Opinion ID: 553338
Heading Depth: 3
Heading Rank: 2

Heading: The Factual Findings

Text: 46 Petitioners also challenge the factual findings that provided the basis for Opinion No. 329. They submit that the ultimate conclusions of the Commission are unsupported by the evidence and amount to arbitrary and capricious action. Specifically, VDPS and the MDAs assert that even assuming the correctness of the public body criteria, the Commission's finding that they did not satisfy these criteria was not supported by substantial evidence and was an exercise of unreasoned decisionmaking. Petitioners argue that the ALJ and the Commission failed to address adequately in their respective opinions the factual evidence that was introduced. Additionally, they assert that the Commission has imposed a de facto  ownership requirement and that this represents an unexplained change in policy. Finally, petitioners contend that the Commission failed to consider several relevant factors when adopting the operational control component of the public body test. We find these arguments to be without merit. 47 Initially, we note that the record of the proceedings before the ALJ consists of thousands of pages. Both the petitioners and the complainants below introduced documentary and testimonial evidence. Nothing in the record suggests that the ALJ did not carefully consider and evaluate all the evidence before rendering his decision. Indeed, the ALJ's decision indicates that the contrary is true. 48 The assertion that the Commission failed to consider evidence presented by petitioners simply is not supported by the record. Indeed, the factual findings of the Commission encompass all of the specific points now being raised. Both the ALJ and the Commission carefully considered each of the factors on which the petitioners presently rely. These challenges to the application of the public body test in our view are nothing more than veiled attempts at collaterally attacking the public body criteria. 49 Moreover, we find no basis for the argument that the Commission in some way abdicated its responsibility by adopting the ALJ's findings and conclusions. After reviewing Opinion No. 329, we are satisfied that the Commission evaluated the ALJ's decision and all the arguments advanced by the parties and that its ultimate conclusions were supported by substantial evidence. 50
51 The MDAs submit that their LOAs with the IOUs satisfy the public body criteria. Specifically, they assert that they (1) provide yardstick competition, and (2) that the LOAs provide them with a sufficient degree of control over the distribution of power. Regarding the first point, the MDAs contend that the Commission ignored the fact that they compete directly with IOUs and that each kilowatt hour sold by a MDA is a kilowatt hour lost to an IOU. Additionally, they note that their rates are a matter of public record and are therefore available for regulatory comparison. Finally, the bills received by MDA customers reflect the difference in cost resulting from the provision of MDA power instead of IOU power. With regard to the second point, the MDAs submit that the record demonstrates that they maintain a high level of control over distribution. Specifically, they select their customer base, determine the amount of power to be sold to each customer, and set their own rates. 52 The LOAs entered into by the MDAs were a part of the record and the subject of close examination. In particular, the Commission analyzed the terms of the lease and operating agreement entered into by NYCPUS (one of the MDAs) and Consolidated Edison Co. (Con Ed)--a New York based IOU. Because the terms of the LOAs entered into by the other MDAs parallelled those of the NYCPUS/Con Ed agreement, the Commission focused its attention on this one agreement. Initial Decision, 42 FERC at 65,169. The Commission reached several conclusions. First, the ultimate responsibility for control of distribution remained with Con Ed. Indeed, the LOA expressly provided that Con Ed retain the franchise responsibility for providing service and that it be vested with the exclusive control over the entire distribution system. Second, Con Ed functioned as the operating agent for NYCPUS with responsibility for billing, metering and collection. Third, Con Ed retained the right to suspend the LOA in the event that provision of preference power resulted in higher energy costs for consumers. Fourth, Con Ed reserved the right to terminate the LOA if the MDA initiated condemnation proceedings or if compliance with the agreement would result in an increase in Con Ed's rates or a reduction in net income available for stockholders below the level that would pertain in the absence of the LOA. Fifth, a prerequisite to receipt of preference power was being a customer of Con Ed. See Opinion No. 329, 48 FERC at 61,471. 53 All of these conditions were expressly enumerated in the LOA. The Commission reasonably concluded that to compete with IOUs public entities must have the ability to manage and change those variables that affect costs and service. These LOAs provided no such flexibility. Instead, all responsibility for operations rested with the IOU. As the Commission appropriately explained: 54 In addition ..., the consumer must be a customer of the privately owned utility, or service is not available. Thus, the consumer has no real choice between utilities. There is insufficient separation of functions between the MDAs and the IOUs to create a threat of displacement, to allow the MDAs substantially to serve their customers' needs, or to provide an opportunity for rate comparison. 55 Id. 56 Given the express conditions of the LOAs and in light of the entire record, we conclude that there was substantial evidence in the record to support the Commission's conclusion that the MDAs lacked the requisite degree of control over distribution. As discussed above, we agree with the Commission that the exercise of such control is essential to a finding of public body status. 57
58 Petitioner VDPS attacks the Commission's finding that it fails to qualify as a public body, challenging the Commission's decision regarding the yardstick competition prong of the public body test. VDPS asserts that it clearly satisfies this test because it supplies a substantial percentage of Vermont residents' electricity needs. VDPS also submits that it presents a clear competitive threat to IOUs and that billing statements clearly identify VDPS as the source of a customer's power. 1 Finally, VDPS, like the MDAs, submits that the LOAs provide it with a sufficient degree of control over distribution. 59 VDPS entered into LOAs with various IOUs in Vermont for the purpose of distributing Niagara preference power to consumers. Under these LOAs, VDPS obtains the right to use of the IOUs' distribution facilities. However, like the MDAs, VDPS has no responsibility for the maintenance, construction, or operation of the distribution facilities. The billing, metering and collection responsibilities are also performed by the IOUs. In short, the distribution and customer service functions that a customer expects ... are performed by the [IOUs], not by VDPS. Id. at 61,474. Most importantly, the Commission concluded that under lease arrangements like those entered into by VDPS and the MDAs, the public entities essentially are precluded from competing with the IOUs on a cost basis. As the Commission stated in reference to VDPS's arrangement: 60 [S]ince VDPS leases its distribution facilities from the IOUs, and the IOUs actually operate them, the distribution costs which are supposed to provide some part of the benchmark against which to judge IOU performance are those of the IOUs. Thus no benchmark is possible, and VDPS does not foster yardstick competition. 61 Id. Simply stated, the Commission concluded that the distribution costs of the lessee public entity and the lessor private utility will always be the same. We find this to be the most compelling argument against the form of leasing arrangement that is before us. If spurring competition is the objective of the NRA, it is difficult for us to see how the leasing arrangements at issue advance that fundamental objective. 62 As in many cases, VDPS points to parts of the record that tend to undermine the Commission's conclusions. However, we are acutely aware that the ALJ was charged with the responsibility of resolving these apparent inconsistencies. After a thorough review of the record, we conclude that the Commission's determination that VDPS's leasing agreements failed to satisfy the public body test was supported by substantial evidence.