Law School Case Brief
Jersey Cent. Power & Light Co. v. Fed. Energy Regulatory Com. - 258 U.S. App. D.C. 189, 810 F.2d 1168 (1987)
In reviewing a rate order, courts must determine whether or not the end result of that order constitutes a reasonable balancing, based on factual findings, of the investor interest in maintaining financial integrity and access to capital markets and the consumer interest in being charged non-exploitative rates. Moreover, an order cannot be justified simply by a showing that each of the choices underlying it was reasonable; those choices must still add up to a reasonable result.
After construction on a nuclear power station was suspended, Jersey Central Power and Light Company (Jersey Central) sought to amortize the cost of the $400 million lost investment over a fifteen-year period, and to include the unamortized portions in the rate base. In its proposal to the Federal Energy Regulatory Commission (FERC), Jersey Central provided testimony that the rate increase requested was the minimum amount necessary to restore the financial integrity of the utility. The FERC issued an order summarily excluding the unamortized portion of the investment from the rate base. Jersey Central sought further review.
Did the FERC err in modifying Jersey Central’s proposed rate schedules without a hearing and requiring the same to file reduced rates?
The appellate court held that the FERC erred by failing to hold a hearing and make factual findings pursuant to the "end result" standard, which required the court to determine whether the rate was "just and reasonable" to both consumers and investors, balancing the investor interest in maintaining financial integrity and access to capital markets and the consumer interest in being charged non-exploitative rates. The customers' argument that Jersey Central was not entitled to a hearing based on procedural deficiencies was without merit because there was no indication that the FERC would have allowed a hearing even if the alleged procedure had been followed.
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