concurring in part and dissenting in part:
I concur in the majority’s reasoned analysis of the jurisdictional challenges raised in this case. I dissent from the majority’s affirmance of the merits of the Commission’s decision because I believe that the Commission has failed adequately to explain two critical issues. I would reverse and remand for further consideration of these issues.
First, the Commission has not explained adequately its criteria for determining what is “undue discrimination” or why the course it has chosen is not also unduly discriminatory. The Commission found the UPSA as filed to be unduly discriminatory because the cost of nuclear capacity varied widely from company to company. Specifically, the Commission found the companies’ costs of nuclear capacity were approximately as follows:
AP & L $ 531,000 per megawatt
LP & L 2,211,000 per megawatt
MP & L 2,247,000 per megawatt
NOPSI 2,090,000 per megawatt
See 26 F.E.R.C. (CCH) at 65,107. Under the Commission’s remedy, however, nuclear capacity costs remain vastly disparate:
AP & L $ 858,000 per megawatt
LP & L 2,219,000 per megawatt
MP & L 2,156,000 per megawatt
NOPSI 2,094,000 per megawatt
*288See id. at 65,109. Those are still very large differences. Indeed, the disparities have changed hardly at all. In response to the argument that this result was also unduly discriminatory, the Commission stated:
What our decision purports to do is to eliminate drastic rate disparities at the wholesale rate level which are associated with units used for the mutual benefit of all companies, and to do so in a manner which disturbs the historical operation of the System as little as possible, and which allows the individual companies to retain as fully as possible the benefits of units they have financed and constructed. In other words, we have sought to achieve an equitable balance between the interests of the individual companies and the System as a whole, consistent with the System Agreement.
32 F.E.R.C. (CCH) at 61,959.
This explanation is inadequate for three reasons. First, the Commission does not explain why the remaining very great disparities should not be considered “drastic” and hence to constitute “undue discrimination.” No criteria whatever are offered for determining when such discrimination exists. Second, the argument that the Commission did not want to disturb the historical operation of the System does not support its finding because historically costs were equalized under the System. Finally, the Commission’s statement that it has attempted to allow “individual companies to retain as fully as possible the benefits of the units they have financed and constructed” is unacceptable as a rationale. As discussed at length in the majority opinion, a basic, and necessary, premise of the Commission’s jurisdiction in this case, as well as the validity of the decision, is that the companies are not autonomous and that decisions are made for the System as a whole. See maj. op. at 1540-43, 1555-56.
Second, I believe that the Commission’s explanation for its decision to include the capacity costs of all nuclear plants, rather than considering only the costs of Waterford III and Grand Gulf, or the costs of all coal and nuclear plants, is not rational. The Commission considered the capacity costs of all nuclear plants because the unforeseen problems that led to dramatic costs overruns were “unique to constructing nuclear units.” 31 F.E.R.C. (CCH) at 61,655. But the cost overruns were not unique to all nuclear plants; they were unique only to Grand Gulf and Waterford III. The investment costs of the ANO units were comparable to the investment costs of the coal units. See 32 F.E.R.C. (CCH) at 61,960. Thus, if the Commission was attempting only to address the “unique” cost overruns, which it has stated as its rationale, then it would seem reasonable to consider only the costs of Grand Gulf and Waterford III. If, however, the Commission wished to include the costs of the ANO units,' for some unexplained reason, then, it would appear, the Commission reasonably should have included the costs of the coal units as well.