Source: https://caselaw.findlaw.com/us-supreme-court/461/402.html
Timestamp: 2019-04-21 11:19:59+00:00

Document:
[ Footnote * ] Together with No. 82-226, Federal Energy Regulatory Commission v. American Electric Power Service Corp. et al., also on certiorari to the same court.
Section 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) was designed to encourage the development of cogeneration facilities and small power production facilities and to reduce the demand for fossil fuels. Section 210(a) directs the Federal Energy Regulatory Commission (FERC) to prescribe rules requiring electric utilities to deal with qualifying cogeneration and small power facilities. With respect to utilities' purchases of electricity from such facilities, 210(b) provides that rates set by FERC "shall be just and reasonable to the electric consumers of the electric utility and in the public interest," shall not discriminate against qualified cogeneration and small power facilities, and shall not exceed "the incremental cost to the electric utility of alternative electric energy." Following rulemaking proceedings, FERC promulgated a rule requiring utilities to purchase electric energy from a qualifying facility at a rate equal to the utility's "full avoided cost," i. e., the cost to the utility which, but for the purchase from the qualifying facility, would be incurred by the utility in generating the electricity itself or purchasing the electricity from another source. FERC also promulgated a rule requiring utilities to make such physical interconnections with cogenerators and small power producers as are necessary to effect purchases or sales of electricity authorized by PURPA. Upon review, the Court of Appeals vacated both rules, holding that FERC had not adequately explained its adoption of the full-avoided-cost rule, and that it exceeded its statutory authority in promulgating the interconnection rule, in view of 210(e)(3) of PURPA, which provides that "[n]o qualifying small power production facility or qualifying cogeneration facility may be exempted under this subsection from" specified provisions of the Federal Power Act (FPA) which require FERC to afford an opportunity for a hearing before ordering an interconnection.
1. FERC did not act arbitrarily or capriciously in promulgating the full-avoided-cost rule, which is the maximum rate permissible under [461 U.S. 402, 403] 210(b). Such rule plainly satisfies the requirement of 210(b) that the rate not discriminate against qualifying cogeneration and small power production facilities. FERC also adequately explained why the rate is "just and reasonable to the electric consumers of the electric utility and in the public interest." Both the statutory language and the legislative history confirm that Congress did not intend to impose traditional ratemaking concepts on sales by qualifying facilities to utilities. And although FERC recognized that the rule would not directly provide any rate savings to consumers, it reasonably deemed it more important at this time that the rule would provide a significant incentive for the development of cogeneration and small power production, and that ratepayers and the Nation as a whole will benefit from the decreased reliance on scarce fossil fuels and the more efficient use of energy. Pp. 412-418.
2. Nor did FERC exceed its authority in promulgating the interconnection rule. The authority granted by 210(a) to promulgate such rules as are necessary to require utilities to deal with qualifying facilities plainly encompasses the power to promulgate rules requiring utilities to make physical connections with such facilities, and FERC reasonably interpreted 210(e)(3) as forbidding it to exempt qualifying facilities from being the "target" of interconnection applications by other facilities under the FPA, but not as forbidding it to grant qualifying facilities the right to obtain interconnections under PURPA without applying for an order under the FPA. Such interpretation is supported by the purposes of PURPA and the statutory scheme created by both Acts. Pp. 418-423.
219 U.S. App. D.C. 1, 675 F.2d 1226, reversed and remanded.
MARSHALL, J., delivered the opinion of the Court, in which all other Members joined, except POWELL, J., who took no part in the consideration or decision of the cases.
Deputy Solicitor General Bator argued the cause for petitioners in both cases. With him on the briefs for petitioner in No. 82-226 were Solicitor General Lee, Deputy Solicitor General Claiborne, Elliott Schulder, Charles A. Moore, Jerome M. Feit, and Robert F. Shapiro. Zachary Shimer, Paul G. Pennoyer, Jr., Rigdon H. Boykin, Richard L. Schmalz, and Walter Kiechel, Jr., filed briefs for petitioner in No. 82-34.
Fn [461 U.S. 402, 404] Briefs of amici curiae urging reversal were filed by Samuel Efron, David J. Bardin, James P. Mercurio, and Lewis E. Leibowitz for Diamond Shamrock Corp. et al.; by Robert H. Loeffler, Steven S. Rosenthal, and Henry D. Levine for Kerr-McGee Chemical Corp. et al.; and by Gregory A. Thomas, Alan S. Miller, and William A. Butler for the Natural Resources Defense Council, Inc. Robert L. Baum, Carl D. Hobelman, and Eugene R. Fidell filed a brief for the Edison Electric Institute as amicus curiae urging affirmance.
This case concerns two rules promulgated by the Federal Energy Regulatory Commission (FERC) pursuant to 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA), 92 Stat. 3144, as amended, 16 U.S.C. 824a-3 (1976 ed., Supp. V). The first rule requires electric utilities to purchase electric energy from cogenerators and small power producers at a rate equal to the purchasing utility's full avoided cost, i. e., the cost the utility would have incurred had it generated the electricity itself or purchased the electricity from another source. The second rule requires utilities to make such interconnections with cogenerators and small power producers as are necessary to effect purchases or sales of electricity authorized by PURPA. The Court of Appeals held that FERC had not adequately explained its adoption of the full-avoided-cost rule, and that it exceeded its statutory authority in promulgating the interconnection rule. 219 U.S. App. D.C. 1, 675 F.2d 1226 (1982). We reverse.
"(2) shall not discriminate against qualifying cogenerators or qualifying small power producers.
"No such rule prescribed under subsection (a) of this section shall provide for a rate which exceeds the incremental cost to the electric utility of alternative electric energy." PURPA 210(b), 16 U.S.C. 824a-3(b) (1976 ed., Supp. V).
Following rulemaking proceedings, FERC promulgated regulations governing transactions between utilities and those cogeneration and small power production facilities, designated as "qualifying facilities," 18 CFR 292.201-292.207 [461 U.S. 402, 406] (1982), that may invoke the provisions of PURPA to sell electricity to and purchase electricity from utilities.
"[I]n most instances, if part of the savings from cogeneration and small power production were allocated among the utilities' ratepayers, any rate reductions will be insignificant for any individual customer. On the other hand, if these savings are allocated to the relatively small class of qualifying cogenerators and small power producers, they may provide a significant incentive for a higher growth rate of these technologies." Id., at 12222.
"[I]n most situations, a qualifying cogenerator or small power producer will only produce energy if its marginal cost of production is less than the price he receives for its output. If some fixed percentage is used, a qualifying facility may cease to produce additional units of energy when its costs exceed the price to be paid by the utility. If this occurs, the utility will be forced to operate generating units which either are less efficient than those which would have been used by the qualifying facility, or which consume fossil fuel rather than the alternative fuel which would have been consumed by the qualifying facility had the price been set at full avoided costs." Id., at 12222-12223.
"(B) the provisions of section 210 . . . or 212 of the Federal Power Act . . . or the necessary authorities for enforcement of any such provision under the Federal Power Act . . . ." 16 U.S.C. 824a-3(e)(3) (1976 ed., Supp. V).
In concluding that an evidentiary hearing under the FPA is not required prior to an interconnection necessary to complete a purchase or sale authorized by PURPA, the Commission reasoned that 210(a) of PURPA "provides a general mandate for the Commission to prescribe rules necessary to encourage cogeneration and small power production." 45 Fed. Reg. 12221 (1980). The Commission also emphasized that "a basic purpose of section 210 of PURPA is to provide a market for the electricity generated by small power producers and cogenerators," and that "to require qualifying facilities to go through the complex procedures set forth in section 210 of the Federal Power Act to gain interconnection would, in most circumstances, significantly frustrate" the achievement of that purpose. Ibid.
Following the filing of several petitions for rehearing, the Commission issued an order adhering to both the full-avoided-cost rule and the interconnection rule. Id., at 33958.
Respondents American Electric Power Service Corp., Consolidated Edison Co. of New York, Inc., and Colorado-Ute Electric Association, Inc., sought review of the Commission's rules in the United States Court of Appeals for the District of Columbia Circuit. The Court of Appeals vacated both rules. 219 U.S. App. D.C. 1, 675 F.2d 1226 (1982).
The Court of Appeals held that FERC had exceeded its authority in promulgating the interconnection rule. The court reasoned that the "relatively specific limitation on authority in PURPA section 210(e)(3) . . . must control over the relatively general grant of authority in FPA section 212(e)." Id., at 15, 675 F.2d, at 1240 (emphasis in original). The court concluded that the Commission must provide notice to interested parties and afford an opportunity for an evidentiary [461 U.S. 402, 412] hearing with respect to each interconnection requested by a qualifying facility.
Following the denial of petitions for rehearing and rehearing en banc, 6 petitions for certiorari were filed by both FERC and American Paper Institute, Inc., the national trade association of the pulp, paper, and paperboard industry, which accounts for a large share of the cogeneration of electric power in the United States today. We granted both petitions. 459 U.S. 904 (1982).
The first question before us is whether FERC's action in promulgating the full-avoided-cost rule was "arbitrary, capricious, [or] an abuse of discretion." 5 U.S.C. 706(2)(A). 7 [461 U.S. 402, 413] We cannot answer this question simply by noting that the full-avoided-cost rule is within the range of permissible rates that Congress established in 210(b) of PURPA. The Commission plainly has the authority to adopt a full-avoided-cost rule, for PURPA sets full avoided cost as the maximum rate that the Commission may prescribe. Whether the Commission properly exercised that authority is a separate issue. To decide whether the Commission's action was "arbitrary, capricious, [or] an abuse of discretion," we must determine whether the agency adequately considered the factors relevant to choosing a rate that will best serve the purposes of the statute, and whether the agency committed "a clear error of judgment." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971).
FERC's explanation of its reasons for promulgating the full-avoided-cost rule must be examined in light of the criteria set forth in 210(b) of PURPA, 16 U.S.C. 824a-3(b) (1976 ed., Supp. V), which provides that the purchase rate established by the Commission must be "just and reasonable to the electric consumers of the electric utility and in the public interest" and must not discriminate against qualifying facilities. 8 Since the full-avoided-cost rule plainly satisfies the nondiscrimination requirement, we need only consider whether FERC adequately explained why the rule is "just and reasonable to the electric consumers of the electric utility and in the public interest."
"It is not the intention of the conferees that cogenerators and small power producers become subject . . . to the type of examination that is traditionally given to electric utility rate applications to determine what is the just and reasonable rate that they should receive for their electric power. The conferees recognize that cogenerators and small power producers are different from electric utilities, not being guaranteed a rate of return on their activities generally or on the activities vis a vis the sale of power to the utility and whose risk in proceeding forward in the cogeneration or small power production enterprise is not guaranteed to be recoverable.
In contrast, a subsequent passage in the Conference Report explicitly states that the "just and reasonable" language of 210(c), 16 U.S.C. 824a-3(c) (1976 ed., Supp. V), which concerns sales by utilities to qualifying facilities, "is intended to refer to traditional utility ratemaking concepts." H. R. Conf. Rep. No. 95-1750, supra, at 98 (emphasis added).
The Commission did not ignore the interest of electric utility consumers "in receiving electric energy at equitable rates." H. R. Conf. Rep. No. 95-1750, supra, at 97. 9 The Commission recognized that the full-avoided-cost rule would not directly provide any rate savings to electric utility consumers, but deemed it more important that the rule could "provide a significant incentive for a higher growth rate" of cogeneration and small power production, and that "these ratepayers and the nation as a whole will benefit from the decreased reliance on scarce fossil fuels, such as oil and gas, and the more efficient use of energy." 10 45 Fed. Reg. 12222 (1980). As the Commission explained, a purchase rate established [461 U.S. 402, 416] at a fixed percentage of avoided cost would discourage production of electric energy by qualifying facilities whose marginal costs exceeded the rate that a purchasing utility would be required to pay under this approach, whereas those same facilities would retain an incentive to produce energy under the full-avoided-cost rule so long as their marginal costs did not exceed the full avoided cost of the purchasing utility. Id., at 12222-12223.
The Commission would have encountered considerable difficulty had it attempted to determine an appropriate rate less than full avoided cost. A wide variety of technologies are used in cogeneration and small power production, including internal combustion engines, steam turbines, combustion turbines, windmills, solar cells, and hydro turbines. Facilities may vary greatly in capacity. It would have been extremely difficult, if not impossible, for the Commission to make any useful estimate of the amount of cogeneration and small power production that would be discouraged by setting the rate at a level lower than full avoided cost.
Under these circumstances it was not unreasonable for the Commission to prescribe the maximum rate authorized by PURPA. 11 The Commission's order makes clear that the Commission considered the relevant factors and deemed it most important at this time to provide the maximum incentive for the development of cogeneration and small power production, in light of the Commission's judgment that the entire country will ultimately benefit from the increased development of these technologies and the resulting decrease in the Nation's dependence on fossil fuels. The Commission has a statutory mandate to set a rate that is "in the public interest," and as this Court stated in NAACP v. FPC, 425 U.S., at 669 , "the words `public interest' in a regulatory statute . . . take meaning from the purposes of the regulatory legislation." The basic purpose of 210 of PURPA was to increase the utilization of cogeneration and small power production facilities and to reduce reliance on fossil fuels. See FERC v. Mississippi, 456 U.S., at 750 . At this early stage [461 U.S. 402, 418] in the implementation of PURPA, it was reasonable for the Commission to prescribe the maximum rate authorized by Congress and thereby provide the maximum incentive for the development of cogeneration and small power production.
"(2) purchase electric energy from such facilities."
The authority to promulgate such rules as are necessary to require purchases and sales plainly encompasses the power to promulgate rules requiring utilities to make physical connections with qualifying facilities in order to consummate purchases and sales authorized by PURPA. No purchase or sale can be completed without an interconnection between the buyer and seller.
In the absence of a specific provision to the contrary, the Commission's power to promulgate rules under PURPA requiring interconnections would not be negated by the provisions of the FPA that give the Commission the authority to conduct adjudicatory proceedings and issue orders requiring interconnections. As a general matter, the existence of power to proceed by adjudication under one statute is in no way inconsistent with the existence of power to proceed by rulemaking under another statute. Moreover, there is nothing in the FPA to suggest that the Commission must proceed by adjudication in determining the obligations of facilities [461 U.S. 402, 419] within its jurisdiction to make interconnections. On the contrary, Congress expressly provided in 212(e) of the FPA, 16 U.S.C. 824k(e) (1976 ed., Supp. V), that 210 of the FPA shall not be construed "as requiring any person to utilize the authority of [ 210] . . . in lieu of any other authority of law," or "as limiting, impairing, or otherwise affecting any authority of the Commission under any other provision of law."
"(B) the provisions of section 210 . . . or 212 of the Federal Power Act . . . or the necessary authorities for enforcement of any such provision under the Federal Power Act . . . ."
The Court of Appeals interpreted 210(e)(3) of PURPA to mean that FERC may not promulgate a rule requiring utilities to interconnect with qualifying facilities in order to complete purchases and sales the utilities are required to enter into under PURPA, but must instead afford an opportunity for an evidentiary hearing under 210 and 212 of the FPA in the case of each purchase and sale.
While the language of 210(e)(3) of PURPA can be so interpreted, the purposes of PURPA strongly support the Commission's contrary reading of that provision. The purposes of the statute make it most unlikely that Congress could have intended that an evidentiary hearing be held for [461 U.S. 402, 420] every interconnection necessary to consummate a purchase or sale of electricity authorized by the Act. Evidentiary hearings under 210 of the FPA entail a determination of whether a proposed interconnection (1) is in the public interest, and (2) would encourage overall conservation of energy or capital, optimize the efficiency of use of facilities and resources, or improve the reliability of the affected utility systems. 16 U.S.C. 824i(c)(1) (1976 ed., Supp. V). It is highly doubtful that Congress could have intended that the Commission make such a determination every time a qualifying facility seeks to hook up with a utility to complete a purchase or sale under PURPA, for Congress itself determined in enacting PURPA that these purchases and sales are in the public interest, and that the development of cogeneration and small power production will help to conserve energy and capital and ensure the more efficient use of the Nation's resources.
Providing an opportunity for evidentiary hearings before the Commission for every interconnection necessary to complete a purchase or sale under PURPA would seriously impede the very development of cogeneration and small power production that Congress sought to facilitate. Many of the facilities in question are small operations. By definition a small power production facility has a production capacity of no more than 80 megawatts, 16 U.S.C. 796(17)(A)(ii) (1976 ed., Supp. V), and cogeneration facilities may also be of modest size. Many owners of qualifying facilities would have little incentive to purchase or sell electric energy if they had to go through an evidentiary hearing before FERC in Washington, D.C., every time they needed to hook up with a utility to consummate a purchase or sale. The average cost to FERC of a contested interconnection proceeding is currently more than $57,000, see FERC Notice of Proposed Rulemaking, Docket RM 82-38-000, Fees Applicable to Electric Utilities, Cogenerators, and Small Power Producers 29-30 (Sept. 1, 1982), and the costs to private parties are doubtless [461 U.S. 402, 421] also substantial. If we were to hold that utilities must be provided an opportunity for a hearing whenever a qualifying facility seeks an interconnection in order to effectuate a purchase or sale under PURPA, we would be "imput[ing] to Congress a purpose to paralyze with one hand what it sought to promote with the other." Clark v. Uebersee Finanz-Korporation, A. G., 332 U.S. 480, 489 (1947). Cf. E. I. du Pont de Nemours & Co. v. Train, 430 U.S. 112, 132 -133 (1977); Permian Basin Area Rate Cases, 390 U.S. 747, 777 (1968).
The Commission's interconnection rule represents "`a contemporaneous construction of a statute by the men charged with the responsibility of setting its machinery in motion, of making the parts work efficiently and smoothly while they are yet untried and new.'" Udall v. Tallman, 380 U.S. 1, 16 (1965), quoting Power Reactor Development Co. v. Electrical Workers, 367 U.S. 396, 408 (1961). To uphold it, "we need not find that [FERC's] construction is the only reasonable one, or even that it is the result we would have reached had the question arisen in the first instance in judicial proceedings." [461 U.S. 402, 423] Unemployment Compensation Comm'n v. Aragon, 329 U.S. 143, 153 (1946). See Mourning v. Family Publications Service, Inc., 411 U.S. 356, 371 -372 (1973). We need only conclude that it is a reasonable interpretation of the relevant provisions. For the reasons stated above, we do conclude that the Commission's interpretation is reasonable and that the Court of Appeals erred in rejecting that interpretation.
We hold that the Commission did not act arbitrarily or capriciously in promulgating the full-avoided-cost rule or exceed its authority in promulgating the interconnection rule. Accordingly, the judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.
JUSTICE POWELL took no part in the consideration or decision of these cases.
[ Footnote 1 ] The statute defines a "cogeneration facility" as a facility that produces both electric energy and steam or some other form of useful energy, such as heat. 16 U.S.C. 796(18)(A) (1976 ed., Supp. V). A "small power production" facility is a facility that has a production capacity of not more than 80 megawatts and produces electric power from biomass, waste, or renewable resources such as wind, water, or solar energy. 16 U.S.C. 796(17)(A) (1976 ed., Supp. V).
[ Footnote 2 ] In an accompanying regulation, FERC directed that each qualifying facility "pay any interconnection costs which the State regulatory authority . . . or nonregulated electric utility may assess against the qualifying facility on a nondiscriminatory basis." 18 CFR 292.306(a) (1982).
[ Footnote 3 ] Section 212 of the FPA, as set forth in 16 U.S.C. 824k (1976 ed., Supp. V), provides in pertinent part: (a) "No order may be issued by the Commission under section 824i [FPA 210] . . . of this title unless the Commission determines that such order - "(1) is not likely to result in a reasonably ascertainable uncompensated economic loss for any electric utility, qualifying cogenerator, or qualifying small power producer, as the case may be, affected by the order; "(2) will not place an undue burden on an electric utility, qualifying cogenerator, or qualifying small power producer, as the case may be, affected by the order; "(3) will not unreasonably impair the reliability of any electric utility affected by the order; and "(4) will not impair the ability of any electric utility affected by the order to render adequate service to its customers. "The determination under paragraph (1) shall be based upon a showing of the parties. The Commission shall have no authority under section 824i . . . of this title to compel the enlargement of generating facilities." (b) "No order may be issued under section 824i . . . of this title unless the applicant for such order demonstrates that he is ready, willing, and able to reimburse the party subject to such order for - "(1) in the case of an order under section 824i of this title, such party's share of the reasonably anticipated costs incurred under such order . . ." . . . . . (d) "If the Commission does not issue any order applied for under section 824i . . . of this title, the Commission shall, by order, deny such application and state the reasons for such denial." (e) "No provision of section 824i . . . of this title shall be treated - "(1) as requiring any person to utilize the authority of such section 824i . . . of this title in lieu of any other authority of law, or "(2) as limiting, impairing, or otherwise affecting any authority of the Commission under any other provision of law."
[ Footnote 4 ] With respect to the Commission's statement that any savings to consumers that a lower rate might produce would be insignificant in comparison to the benefit to qualifying facilities provided by the full-avoided-cost rate, the court suggested that the Commission had failed to "bear in mind, as Congress surely knew, that inevitably the impact of FERC's rules per consumer will be less than their impact per cogenerator." 219 U.S. App. D.C., at 9, 675 F.2d, at 1234.
[ Footnote 5 ] The court proceeded to "outline some additional concerns raised by the full avoided cost rule, which the Commission should address in its subsequent rulemaking." Ibid. See id., at 9-11, 675 F.2d, at 1234-1236.
[ Footnote 6 ] In denying a petition for rehearing, the Court of Appeals emphasized that it had not declared the full-avoided-cost rule inconsistent with PURPA but had "simply remanded the matter because the Commission had failed to explain `its rationale and process of consideration.'" 219 U.S. App. D.C., at 21, 675 F.2d, at 1246, quoting id., at 8, 675 F.2d, at 1233. A suggestion for rehearing en banc was denied by a vote of 3 to 2, with 6 of the 11 active Circuit Judges not participating. Id., at 21, 675 F.2d, at 1246.
[ Footnote 7 ] It is not entirely clear from the Court of Appeals' opinion what standard of review the court applied, but it appears that the court may have erroneously employed the substantial-evidence standard. The court criticized FERC for failing "to demonstrate the factual basis," id., at 9, 675 F.2d, at 1234, for its finding that sharing the savings from cogeneration with consumers would afford consumers only insubstantial savings, and it cited in a footnote an earlier decision that had employed the substantial-evidence test in a case involving informal rulemaking by the Commission under the FPA. Id., at 9, n. 36, 675 F.2d, at 1234, n. 36, citing Public Systems v. FERC, 196 U.S. App. D.C. 66, 606 F.2d 973 (1979). In any event, the Court of Appeals should have applied only the arbitrary-and-capricious standard. Unlike the FPA, see 16 U.S.C. 825l(b), PURPA does not direct reviewing courts to determine whether orders entered thereunder are supported by substantial evidence. In the absence of a specific command in PURPA to employ a particular standard of review, the full-avoided-cost rule must be reviewed solely under the more lenient arbitrary-and-capricious standard prescribed by the Administrative Procedure Act for judicial review of informal rulemaking. See, e. g., FCC [461 U.S. 402, 413] v. National Citizens Committee for Broadcasting, 436 U.S. 775, 803 (1978).
[ Footnote 8 ] See also H. R. Conf. Rep. No. 95-1750, p. 98 (1978) (the purchase rate prescribed by the Commission is to be "the lower of . . . a rate which is just and reasonable to consumers of the utility, in the public interest, and nondiscriminatory, or the incremental cost of alternate electric energy").
[ Footnote 9 ] We interpret the "just and reasonable" language of 210(b) to require consideration of potential rate savings for electric utility consumers. Of course, even when utilities purchase electric energy from qualifying facilities at full avoided cost rather than at some lower rate, the rates the utilities charge their customers will not be increased, for by hypothesis the utilities would have incurred the same costs had they generated the energy themselves or purchased it from other sources. Moreover, a utility's existing rates will ordinarily have been determined to be "just and reasonable" by the appropriate state regulatory authority. But it does not follow that the full-avoided-cost rule is necessarily "just and reasonable to the electric consumers of the electric utilities" within the meaning of 210(b) of PURPA. Unless the "just and reasonable" language is to be regarded as mere surplusage, it must be interpreted to mandate consideration of rate savings for consumers that could be produced by setting the rate at a level lower than the statutory ceiling.
[ Footnote 10 ] A decrease in the utilities' reliance on fossil fuels may result in a reduction of the prices of those fuels to levels lower than would have been the case with higher demand. Since the rates the utilities are permitted to charge their customers are based on their costs, electric utility customers can expect to share in the savings to the utilities resulting from reduced fuel prices.
[ Footnote 11 ] We reach this conclusion even though we agree with the Court of Appeals, see n. 4, supra, that the rule was not adequately explained by the Commission's observation that "in most instances, if part of the savings from cogeneration and small power production were allocated among the utilities' ratepayers, any rate reductions will be insignificant for any individual customer," whereas the rule would provide significant incentives for cogenerators and small power producers. 45 Fed. Reg. 12222 (1980). In the context of ratemaking, it is typically the case that any increment in the rate will "make a small dent in the consumer's pocket," FPC v. Texaco Inc., 417 U.S. 380, 399 (1974), while that same increment will have substantial consequences for the parties to whom the rate is paid. FERC's statutory mandate to prescribe a rate that "shall be just and reasonable to the electric consumers of the electric utility," 16 U.S.C. 824a-3(b) (1) (1976 ed., Supp. V), obviously reflects a congressional determination that potential savings for consumers as a class are important even though rate changes will generally not have great economic significance for any individual consumer. Cf. FPC v. Texaco Inc., supra, at 399 ("Even if the effect of increased small-producer prices would make a small dent in the consumer's pocket, . . . the [Natural Gas] Act makes unlawful all rates which are not just and reasonable, and does not say a little unlawfulness is permitted").

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.