sp. Asst., and James E. O'Neil, Atty. Gen., Providence, RI, on brief, for petitioner R.I. Div. of Public Utilities and Carriers and Rhode Island Office of Atty. Gen.
Robert F. Shapiro, Lynn N. Hargis and Chadbourne & Parke, Washington, DC, on brief, for petitioner The American Paper Institute, Inc.
Wayne R. Frigard, Boston, MA, on brief, for petitioner Boston Edison Co.
George M. Knapp, Roger B. Wagner, Washington, DC, David A. Fazzone, John F. Smitka, and McDermott, Will & Emery, Boston, MA, on brief, for petitioner Montaup Elec. Co.
Robert S. Golden, Jr., Asst. Atty. Gen., Richard Blumenthal, Atty. Gen., Hartford, CT, and Howard E. Shapiro, Sp. Asst. Atty. Gen., and Van Ness, Feldman & Curtis, Washington, DC, on brief, for intervenor CT Dept. of Public Utility Control.
Kenneth M. Simon, Larry F. Eisenstat, and Dickstein, Shapiro & Morin, Washington, DC, on brief, for intervenor Masspower.
Harold T. Judd, Sr. Asst. Atty. Gen., Concord, NH, John P. Arnold, Atty. Gen., Francestown, NH, Glen L. Ortman, John S. Moot, and Verner, Liipfert, Bernhard, McPherson and Hand, Chrtd., Washington, DC, on brief, for intervenors State of NH and NH Public Utilities Com'n.
Kenneth D. Brown, Newark, NJ, on brief, for intervenor Public Service Elec. and Gas Co.
Edward Berlin, Kenneth G. Jaffe, Martin W. Gitlin, and Swidler & Berlin, Washington, DC, and Cynthia A. Arcate, Westborough, MA, on brief, for intervenor New England Power Co.
These petitions for review challenge the Federal Energy Regulatory Commission's ("FERC" or "the Commission") decision to conditionally approve the merger of Northeast Utilities ("NU") and the Public Service Company of New Hampshire ("PSNH"). Certain joint petitioners and intervenors 1 contend that FERC erred when it: (1) held that the benefits of the merger outweighed its costs; and (2) failed to condition the merger on NU's waiver of single participant status ("SPS") in the New England Power Pool ("NEPOOL"). A group of public and private electric utilities, state commissions, state agencies, independent power producers cogenerators and electric end users 2 claim that FERC erred when it: (1) allowed the consummation of the merger upon the filing of, rather than upon approval of, a transmission tariff; (2) adopted transmission access conditions that gave "native load" customers a priority over other customers; and (3) endorsed "opportunity cost" pricing principles. The Holyoke Gas & Electric Department ("Holyoke") argues that FERC erred when it failed to: (1) conduct an appropriate review of the environmental impact of the proposed merger; and, (2) make findings regarding allegations of anticompetitive consequences of the merger that were unique to Holyoke. Finally, Northeast Utilities Service Company ("NUSCO") asserts that FERC's orders changing the terms of three rate schedules filed in conjunction with its merger application were arbitrary, capricious, and an abuse of discretion.
For the reasons which follow, we reject petitioners' arguments and affirm the Commission's decisions with the exception of the Commission's decision to change the terms of the Seabrook Power Contract which we remand for consideration under the "public interest" standard.
Northeast Utilities ("NU") is a registered holding company under the Public Utility Holding Company Act of 1935 (PUHCA). 15 U.S.C. § 79 et seq. (1988). Northeast Utilities Service Company ("NUSCO") is a service company subsidiary of NU and supplies centralized administrative and support services to NU's operating companies. 3
Prior to the merger, Public Service Company of New Hampshire ("PSNH") was the largest electric utility in New Hampshire, supplying electric service to some 375,000 retail customers, approximately three-quarters of the State's population, in every county in the State. PSNH also provided wholesale service to the New Hampshire Electric Cooperative, three New Hampshire municipalities, and one investor-owned utility, Vermont Electric Power Company. PSNH had the largest ownership share, approximately 35.6 percent, of Seabrook Unit No. 1, a nuclear generating facility declared to be available for service on June 30, 1990.
On January 28, 1988, PSNH filed a voluntary petition in the United States Bankruptcy Court for the District of New Hampshire for reorganization under Chapter 11 of the Bankruptcy Code. 11 U.S.C. § 1101 et seq. (1988). PSNH alleged that it was unable to recover in its rates the outlays it had made in the construction and operation of the Seabrook nuclear power plant. On April 20, 1990, after sifting through several competing reorganization plans, the bankruptcy court approved NU's proposal to merge with PSNH and to acquire and operate all of PSNH's power facilities. See In re Public Service Co. of New Hampshire, 963 F.2d 469, 470 (1st Cir.), cert. denied, Rochman v. Northeast Utilities Service Co., --- U.S. ----, 113 S.Ct. 304, 121 L.Ed.2d 226 (1992).
NU's proposal contained a two-step process: first, PSNH would emerge from bankruptcy as a stand-alone company bound to a merger agreement with NU; second, PSNH would be merged with an NU subsidiary created solely for the acquisition (NU Acquisition Corporation), with PSNH emerging as the surviving entity. After the merger, PSNH would be a wholly-owned subsidiary of NU and would transfer its ownership interest in Seabrook to a newly formed NU subsidiary, North Atlantic Energy Corporation ("North Atlantic"). The second step would occur only after all necessary approvals were received from the relevant regulatory agencies.
On January 8, 1990, NUSCO, on behalf of NU and NU's operating subsidiaries, filed an application with FERC under section 203 of the Federal Power Act ("FPA"), 16 U.S.C. § 824b (1988), seeking authorization for PSNH to dispose of all of its jurisdictional facilities and concurrently to merge with, and become a subsidiary of, NU. In connection with this application, NUSCO filed four rate schedules with FERC pursuant to § 205 of the FPA: the Seabrook Power Contract, 4 the Sharing Agreement 5 and two...
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