US SUPREME COURT DECISIONS

An Arkansas public utility company (hereinafter Company) that makes wholesale interstate electricity sales, as well as retail industrial sales in competition with some of its wholesale customers (including respondents, seven municipally owned electric systems and two cooperatives, operating within Arkansas) filed a wholesale rate increase with the Federal Power Commission (FPC). Respondents sought to intervene before the FPC, urging that the increase be rejected on the ground that it was

"an attempt to squeeze [respondents] . . . out of competition and make them more susceptible to the persistent efforts of the Company to take over the publicly owned systems in the State."

The FPC allowed only limited intervention, excluding the alleged anticompetitive activities as outside the FPC's jurisdiction, which does not reach retail sales. The Court of Appeals, on review, took a contrary position, holding that the Company's retail rates

"in a market in which it is competing with its own customers are part of the factual context in which the proposed wholesale rate will function . . . ,"

and should be considered in determining whether or not the rate increase was just and reasonable.

Held: The FPC's jurisdiction to review a petition to set aside or reduce a public utility's wholesale electric rate increase permits consideration of the utility's alleged purpose to forestall its customers from competing with it at retail. Pp. 426 U. S. 276-282.

(a) Though the Federal Power Act confers jurisdiction on the FPC with respect to the sale of electric energy at wholesale in interstate commerce, and the FPC has no authority to correct an alleged discriminatory relationship between wholesale and retail rates by regulating the nonjurisdictional, retail price, § 205(b) of the Act forbids the maintenance of any "unreasonable difference in rates" or service "with respect to any . . . sale" subject to the FPC's jurisdiction, and a jurisdictional sale is necessarily implicated in respondents' charge that the difference between the Company's wholesale and retail rates is unreasonable chanrobles.com-red

Page 426 U. S. 272

and anticompetitive. To the extent that the alleged discrimination is traceable to the jurisdictional rate § 205(b) would apply, and the FPC would have remedial power over the jurisdictional rate under § 206. Pp. 426 U. S. 276-277.

(b) Ratemaking is not an exact science, and there is no single cost-recovering rate: one rate as related to another may be discriminatory, although each rate, if considered independently, might fall within the zone of reasonableness. When the intrazonal relationship unduly favors one rate, the discrimination must be removed. Pp. 426 U. S. 277-279.

(c) While the FPC lacks authority to fix retail rates, it may take those rates into account when it fixes the rates for interstate wholesale sales that are subject to its jurisdiction. Cf. Panhandle Co. v. FPC, 324 U. S. 635, 324 U. S. 646. Pp. 426 U. S. 279-282.

167 U.S.App.D.C. 43, 510 F.2d 1264, affirmed.

WHITE, J., delivered the opinion for a unanimous Court.