Pennsylvania Water & Power Co. v. Federal Power Commission Pennsylvania Public Utility Commission v. Federal Power Commission

ORDER

Upon consideration of the Plan of Distribution of Segregated Funds Involving Three' Pennsylvania Utilities Customers, jointly submitted to the court, pursuant to-its order of October 30, 1952, by the Pennsylvania Public Utility Commission and the Federal Power Commission, and consented to by the intervenors Philadelphia Electric Company, Metropolitan Edison Company and Pennsylvania Power & Light Company, but slightly modified by the court and as so modified also consented to as evidenced by the endorsements hereon, it is by the court

Ordered :

. 1. That funds impounded by petitioner, Pennsylvania Water & Power -Company, with respect to the intervenors Pennsylvania Power & Light Company, Metropolitan Edison Company and Philadelphia Electric Company, together with actual earnings thereon, be promptly distributed and paid by petitioner to said intervenors, said funds being in the following amounts as of January 8, 1953:

Provided, that there shall be added- to the above amounts any additional amounts segregated and -any additional earnings to the date of this order.

2. That such distribution and payments shall be made upon the following terms and conditions:

(a) Each such intervenor shall set up on its books of account a special reserve in an amount equal to the aggregate of the amount or amounts received by it under the order or orders of the court, less any state and federal income taxes paid thereon, and shall maintain such reserve for twenty years commencing December 31, 1952, and thereafter until extinguished by four equal annual credits therefrom to earned surplus commencing December 31, 1973, and continuing on each December 31 thereafter ending with December 31, 1976.

(b) Each intervenor shall deduct the amount in such special reserve from the base upon which it would otherwise seek or claim a right to earn a fair return for the purpose of all proposals or claims of rates or modifications or changes in rates and each Commission shall deduct the amount in such special reserve from the base upon which a fair return would otherwise be allowable for all rate regulatory purposes with respect to each such inter-venor.

3. That petitioner shall promptly file with the clerk of this court and serve on all parties herein a statement in writing of the dates and amounts of payments and the names of the parties to whom payments were made pursuant to this order.

Dated: March 6, 1953.

Circuit Judge WILBUR K. MILLER dissents from the foregoing order for the reasons indicated in his opinion this day filed herein.

Circuit Judge FAHY filed a memorandum stating the position of Judge BA-ZELON and himself in entering the foregoing order.

Memorandum of Circuit Judge FAHY in support of order of distribution entered herein March 6, 1953.

FAHY, Circuit Judge.

Judge MILLER’S opinion dissenting from the order for partial distribution leads me to file this memorandum giving the reasons for my approval of the order. The order adopts with minor changes a plan for distribution jointly submitted to the court by the Pennsylvania Public Utility Commission and the Federal Power Commission. The order in its final form bears the consents of these two Commissions and also of the Pennsylvania Water & Power Company, the Pennsylvania Power & Light Company, the Philadelphia Electric Company, and the Metropolitan Edison Company, all by counsel.¹ Neither the Federal nor State Commission nor any other party to the case objects to the order.

Whether or not a majority of the court displayed at some point an inclination to invite the Federal Power Commission alone to formulate a plan for distribution the fact is that after full consideration our order of October 30, 1952, requested the Federal and Pennsylvania Commissions jointly insofar as possible but separately to the extent that they were unable to agree, to present a plan consistent with law.

The fund grew out of our order of April 29, 1949, which required amounts paid by the utility companies to the Pennsylvania Water & Power Company, in excess of rates the latter was authorized to charge under the Federal Commission’s order, to be segregated pending outcome of the litigation over the validity of the rates so authorized. The Federal Commission’s order was sustained by this court and then by the Supreme Court, 1952, 343 U.S. 414, 72 S.Ct. 843, 96 L.Ed. 1042. The segregated funds therefore became distributable. Our jurisdiction over their distribution is coincident with our unquestionable jurisdiction •over the rates out of which the funds grew. Though this does not empower us to direct .a particular method of distribution which is beyond our power, I think it clear that the plan we now approve is well within our power under the decision of the Supreme Court in Federal Power Comm. v. Interstate Gas Co., 1949, 336 U.S. 577, 581-583, 69 S.Ct. 775, 93 L.Ed. 895; and see, also, concurring opinion of Mr. Justice Frankfurter, 336 U.S. at page 589, 69 S.Ct. at page 781. Here, as in that case, to borrow the language of the Supreme Court, “the intended beneficiaries of rate reductions ordered by the federal commission” are the ultimate consumers, “though state machinery might have to be invoked to obtain lower rates 'at the consumer level.” 336 U.S. at page 581, 69 S.Ct. at page 778. Disclaiming any authority to determine the reasonableness of rates not before it, that is, rates charged to their own consumers by the companies whose excess payments to the regulated utility made up the fund to be distributed, the Supreme Court held nevertheless that the federal court under whose order the fund arose “assumes the duty to make disposition of the fund in accord with equitable principles.” Such principles were ruled to include if need be consideration of reasonableness of rates when that was ancillary “to the problem of determining what claimants are equitably entitled to share” in the fund. The situation before us is in all essentials the same. The fact, then, that the reserve provided for in our order of distribution will affect local rates charged by the utility companies to ultimate consumers, over which rates as such the Federal Commission does not have jurisdiction, but which are paid by those for whose benefit it does exercise its jurisdiction under Federal law, 336 U.S. 581, 69 S.Ct. 775, not only does not render our order invalid but brings it within the equitable principles stated by the Supreme Court to be duty of the court to apply.

In Central States Elec. Co. v. Muscatine, 1945, 324 U.S. 138, 65 S.Ct. 565, 89 L.Ed. 801, the court had before it a legal controversy initiated by a local distributor. It was this local contest over which the Supreme Court said the Circuit Court did not have jurisdiction. Here there is no such contest. Moreover, insofar as it might otherwise have been applicable, and we do not think it would have been applicable at all, the Muscatine case must be deemed to have been either overruled or distinguished in Federal Power Comm. v. Interstate Gas Co., supra.

Finally I should like to add that our present order is not imposed upon, dictated to or the result of compulsion upon the Pennsylvania Utility Commission or the three utility companies. I assume their consents arise from their judgment as to what is an “equitable and efficient distribution, consistent with applicable law”, the criteria'laid down in our order of October 30, 1952.

I am authorized to say that Judge BAZELON joins in the views expressed in this memorandum.

Opinion of Circuit Judge WILBUR K. MILLER dissenting from the order of distribution entered herein March 6, 1953.

1 . Hereinafter the last three named Pennsylvania utility companies are referred to as the utility companies.