Wisconsin v. Federal Power Commission Page 18

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Audio Transcription for Oral Argument - January 09, 1963 (Part 2) in Wisconsin v. Federal Power Commission

Audio Transcription for Oral Argument - January 09, 1963 (Part 1) in Wisconsin v. Federal Power Commission

Hugo L. Black:

Suppose he chose it, you picked an average rate, you -- as I have understood it --

Richard A. Solomon:

Well --

Hugo L. Black:

-- different companies have different costs and make different amounts of profits.

Suppose one of them chose that the rate you fixed on the average confiscates his property, let's assume that he's proven it, what happens then?

Richard A. Solomon:

Well, of course he --

Hugo L. Black:

Does he have to follow those rates?

Richard A. Solomon:

No.

Of course, you're asking me to move ahead of the Commission in deciding this problem --

Hugo L. Black:

Well, I'm sort of thinking about your problem that you are -- of the difficulties of fixing individual rates and I understood you to say, maybe I'm wrong that the -- if you fix them altogether, that wouldn't necessarily raise them to the highest cost then, how could you keep from doing it, raising it to the highest cost then?

Richard A. Solomon:

As this -- Your Honor, will undoubtedly remember this problem is not a new one in price fixing ratemaking activities of the various governmental agencies.

In the Tagg Brothers and Moorhead case decided by this Court I think in 280, a problem came up under the Agricultural Packers and Stockyards Act very similar statute, very, very similar to the Natural Gas Act where the Secretary of Agriculture in fixing the prices for a certain merchandising man in Denver Stockyard I think fixed a level price based upon his analysis of the entire economics of the thing and somebody came up and said that this price is too low for me and this Court and that case said that that part of the -- you're not guaranteed a profit, you don't have it --

Hugo L. Black:

I understand that.

Your answer to me then, as I understand it is, that even though the rates you fixed would be confiscatory to the Phillips for instance because of its higher cost than others, it will have to sell at that price that you think.

As I understand that's your answer?

Richard A. Solomon:

Or get out of the interstate market.

Hugo L. Black:

Or get out of the business?

Richard A. Solomon:

Interstate market.

Hugo L. Black:

Interstate market.

Byron R. White:

But isn't there some doubt Mr. Solomon, that there is still gas in there, [Inaudible]

Richard A. Solomon:

Well, I think this is right.

I think that it is more of a theoretical problem than anything else that the -- at least and certainly, the very high cost producer is not going to be able to get his cost anyway.

This is not surprising Justice White because in this business particularly, you will have lots of people who at least at varying times are not making a full return.

They may be spending all their money in investment at that time.

Hugo L. Black:

I started to quit that for lunch, but l asked you that because I thought about the fact that the basic rates are fixed originally according by the company and rather difficult to unfix those rates and they vary according to what they think, they ought to get or what they can give.