246 P.3d 443
N.M.2010Background
- EPE operates in southern New Mexico under county-franchise agreements with Doña Ana and Otero counties for use of county rights-of-way.
- Franchise fees have been collected since 1999 as separate line-item charges to customers within the counties’ jurisdictions; prior to 1999 fees were included in base rates.
- Doña Ana’s agreement: two percent of gross receipts plus $105,000 per year; Otero’s agreement: two percent of gross receipts per year.
- The Public Regulation Commission opened an investigation and issued a Final Order (Jan. 26, 2010) directing EPE to stop charging franchise fees and to refund amounts collected since 2004.
- The Commission asserted jurisdiction over franchise fees as rates; EPE challenged this, and emergency stay was granted pending merits review.
- The central issue is whether franchise fee charges are legally within the Commission’s rate-making jurisdiction under the Public Utility Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether franchise fee charges are “rates” within the Commission’s jurisdiction. | EPE’s view: franchise fees are payments to local counties, not part of utility rates; they are separate charges passed through to counties. | Commission’s view: franchise fees are charges associated with providing utility service and thus fall within rate jurisdiction. | Franchise fee charges are not rates and fall outside the Commission’s jurisdiction. |
| Whether the Commission can expand its rate jurisdiction to franchise fees by analogy to taxes or automatic adjustment clauses. | Franchise fees are not taxes; they are local charges outside statewide rate regulation. | The Commission could analogize to taxes/adjustment mechanisms to include franchise fees in rate context. | The Legislature intended franchise fees to be distinct from rates; the Commission may not expand jurisdiction by analogy. |
Key Cases Cited
- In re Adjustments to Franchise Fees, 2000-NMSC-035 (N.M. 2000) (franchise fees are fees, not part of statewide rates and thus outside rate jurisdiction)
- City of Albuquerque v. N.M. Pub. Serv. Comm'n, 115 N.M. 521, 854 P.2d 348 (1993) (franchise-related charges are local concerns; legislature authorship decides review scope)
- NMIEC (N.M. Indus. Energy Consumers v. N.M. Pub. Serv. Comm'n), 2007-NMSC-053 (N.M. 2007) (agency jurisdiction over rate-making includes general rate cases and automatic adjustment clauses but not local franchise fees)
- Plains Elec. Generation & Transmission Coop., Inc. v. N.M. Pub. Util. Comm'n, 1998-NMSC-038, 126 N.M. 152, 967 P.2d 827 (N.M. 1998) (agency jurisdiction and review of rate-related determinations)