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New York v. Federal Energy Regulatory Commission | 535 U.S. 1 (2002)
We’ll see whether the Federal Energy Regulatory Commission, or FERC , has jurisdiction over unbundled retail transmissions of interstate electricity in New York versus Federal Energy Regulatory Commission.
Congress enacted the Federal Power Act, or F P A, in nineteen thirty-five. At that time, most electric companies were local companies that were regulated by state law. The companies typically bundled their electricity sales to customers. The term bundled means that electric companies would charge customers a single fee for both the cost of the electricity as well as the cost of delivering the electricity. Under Section Two Oh Five of the F P A, the Federal Power Commission, the predecessor of FERC, could prohibit unreasonable rates and undue discrimination for interstate utility transactions.
In the nineteen seventies and eighties, there was a dramatic increase in the number of electric suppliers in the country. The increase in suppliers coincided with technological advances that allowed suppliers to share electricity over large regional grids. This meant that a customer in one state could buy electricity from a company that produced the power in another state. However, public utility companies continued to own the transmission lines that transported the electricity to wholesale and retail customers across the grid. Because the utility companies still owned the transmission lines, the companies could either refuse to deliver a competitor’s electricity across the lines, or the companies could deliver a competitor’s electricity at less favorable terms and prices compared to the utility company’s own transmissions.
In nineteen ninety-six, FERC issued Order Eight Eight Eight , which held that these practices were discriminatory. To address the discrimination, FERC invoked its authority under Section Two Oh Six of the F P A and imposed an open-access requirement on unbundled retail transmissions in interstate commerce.
Multiple parties petitioned the United States Court of Appeals for the District of Columbia Circuit to review Order Eight Eight Eight. The district court consolidated many of the petitions and upheld most of FERC’s order. The State of New York and other parties, referred to collectively as New York, then challenged FERC’s jurisdiction over unbundled retail transmissions, claiming that only states can regulate retail transmissions and that FERC’s jurisdiction only applies to the wholesale market. The United States Supreme Court granted cert.
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