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Court Agrees to Referee Dispute Over Power Rates

December 9, 1985

WASHINGTON (AP) _ The Supreme Court today agreed to referee a federal-state dispute over the setting of electric power rates that affect customers from more than one state.

The court will hear a private company’s appeal, supported by the Reagan administration, in a case involving millions of dollars for consumers in North Carolina and Tennessee.

The Aluminum Company of America (Alcoa), which runs utilities in both states, appealed a July ruling by the North Carolina Supreme Court.

The state court, in effect, upheld the authority of North Carolina officials to order lower rates for state customers than those recommended by the Federal Energy Regulatory Commission.

The Nantahala Power and Light Co., Alcoa’s North Carolina subsidiary, was ordered to pay some $45 million in refunds as of Oct. 1 to electricity users there.

That order previously was suspended by Chief Justice Warren E. Burger pending action on the case by the full Supreme Court.

Alcoa also has a utility company subsidiary in Tennessee, Tapoco Inc. The two subsidiaries are part of the Tennessee Valley Authority system.

The companies pay the TVA two separate rates to receive hydroelectric power. Supplemental power received from the TVA costs about three times more than the utilities’ regular allotment.

The North Carolina Utilities Commission ordered Nantahala Power and Light to provide additional cheap electricity for its customers, and the order was upheld by that state’s Supreme Court.

Alcoa and the Reagan administration challenged the state court decision. The administration said the ruling gives North Carolina citizens ″a bigger share of the low-cost power, leaving less for the neighboring state’s customer.″

Justice Department lawyers also said the state unlawfully preempted the Federal Energy Regulatory Commission.

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