Ownership and operation of the plant by the University would provide tax benefits.A plant of that size would cost $36 million.The optimal plant for the University would produce 23 megawatts ("MW") of electricity.Cogeneration was a viable alternative for the University.The group worked for six months and reached a number of conclusions: The University took concrete steps toward the cogeneration alternative in early 1993, when the President of the University formed a group to analyze and evaluate the technical, financial and legal aspects of cogeneration. (3) The University learned that, by replacing its existing steam plant with a more efficient plant, it could meet its steam needs and also produce - or cogenerate - electricity as a byproduct. ![]() The University had a decades-old "central utilities plant" that produced steam for heating and cooling campus buildings. In the meantime, the University of Rochester, a major industrial customer of RG&E, was grappling with a number of issues in an effort to reduce its energy costs. ![]() The PSC intended to "afford utilities the flexibility to compete with their largest customers' other supply options." Id. (2) After a period of granting individual utilities' requests for flexible pricing, the New York Public Service Commission ("PSC") opened a proceeding that would universally permit utilities to price flexibly, that is, to set prices through individual negotiations with certain customers rather than according to a tariff filed with the state. RG&E's agreement is illegal.īy the early 1990's, regulated electricity rates had become so high that, all over New York State, industrial customers were beginning to look for alternatives to high-priced power, either by relocating to other states or by cogenerating some of their own electricity. The agreement between RG&E and UR ensured that RG&E would not face competition from a cogeneration plant on the UR campus. (1) RG&E's customers never got an opportunity to bargain for those discounts. The anticompetitive result of the agreement is clear - as RG&E's President and COO, the chief negotiator of the contract, admits - with construction of UR's new steam plant, "you could use this steam host here to sort of have everybody in town demand some kind of discount." Richards Depo. Faced with the choice between losing some important customers or offering them discounts to keep their "load on the system," RG&E adopted a third, but illegal, option - it promised to pay the University hundreds of thousands of dollars if it would agree not to "solicit or join with other customers of RG&E to participate in any plan to provide them with electric power and/or thermal energy from any source other than RG&E." RG&E, in short, paid the University not to compete, leaving RG&E free to demand higher prices from customers the University's plant otherwise could have served. The University's potential capacity to supply electricity to RG&E customers, combined with its legal ability to do so under New York State law, threatened RG&E's monopoly. The University planned to sell its excess electricity, but had not yet made a commitment to any particular customers. Excess electricity cannot be stored or disposed of - it must be used. As a by-product, it would have produced inexpensive electricity, and substantially more of it than the University needed. The plant would have efficiently produced sufficient steam to meet the University's heating and cooling needs. The University trustees had voted to develop a modern, efficient, natural-gas-fueled electrical cogeneration plant to replace the University's more than 60-years old coal-burning steam plant. In 1993, Rochester Gas and Electric Company ("RG&E") recognized that the University of Rochester ("UR" or "University") posed a significant threat to its electric monopoly. SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT AND IN OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT PLAINTIFF UNITED STATES' MEMORANDUM OF LAW IN For an official signed copy, please contact the Antitrust Documents Group. To view the PDF you will need Acrobat Reader, which may be downloaded from the Adobe site. ![]() ![]() This document is available in two formats: this web page (for browsing content) and PDF (comparable to original document formatting).
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