[BETA] Fortnightly

The U.S. Court of Appeals for the Third Circuit has ruled that federal antitrust laws provide no remedy for complaints by a qualifying cogeneration facility that an electric utility was impermissibly curtailing purchases under its power purchase contract with the QF.

It said that Pennsylvania's recently enacted electric restructuring law "comes too late" to make the QF's complaint a valid one.

Schuylkill Energy Resources Inc., owner and operator of an anthracite coal refuse-fired QF in Shenandoah, Pa., had filed an antitrust claim against Pennsylvania Power and Light Co. in federal court. Schuylkill alleged the utility was trying to monopolize the provision of electric energy to retail consumers in the utility's service territory and to wholesale resellers affiliated with PP&L. (The appeals court affirmed a district court ruling that dismissed the case for failure to state a claim.)

According to the QF, the utility had used "minimum generation events" as an excuse to reduce purchases of energy from independent power producers with high energy prices first. It also used the same excuse to cut purchases from its own plants less severely. (A minimum generation event occurs when the aggregate power demand within the areas served by the region's power pool is expected to fall below its emergency minimum floor level. The power pool cannot sell the pool's excess to other pools or reduce member-company purchases.)

The QF claims PP&L's curtailment policy harms competition and consumer welfare by keeping its rate base artificially high. It also deprives customers of other energy sources, including that using "environmentally pro-active fuel sources."

In finding that the QF had stated no claim of action under the antitrust law, the court ruled such laws were designed to preserve competition for the benefit of consumers. A complaining party who is not a consumer must show that he is a participant in the same market. The QF was not PP&L's competitor, but rather PP&L's supplier, the court said. As evidence of this fact the very agreement that the QF seeks to enforce prohibits it from competing with PP&L in the relevant market, it added.

The court also concluded that whether and to what extent PP&L maintains an artificially high rate base is not within the purview of the antitrust laws. Such claims should instead be brought before state utility regulators. Schuylkill Energy Resources, Inc. v. Pa. P&L Co., No. 96-1447, (em F.3d (em , May 5, 1997 (3d Cir.).

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