{"ID":60488,"name":"Federal Power Commission v. Tennessee Gas Transmission Company","href":"https:\/\/api.oyez.org\/cases\/1962\/48","view_count":0,"docket_number":"48","additional_docket_numbers":null,"manner_of_jurisdiction":"Writ of \u003Ci\u003Ecertiorari\u003C\/i\u003E","first_party":"Federal Power Commission","second_party":"Tennessee Gas Transmission Company","timeline":[{"event":"Argued","dates":[-227473200],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/49007"},{"event":"Decided","dates":[-223408800],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/49008"}],"lower_court":{"ID":10,"name":"United States Court of Appeals for the Fifth Circuit","href":"https:\/\/api.oyez.org\/taxonomy\/term\/10"},"facts_of_the_case":"\u003Cp\u003EIn 1959, Tennessee Gas Transmission Company filed a 7% proposed rate increase across all six of its zones with the Federal Power Commission. The rate increase was based on the expected cost of service and rate of return. The Commission imposed a five-month suspension period while hearings were conducted to determine whether the rate increase was reasonable. At the end of five months, the new rates would be applied, but they were subject to refund if the hearings found a reasonable rate lower than 7%. On August 9, 1960, the Commission found that only a 6 1\/8% increase was reasonable and that Tennessee Gas must provide refunds.\u00a0\u003C\/p\u003E\n\u003Cp\u003ETennessee Gas challenged the ruling by arguing that requiring a refund prior to a final determination of cost made the company unable to recoup its 6 1\/8%. Because Tennessee Gas spreads its rates differently across the different zones, there are certain zones in which the refund would be greater than the value of the new rate. The United States Court of Appeals for the Fifth Circuit found in favor of Tennessee Gas.\u003C\/p\u003E\n","question":"\u003Cp\u003ECan the Federal Power Commission order a rates reduction and refund without determining how such a reduction would affect costs in different service zones?\u003C\/p\u003E\n","conclusion":"\u003Cp\u003EYes. Justice Tom C. Clark delivered the opinion of the 9-0 majority. The Court held that it is the company\u2019s responsibility to determine a rate schedule that is \u201cjust and reasonable\u201d in order to prevent the Commission from ordering a change. Additionally, since the company cannot expect to be able to recoup the losses it accrues during the five-month suspension period, it should not expect to recoup the losses during the readjustment period either. 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