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

Heading: Rhode Island's Argument

Text: 63 The State of Rhode Island does not challenge the substance of the Commission's public body test; rather, it asserts that the test should not apply to states. Rhode Island argues that the test undermines the role of the states under the NRA. Specifically, Rhode Island takes exception to the criteria that must be met to qualify as a public body. Rhode Island argues that the term public body necessarily encompasses states and that states should not have to engage in the sale of preference power to retail consumers in order to obtain an allocation of preference power under the NRA. 64 In support of this argument, Rhode Island points to specific language in the NRA that permits ten percent of the Niagara Project's preference power to be allocated for use within reasonable economic transmission distance in neighboring States. 16 U.S.C. Sec. 836(b)(2). The statute goes on to provide: The arrangements made by the licensee [PASNY] for the sale of power to or in such States shall include observance of the preferences in paragraph (1) of this subsection. Id. (emphasis added). From this and similar language in the statute, Rhode Island surmises that states were among the intended beneficiaries of the NRA and that states are statutorily entitled to an allocation of preference power even if they do not directly sell power to consumers at retail. We disagree. 65 We see no indication that Congress intended states to be treated differently from other municipal and public utilities. The NRA's primary objective is to encourage rate competition with private investor owned utilities so that consumers can benefit from reduced electric costs. To treat states differently from other public entities would undermine this statutory purpose. Indeed, our analysis in MTA directly addresses the arguments being advanced by Rhode Island. In MTA, we held that an allocation of preference power to end-users fails to advance the NRA's objective of enhancing rate competition. We concluded that to be a yardstick competitor a recipient of an allocation of preference power must sell directly to retail consumers. Nothing in our opinion suggested that any entity, including a state, was to be exempt from this requirement. As we unequivocally stated: 66 Indeed, if preference power were made available to all government bodies, whether or not they distributed that power to consumers, every town and local library would be entitled to claim a direct share. Niagara hydropower would be spread so thin that any competitive effect it might have had would be lost. 67 MTA, 796 F.2d at 592. Similarly, an allocation of preference power to a state to distribute the energy as it sees fit does not advance the statute's purpose. We therefore reject Rhode Island's invitation to carve out an exception for states and we see no justification for treating a state more favorably than any other public entity. 68 Rhode Island also advances various Federalism-based arguments to support its position that states should be treated differently from other public entities. We have considered those arguments and find them to be unpersuasive.