Brief in Opposition to Petition for A Writ of Certiorari — White v. United States

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* - rTATIONS

Ailantic Seaboard’ Corp. v: Federal. Lobe

Commission {C.A.D.G. No. 21400, decided |

_ September 27, 1968)....--_-.--2.--.-- see 15.

California v. sheained Power Commision, 369° +

ene wre een ww www wm ew wr eB eM ee eH www OM Dw ew ee

-“—«“a ee See ec een ee eB eee eB eee ee ee eee ee

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” y. United States, 387 U.S. 485-..--------- 18

Federal Maritime_Comméssion—v-Aktiebolaget aS

| Svenska Amerika Linien, 390 U.S. 238.--. 15

; McLean Trucking Co. v. United States, 321 . 6

BE he a ies sniettchn initia igen emia ei tin iain 15,

Penn-Central Merger ‘Cen, 389 US. 486... 13, 15

Pennsylvant, Water & Power Co. v. Federal —-

Power Commission, 193 F. 2d 230, affirmed, |

BES Sh NE inks copsctactaréaetoue ee

Seaboard Air Line R.Co. “v, United States,

ee te ee ee lL ll

4)

ae

: Sietoies and - reguiations; ;

Federal Power Act, Act -of Sete 10, 1920, 41.

Beat, 1063, as amended, 16 USC. 791a-.

ae "fetion 202(a), 16 U.S.C. 824a(a).. ES 7,16

_ , 2... Seetaon 203, 16 U.S.C. 824b_. 222. ..2_. 2,3.

Bie Bee oe € > Section 203(a), 16 U.S.C. S2ab(a)....-°. 7,125

———_ Seetibn 208(b),'16 U.S.C. 824)... 8

Section 313(b), 16 U.S.C; 825(b).....-. 12,15 oe,

Public Utility Act of 1935, 16 U.S.C: 7la- > *

a dni ciesdaene nd = Sabedecnskckndau: 48°

Public Utility Holding Compene ‘Act, August

26, 1985, ¢. 687, 49 Stat. 803, 15 U.S.C. 79, ,

ees AL ARLE G A 5 te DE 8

ote apie Federal Power Secon: Uniform: System -

one _ Sof Accounts for Publi¢' Utilities‘and Licen- -

ee: 1937, 18 CFR. “9

| Se ae iE re 4:

‘ Miscellaneous: eet She ;

The Wall Street Journal, September 19, 1968. i

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on -Ocrosss, Tana; 1968, ~

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"Umar Users Lick AND Senos. Bann, |

gars oi “PETITIONERS - uge

: “v. < of 2 . ve"

: ‘Fepniiat Powm Coxanssi0x ET abs

; ONTO epee 93 6 » | Ok. Be

@

ON PETITION FOR A WRIT ‘OF OBRTIORARI TO ‘THR UNITED és

STATES COURT OF APPEALS FOR en sear ths CIRCUIT i?

‘ : y ; eee el en

BRIEF FOR THE FEDERAL POWER connusero

| ao a :

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OPINIONS BELOW | A Jyh: Se ee

The opinion 1 of the. court of appeals’ ales i App) eee

reported. at 394 F. 2d 16. The opinion of the Federal. _

Power Commission (C.A. App. 1-33)* is reported at

36 FPO 927. The Commission’s order denying peti-

tioners’, application for rehearing and- motion for ‘a- \

see! (C.A. App. ah:42) is nevortad St .. FEC 257.

~— | “JORISDICTION © Sai:

The pole of the court of camel: was entered

j April 5,:1968,, Petitions for rehearing and for rehéar- |

py TThe Commission and intervenor ‘Commonwealth Edison eae

‘Compaiiy' filed a joint appendix below (hereafter “J.A.”), and a

‘petitioners’ filsd “a sli caretes ‘appendix ae enc Ream oe

(1) .

me ear

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, WA

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- ia take eee Wiinled: vempectively; on May 21 and

Boe Sa per agence oll

ee

confetc at ae was’ ed "Beptentiber !

8 68, ‘The be jutliction of Wis Court ie invoked ae

1954(1) and Section 313(b) of the

Federal 1 Power “Act, ad'imetided, 16 U.S.C. 8251(b).

Ae a8 Leake i be na re

Fey 3 QUESTION PRESENTED

eh “fe HTS + ee :

- ‘Whether the ‘order of the Federal Power Connmis- |

_ gion ‘authorizing the ‘merger: of Central Bilinois Elec-

_ trie: and Gas Company~inte- Commonwealth Edison

- Company;: as “eonsistent ‘with: the public. interest”

' under Section 203" of "the Federal ‘Power Act, was

Fee} pe by substantial e Sivte =

"Section 203 of the aterm Power: Act, 16 US. C.

-824b, sapomae

“+ Siaes 208, (a): Ne publio xiitity shill poll, tons

sie ot otherwise dispose of the whole. of its;facili- - |

‘i. f ._ Hes. subject. to. the

he Jurisdiction, of. the Commis- -

sion, or any part thereof of a yalue,in excess of S

“! “$50,000, ‘or by any méans whatsoevet, directly

inectly, inerge or consolidate sich facili-

S ties or ‘aly: ‘pait thereof with"these of’any other

- e, acquire, or take any secu- .

rity of any other public utility, without first _

oo) thawing: seeuted® ak order Of “the Corhrfiission

» ik eee cod ‘docbo:: Mpon' lappiication: for

such Pgh tae Pog rission. sii va.

* eats Roos in pi pepe re States in, which |

a ¢

«ast _propoend Gist, onnel blin |

» aequisition, or ‘control’ will -be ‘consistent with ——

_ (b) The Commission may. grant any aPt ipa |

tion for an order undet~this section in whol

‘gn bere ened Gree) Sack Gace teed Go ons as

“tt fits ‘dooedeary ¢ upproptiate’ to seonre Os

? sowie inthe tagea perigee og ant

- ordination in the publie interest” of facilities

icy subject, to the jurisdtetion of the Commission, —

_. . The, Commission may from time, to time for

good, cause shown make such orders.supple-

oe mental to any order made under. # digas

it may find necessary or appropria

On March 2, 1966, Gisnnenwititti Beinn: Dokepkny ee

(Commonwealth) and Central Illinois Electric and

_ Gas Company (Central) filed an application with the

: Commission seeking authority t y merge Central ‘into

Commonwealth’ in accordance * Section 203 of "the

_ Federal, Power Act, 16,U.S.C..824b, After a

ho rts pet igen berth al

to participate’ at’ minimum expense; the ‘Commission

found that the merger was “consistent with the pub- _

lie in ”? as required by’ Section 203, and author-

ined the merger.” ‘The merger has been consummated.

“anaemia

“2 The\ menger. wae) also’ approved : by ‘the: Tilinois::Commeres.

Dears pe rgina sc ame ae een

cecal ti *4- $3

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“of the: merger ~Commonweaith is a

; power my wholesale ent through its, distribution sys-

: Ranch repenget Prior te the mepEeh, it a in

: except \ for ‘the’ area ada ‘by ‘Geontira’s Rockford

Division. Tt was, (and: remains) oy third largest of

> >423

| < 941), Gousthortnealth has had a Aanise ith FPO.

' “tions with unaffiliated electric systems since ‘the, 1920’s :

(S.A. 45-463 ‘CA. App. 9;'36 FPC at 933). In recent ©

years ‘Commonwealth fhasbeen able to build’and plan. -

for’ latge-sizé: ‘generating units of 600 000 kw or larger.

Commonwealth showed that a 600,000 kw unit costs 27

percent less per kw than a 100,000 kw unit (S.A. 39-42;

-C.A. App. 9-10; 36 FPO at 933-934),

-Qentral, prior to the merger, was a << ohmalifeaaihly

smaller combination: utility system serving at retail

94,468 electric and 87,227 gas. ‘customers in: several

widely scattered - areas in Illinois. (QnA. App: 8; 36 :

FPC at:933).* About 78 percent: of Central’s electric

3 Glade A chbticle willitdes ‘lee thot which have annual “eles!

_tric xevenues of $2,500,000 or more. ‘Class ‘B: electric utilities

“have. electric, revenues between $1,000,000 and. $2,500,000 as

defined in the Commission’s Uniform System of Accounts for

Public Utilities and Ticensees. (18'C-F-R. 101.) |

th are nee of th Cal ete snd of oh .

cyutemap dipper in dOL4 By sha Sst Oieolldeted Bieber i

ond Gas Co,;:et al.,.15. SBC .386) Central had held Consolidated’s :

——— ee £

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3 x

pee an: 81 wo ena of. its leiseitiii: were

‘in the Rockford’ area, surrounded on. three:sides. by

- Commonwealth’s 8 service, area. In addition, it. operated

electric distribution. properties in three: isolated. pock-" -

ets i in. central Illinois, and another tiny pepheh in auth:

eastern Illinois, (Tbid.) O44

. The major-reason. for Central’ 8 interest. in merger .

with. Commonwealth. _Was its anticipated, need. for. an

increased, power supply. Central estimated that its

- total system. demand for electric power in 197 1 would

be 300,000 kw, an increase. of 49.3 percent over 1965

eA, App: 12; 36 FPC. at 935). Central ‘considered

a several: possible. programs for satisfying this need.

: Following unsuccessful. attenipts to join. with neigh-

boring systems (other than Commonwealth} in- the

construction of jointly owned units, Central’s | engi-

neering consultant made a study. suggesting two other

approaches © (J. A. 9-28; ‘C.Ay App. 13-14; 36 cae

at; 935-936). ‘Orie of these approaches involved -

construction of independent facilities by Central an

the other ‘the purchase of power from Commonwealth ~ Ne:

ata Tate based’ ‘On. ‘Comnionwealth ’s average costs (a

rate. viewed as reasonable by the Coneealesion) (C. A.

‘App. 13; 36.FPC at 936).

— St turned ‘out,’ however, thet still a ‘third iididlech

_smerger with Commonwealth—would provide the

_ most economical source of power for Central’s area.

‘Although the program. Of ‘self-generation by Central

would haye.been more than. $3,900,000. cheaper than

purchase of eléctricity from ‘Commonwealth over a 10- -

year period (ibid), thergét” ‘would ‘give’ a. source a.

power estimated to be $13,000, 000 cheaper than the self-

°

: ,

* ° < ”

:

generation program over the same period (C:A. App.

13;36 FPC at 935). 2 tai

| ‘Phe Commission proceedings.—There were only two

intervenors before the Commission: petitioners in op-

.

‘.

7

staff as a resuit of its field anv Ration ittto the com-

panjes’ offices, and’ facilities atid! adjacent bulk ‘power

. systems, ‘The staff introduced a number of. exhibits

and conducted extensive cross-examination ;. in addi-

tioh, since petitifners’ ¢ounsel, were not able to be

present, they were pertnitted to cross-examine by writ-

ten interrogatories |(J.A., 95-151); On August 19) -

1966, the Commission granted applicants’ ‘unopposed.

reqnest for: waiver ofan intermediate decision rv the

-exanhiner (36 FPC at 482). ° Sey

The Commission decision Sa yDesmber 3 2, 1965,

the Commission, in a comprehensive opinion (O.A, .

App. 1-33; 36 FPC 927-946) reviewing both legal and °

poliey patrons applicable to utility mergers, approved”

the merger, but retained jurisdiction to require Com-,

monwealth to demonstrate within three years why it —

should. not be compelled to divest itself of control over

Central’s isolated, electric properties and its gas prop.

erties (C.A. App. 25-27; 36. FPO 942-943).

' The. Commission viewed’ the basic criterion Gor

measuring whether a particular merger would be “con-

sistent with the public interest” ‘to be whether it would

be compatible with the Federal Pewer 'Act’s goal of

“assuring abundant ,supply' of electric energy

- throughout the United States with the greatest pos-

sible: eddnogay: amd with 't1%:2 the igeoper itrtilfsstion,/

. dnd conservation! of inatiutal resources <* )*:*”?4.(0.A;

App: 5; 86 FPPC: at938). The Cotmniesi n noted C.A.

App. 8 ; 36 PC: 980) : 4

. THRieich 208 ay te TSG: Seabeuyso! Coon: ss pia

-* Sectioin' 202 (a) 16 U8.0. Mitebars «tile vtetgiee oo

321-853—68——-2

al

“ting The touchstone.of successful operation into

9, Gday’s electric power industry is the..coordina-

' .« . thon, of. operating’ facilities to achieve the full

-” eeonomies of scale made possible by advancing

"SY ‘technology. ‘There are several ways in wigch

the advantages of éoordination may be realized,

vo apm An ipa ercerr geestementeiteill

_ The & i expressly retegnized that the “public

interest” also requires evaluation of the pro-

posed merger’s consistency with the entire Public

_ Utility Actrof-1985. consisting of both the Federal

Power Act (16 U.S.C. 791a-825r) and the Public

Utility Holding Company Act (15 USO. 79 et seq.)

cca App. 5-6; 36 FPC at 931-982).

In making ‘its overall assessment, ‘the Commission

entimerated: six separate factors of special signifi-

cance: (1) the economic effect of the merger on oper-

ating costs and rates; (2) reasonableness of the pur-

- chase price; (3) anticipated accounting treatment; —

(4) voluntariness of the participation’of the acquired -

utility; (5) impact on ‘existing and potential com-—

_ ~petition; and (6) consistency with effective federal

and state regulation over operations and rates (C.A.

App. 7; 36 FPO at 932). The proposed merger was

. foutid to ebmport with the public interest, as gauged

by each of these criteria, as' follows: : ——

(1) While relatively small systems may in some

situations be able to share fully in the economies of

_seale simply by coordination with other systems, here

¢ “a merger would achieve substantial bulk power econ-

omies ($13 million) beyond those possible for Central

as a separate entity even with maximum feasible coor-

. * © : .

, 3 ,

9 ‘a

_ dination (©.A. App. 4; 36 FPO at 990-981). Merger

would further permit. annual savings of about $2,-

400,000 through payroll ‘and administrative . cost |

reductions and through replacement of Central's

preferred stock with debt capitalization. The imme- —

diate .post-merger period would bring a rate reduc- -

tion—already approved by the Illinois Commission— .

aggregating $270,000 annually for Central's customers

(C.A. App. 17-19) ; 36 FPC at 937-938). The Com-

mission also found that further reductions in the fu-

ture appeared likely by reason ofthe cost savings

" resulting from the merger (J.A. 85; C.A. App. 20-21;

36 FPC at 935-940).

(2) Although the purchase price for Centrai’s

_shares was set at $24 million over their market value,

the figure agreed upon was the fair result of arms-

length bargaining, and reflected a reasonable adjust-

ment for long-term growth and economies ‘of scale _

(C.A. App..16; 36 FPO at 987).

(3) The proposed. merger involved ay exchange of

stock and the capitalization of the resulting entity

would . not exceed the aggregate cnplipliaationy of the

‘\

‘ either utility. This treatment ‘was found to be in

cordance with sound. accounting principles and 1

we zeqnizements of:the Commission's Uniform §

of Accounts (ibid). aj

(4) While Commonwealth had the power the

dominant -utility in northern Illinois to inhibit) Cen-

10 res

tralis} fforts-to.: sseure! “‘mexning{ul /intefeonnection,

Cotunonwealth. thad ..not: im: fact retarded | Central's

| ¢ffortseto achieve savings through eoondination with ‘its

' - g@ighhots and hadmot-ite any way-coerdedCentyal into ——

the:mergér (@.A,. App.) 21-22; 36 .FPC. at: 940).

-9 (5) Nor.was any ailverse effect on the ‘eompetitive.

situation found. Since both Commonwealth and: Central

sold electricity to. retail: consumers: only within. their

own’ franchised ‘areas, ‘and ‘since Central’ hac ‘no ‘sig-

nificant wholesale sales or capacity, they were notin *

direct: competition. The Commission further found

that the merger of these two companies would not (a).

- result. in any significantly increased concentration: of.

__ etfndmie power ;.(b) eliminate potential, edmpetition ;

“ either directly or in attraction of new industries to Ly

: thekr wéspective serviceareas; or:(¢)'have'an adverse ~

effection ¢ompeting Weg sourtees (0; A. App. 22-23;

36 FPC. at 940-942).. bere site

_ _ (6) Finally, the integretion: of facilities, would. ak —

ae lessen the ability of the Iilinois Commerce Comithission

_ ter ieontinue!: to. regulate effectively;:the. rates to! be

charged: by Oommgnwedlth to the various eustomers of:

' the, combinedi systems) (€.A. App. 25; 36 FPO at 942).

; ielacasprievining the hope of the merger, the Commis-

dim, eleehrio:nbiliéyn,(ehich ‘rad revieusly nei off its,

gas propérties): arid -was ‘limited: 'to a‘/physically inte-; --

., gbtited) serviee; anda; while: Central:had some isolated:

electri¢’ properties’ as: well .adé) major gas: properties:

Although there had been no demonstidtion: that. it:

“well dixbe scongistent | with: the sip dittentiat fon the

19) tididni o3 aiomilih sristition ni yilou dasntnob |

| ee ee a ees

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merged company to. retain these pro ar

nently, the Commission concluded that. the: 1

determinatior. of the propriety of Peat or

. continued operation of these facilities need not be a

condition precedent to the approval of the merger.

/ Indeed; the Commission found that the merger would

y not have been feasible if it had not initially included

. _ the transfer ofthe gas and non-contiguous electric

- facilities A. App. 27; 36 FPC at 943). -

and isolated’ electric. propertiés, .and. directed the

merged company to show, not later than December. 1,. 3

ae a 1969, either why it should ,be allowed. to, continue to _

: 1° operate such properties, or what its plans were for

° isposition of them.’ (CA. App 25-27, a 36 FPG

i ad a 942-943, 945). y iF

mM haps snsentiiemeer Sin dome, a lly

. tione b soni rehearing, om SiN 8: Se RMON ee

. January 20, ART (0.4. App, 41-42; 37 FPC

Fe 257-258). e

Qn review, the court. of sapeale held alternatively <a

(1) .that petitioners were not aggrieved, within the

meaning of Seetion 313(b) of ine Federal Power Act,

- *Qn November 24, 1967, Commonwealth reported that: it had

approached twelve electric and, panies, about a possible> —

exchange of the: gas and non-con —— tiguous electri¢ properties or

bane cher dnp thret, and tat Gemma with er

BMIDTIAI® Sso2.° ITtTase 9617 “ ehoegte

Siobe.e 2 4G. & A909)

12—

16 vse ‘8251(b) ‘(wet ‘App: say ‘gud (2) “that, |

in, _any event, | the Commission’s findings were adeé-

quately supported by the record and consistent with

the applicable legal criteria. Concluding that the pub-

lic interest hdd been’ “faithfully protected,” the ‘court

affirmed the Commission's Ss order (Pet. App. 4-8). .

Petitioners’ motion for a remand to adduce additional

evidence was | denied (Pet. App. .,

ee

sh : ARGUMENT 3 7 H ’

ling ‘its responsibility under Séétion 203 13(a) *

e

*

of thé Federal Power Act to determine whether pro-

posed cdrsolidations are “‘consistent with the’ public —

interest”, the Federal Power Commission has evolved

several pertinent criteria. Applying these criteria, the -

_ Commission’ found that the merger ‘of Central’ into .

Commonwealth: would result in substantial economies -

‘ in supplying bulk power needed to: meet load growth -

in Centrai’s area and would facilitate rate reductions.

Nothing in the policies of the Federal Power Act, the

. antitrust laws, or the: Public Utility Holding Com-

pany ‘Act-was found to outweigh the advantages flow-

ing from merger. The Commission’s conclusions were

rationally ‘based ' ‘and waiterdanee by se ‘atiiply :

supported by thé record. : des ~

Ns! te’ court’ of appeals iddgritiia’ the” ‘iiiiaasy

responsibility. for measuring whether a proposed mer-

ger in ‘a ‘regulated ‘industry's compatible with the

2194 ak Gommnieniol dts below; dnd: Bien. it mm, age

this ground. Indeed, since the court-did-in fact reach'and pass 3

a ee

—

-¢

-_-publie interest rests‘on ‘the appropriate ‘adininistrative

agency. ‘Having’ ‘found that the’ Commissiori acted in |

accordance with’ proper legal standards and‘ on’ the

basis of substantiated: findings, the-court below: prop- —

- erly affirmed the ‘Commission’s decision. “See ‘Penn:

Central Merger Cases, 389 U:S.' 486, 498-499.) 22

Except for the standing ‘poirit—which- need not ‘be

cotisideréd here’ because the court of appeals also

reviewed the’ 'case on ‘the ‘‘merits—thé' multifarious:

are questions formulated in the ‘petition (Pet. 2-6) “are

reducible to the final’ question framed:''“Was the,

[Commission’s] order contrary to the evidence?” Such —

questions as fre raised in the petition as to ‘the sub-

| startiality of evidence ‘and the telative weight: to ‘be

given to the various factual élemerits of an: adminis:

trative proceeding do not present, issues appropriate &

for- plenary attention by’ this Court. Beyond these

objections, the petition taisés ‘no ‘issjie' of’ public

importance, and points to no relevant ‘conflict of

decisions. Hence, further review is mot warranted.

- "lL. We discuss only: briefly the arguments petitioners

have advanced to support their request’ for review.

‘First, as the court below. recognized . (Pet. App. 6), .

petitioners are doubly in error in complaining (Pet.

13-16) that the consideration given for Central stock

was excessivé.. The price. paid fairly reflects the. book

value of Central’s plant: taken together with its’sales :

_ growth potential and ariticipated. economies’ of Seale,

- Moreover, . thé, payment, of the. purchase, price in. zt

- Stock having a market value higher than ‘the: .depre- a

eidted original éost’ of the Central properties could in

Isai ccicuntearncheae garuere ex santas a

a

+ evidence: ‘Petitioners chose to participate in the pro-

4 ceedings, only to the extent of submitting interrog-

Lait,

- cost of Central’s asseta,on Commonwealth’s books is

identical with their premerger cost.on Central books;

- adjustments have been made only in Commonwealth’s |

' stock and capital surplus accounts and the total eapi-

talization.of the merged company ‘will not exeeed the ae

aggregate capitalisation of ‘Central and Common-

wealth (C.4. App. 16; 36 FPO at 987). i

2. The court helow ‘properly denied petitioners’

motion to remand to permit them to adduce additional

atories/by way of. eross-examination, But this is no

pine why they could not have offered, during the

hearings, evidence relating to the very. matters. re-

0

ferred to in the motion. In any event, as the Com-_

migsion’s opinion reveals, the petition to remand (see

Pet. 5). does little more than repeat claims advaneed

to the Commission: at various stages of the proceed-

~ ings. These elaims. were considered by the Commis-—

sion on the basis of substantial evidence developed by

the apptiegate and: the staf (ntter jn. feld:lnventign-

tion), none of which is here challenge

Ge eidehdihtdecitiiteihaietbite they eid shan en

intended. to show that the retail tates and average revenue of

large utilities, including Commonwealth, were frequently higher. —

those of smaller ‘utilities. But’ the Commission did consider

"gf gil Utd velative zatee' of edt: Ooamion wekteh; est Contcal

ec a inte, account that Cominonwealth’s rates in

were higher than those of Central, thoy over-

erence (C.A. App. 19-21; 36 FPC at

Seb-oanye eeabaiaed do not challenge the bulk power ‘savings

-_fonnd: to eatist here. \

., Petitioners’. pee eh een ah

+

ins. ge 8 4 4% : :

ap LTA 7% rays by. tories NLT. FPOIY LEE? COLBY ;

° ° . r

a *,

.

“15

| 8) Tnwotar'ea pettioncns ahi etggeteal 46

~ 19) that the Commission failed to take ‘proper coun

of ‘antitrust’ laws: and policies,’ their contentions: ar

baseless, Contrary to any such claim the Cominission

“was acutely aware ‘that’ the policies: of ‘thé ‘antitrust

laws and the Public Utility: Holding Company’ Act

constitute’ an important’ ingredient’ of ‘the: “public - .

7 interest.” Assessment of the proper impact of these 3 %

principles on, electri¢ utilities calls for the exercise of

expert judgment by the agency entrusted by Congress . =

with the comprehensive task of regulating this in- .

dustey. I In. 30 doing, that agency must also give effect a

_ eréased creased sir polhition ‘in Chicago wai nade for ‘the first time in

petitioners’ to the court’ below iand hence its claim that the

Commissioy failed to take this into consideration. is not. open.

here. See Section 313(b) of the Power Act, 16 U.S.C, 8252 (b).

In any event, the claim that the merger will increase ‘toal-fired

generation in Chicago is without substance), Commonweaith’s

construction plans (which;.we point out, are not, significantiy

affected by the merger) included no fossil fuel plants in or near — |

Chicago. Two 600 mw units were ‘under construction or on ofder

| and two 800 mw nuclear unite wére' planned for later ocon-

struction (C.A. App. 9-10; 36.FPC at 933-934). The 600 mw -

units are mine-mouth coal-fueled facilities. located 175 miles

southwest of Chicago and the energy will be carried to Chicago

over 845 ky: lines (J-A, 39-40)::(Commonwealth is aleo planning

"another coal-fueled:; as. a possible alternative to‘a nuclear

unit, but, this, too, will remote from Chicago, at a site ‘in

‘southern Uinois. See The Wall Street Journal of sptember 1:

1968, p. 8): 4 iswod tse :

Cf, California y. Federal Peer Comesiasion 309 U5 49;

484-485; Atlantic Sea Corp. a

‘gion (CA. DS. No. 409,

| ios ar emt ne oman A -

Ah {43 [tt

5%

6. the. ieitinise of. the gaiatiei statute. it tiadministers.

"Thus, in. defining the poli¢y of the Federal. Power Act

to. assure abundant electric energy with the lowest.

possible rates to e¢onsumers, Congress. has expressly

recognized that-an appropriate method for achieving —

economies of scale in bulk power’ supply is to.allow,

oh encourage, and regulate coordination@t ‘power supply -

facilities.” See Pennsylvania Water & Power Co. v.,

| Federal Power Commission, 193 F. 2d 230,.234-235‘

- (C.AD.C.), affirmed, 343 U.S. 414. It was in this con-

text that the Commission emphasized that whether a

merger is the most appropriate form. of eoordination

of systems turns on the peculiar fgéts: of each specific

situation and will bey closély scx itinized — App.

3-5; 36 FPO at 930-931). :

In making. this inquiry in this case, the Commission -

Ss acknowledged that economies of scale may be achieved

_ by coordination between otherwise independent power ~—

a. systems. and not only by corporate integration. The -

~ pecord here showed, however,. that the- coordination

, reasonably available to Central as a separate com-

‘pany: would. fall short by $13 million. (over a 10-year | |

period) .of achieving the economies, of seale that will’ —

result: -from the merger. See, pp.56,39, supra. Cor-—

Beet _ Respondingly, the Commission concluded that the

ye eedhomies in supplying bulk. power resulting from. the

‘merger would: ae i eae aah for the Hlinois a

| TWection a) of the Snie, USC. sae direied the

ue Goss for Central a than uo

| Pos sav alary (ca. App. als

saad ><) oe

ho Mele ‘addition, ‘the ‘Commission GEST found :

ee that the merger would have. no substantial anti- ompet- Ste

. itive ‘consequences (C.A. ‘App. 22-24. 36 | i

942). ‘The two companies were not ino ee

“any real sense: Central had: no wholesale sales except oe

|. for some limited interchanges with Commonwealth ;

~. |, > ‘and thé franchised’ retail service areas of the ied

- ’ eompanies were distinct in aecordance: with state law. Re Ms

' Furthermore, since: Commonwealth’s. industrial rates ‘-

. + were lower than Central’s , there was no. serious ¢om-

“petition in . attracting: new. industrial ‘ ¢ustomers to |-

see their respectivé service areas. Indeed, the City of >

-.. Roekford’s ability. to attract industry is probably ~

enhanced by the economies that, will result from | the

merger. Moreover, in light, of the’ existing degree of

ae ee: ‘concentration and the sizes of the two icomtpanies, the. _-

“+, Commission yeasonably concluded that Oommon-

‘wealth’s economic power would’ not ‘be: ‘significantly ts

~ -dnereased ‘by the ‘mergér,. “either “in relative or abso- .

Inte terms (C.A. App. 22-24; 36°FPO at 940-942).

‘Phe record also ‘supports thie Commhission?s finding’. .

(C.A. App. 94, 31; 36 FPC at 941-942, 945) that the

Merger would have no adverse éffect ‘on: ‘competition ee

a with other energy’ sources. Central, to be sure, owned . .

’.., ‘gas distribution properties which were included in

the merger, and Commonwealth, ‘which previously

controlled no gas: properties of its own, -intended to

'. continue. Central’s practice of using excess: gas as

| boiler sg in sk a acaccannees As a tet *

#4. T#2

Wee

18

. matter, the merger. wi ‘jts attendant economic ene-

fits ‘would not have been feasible if these properties

were not initially incuded inthe tranafer. It was

within the Commission’s sound discretion to conclnde

that any divestiture of the acquired gas and non-:.

contiguous electric properties should be delayed pend-

ing further study of the alternatives. Compare Den-

ver & Bio Grande Westérn Railroad Co. v. United .

+ States, 387 U.S. 485. .

_ The ‘petition for a writ of certiorari should be

denied. we : .

' ‘’ ‘Erwme ‘N. Gursworp,