Federal Power Commission v. Conway Corp.

Arkansas Power & Light Company (Arkansas Power) was a public utility that sold electricity at wholesale and retail. Arkansas Power’s retail sales to industrial customers competed with the sales of some of its wholesale customers, including Conway Corp. (customers) (plaintiffs). In 1973, Arkansas Power filed an application for an increase of its wholesale electricity rate with the Federal Power Commission (the commission) (defendant). The wholesale customers filed a petition to intervene in the proceeding. They argued that the rate increase was an attempt to squeeze them out of competition and make them more susceptible to the persistent takeover attempts of Arkansas Power. The customers alleged that Arkansas Power had tried to drive them out of business in the past. They asserted that the rate increase was discriminatory against only their class of customer and that it was not justified by costs. Arkansas Power opposed the customers’ petition, but the commission permitted the customers to intervene. However, the commission prohibited the customers from participating on the matter of alleged anticompetitive activities and refused to consider or hear evidence on this issue. The commission reasoned that considering the effects that a wholesale rate would have on retail rates was improper because retail rates were outside the commission’s jurisdiction and it had no power to prescribe retail rates. The customers appealed. The court of appeals held that if undue preference or discrimination by a wholesaler caused any unreasonable difference in rates, the commission had both the power and the duty to effect a remedy if one of the rates involved was subject to the jurisdiction of the commission. The United States Supreme Court granted certiorari.