Energy Law Outline

Origins of Utility Regulation 1
Wednesday, October 26, 2016
10:11 AM
Charles River Bridge v. Warren Bridge
Massachusetts granted liberty and power to dispose of a ferry from Charlestown to Boston to Harvard College
Massachusetts incorporated a company to build a bridge over the Charles
Gained tolls to pay to Harvard
Massachusetts incorporated another company to build another bridge over the Charles
Allowed for tolls
Was to become free after a few years
Did become free to use
-> the Charles River Bridge company was deprived of tolls they would have received without the new bridge's existence
Procedural History
Charles River Bridge filed for injunction to prevent erection of the Warren Bridge
Massachusetts had authorized an act impairing the obligations of a contract -> repugnant to the US Constitution
Because Harvard had the exclusive right to run a ferry without legislative interference with another ferry
A state law may divest vested rights without violating the constitution of the US unless it also impairs the obligation of a contract
Satterlee v. Matthewson
The ferry franchise and bridge franchise were established by separate grants
Have no connections of privileges to each other
There is no reason to have a new rule of construction to favor corporations
Public Grants are construed strictly
US v. Arredondo
Providence Bank v. Billings
The whole community is interested in retaining the taxing power undiminished
Right to presume that the government has not abandoned this power via contract
Government cannot be stripped of its power via contract
Surrendering this line of travel to 1 corporation would exclude competition for 70 years
The rights of private property are sacredly guarded
But the community also has rights
Here, there was no exclusive privilege given over the Charles River waters above or below the bridge
Can't erect another bridge
Can't prevent others from erecting another bridge
The state did not enter into a contract that prohibited the construction of another bridge at a later date
The legislature did not give exclusive control over the river's waters and did not invade corporate privilege by interfering with the company's profit-making ability
Rights of Private Property
Need for Economic Development
-> Community interest in creating new channels of travel & trade have priority
FPC v. Hope
FPC v. Natural Gas Pipeline
FPC isn't bound to use any single formula or combination in determining rates
FPC Ratemaking Function involves the making of pragmatic adjustments
When the FPC's order is challenged
Is the order (in its entirety) in compliance with the requirements of the Act?
Result reached is controlling
Analyze impact thru expert testimony
If the total effect of a rate order can't be said to be unjust and unreasonable, judicial review ends
NOT the method used
Challenger Burden of Proof
Order is invalid because its consequences are unjust and unreasonable
Just and Reasonable Ratemaking Process
Balance Investor and Consumer Interests
Investor Interest – financial integrity of the company whose rates are being regulated
Enough revenue for operating expenses and capital costs of business
Return to equity owner – commensurate with returns on investments in other enterprises with similar risks
Sufficient to assure confidence in financial integrity of the enterprise
To maintain credit
Attract capital
Market St. Railway v. Railroad Commission
Market St. operated a system of passenger transports by street car and bus in SF
Railway Commission of CA inquired into company rates and service
Reduced fare from 7 to 6 cents
Market St. sold its property to the City of SF
Increased (7 cent) fare brought no increased revenue to Market St.
Market St. defects
Failure to operate on schedule
Long intervals b/w cars
Operation with little headway
 
Inadequate inspection
Improper maintenance
Obsolete cars
Charging 40% more than competition
Railroad Commission concluded that Market Street Railway would gain no lasting benefit from rates above 5 cents
Higher rate discourages customers
6 cent fare would be a reasonable fare
Considering reasonable value of services to customers
Was the company entitled to the impounded portion of the fares?
Should the money be refunded to the passengers?
Has the rate reduction taken the company's property?
Does the Commission Oder deprive the appellant of its property without 14 Amendment Due Process?
Adequate notice of rate attack
Adequate opportunity for hearing
Force company to operate at a loss
Most case law dealt with utilities with earning opportunities and public regulation curtailed earnings that otherwise would have been possible
Must balance patrons' needs with investors' rights in a business that isn't profitable any longer and is no longer useful
Investment is is impaired by economic forces
Earning possibilities invaded by competition from other forms of transportation
Federal Pow