Vermont Dept. of Public Service v. F.E.R.C.
| Decision Date | 28 April 1987 |
| Docket Number | No. 85-1849,85-1849 |
| Citation | 817 F.2d 127 |
| Parties | VERMONT DEPARTMENT OF PUBLIC SERVICE, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Vermont Electric Power Company, Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Harvey L. Reiter, with whom William I. Harkaway, Washington, D.C., and Gerald R. Tarrant, Montpelier, Vt., were on the brief for petitioner.
John Conway, F.E.R.C., Washington, D.C., for respondent. Barbara J. Weller, Deputy Sol. and Joseph S. Davies, Atty., F.E.R.C., Washington, D.C., were on the brief for respondent.
A. Karen Hill, F.E.R.C., Washington, D.C., entered an appearance for respondent.
George F. Bruder, Washington, D.C., for intervenor.
Before STARR and BUCKLEY, Circuit Judges, and GASCH, * Senior District Judge.
Opinion for the Court filed by Circuit Judge STARR.
This case calls upon us to review an agency's interpretation of an electric utility contract. Specifically, the Vermont Department of Public Service ("VDPS") challenges the Federal Energy Regulatory Commission's determination that VDPS's contract with Vermont Electric Power Company ("VELCO") for transmission of power permitted VELCO unilaterally to make a series of rate filings with the Commission disaffirming certain supervisory powers reserved to VDPS in the original transmission contract. After careful review, we conclude that FERC's interpretation of the contract was amply supported both factually and legally. We therefore deny the petition for review.
The background of this case can be traced thirty years back, to the winter of 1956. In January of that year, the State of Vermont through its Public Service Commission ("PSC") executed a contract for the wholesale purchase of hydroelectric power from the Power Authority of the State of New York ("PASNY"). Under this contract, designated as the "St. Lawrence Contract S-2" by the contracting parties, PASNY agreed to supply Vermont with power generated by the St. Lawrence River project then under construction. 1 With this power supply thus assured, Vermont's PSC then entered into a separate contract in 1957 with VELCO for delivery of power supplied by PASNY under the S-2 contract. Because the current controversy revolves around the provisions and interrelation of these two contracts, each merits fuller description.
The St. Lawrence Contract S-2 imposed two primary obligations on PASNY: first, to supply from its St. Lawrence project 100,000 kilowatts of "firm" power for the life of the contract; 2 second, to provide from the St. Lawrence project classes of power other than firm power to the extent that other classes became available and Vermont wished to secure them. 3 The contract provided for an initial term through June 30, 1985; it also provided for renewal "upon such conditions as may be agreed upon by the parties." 4
The transmission contract of 1957 between Vermont and VELCO set forth a comprehensive framework for delivering power obtained under the PASNY-Vermont contract to utilities throughout the State. 5 Many of the provisions of the 1957 contract defined VELCO's transmission obligations by reference to Contract S-2. In Article I, for example, section 1.1 required VELCO to construct facilities as approved by the State "adequate to (i) receive ... 100,000 kilowatts of firm electric power and such power of other classes as may be purchased ... in accordance with the St. Lawrence Contract S-2, and (ii) to deliver such power ... to allottees of the State at such locations ... and at such delivery voltages as the State may specify." Sections 1.3 and 1.4 elaborated the approval authority conferred upon the State in section 1.1 by specifying that whether these facilities were those initially constructed by VELCO or subsequent additions or extensions, they had to be "as approved by the State."
In addition to prescribing the facilities to be provided, the 1957 contract detailed the services VELCO was to perform by specific reference to Contract S-2. Article II imposed two duties on VELCO. Section 2.1 of Article II required it to deliver "St. Lawrence power"; section 2.2 required it to deliver "Other Power," the latter in apparent recognition that the facilities constructed pursuant to Article I would have capacity to transmit power in addition to that obtained under S-2 purchases. "St. Lawrence power," referred to in section 2.1, was defined by section 0.2 as follows:
Whereas, the State has entered into a contract dated January 25, 1956, designated St. Lawrence Contract S-2, with Power Authority of the State of New York (hereinafter referred to as Power Authority) whereby Power Authority has undertaken to sell and deliver to the State 100,000 kilowatts of firm electric power, to be transmitted by Power Authority from its St. Lawrence River Power Project to delivery points ... located on the New York-Vermont state boundary, and also to sell and deliver to the State power of classes other than firm if such power becomes available and the State elects to purchase it, all classes of such power being hereinafter referred to as St. Lawrence power.
1957 Contract Sec. 0.2, R. at 122.
VELCO and Vermont likewise fixed the term of the 1957 contract by reference to the S-2 contract. The original term of the 1957 contract was to last through June 30, 1985, the day on which Contract S-2 expired. 6 Section 10.3, however, provided for renewal under the following terms:
The State at its option, may renew this agreement upon the same terms and conditions as herein stated for the purpose of providing transmission services and facilities for the transmission of St. Lawrence power or other electric power and energy from sources without the State of Vermont for use, distribution or sale within the State of Vermont, such renewal term to be for such period not exceeding twenty-five years as the State shall elect; notice in writing of such renewal to be given by the State to the Corporation on or before June 30, 1984. This contract may be renewed upon such other terms and conditions as may be agreed upon by the parties.
Vermont exercised this renewal provision in September 1969, when the parties extended the 1957 contract through June 30, 2000. The renewal agreement provided for further renewal through the year 2010 and adjusted the rate of return under the contract but otherwise left intact the 1957 contract. R. at 157-58.
Much of the remainder of the 1957 contract was devoted to specifying the terms and conditions under which "St. Lawrence power" was to be delivered. The contract appeared, in contrast, to leave the terms and conditions for delivery of "other power" to the agreement of the parties. Section 2.2 provided:
Other Power--In the event the State, during the term of this contract, shall acquire power for transmission within Vermont from sources outside the state other than those enumerated in St. Lawrence Contract S-2, the same may be transmitted over the transmission facilities provided for in paragraphs 1.3 and 1.4 hereof to such extent as capacity, not otherwise used or reserved for use by contracts or arrangements made pursuant to paragraph 2.5 hereof for the transmission of firm power within the state, shall be then available, upon such terms and conditions as the parties hereto shall determine.
Of especial pertinence to the issues before us, in a number of provisions in the 1957 contract, Vermont expressly reserved authority to override VELCO management decisions. The most important of Vermont's supervisory powers relate to VELCO's construction of "initial" and "subsequent" facilities. Those powers are enumerated in sections 1.1, 1.3, and 1.4, which we have already described. The remaining, non-construction related supervisory powers permit the State to control the use of transmission facilities of others, use of VELCO's facilities by others, and expenditures for engineering studies. 7
As contemplated by the 1957 contract with respect to non-St. Lawrence power, Vermont subsequently entered into three supplemental agreements with VELCO fixing the terms and conditions for transmission of what the agreement denominated (in section 2.2) as "other power." In 1961, the parties executed an agreement for transmission through December 31, 1979 of power purchased from PASNY's Niagara Project. Almost two decades later, an agreement in 1980 between VELCO and Vermont provided for the former's transmission through June 30, 1985 of a purchase of power from the Niagara Project to succeed the Vermont-PASNY 1961 purchase agreement. Finally, in 1980 VELCO agreed to transmit from October 1, 1980 through September 30, 1985 power that Vermont purchased from Hydro Quebec. In 1982, however, Vermont interrupted its Hydro Quebec purchase and substituted for it power purchased from Ontario Hydro. VELCO nonetheless continued delivering this substituted Canadian power under the 1980 Hydro Quebec agreement. Each of these "other power" transmission agreements expressly set forth the amount, class, and source of the power, provided for no charges in addition to those prescribed in the 1957 contract, and, importantly, stated that "[o]ther terms and conditions of [VELCO's] performance [would] be the same as those contained in the 1957 contract." 8
As VELCO's delivery of power to Vermont falls within the jurisdiction of the Federal Energy Regulatory Commission, VELCO duly filed the 1957 contract and the various supplemental agreements with the Commission. 9
Clouds portending the storm of controversy which has now erupted began to gather in the spring of 1985. Those were the waning days of Vermont's S-2 purchase from PASNY (now known as the New York Power Authority, or "NYPA"), which was due to expire June 30, 1985. Also nearing their respective ends were the 1980 supplemental agreement under which VELCO agreed to transmit Vermont's purchase of power from NYPA's Niagara...
To continue reading
Request your trial
-
Wisconsin Public Power, Inc. v. F.E.R.C.
...analysis hinges on interpretation of utility contracts, our review of that analysis is deferential. See, e.g., Vt. Dep't of Pub. Serv. v. FERC, 817 F.2d 127, 134-35 (D.C.Cir.1987). The first step in the Mobile-Sierra analysis is to determine whether the challenged regulatory action constitu......
-
City of Brookings Mun. Telephone Co. v. F.C.C.
...agency decision. See SEC v. Chenery Corp., 318 U.S. 80, 87-88, 63 S.Ct. 454, 459, 87 L.Ed. 626 (1943); Vermont Department of Public Service v. FERC, 817 F.2d 127, 139 (D.C.Cir.1987). Post hoc rationalizations advanced to remedy inadequacies in the agency's record or its explanation are boot......
-
Alabama Power Co. v. F.E.R.C.
...Co. v. FERC, 881 F.2d 1101, 1118 (D.C.Cir.1989); Duke Power Co. v. FERC, 864 F.2d 823, 826 (D.C.Cir.1989); Vermont Dep't of Pub. Serv. v. FERC, 817 F.2d 127, 134-35 (D.C.Cir.1987). Our deference on settlements stems from recognition of the explicit statutory delegation of authority over rat......
-
Panhandle Eastern Pipe Line Co. v. F.E.R.C., s. 87-1431
...that FERC's contract interpretations are "amply supported both factually and legally." Id. at 442 (quoting Vermont Dep't of Pub. Serv. v. FERC, 817 F.2d 127, 134 (D.C.Cir.1987)). The agency's determination must reflect reasoned decisionmaking that has adequate support in the record and must......