Preface

ix

PREFACE

Historically, energy has been at the center of the development of the

antitrust laws. The oil industry, for example, has been the source of many

seminal antitrust cases, including United States v. Standard Oil Co. of

New Jersey1; United States v. Socony-Vacuum Oil Co.2; and Standard Oil

Co. of Cal. v. United States.3

On the other hand, the electric and natural gas industries, with few

exceptions such as Tampa Electric Co. v. Nashville Coal Co.4 and United

States v. Otter Tail Power Co.5 were considered to be the province of

regulation. These industries were pervasively controlled by federal and

state regulation and subject to substantial if not complete antitrust

immunity. As a result of the oil crisis of the mid-1970s and various

legislative responses, competition began to enter these two industries and

develop particularly in the late 1980s and 1990s. For many antitrust

lawyers, understanding these industries and their economics, and

applying the antitrust laws to them, is a daunting task. The engineering

and physics particularly of electricity are difficult. Both the electric and

natural gas industries continue to be subject to federal and state

regulation.

The purpose of this book is to provide a basic background of the

history and economic structure of electricity and gas and the applicable

regulatory structure and to explain the application of antitrust laws to

these industries both by the courts and the agencies, particularly the

Federal Energy Regulatory Commission (FERC). While this book is

entitled the Energy Antitrust Handbook, the principal focus is on issues

relating to electricity and gas. The authors believe that battles over oil

have largely been fought and the rules are well defined. Similarly coal,

hydropower, and nuclear energy do not generally raise antitrust issues

distinct from other industries. On the other hand, both gas and electricity

have been pervasively regulated and are evolving toward less regulation.

Because gas deregulation began first and is substantially more complete,

the issues are more defined and to some extent more historical. The

shape of electricity deregulation is still evolving. Because the purpose of

1. 221 U.S. 1 (1911) (the rule of reason).

2. 310 U.S. 150 (1940) (per se rule against price fixing).

3. 337 U.S. 293 (1949).

4. 365 U.S. 320 (1961).

5. 410 U.S. 366 (1973).