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Court Grants Power Of Choice

The Supreme Court on Monday upheld rules intended to give people choices for electricity service, a partial victory for Enron, which had aggressively litigated over the regulations.

The losers were nine states that challenged the federal government's authority to order electric utilities to open their power lines to competitors.

The ruling makes clear that the federal government controls the management of the nation's power grids - and the future of electricity competition.

The Federal Energy Regulatory Commission required traditional utilities in 1996 to open their transmission lines to competing power merchants. That helped companies like Enron, which before its collapse was one of the country's largest power marketers.

Enron lost its Supreme Court argument that FERC should do even more to open power grids to competition.

The court issued a mixed verdict in which it ruled unanimously on the major elements of the case, but divided over details.

Richard Pierce Jr., a George Washington University law professor, said the ruling "is terribly important for anybody who's a consumer and interested in getting a level playing field."

"The issue is far from dead, even if Enron's role is no longer what it once was," he said.

FERC's order led numerous states to end monopolies in retail power markets. About half the states have moved toward electricity competition.

But utility regulators in Florida, Idaho, New Jersey, New York, North Carolina, Virginia, Washington, Vermont and Wyoming filed suit arguing that the regulation of retail sales should be controlled by states.

The Supreme Court turned down the states' claims. Also turned down was Enron's arguments that FERC should have required access to transmission lines when utilities continued to keep transmission and retail sales as one operation - as remains the case in many states that have yet to allow competition.

The nation's top court also agreed to settle a messy cellular service dispute, months after a proposed government settlement with NextWave stalled at the Capitol.

At stake is improved cell phone service in dozens of cities.

The Bush administration had pressed the court to intervene in its fight with the bankrupt NextWave over unpaid debts for cell service licenses. Top phone companies want those licenses.

The court has refused in the past to get involved in the case. The decision to do so now extends the long-running disagreement. Justices will hear arguments next fall and may not rule until 2003.

Michael Powell, chairman of the Federal Communications Commission, said he was pleased that the court would "clarify the relationship between public spectrum auctions and the U.S. bankruptcy laws."

A federal appeals court had said the government was wrong to sell to the other phone companies valuable spectrum rights that had been won by NextWave in an 1996 auction. NextWave paid only part of the bid before filing for bankruptcy protection.

Justices must decide what options the government has when a telecommunications company obtains licenses but then fails to pay for them.

NextWave, the FCC and Justice Department reached a $16 billion deal last fall that would have ended the five-year-dispute. The proposal expired Jan. 1 after Congress failed to endorse it.

Under that deal, companies such as Verizon Wireless and affiliates of Cingular Wireless, VoiceStream Wireless and AT&T Wireless Services Inc. would pay the government for NextWave's licenses.

They could then expand services in lucrative but overcrowded markets such as New York, Los Angeles, Chicago, Seattle, San Francisco, Washington and Philadelphia.

The Hawthorne, N.Y.-based NextWave would have gotten part of the settlement to use for networks being built in Detroit and Madison, Wis. - areas covered by five licenses NextWave paid for.

Thomas G. Hungar, an attorney for NextWave, said the FCC had changed its rules for purchasing licenses and the case is now moot.

Paul D. Clement, representing the Justice Department, told the Supreme Court that the case threatens the government's authority to oversee communications.

The Justice Department maintains that the FCC has exclusive power to grant broadcast licenses, and that a winning bidder loses its entitlement to a license if it does not pay.