The electric industry hasn't seen so much upheaval since Thomas Edison threw the switch at the Pearl Street Station. Full retail access to competitive markets in generation and supply will...
Why Special Contract Discounts are Good For Electric Competition
that defense, if a customer is offered a special deal by a competitor, a company, dealing in good faith, can meet that competitor's terms to retain that customer even if the same terms were not offered to its other customers. %n17%n This defense is specifically written into the text of the Robinson-Patman Act. %n18%n
Despite the hue and cry raised against special contract discounts, opponents have yet to muster proof that such discounts injure customers. t
Paul F. Hanzlik is a partner at Hopkins & Sutter, where he specializes in representing electric utilities with respect to demonstrating the prudence of management conduct, emerging competitive issues and certification of new energy facilities. David B. Goroff is a partner at Hopkins & Sutter, where he specializes in antitrust law with a particular focus on deregulated industries.
1William G. Shepherd, "Anti-Competitive Impacts of Secret Strategic Pricing in the Electricity Industry," PUBLIC UTILITIES FORTNIGHTLY, Feb. 15, 1997, p. 24.
2See Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 489 (1977).
3Conn.Gen.Stat. §16-19hh (1994).
435-A M.R.S §3195 (1995).
5Massachusetts Ann. Laws, Ch. 164, §94 (1996).
6See, e.g., In re Homer Electric Association Inc., 101 PUR4th 14 (Docket No. U-88-25, Alaska PUC, Feb. 28, 1989); In re Southern California Edison Co., 150 PUR4th 271 (Decision 94-03-075, Cal.PUC, Mar. 16, 1994); In re Competitive Opportunities Available to Customers of Electric and Gas Service, 145 PUR4th 267 (Case 93-M-0229, N.Y.PSC, June 30, 1993).
7See, e.g., In re Pacific Gas & Electric Co., 39 CPUC 2d 540 (Decision 91-04-060, Cal. PUC, Apr. 24, 1991) (rejecting a special contract discount where a utility could not demonstrate that other ratepayers would not be adversely affected).
8See, e.g., In re Southern California Edison Co., 53 CPUC 2d 663 (Decision 94-03-075, Cal. PUC, Mar. 16, 1994) (The Commission found that "[t]he agreement provides a significant benefit to other Edison customers by retaining Edison's largest single-site customer, who will make a positive contribution to Edison's fixed costs.")
9See, e.g., In re Alabama Power Co., 168 PUR4th 513 (Informal Docket No. U-3672, Alabama P.S.C., Apr. 1, 1996).
10United States v. Grinnell Corp., 384 U.S. 563, 571 (1966).
11See, e.g., Bayou Bottling, Inc. v. Dr. Pepper Co. 543 F.Supp. 1255, 1266 (W.D.La.1982) ("Even a monopolist is allowed to meet competition by promoting its own product"), aff'd, 725 F.2d 300 (5th Cir.), cert. denied, 469 U.S. 833 (1984); Northeastern Tel. Co. v. AT&T, 651 F.2d 76, 93 (2d Cir. 1981) ("Even monopolists must be allowed to do as well as they can with their business."), cert. denied, 455 U.S. 943 (1982); Superturf, Inc. v. Monsanto Co., 660 F.2d 1275, 1280 (8th Cir. 1981) ([A monopolist] "may ... aggressively compete in the marketplace").
12See, e.g., Olympia Equip. Leasing v. Western Union Telegraph 797 F.2d 370, 375 (7th Cir.1986) ("Today it is clear that a firm with lawful monopoly power has no general duty to help its competitors, whether by holding a price umbrella over their heads or by otherwise pulling its competitive punches."), cert. denied, 480 U.S. 934 (1987); Foremost Pro Color, Inc. v. Eastman Kodak Co. 703 F.2d 534,