Opinion ID: 553338
Heading Depth: 2
Heading Rank: 1

Heading: Prior Circuit Precedent

Text: 9 In PASNY, we reviewed orders of the Commission regarding the proper allocation of Niagara Project hydropower to preference customers. We discussed in detail the historical background of the Niagara Project and examined the agonizingly long legislative history of the NRA. PASNY, 743 F.2d at 98-99, 104-106. In concluding that the Commission had properly applied the preference provisions of the NRA, we held that the NRA imposed no restrictions on the type of consumer--domestic or industrial--to which preference power could be sold at retail and that in adopting the NRA Congress intended to incorporate the principle of yardstick competition. Id. at 105. This principle assumes that if the municipal entities [that distribute power at retail] (as distinguished from the end-users) are supplied with cheap hydropower their lower competitive rates will force the private utilities in turn to reduce their rates, with resulting benefits to all. Id. 10 In MTA, we were called on once again to review Commission orders dealing directly with the allocation of NRA preference power. See Opinion No. 229; Declaratory Opinion and Order Affirming With Modifications Initial Decision on Niagara Preference Power for States Neighboring New York, 30 FERC p 61,323 (Mar. 27, 1985) (Opinion 229 ); Opinion No. 229-A; Opinion and Order on Rehearing Clarifying Declaratory Opinion in Part, and Granting Petitions to Intervene Out of Time, 32 FERC p 61,194 (July 30, 1985) (Opinion 229-A ). The issues presented in MTA arose from a dispute involving many of the parties presently before us and concerned the extent to which the NRA required PASNY to allocate preference power to out-of-state public entities. The Commission found that PASNY had improperly allocated preference power to in-state entities such as the Metropolitan Transportation Authority (MTA), thereby reducing the percentage of preference power available for allocation to eligible out-of-state entities. The Commission concluded that the statutory term public bodies meant governmental entities that sell and distribute preference power to consumers. MTA, 796 F.2d at 592. Because MTA utilized its preference power directly (i.e., an end-user) and did not distribute it to consumers, the Commission found MTA ineligible for the receipt of preference power. 11 In addition to the issues involving MTA, the legality of an allocation of Niagara power to VDPS was also before the Commission. At that time, VDPS received its allocation of preference power and then sold it directly to a private utility company for consumer resale, essentially functioning as a wholesaler of electric power. In reviewing the VDPS arrangement, the Commission, departing from its own precedent, concluded that VDPS could not qualify as a public body because it was not capable of selling and distributing power directly to consumers of electricity at retail. Id. at 590 (quoting Opinion No. 229, 30 FERC at 61,651). Because VDPS neither sold nor distributed power directly to consumers at retail, the Commission concluded that VDPS did not foster the requisite yardstick competition. 12 Building on our analysis in PASNY, we affirmed the Commission's orders that found PASNY's allocation of preference power to both MTA and VDPS to be impermissible. Once again, we carefully analyzed the legislative history of the NRA. Id. at 591-93. We concluded that the Commission correctly interpreted the term public bodies to encompass only publicly owned entities capable of selling and distributing electric power at retail. Id. at 593. Moreover, we held that the allocation of preference power to end-users such as MTA or to entities such as VDPS, that essentially acquired power and then resold it to a private utility for retail sale, failed to advance the NRA's statutory purpose of encouraging rate competition. Id. at 592.