In the Northwestern Electric Co. et al. v. Federal Power Commission case of 1943, the Supreme Court ruled in favor of the Federal Power Commission (FPC). The dispute arose when several utility companies challenged FPC's authority to regulate wholesale electricity rates for interstate transactions under Section 201(b) of the Federal Power Act (FPA). The utilities argued that their operations were intrastate and thus outside FPC's jurisdiction as they only sold power within one state, even though they received it from an out-of-state source. However, Justice Frankfurter writing for a unanimous court held that once electric energy enters into interstate commerce by being transmitted across state lines, all subsequent sales are subject to federal regulation regardless if those sales occur within a single state or not. This decision significantly expanded federal regulatory powers over electricity markets.

In the dissenting opinion for Northwestern Electric Co. et al. v. Federal Power Commission, Justice Frank Murphy argued that the majority's interpretation of the Federal Power Act was overly broad and inconsistent with its legislative history and purpose. He contended that Congress intended to regulate only those utilities engaged in interstate commerce, not those involved solely in intrastate activities as is the case with Northwestern Electric Company which sells power exclusively within Nebraska state lines. He further pointed out that this expansive interpretation could lead to federal regulation over all aspects of local utility operations, infringing upon states' rights and potentially disrupting established regulatory systems without clear congressional intent or constitutional authority.