Federal Power Commission v. Hope Natural Gas Co

In Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 594, 64 S. Ct. 281, 88 L. Ed. 333 (1944) consumers and regulatory agencies contended that rates charged by a utility were excessive and unreasonable within the meaning of the Natural Gas Act. The United States Supreme Court reaffirmed in that case that Congress had the constitutional authority to regulate the rates at issue and that Congress's authority was "at least as great under the Fifth Amendment as is that of the States under the Fourteenth Amendment to regulate the prices of commodities in intrastate commerce." Therefore, when a consumer filed a complaint, the Federal Power Commission was free to establish rates as long as those rates were just and reasonable. The United States Supreme Court later explained in Permian Basin Area Rate Cases, that "the just and reasonable standard of the Natural Gas Act 'coincides' with the applicable constitutional standards," and that "any rate selected by the Federal Power Commission from the broad zone of reasonableness permitted by the Act cannot properly be attacked as confiscatory." The Supreme Court had also explained in Hope Natural Gas that the "rate- making process under the Natural Gas Act, i.e., the fixing of 'just and reasonable' rates, involves a balancing of the investor and the consumer interests." The Court elaborated in Permian Basin that as long as a regulatory authority has balanced the interests of consumers and investors, rates established within a zone of reasonableness are not subject to attack as confiscatory: Accordingly, there can be no constitutional objection if the Federal Power Commission, in its calculation of rates, takes fully into account the various interests which Congress has required it to reconcile. The Court did not suggest that maximum rates computed for a group or geographical area can never be confiscatory; we hold only that any such rates, determined in conformity with the Natural Gas Act, and intended to "balance . . . the investor and the consumer interests," are constitutionally permissible. 390 U.S. at 770