Otter Tail Power Co. v. Federal Energy Regulatory Commission, No. 77-1582

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtBefore VAN OOSTERHOUT, Senior Circuit Judge, and LAY and STEPHENSON; LAY
PartiesOTTER TAIL POWER COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Alexandria, Barnesville, Benson, Detroit Lakes, Henning, Lake Park, Ortonville, and Warren, Minnesota, and Big Stone City, South Dakota, Intervenors- Respondents.
Docket NumberNo. 77-1582
Decision Date08 September 1978

Page 399

583 F.2d 399
OTTER TAIL POWER COMPANY, Petitioner,
v.
FEDERAL ENERGY REGULATORY COMMISSION, Respondent,
Alexandria, Barnesville, Benson, Detroit Lakes, Henning,
Lake Park, Ortonville, and Warren, Minnesota, and
Big Stone City, South Dakota,
Intervenors- Respondents.
No. 77-1582.
United States Court of Appeals,
Eighth Circuit.
Submitted May 17, 1978.
Decided Sept. 8, 1978.

Page 400

David F. Lundeen of Arvesen, Donoho, Lundeen, Hoff & Svingen, Fergus Falls, Minn., for petitioner.

Howard E. Shapiro of Federal Energy Regulatory Commission, Washington, D. C.,

Page 401

for respondent; Robert R. Nordhaus, Gen. Counsel, and Philip R. Telleen, Atty., Washington, D. C., on brief.

Clinton A. Vince of Duncan, Allen & Mitchell, Washington, D. C., for intervenors-respondents; Alden Gjevre, Moorhead, Minn., Ray E. Holmquist, City Atty., Benson, Minn., James O. Ramstad, Detroit Lakes, Minn., Oscar J. Sorlie, Rufer, Hefte, Pemberton, Schulze & Sorlie, Fergus Falls, Minn., Arthur A. Drenckhahn, Myhre, Jorgenson & Drenckhahn, Warren, Minn., R. D. Schreiner, Benson & Schreiner, Ortonville, Minn., Robert R. Pflueger, City Atty., Ortonville, Minn., of counsel.

Before VAN OOSTERHOUT, Senior Circuit Judge, and LAY and STEPHENSON, Circuit Judges.

LAY, Circuit Judge.

This is another episode in the continuing dispute over rate schedules filed by Otter Tail Power Co., a public utility subject to the Federal Power Act, 1 and the Federal Energy Regulatory Commission. 2 The basic issue here presented is whether the Commission properly exercised its authority in the suspension of certain rate schedules for transmitting electricity proposed by Otter Tail to be charged several municipalities in Minnesota and South Dakota. We uphold the Commission's ruling.

I.

Otter Tail Power Company sells electricity at retail to several municipalities in Minnesota, North Dakota and South Dakota. In years past, several retail customers sought to establish their own municipal electric systems upon the expiration of the retail distribution franchises awarded Otter Tail. Otter Tail's refusal to sell energy at wholesale or "wheel" transmit power to these municipalities resulted in an antitrust action in which Otter Tail was found guilty of monopolizing the retail distribution of electric power in its service area. See United States v. Otter Tail Power Co., 331 F.Supp. 54, 56 (D.Minn.1971), Aff'd in part and vacated and remanded in part, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973). As a result Otter Tail was enjoined from refusing to sell electric power at wholesale and from refusing to wheel electric power over its transmission lines. 410 U.S. at 375-77, 93 S.Ct. 1022.

Prior to the culmination of the antitrust action, the Village of Elbow Lake, Minnesota, who is not a party to this case but was a former retail customer of Otter Tail, successfully established its own municipal distribution system and obtained an order from the Commission that required Otter Tail to furnish wholesale power. 3 Immediately after the Supreme Court upheld the antitrust injunction against Otter Tail, Elbow Lake contracted with the Bureau of Reclamation for wholesale power and requested Otter Tail to wheel the power to its distribution system. Accordingly, Otter Tail sought Commission approval to set a compensatory rate at five mills per kilowatt hour for this service.

The Commission ruled that the service to Elbow Lake was an initial rate for a "new type of service" under § 205 of the Federal Power Act, 16 U.S.C. § 824d (1970) and 18 C.F.R. § 35.12 (1976) of the regulations issued thereunder. 4 This decision was not appealed. The Commission then ordered a hearing to determine whether the rate was compensatory, just and reasonable. Elbow Lake asserted that the five mill rate was

Page 402

discriminatory because it exceeded rates charged to 17 other municipalities in Minnesota and South Dakota that had been receiving electrical power from the Bureau wheeled by Otter Tail. 5 Otter Tail countered by arguing that the one mill flat rate to the 17 towns was not compensatory and that an increased rate would soon be established for these services since the firm wheeling contracts for most of the municipalities had by their terms expired and the Bureau Otter Tail contract was due to expire on December 31, 1976. The Commission thereafter revised its hearing order to include the 17 municipalities and ordered that they be permitted to intervene as parties. 6 Ten of the municipalities took advantage of this order and the Commission granted their petition to intervene. 7

Meanwhile, on October 4, 1976, Otter Tail attempted to adjust its rate schedule and service obligations regarding the 17 municipalities. On that date Otter Tail tendered for filing with the Commission the following documents: (1) an "Initial Rate Schedule Providing for a Compensatory Rate for Firm Wheeling (Transmission) Service, Applicable to Municipalities;" 8 (2) a notice of termination of the Bureau Otter Tail contract to be effective on December 31, 1976; 9 and (3) notices of termination of the 17 special municipal agreements to be effective on December 31, 1976. 10 Otter Tail sought to commence service under the newly filed rate schedule on January 1, 1977. 11

Page 403

Nine of the municipalities 12 affected by Otter Tail's proposed rate schedule intervened to protest the proposed rate schedule and the termination of the Bureau Otter Tail rate schedule. Eight of these cities 13 also intervened to protest the alleged attempt by Otter Tail to perpetuate the special municipal agreements past their expiration dates. 14 In addition, seven of the cities 15 filed a complaint with the Commission requesting that the termination dates of the special municipal agreements be confirmed in accordance with the terms of such agreements.

On December 28, 1976, the Commission issued one of the orders that gave rise to this appeal. 16 The Commission accepted Otter Tail's tendered filing of October 4, 1976, for a compensatory firm wheeling rate schedule. 17 However, the Commission rejected Otter Tail's petition to order the new rate effective January 1, 1977, and held that the rate application did not constitute an "initial" rate under § 206 of the Federal Power Act. The Commission found instead that the filing was a rate change subject to suspension under the Act, 16 U.S.C. § 824d(e). Pursuant thereto the Commission ordered the effective date of the rate change for wheeling suspended for five months from January 1, 1977, to June 1, 1977. The Commission also accepted and suspended for five months Otter Tail's separate notices of termination of the special municipal agreements regarding the cities that did not protest the termination. 18 The effective termination dates of the special agreements of the remaining seven cities were fixed at dates prior to December 31, 1976. 19

Two months later the Commission granted Otter Tail's request for a rehearing of the December 28, 1976, order, but only for the limited purpose of further consideration. 20 On June 2, 1977, the Commission affirmed its earlier decision.

II.

The major effect of the Commission's ruling is that the rate increase was delayed for five months and the increased rate charged the 17 towns 21 commencing June 1, 1977, is

Page 404

subject to refund in the event the Commission determines in the ongoing rate hearing that the rate is unjust or unreasonable. 22 This is in contrast to the new rate now being charged Elbow Lake. 23 In the event that rate is held to be excessive, the Commission could order a prospective rate reduction. 24 The Commission possesses no authority, however, to order a refund for the period the excess rate is charged to Elbow Lake. 25

Otter Tail now seeks review of the Commission's latest orders as they affect the rate filed for the 17 communities. It urges that the Commission erred (1) in failing to file the rate schedule as an initial rate under § 205, (2) in failing to make Otter Tail's newly filed rate for firm wheeling service applicable to the towns effective January 1, 1977, (3) in suspending the expiration and termination of the Bureau Otter Tail contract beyond December 31, 1976, and (4) in failing to recognize the termination of the separate municipal rate schedules for each town on December 31, 1976.

Before assessing the merits of these contentions we first summarily dispose of the intervenors' and Commission's claim that the suspension of Otter Tail's rate increase is not a reviewable matter. The Commission urges that suspension or the refusal to suspend a rate change is a nonreviewable exercise of agency discretion. See City of Westfield v. FPC, 551 F.2d 468, 468 (1st Cir. 1977); Municipal Light Boards v. FPC, 146 U.S.App.D.C. 294, 304, 450 F.2d 1341, 1351 (1971), Cert. denied, 405 U.S. 989, 92 S.Ct. 1251, 31 L.Ed.2d 445 (1972). We have no disagreement with these authorities. The Commission's discretionary suspension power, however, exists only when a utility files a rate change. Accordingly, an initial inquiry must be made to determine whether the Commission has exceeded the scope of its authority in declaring the newly filed rate a change in rate rather than an initial one. Because the Commission's characterization of the rate affects its basic authority under the Act, the Commission's decision is reviewable. Cf. Trans Alaska Pipeline Rates Cases, 436 U.S. 631, 638-39, 98 S.Ct. 2053, 2058-59, n.17, 56 L.Ed.2d 591 (1978).

The fundamental question relating to all issues on review is whether the Commission appropriately characterized the Otter Tail rate filing a changed rate. If the Commission erred in its determination, it of course would have no statutory power to suspend the new rate or continue the old rate.

In order to reject the Commission's rate change conclusion this court must find that the decision cannot be rationally reconciled with the terms of the Act. See Gulf Oil Corp. v. FPC, 563 F.2d 588, 606...

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13 practice notes
  • Boston Edison Co. v. F.E.R.C., No. 87-1935
    • United States
    • U.S. Court of Appeals — First Circuit
    • June 6, 1988
    ...exist any time a newly filed rate schedule purports to modify or supersede a preexisting schedule." Otter Tail Power Co. v. FERC, 583 F.2d 399, 406 (8th Cir.1978) (footnotes omitted), cert. denied, 440 U.S. 950, 99 S.Ct. 1431, 59 L.Ed.2d 639 (1979). Unlike the fixing of initial rates, chang......
  • MGPC, INC. v. Duncan, No. C79-0279-B.
    • United States
    • United States District Courts. 10th Circuit. District of Wyoming
    • February 28, 1984
    ...(2d Cir.1966); Retail, Wholesale and Dept. Store Union v. N.L. R.B., 466 F.2d 380 (D.C.Cir.1972); Otter Tail Power Co. v. F.E.R.C., 583 F.2d 399, 408 (8th Cir.1978), cert den. 440 U.S. 950, 99 S.Ct. 1431, 59 L.Ed.2d 639 (1979); Squaw Transit Co. v. United States, 574 F.2d 492 (10th 11. Defe......
  • Cities of Anaheim, Riverside, Banning, Colton and Azusa, Cal. v. F.E.R.C., No. 82-7478
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 9, 1984
    ...discretion, they are free to construe the governing statutes that define the scope of FERC's authority. In Otter Tail Power Co. v. FERC, 583 F.2d 399 (8th Cir.1978), cert. denied, 440 U.S. 950, 99 S.Ct. 1431, 59 L.Ed.2d 639 (1979), the court examined whether a rate filing was a "new rate" u......
  • Nepco Municipal Rate Committee v. Federal Energy Regulatory Commission, Nos. 80-1343
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • October 15, 1981
    ...943 (1972) and Pennsylvania Electric Co., Opinion No. 739-4, 10 FPS 50732 issued October 5, 1976, at pp. 3-4. 21 Otter Tail Power v. FERC, 583 F.2d 399, 408 (8th Cir. 1978), cert. denied, 440 U.S. 950, 99 S.Ct. 1481, 59 L.Ed.2d 689; see Greater Boston Television Corp. v. F.C.C., 143 U.S.App......
  • Request a trial to view additional results
13 cases
  • Boston Edison Co. v. F.E.R.C., No. 87-1935
    • United States
    • U.S. Court of Appeals — First Circuit
    • June 6, 1988
    ...exist any time a newly filed rate schedule purports to modify or supersede a preexisting schedule." Otter Tail Power Co. v. FERC, 583 F.2d 399, 406 (8th Cir.1978) (footnotes omitted), cert. denied, 440 U.S. 950, 99 S.Ct. 1431, 59 L.Ed.2d 639 (1979). Unlike the fixing of initial rates, chang......
  • MGPC, INC. v. Duncan, No. C79-0279-B.
    • United States
    • United States District Courts. 10th Circuit. District of Wyoming
    • February 28, 1984
    ...(2d Cir.1966); Retail, Wholesale and Dept. Store Union v. N.L. R.B., 466 F.2d 380 (D.C.Cir.1972); Otter Tail Power Co. v. F.E.R.C., 583 F.2d 399, 408 (8th Cir.1978), cert den. 440 U.S. 950, 99 S.Ct. 1431, 59 L.Ed.2d 639 (1979); Squaw Transit Co. v. United States, 574 F.2d 492 (10th 11. Defe......
  • Cities of Anaheim, Riverside, Banning, Colton and Azusa, Cal. v. F.E.R.C., No. 82-7478
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 9, 1984
    ...discretion, they are free to construe the governing statutes that define the scope of FERC's authority. In Otter Tail Power Co. v. FERC, 583 F.2d 399 (8th Cir.1978), cert. denied, 440 U.S. 950, 99 S.Ct. 1431, 59 L.Ed.2d 639 (1979), the court examined whether a rate filing was a "new rate" u......
  • Nepco Municipal Rate Committee v. Federal Energy Regulatory Commission, Nos. 80-1343
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • October 15, 1981
    ...943 (1972) and Pennsylvania Electric Co., Opinion No. 739-4, 10 FPS 50732 issued October 5, 1976, at pp. 3-4. 21 Otter Tail Power v. FERC, 583 F.2d 399, 408 (8th Cir. 1978), cert. denied, 440 U.S. 950, 99 S.Ct. 1481, 59 L.Ed.2d 689; see Greater Boston Television Corp. v. F.C.C., 143 U.S.App......
  • Request a trial to view additional results

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