of the two associate companies are 5 miles apart. The peak load of Northampton in 1956 was some 14,000 Kw. The service area of Southern Berkshire Power & Electric Company ("Southern Berkshire"), which operates in southwestern Massachusetts, is also separated from the service area of its closest associate company, Northern Berkshire Electric Company, by the service area of Western Massachusetts. At the nearest points, the service areas of the two associate companies are about 7 miles apart. The peak load of Southern Berkshire in 1956 was some 8,500 Kw. Under an agreement between NEPCO and Western Massachusetts the latter takes from NEPCO such electricity as may be required to service the energy requirements of Northampton and Southern Berkshire and in turn delivers to Northampton and Southern Berkshire their energy requirements at the points of interconnection between them and Western Massachusetts. The deliveries of energy from NEPCO to Western Massachusetts and from the latter to Northampton and Southern Berkshire are made as nearly as possible on a simultaneous basis. The payment for the energy is made directly by Northampton and Southern Berkshire to NEPCO in the same manner and at the same rate as other system companies make payments to NEPCO for purchased energy. The service areas of Quincy Electric Company ("Quincy") and of Weymouth Light and Power Company ("Weymouth"), which companies operate in the east central portion of Massachusetts, adjoin each other, and the facilities of these two companies are interconnected. Quincy's service area is approximately 8 miles from the nearest points of the service areas of two other associate companies, Worcester County Electric Company and Lynn Gas and Electric Company. The properties of Quincy are adjacent to the City of Boston and the properties of both Quincy and Weymouth lie at the southeasterly portion of a high voltage transmission loop circling metropolitan Boston. A number of subsidiaries of NEES, along with Boston Edison Company, fed power into this loop. Approximately two-thirds of the loop is owned by NEPCO and one-third by Boston Edison Company. The power requirements of Quincy and Weymouth are supplied by Boston Edison Company pursuant to a contract which is terminable by either party on one year's notice. The peak load for the Quincy-Weymouth area for 1956 was 68,850 Kw. The Tiverton distribution area of the Narragansett Electric Company ("Narragansett") is located in the southeastern portion of Rhode Island and its facilities are not directly connected with those of Narragansett's transmission system. Tiverton's power requirements A minor portion of Southern Berkshire's power requirements is furnished by two small hydro-electric stations owned and operated by it. (with a peak demand in 1956 of some 4,000 Kw) are supplied by a non-affiliate, Fall River Electric Light Company, whose facilities are, in turn, connected with those of the NEES system. In the event Fall River's capacity to supply the Tiverton load is impaired, the NEES system is in a position to make up any deficiency in the supply. CAPABILITY OF INTERCONNECTION AND COORDINATED OPERATION Although the facilities of the four companies described above and the Tiverton area of Narragansett are not at present directly connected with the high voltage transmission system of NEES, engineering studies and testimony regarding the feasibility and costs of making such direct interconnections were submitted by NEES. To make such interconnections would require the construction of 16 miles of 69 Kv transmission line for Northampton, 13 miles of 115 Kv and 6 miles of 23 Kv transmission lines for Southern Berkshire, 35 miles of 115 Kv and 6 miles of 23 Kv transmission lines for Quincy-Weymouth and 8 miles of 23 Kv transmission line for the Tiverton area. While the existing arrangements are merely those which, at present, make the best economic sense, the necessary interconnections would be constructed forthwith if the present arrangements with the non-affiliate companies were terminated. The record indicates that the system's electric business is conducted on a unified basis. Construction of new generation, transmission and other facilities is planned with a view to the requirements of the system as a whole as well as of the constituent company or companies which may be particularly affected. Daily coordination of the power supply for the system is controlled by a central system dispatcher, located at Millbury, Massachusetts, who schedules and controls, principally through automatic electronic equipment, the use of the important generating units in the system. He also arranges the daily purchases and sales with neighboring companies. The supplying of power for the Southern Berkshire and Northampton areas, which are not directly connected with the system's high voltage transmission lines, is in important respects coordinated with that of the system as a whole since the necessity of satisfying their daily requirements is the responsibility of the NEES system dispatcher. As to the Quincy-Weymouth areas, the automatic controls in the NEES system instantly detect any power deficit arising in the transmission loop surrounding the Boston area, including the power requirements of the Quincy-Weymouth areas, and under normal conditions the NEES system is in a position to recify automatically from its generating facilities the power deficit. Similarly, in the event the supply to the Tiverton area should be impaired, the NEES system is in a position to supply the load automatically. Accordingly, we find that the electric utility assets in the NEES system are physically interconnected or capable of physical interconnection and may be economically operated as a coordinated system." OTHER STATUTORY STANDARDS The electric operations of the NEES system are conducted in a comparatively small and compact area in five contiguous States in New England. The distance between the most northerly point and the most southerly point in the system is approximately 200 miles; and the distance between the most westerly point and the most easterly point is approximately 150 miles. Although the record indicates that most of the principal executive and technical personnel who formulate system policy and planning and control the affairs of the system have their offices at the central headquarters in Boston, it is noted that, by reason of the comparatively compact area served, the central organization has ready access to almost any part of the system and can maintain daily contact with local needs and conditions. In this connection, the local companies employ experienced local managers to deal with local problems of operation, and as day-by-day customer relationships, supervision of local employees and public relations. The manager is a member of the local company's Board of Directors and in most instances other local residents are also member of the Board. The electric distribution properties of the NEES system are subject to the regulatory jurisdiction of the State commissions in the four States in which the system renders retail service, namely the Connecticut Public Utilities Commission, the Department of Public Utilities of Massachusetts, the Public Utilities Commission of New Hampshire, and the Public Utility Administrator, Department of Business Regulation of the State of Rhode Island. Each of these commissions have extensive regulatory jurisdiction over the operations of the respective companies located in their respective States. The retention under common control of the various electric properties does not appear to impair the effectiveness of State regulation. CONCLUSIONS Upon consideration of the entire record, we are of the opinion that the electric utility assets owned and operated by subsidiaries in the NEES holding company system are either physically interconnected or are capable of physical interconnection so that, under normal conditions, they may be economically operated as a single interconnected Cf. The North American Co., 11 S.E.C. 194, 241-243 (1942); Cities Service Power & Light Co., 14 S.E.C. 28, 52-55 (1943); Federal Light & Traction Co., 15 S.E.C. 675, 679-681 (1944). and coordinated system and in other respects meet the definition of an integrated public utility system as applied to electric utility companies set forth in Section 2(a) (29) (A) of the Act. We shall, therefore, dismiss the proceeding insofar as it relates to the issue of whether the electric utility assets of the NEES holding company system constitute a single integrated public utility system, and shall reconvene the hearing at an appropriate time for the taking of evidence with respect to the other issues in the proceeding. An appropriate order will issue. By the Commission (Chairman Gadsby and Commissioners Orrick, Patterson, Hastings and Sargent). |