Monday, June 11, 2012

Price Discrimination Claims Against Electricity Service Provider Revived

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The U.S. Court of Appeals in Cincinnati has ruled that Robinson-Patman Act claims should not have been dismissed against retail electricity service provider Duke Energy Corporation for discriminating in price between different purchasers through Duke subsidiaries and an affiliated company.

Dismissal of the action (2009-1 Trade Cases ¶76,595) brought by individuals and businesses based in Ohio was reversed, and the case was remanded. The antitrust claims were not barred by the filed-rate doctrine and were adequately stated.

The complaining customers adequately alleged injury and competitive disadvantage sufficient to survive a Rule 12(b)(6) motion to dismiss, the court ruled. The complaining customers alleged that they suffered competitive disadvantage compared to certain favored companies as a result of alleged “indirect rebates to General Motors Corporation and other large consumers in exchange for their withdrawal of objections to a rate-stabilization plan under review by the Public Utilities Commission of Ohio (PUCO). The complaining customers would have had to pay substantially more for electricity than their competitors due to the rebates.

The court also rejected Duke’s argument that electricity was not a commodity within the scope of the Robinson-Patman Act. The defendants suggested that electricity was not a commodity because the Act used terms such as “goods, wares, or merchandise to refer to commodities, and these terms were not commonly applied to electricity. Moreover, the complaining customers were not required to purchase for resale in order to pursue a Robinson-Patman Act claim, the court held. The defendants’ contention that the Robinson-Patman Act applied only to the resale of a purchased product was not consistent with case law.

Filed-Rate Doctrine

The complaining customers’ federal claims against Duke were not barred by the filed-rate doctrine, the court ruled. The filed-rate doctrine barred challenges to the reasonableness of a filed rate. The complaining customers’ claims did not concern the particular rate set by the PUCO, but rather payments made outside of the rate scheme. The complaining customers argued that the side agreements were not filed with any agency, including the PUCO, and are unlawful. The allegation that certain large consumers, by receiving a rebate, effectively paid a lower rate than the complaining customers did not transform the action into an attack on filed rates.

The June 4 decision is Willams v. Duke Energy International, Inc., 2012-1 Trade Cases ¶77,913.

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