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Jersey Central Power & Light Co. v. Federal Power Commission

May 25, 1942; As Amended July 11, 1942.

JERSEY CENTRAL POWER & LIGHT CO.
v.
FEDERAL POWER COMMISSION; NEW JERSEY POWER & LIGHT CO. V. SAME.



On Petitions for Review from an Order of the Federal Power Commission.

Author: Biggs

Before BIGGS, MARIS, and GOODRICH, Circuit Judges.

BIGGS, Circuit Judge.

Questions Involved.

The petitioners in the cases at bar, Jersey Central Power and Light Company and New Jersey Power and Light Company, seek review of an order of the Federal Power Commission entered July 18, 1939, pursuant to the Federal Power Act, 16 U.S.C.A. § 791a et seq. The first question presented for our determination is whether this court has jurisdiction of the petitions by virtue of Section 313(b) of the Federal Power Act, 16 U.S.C.A. § 825 l (b). The second question is whether the "Determination of the Commission" can be sustained on its merits. The facts are as follows:

Facts.

On June 7, 1938 the Commission entered an order pursuant to the provisions of Section 301(b), Part III of the Federal Power Act, 16 U.S.C.A. § 825(b), directing the petitioner, Jersey Power, to submit information concerning the acquisition by it of 341,350 shares of the common stock of the petitioner, Jersey Central, without the authorization of the Commission and allegedly in violation of Section 203(a) of the Act, 16 U.S.C.A.§ 824b(a).This section provides that no public utility within the purview of the Act shall purchase or acquire any security of any other public utility within the purview of the Act without having first secured an order of the Commission authorizing it to do so. Jersey Power, admitting that it was a public utility within the meaning of Section 201(e) of the Act, 16 U.S.C.A. § 824(e), filed an answer to the Commission's order admitting that it had acquired the stock of Jersey Central but denying that the provisions of Section 203(a) were applicable to the transaction for the asserted reason that Jersey Central was not a public utility within the meaning of the Act. Jersey Central sought intervention, was made a party to the proceedings, and asserted the same defense.After hearing, the Commission found that Jersey Central was a public utility within the meaning of the Act and that Jersey Power had acquired the securities in violation of Section 203(a). The Commission issued its findings on July 18, 1939. Petitions for rehearing timely filed by both Jersey Central and Jersey Power were denied by the Commission on September 15, 1939. Review of the Commission's determination was then sought in this court.

Both Jersey Central and Jersey Power own and operate public utility systems in New Jersey. The petitioners and another electric public utility corporation, Public Service Electric and Gas Company, serve territories which comprise about two-thirds of the area of the State of New Jersey. Jersey Power's territory lies in the western part of the State and is bounded roughly upon the west by the line of the Delaware River and the western boundary of New Jersey. To the south Jersey Power's territory moves down with the line of the river to territory contiguous with that served by the Philadelphia Electric Company and its subsidiaries in Pennsylvania.

Jersey Central for its part serves two non-contiguous areas in New Jersey. One lies to the north adjacent to and east of the territory of Jersey Power and contiguous to the area served by Public Service on the east. Jersey Central has another area of service to the south and east of the territory of Public Service just mentioned. The latter area of Jersey Central runs from the Atlantic coast back to and contiguous with territory served by Public Service. It is with this area of service of Jersey Central with which we are most concerned in the cases at bar. Beginning at a point near Barnegat on the Atlantic coast, Jersey Central's lines run north through the New Jersey seaside resorts to South Amboy. Further to the west in central New Jersey other lines of Jersey Central supply electricity to New Lisbon and villages and towns to the north of it. These western lines connect with the eastern system at South Amboy.

From South Amboy a main connecting line runs across the territory of Public Service into the northern area served by Jersey Central. There is a large generating plant at South Amboy which is connected with a substation maintained by Public Service at Perth Amboy on the opposite side of the Raritan River. This substation is known as the Mechanic Street Substation and what goes on there furnishes many of the basic facts giving rise to the controversy at bar.

The line which connects Jersey Central's generating plant at South Amboy with the Mechanic Street Substation is a little over two miles long. Jersey Central owns about seven-eights of a mile of the connecting line, that portion of it which runs from Jersey Central's generating plant to the south bank of the Raritan River. At that point a submarine cable, owned by Public Service, takes the current under the Raritan River. Emerging from the river the current is taken by an overhead line owned by Public Service for a distance of about a mile and a fifth to the Mechanic Street Substation owned by Public Service. The connecting line comes into the Mechanic Street Substation through metering equipment and switches and is connected with a "bus-bar". There are a number of connections to the bus. Two are to the plant of the General Cable Corporation, a customer of Public Service. Two are connections with Metuchen, New Jersey. Another connection leads to the town of Keasby in that state. An additional connection runs to Public Service's substation at Carteret, New Jersey. There is also, and this is of particular importance, a tap with metering equipment and an air break switch connected to a line of Staten Island Edison Corporation which serves Staten Island, New York.

At this point it becomes necessary to endeavor to describe three "types" of electricity which flow through the Public Service bus-bar at the Mechanic Street Substation. These three "types" of power are designated as "emergency", "economy-flow" and "incidental" or "slop-over" power. The petitioners take the point of view that we are concerned particularly with the last two kinds of electrical energy.But the fact is that electricity is energy no matter what you call it and the "types" of electrical energy involved in the cases at bar, as the petitioners use that word, refer really to the kind of contractual relations between Jersey Central and Public Service on the one hand and Public Service and the Staten Island Company on the other, pursuant to which current comes to or from Public Service's bus-bar at the Mechanic Street Substation.

"Emergency" power is simply electricity supplied by one power company to another when the latter needs additional electrical energy to take care of an emergency. The cost of emergency power is higher than that of the other types of power. The cost of and conditions for supplying emergency power between Public Service and Jersey Central are governed by a contract executed by the two companies and dated March 24, 1931.

The contract of March 24, 1931, provides that if the interconnecting facilities of the two companies are made available for power other than emergency power, the use of the connections should be made available by agreement between the companies.Accordingly Jersey Central and Public Service arrived at an oral agreement for an interchange of "economy-flow" electricity. Economy-flow electricity may be described as energy generated and supplied by one company to another when the receiving company has enough generating facilities to generate that electricity for itself but elects to receive it from another company because that company can generate and deliver it to the point where it is needed more cheaply than the purchasing corporation. Economy-flow power is supplied to Public Service by Jersey Central upon a day-to-day basis and the price is calculated by a formula which consists in taking half of the cost of the electricity to the generating company and adding to that figure half of what the cost would have been if the purchasing company had generated the electricity.

Public Service receives economy-flow current almost daily from Jersey Central but it should be noted that Jersey Central's net receipts from the sale of economy-flow current for the year 1937 were about $10,000 while its net income from all the electricity sold by it during the same period amounted to $4,170,585. Jersey Central in fact is principally engaged in the retail sale of electricity to numerous individual customers in its territory. We shall deal with the electricity supplied by Jersey Central to Public Service in terms of kilowatthours at a later point in this opinion.

We think that "slop-over" or "incidental" current is well described upon the brief of the petitioner, Jersey Power, as " * * * an electrical phenomenon which consists in an instantaneous, involuntary ebb and flow where there is a physical connection, otherwise unused, between two systems. Where such an unused connection exists the two systems are normally 'in balance'. When there is a sudden demand for more energy made on one of the systems, its generators are speeded up to meet the demand. There is a tendency, however, for the system on which the sudden demand is made, to draw on the system with which it is connected for the instantaneous period between the demand and the compensating generating speed-up * * * ." Since the systems of Jersey Central, Jersey Power and Public Service are interconnected and are synchronized,*fn1 not only with each other but also with other electrical transmission systems covering the southern part of New Jersey, the southeastern part of Pennsylvania, the northeastern part of Maryland, Delaware and with the Staten Island Company, "spinning" reserve is maintained by Jersey Central, Jersey Power and Public Service.Additional spinning reserve is procurable from interconnected public utilities in Pennsylvania and New York. Spinning reserve consists of spinning dynamos, whose current may be thrown on the circuits in case of necessity. Since these various electric utilities systems are interconnected, it is obvious that there will be some incidental or slop-over current passing through the various system connections including the bus-bar at the Mechanic Street Substation which comprise the connections between Jersey Central and Public Service on the one hand and Public Service and the Staten Island Company on the other.

According to an exhibit introduced in evidence by the Commission the amount of economy-flow current received by Public Service from Jersey Central in 1937 and in the first three months of 1938 far exceeded the current in that category gotten by Jersey Central from Public Service. This power was metered at South Amboy and passed through the bus-bar of the Mechanic Street Substation. In 1937, 55,421,000 KWH of electricity were delivered by Jersey Central to Public Service against 315,600 KWH received by Jersey Central from Public Service. For the first three months of 1938 Jersey Central delivered to Public Service 10,140,000 KWH against 87,400 KWH received by Jersey Central from Public Service. In 1936 Publice Service received from Jersey Central 70,694,825 KWH against 1,400,720 KWH delivered ...


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