New England Power Co. v. New Hampshire

Background

A regional power company that generates and sells wholesale electricity in New England owned six hydroelectric plants on the Connecticut River. Twenty-one generating units sit in one state and produce low‑cost power that the company sells mostly to Massachusetts and Rhode Island customers; less than six percent of that state’s population receives the company’s wholesale service. A century‑old state law let the state utilities commission stop electricity produced by water power from being sent out of the state. The commission withdrew the company’s previous permission to export hydroelectric energy and ordered the company to make in‑state sales so residents would capture the savings, estimating about $25 million a year in local benefit.

Reasoning

The core question was whether a state may bar a federally licensed hydroelectric producer from selling power across state lines or reserve the economic benefit for its own citizens. The Court held that a state cannot adopt protectionist rules that burden interstate trade in electricity. The Court said the constitutional power to regulate interstate commerce prevents a state from forcing in‑state priority sales. It explained that the Federal Power Act’s saving clause (§201(b)) only preserved state authority that was lawful in 1935 and did not give states a new right to ignore constitutional limits. The Court therefore reversed the state court’s decision.

Real world impact

The ruling prevents a state commission from forcing a power company to sell hydroelectric energy only to in‑state buyers and protects the regional transmission and pooling arrangements that move electricity across state lines. The decision leaves open future federal‑state issues about rates and implementation, and the case was sent back for proceedings consistent with the Court’s opinion.