US SUPREME COURT DECISIONS

A supplier of electric power which is a "public utility" subject to regulation under Part II of the Federal Power Act entered into a contract, duly filed with the Federal Power Commission, to supply electric power to a distributor at a special low rate for 15 years. Before expiration of the contract, and without the consent of the distributor, the supplier filed with the Commission under § 205(d) of the Act a schedule purporting to increase its rate to the distributor. Acting under § 205(e), the Commission conducted proceedings to determine the reasonableness of the new rate, denied the distributor's motion to reject the filing on the ground that the supplier could not thus unilaterally change the contract, and held the new rate not to be "unjust, unreasonable, unduly discriminatory, or preferential."

Held:

1. These proceedings were not effective to supersede the supplier's contract with the distributor. United Gas Pipe Line Co. v. Mobile Gas Service Corp., ante, p. 350 U. S. 332. Pp. 350 U. S. 352-353.

2. The requirements of § 206(a), which provides that, if the Commission finds an existing rate to be "unjust, unreasonable, unduly discriminatory or preferential," it may determine a "just and reasonable rate" and fix the same by order, were not satisfied by the Commission's statement that,

"if a finding on the lawfulness of the [existing] contract rate were necessary or appropriate, on the record before us, that finding would have to be that the [existing] rate is unreasonably low, and therefore unlawful. For none of the evidence in this record warrants a finding that any rate would be reasonable that would produce a return of substantially less than the 4.75% resulting from the proposed rate, which is the minimum [the supplier] is willing to accept."

Pp. 350 U. S. 353-355.

(a) Under § 206(a), the Commission has undoubted power to prescribe a change in contract rates whenever it determines chanrobles.com-red

Page 350 U. S. 349

them to be unlawful, but its power is limited to prescribing the rate "to be thereafter observed," and it can effect no change prior to the date of the order. P. 350 U. S. 363.

(b) If the proceeding here satisfied in substance the requirements of § 206(a), it would seem immaterial that the investigation was begun as one into the reasonableness of the proposed rate, rather than the existing contract rate. P. 350 U. S. 353.

(c) The purpose of the power given the Commission under § 206(a) is the protection of the public interest, as distinguished from the private interest of the utilities, and a contract may not be said to be either "unjust" or "unreasonable" simply because it is unprofitable to the public utility. Pp. 350 U. S. 354-355.

3. The order of the Court of Appeals setting aside the Commission's approval of the new rate and remanding the case to the Commission is affirmed with instructions to remand the case to the Commission for such further proceedings, not inconsistent with this opinion, as the Commission may deem desirable. P. 350 U. S. 355.

96 U.S.App.D.C. 140, 223 F.2d 605, affirmed.