114 N.C. App. 272 | N.C. Ct. App. | 1994
On the appeals of respondent Haywood EMC and intervenors NCEMC and the Public Staff, the questions presented are whether the Commission erred in: (1) failing to render its decision pursuant to the standards set forth in G.S. 62-79(a), thereby frustrating appellate review; (2) reassigning complainant M-B Industries, the manufacturing company, from Haywood EMC to Duke; (3) failing to reassign the residential complainants to an electric supplier other than Haywood EMC, and; (4) excluding an expert’s testimony regarding the adverse economic impact on Haywood EMC of shifting customers to other electric suppliers. After careful review of the record, transcript, and briefs, we hold that the Commission erred in reassigning M-B Industries from Haywood EMC to Duke and
I. Standard of Review
G.S. 62-94(b) governs our review of the Commission’s order. G.S. 62-94(b) provides that an appellate court
(b) . . . may reverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission’s findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional provisions, or
(2) In excess of statutory authority or jurisdiction of the Commission, or
(3) Made upon unlawful proceedings, or
(4) Affected by other errors of law, or
(5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted, or
(6) Arbitrary or capricious.
The Commission’s order will not be upheld if error is found based on one of the enumerated grounds of G.S. 62-94(b). State ex rel. Utilities Comm. v. Southern Bell, 88 N.C. App. 153, 177, 363 S.E.2d 73, 87 (1987); Utilities Comm. v. Bird Oil Co., 302 N.C. 14, 20, 273 S.E.2d 232, 235 (1981) (“judicial reversal of an order of the Utilities Commission is a serious matter for the reviewing court which can be properly addressed only by strict application of the six criteria which circumscribe judicial review”). Grounds for relief not specifically set forth in the notice of appeal filed with the Commission may not be relied upon in the appellate courts. G.S. 62-94(e). However, even when specific grounds are set forth, the applicable scope of review may be determined only from an examination of the issues brought forward by the appealing party and the nature of the supporting contentions. Utilities Comm. v. Bird Oil Co., 302 N.C. 14, 273 S.E.2d 232.
II. Appealability of the Commission’s Order
Respondent Haywood EMC argues that “[t]he Commission’s order lacks proper findings and conclusions and a statement of
(a) All final orders and decisions of the Commission shall be sufficient in detail to enable the court on appeal to determine the controverted questions presented in the proceedings and shall include:
(1) Findings and conclusions and the reasons or bases therefor upon all the material issues of fact, law, or discretion presented in the record, and
(2) The appropriate rule, order, sanction, relief or statement of denial thereof.
G.S. 62-79(a) mandates that the Commission has “to find all facts which are essential to a determination of the issues before it, in order that the reviewing court may have sufficient information to determine whether an adequate basis exists, in law and in fact, to support the Commission’s resolution of the controverted issues.” State ex rel. Utilities Comm. v. Mackie, 79 N.C. App. 19, 29, 338 S.E.2d 888, 895 (1986), modified on other grounds and aff’d, 318 N.C. 686, 351 S.E.2d 289 (1987) (citations omitted). “The failure to include all the necessary findings of fact is an error of law and a basis for remand upon N.C.G.S. § 62-94(b)(4) because it frustrates appellate review.” State ex rel. Utilities Comm. v. The Public Staff, 317 N.C. 26, 34, 343 S.E.2d 898, 904 (1986) (citations omitted). See State ex rel. Utilities Comm. v. Carolina Water Service, 335 N.C. 493, 502, 439 S.E.2d 127, 132 (1994); State ex rel. Utilities Comm. v. AT&T Communications, 321 N.C. 586, 588, 364 S.E.2d 386, 387 (1988). However, the Commission is not required to set forth comments regarding “every single fact or item of evidence presented by the parties.” State ex rel. Utilities Comm. v. Nantahala Power & Light Co., 313 N.C. 614, 745, 332 S.E.2d 397, 474 (1985), rev’d on other grounds sub nom., Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, 90 L.Ed.2d 943 (1986). Our Supreme Court has stated that:
The purpose of the findings required by G.S. § 62-79(a) is to provide the reviewing court with sufficient information to allow it to determine the controverted questions presented in the proceedings. . . .
*284 The Commission’s summary of the appellant’s argument and its rejection of the same is sufficient to enable the reviewing court to ascertain the controverted questions presented in the proceeding. That is all that G.S. § 62-79 requires.
State ex rel. Utilities Comm. v. Conservation Council, 312 N.C. 59, 62, 320 S.E.2d 679, 682 (1984).
Respondent Haywood EMC contends that various findings of fact actually are “mere conclusions.” Regarding findings of fact, our Supreme Court has stated:
Findings of fact are statements of what happened in space and time. . . .
The Commission’s mislabeling of its findings and conclusions will not, however, be fatal to its order if certain procedural requirements are met. The judgments and orders of courts and administrative bodies must reflect a basic understanding of how the decision-making process is supposed to work. “Evidence must support findings; findings must support conclusions; conclusions must support the judgment. Each step of the progression must be taken ... in logical sequence; each link in the chain of reasoning must appear in the order itself.” Coble v. Coble, 300 N.C. 708, 714, 268 S.E.2d 185, 190 (1980). As long as “each link in the chain of reasoning” appears in the Commission’s order, mislabeling is merely an inconvenience to the courts.
State Ex Rel. Utilities Comm. v. Eddleman, 320 N.C. 344, 351-52, 358 S.E.2d 339, 346 (1987). See Mackie, 79 N.C. App. at 30, 338 S.E.2d at 896 (a conclusion of law “applies principles of law, rather than a determination of facts from the [parties’] evidence, to resolve the issue”). Here, the Commission’s summary of evidence, findings of fact, and conclusions of law are mixed together in portions of the order entitled inter alia “Findings of Fact,” “Discussion of Evidence and Conclusions,” “Conclusions,” and “Conclusions on Decision.” Proper labeling would have made this Court’s task more efficient, but we nevertheless have been able to separate facts from conclusions in examining appellants’ various assignments of error. After careful scrutiny of the briefs, transcript, and record, we are persuaded that the Commission’s summary of evidence, findings of fact, and conclusions of law satisfy “the limited purpose of N.C.G.S. § 62-79(a).” Eddleman, 320 N.C. at 353, 358 S.E.2d
III. Propriety of Reassignment of M-B Industries
Respondent Haywood EMC argues that “[t]he Commission’s order exceeds its authority under G.S. 62-110.2(d)(2)” in that the portion of the order requiring the reassignment of M-B Industries to Duke Power Company is based upon improper grounds. We agree.
G.S. 62-110.2(d) provides:
(2) The Commission shall have the authority and jurisdiction, after notice to all affected electric suppliers and after hearing, if a hearing is requested by any affected electric supplier or any other interested party, to order any electric supplier which may reasonably do so to furnish electric service to any consumer who desires service from such electric supplier at any premises being served by another electric supplier, or at premises which another electric supplier has the right to serve pursuant to other provisions of this section, and to order such other electric supplier to cease and desist from furnishing electric service to such premises, upon finding that service to such consumer by the electric supplier which is then furnishing service, or which has the right to furnish service, to such premises, is or will be inadequate or undependable, or that the rates, conditions of service or service regulations, applied to such consumer, are unreasonably discriminatory.
G.S. 62-110.2(d)(2). In that the Commission may “order such other electric supplier to cease and desist from furnishing electric service,” it is clear that the Commission, after due deliberation in an appropriate proceeding, may order the reassignment of customers from one electric supplier to another under G.S. 62-110.2(d)(2). Here, our task pursuant to G.S. 62-94 is to discern whether the Commission, after considering the relevant facts and applying the pertinent statute (G.S. 62-110.2(d)(2)), made an allowable judgment, based upon permissible grounds as prescribed by our General Assembly, in its choice of remedy.
G.S. 62-110.2(d)(2) authorizes the Commission to transfer a customer from one electric supplier to another only “upon finding that service to such consumer by the electric supplier which is then furnishing service, or which has the right to furnish service, to such premises, is or will be inadequate or undependable, or that the rates, conditions of service or service regulations, applied to such consumer, are unreasonably discriminatory.” (Emphasis added.) As shown by the italicized portion of the quote, the Commission may only transfer a consumer upon a finding that service “to such consumer” is inadequate or that the rates, etc., when “applied to such consumer” are unreasonably discriminatory. There is nothing in the statute that permits the Commission to require the transfer of one customer for the purpose of letting an electric supplier know that the Commission is serious about the need to solve alleged problems of other customers. Therefore, the Commission has exceeded its authority under the statute.
In our examination of the 5 October 1992 order, we find particularly troubling a specific passage from the section of the order entitled “Conclusions on Decision” which states:
The Commission has concluded that the service complaints in the Quebec substation area indicate a level of service that has been unacceptable and needs to be improved. The most severe remedy would be a transferral of the entire service area to another supplier. Other remedies include an upgrade of the service facilities, or transferral of a portion of the service area to another supplier in order to relieve the load on the Haywood facilities, or some combination thereof.
The Commission further concludes that the best candidate for a transferral of a portion of the Haywood service area to another supplier is the M-B Industries plants. One plant is fifty feet away from an alternative supplier (Duke), its sister plant in the same area is already served by that alternative supplier with a satisfactory level of service, and the third plant (Flame Spray) is some 200 yards from Duke’s lines. No other single customer in the area affects as many employees, and people, as these plants. Transferral of the M-B Industries plants from Haywood to Duke would relieve the load on the*287 troubled Quebec substation. Transferral of the plants would also make it clear to Haywood, and particularly to the Board of Directors of Haywood, the seriousness with which the Commission views the service problems that have been occurring, and the Commission’s determination to press for a resolution of the service problems throughout the Haywood service areas. The plants are apparently the only industrial plants in Transylvania County served by Haywood. It pays Haywood approximately $4,000 per month for the electric service.
(Emphasis added.) While Haywood EMC disputes the Commission’s findings regarding the Quebec substation, it argues that assuming arguendo these findings were true, the Commission’s conclusion that the “[t]ransferral of the M-B Industries plants from Haywood to Duke would relieve the load on the troubled Quebec substation,” is irrelevant to “the requirements of G.S. 62-110.2(d)(2) that the Commission make a finding that Haywood’s service to M-B Industries is or will be inadequate or undependable or that the rates, conditions of service or service regulations are unreasonably discriminatory as applied to M-B Industries.” (Emphasis in original.)
In its conclusions, the Commission ruled that Haywood EMC’s service to all complainants was “inadequate and undependable and that Haywood’s conditions of service and service regulations, as applied to the complainants and to the public witnesses, are arbitrary and unreasonably discriminatory.” While it is obvious from the order that the Commission declined to impose “[t]he most severe remedy . . . [that is,] a transferral of the entire service area to another supplier,” it is also apparent from the record that the poor quality of electric service arising from the “troubled Quebec substation” affected the area’s individual residential consumers as well as the facilities at M-B Industries. Yet the Commission elected to transfer only M-B Industries. Accordingly, it is apparent from the italicized portion of the Commission’s order, supra, that the punitive effect on Haywood EMC of the transfer of its (Haywood EMC’s) largest commercial ratepayer was a major determinative factor in the Commission’s decision to reassign M-B Industries and served as a ground for the Commission’s decision to reassign M-B Industries while leaving the similarly affected residential consumers assigned to Haywood EMC. The last sentence of G.S. 62-110.2(d)(2) expressly delineates the five grounds upon which a transfer may be based: (1) inadequate service; (2) undependable service; (3) unreasonably discriminatory conditions of service; (4) unreasonably
We conclude that authority for a punitive basis for the transfer of customers by the Commission would have to be expressly enacted by our General Assembly. See Utilities Comm. v. Electric Membership Corp., 275 N.C. 250, 166 S.E.2d 663 (1969) (Utilities Commission is a creation of the Legislature and has no authority except insofar as that authority has been conferred upon it by statute). See also Utilities Comm. v. Electric Membership Corp., 276 N.C. 108, 171 S.E.2d 406 (1970); Utilities Comm. v. Edmisten, Atty. General, 291 N.C. 451, 232 S.E.2d 184 (1977). At this time, the Public Utilities Act does not contain such authority. Accordingly, we reverse the Commission’s decision to transfer the M-B Industries plants from Haywood to Duke, G.S. 62-94(b)(2), and we remand for entry of an order reinstating service of these plants by Haywood EMC.
IV. Propriety of Failure to Reassign Residential Complainants
The Public Staff argues that the Commission erred “by failing to order an investor-owned utility to serve the appellants[-residents] and by failing to order Haywood Electric Membership Corporation to cease and desist from providing electrical service to the appellants[-residents].” We disagree.
The Public Staff contends that G.S. 62-110.2(d)(2), supra, mandates the immediate transfer of electric service suppliers upon the entry of the Commission’s determination “that the service provided to the petitioning consumers by the current service supplier [Haywood EMC] is inadequate or undependable, or that the conditions of service and service regulations, as applied to those consumers, is unreasonably discriminatory.” The Public Staff argues that the General Assembly has not authorized a waiting period for transfer proceedings and that the Commission has acted in excess of its statutory authority by unilaterally instituting a delay period through its failure to immediately reassign the residential complainants.
V. Propriety of Exclusion of Expert Testimony Regarding Economic Impact .of Transfer on Nonprofit Electric Supplier
Haywood EMC and NCEMC argue that the Commission erred by excluding the testimony of Gregory L. Booth, an executive vice president of an engineering consulting firm, who would have testified inter alia that “there will be significant and irreparable harm imposed on Haywood EMC and its member/consumers and on NCEMC and its other members if any or all of the service area is transferred to another power supplier.” We agree.
G.S. 62-65 provides:
(a) When acting as a court of record, the Commission shall apply the rules of evidence applicable in civil actions in the superior court, insofar as practicable, but no decision or order of the Commission shall be made or entered in any such proceeding unless the same is supported by competent material and substantial evidence upon consideration of the whole record. Oral evidence shall be taken on oath or affirmation. The rules of privilege shall be effective to the same extent that they are now or hereafter recognized in civil actions in the superior court. The Commission may exclude incompetent, irrelevant, immaterial and unduly repetitious or cumulative evidence. All evidence, including records and documents in the possession of the Commission of which it desires to avail itself, shall be made a part of the record in the case by definite reference thereto at the hearing. Any party introducing any document or record in evidence by reference shall bear the expense of all copies required for the record in the event of an appeal from the Commission’s order. Every party to a proceeding shall have the right to call and examine witnesses, to introduce exhibits, to cross-examine opposing witnesses on any matter relevant to the issues, to impeach any witness regardless of which party first called such witness to testify and to rebut the evidence against him. If a party does not testify in his own behalf, he may be called and examined as if under cross-examination.
(b) The Commission may take judicial notice of its decisions, the annual reports of public utilities on file with the*291 Commission, published reports of federal regulatory agencies, the decisions of State and federal courts, State and federal statutes, public information and data published by official State and federal agencies and reputable financial reporting services, generally recognized technical and scientific facts within the Commission’s specialized knowledge, and such other facts and evidence as may be judicially noticed by justices and judges of the General Court of Justice. When any Commission decision relies upon such judicial notice of material facts not appearing in evidence, it shall be so stated with particularity in such decision and any party shall, upon petition filed within 10 days after service of the decision, be afforded an opportunity to contest the purported facts noticed or show to the contrary in a rehearing set with proper notice to all parties; but the Commission may notify the parties before or during the hearing of facts judicially noticed, and afford at the hearing a reasonable opportunity to contest the purported facts noticed, or show to the contrary.
G.S. 62-65.
G.S. 62-60 provides:
For the purpose of conducting hearings, making decisions and issuing orders, and in formal investigations where a record is made of testimony under oath, the Commission shall be deemed to exercise functions judicial in nature and shall have all the powers and jurisdiction of a court of general jurisdiction as to all subjects over which the Commission has or may hereafter be given jurisdiction by law. The commissioners and members of the Commission’s staff designated and assigned as examiners shall have full power to administer oaths and to hear and take evidence. The Commission shall render its decisions upon questions of law and of fact in the same manner as a court of record. A majority of the commissioners shall constitute a quorum, and any order or decision of a majority of the commissioners shall constitute the order or decision of the Commission, except as otherwise provided in this Chapter.
G.S. 62-60.
It is well established that within its discretion the Commission may agree with a single witness, provided that the evidence supports his or her position, regardless of the number of opposing
Mr. Booth’s testimony was pre-filed by NCEMC and was offered to “evaluate the financial impact which will be imposed on Haywood EMC and its remaining consumers if any or all of the service area is transferred to another utility.” See G.S. 62-66. The testimony was excluded by an order of the Commission entered prior to the first public hearing. G.S. 62-69. Mr. Booth’s testimony stated that “there will be significant and irreparable harm imposed on Haywood EMC and its member consumers and on NCEMC and its other members if any or all of the service area is transferred to another power supplier.” NCEMC argues that the Commission should have considered the financial impact on both Haywood EMC and NCEMC of transferring customers in making its determination of whether to order the transfer of any of Haywood EMC’s customers. NCEMC also argues that such consideration is constitutionally mandated by due process under both the federal and state constitutions. NCEMC further argues that the customer reassignments “will reduce the payment base and force higher rates on the residential members, thereby frustrating the original intent of the REA [Rural Electrification Act of 1936, 7 U.S.C.A. 901 et seq.], i.e., to provide affordable electric service to the rural areas of this country.” Noting its own substantial loans acquired through the Rural Electrification Administration and “made on the basis of existing load and anticipated future load of Haywood and NCEMC’s other members,” NCEMC cites the following passage from a recent federal case, City of Morgan City v. South Louisiana Electric, 837 F. Supp. 194, 199 (W.D.La. 1993), which involved the municipal condemnation of the property of a distribution cooperative, as support for the relevancy of Mr. Booth’s evidence to the Commission’s proceedings:
This Court notes that the federal government, through the REA, has loaned directly or guaranteed loans to Cajun [Electric Power Cooperative, a generation and transmission cooperative] of approximately $3.2 billion. The federal government’s security for these loans is limited to the assets of Cajun and the revenue stream resulting from the sale of electric*293 power generated by the facilities constructed by Cajun to its members/owner distribution cooperatives, including SLECA [a federally financed, nonprofit cooperative], under the All Requirements Wholesale contracts. Loans for the construction of multi-million dollar generating plants were made on the basis of existing load and anticipated future load of SLECA and Cajun’s other member distribution cooperatives with the expectation that those loads would continue and grow in order to generate the revenue stream necessary to repay the loans. The report by the REA details the backgrounds of both Cajun and SLECA including the financial stability of the cooperatives, which is of particular concern to the United States considering the $3.2 billion debt involved. The REA made a detailed analysis of the ability of Cajun and the SLECA to repay these loans and the impact of the proposed expropriation on this repayment. Further, the expropriation would result in a loss of operating margins, as the customers sought to be expropriated by the City of Morgan City are located in SLECA’s highest density service area. Therefore, expropriation of these customers would reduce the payment base and thereby force higher rates on those being served in less dense areas, thereby frustrating the original intent of the REA, i.e., to provide affordable electrical service to the rural areas of this country. Further, the expropriation by stripping SLECA’s densest service area could place repayment itself in jeopardy.
City of Morgan City v. South Louisiana Electric, 837 F. Supp. 194, 199 (W.D.La. 1993) (emphasis added). See G.S. 62-2(3) (declaring our State’s public policy to be “[t]o promote adequate, reliable and economical utility service to all of the citizens and residents of the State”); G.S. Chapter 117 (North Carolina’s version of the federal Rural Electrification Act); G.S. 117-2 (declaring that the “purpose of [the] North Carolina Rural Electrification Authority is to secure electrical service for the rural districts of the State . . . and it is hereby empowered to do” several enumerated activities, including “(12) ... all other acts and things which may be necessary to aid the rural communities in North Carolina to secure electric energy”). See also Membership Corp. v. Light Co., 253 N.C. 610, 616-17, 117 S.E.2d 764, 769 (1961) (“The ‘Rural Electrification Act of 1936,’ USCA, Title 7, § 901 et seq., the Act creating the North Carolina Rural Electrification Authority, G.S. Chapter 117, Art. 1, and the Act providing for the formation of
Supporting the admissibility of Mr. Booth’s testimony, Haywood EMC argues that
It is important for the Court to recognize the important role that electric membership corporations, in general, and Haywood, in particular, have played in the health and welfare of this State and how the Commission’s order, if not reversed, will affect that role.
It is the declared policy of this State to “promote adequate, reliable and economical utility service to all of the citizens and residents of the State.” G.S. 62-2. This policy cannot be accomplished unless all electric suppliers, including Haywood, are financially able to construct and maintain their facilities.
.... Obviously, the loss of this revenue will affect Haywood’s ability to serve its remaining customers and to make the costly improvements required by the Commission. Therefore, this loss of revenues is relevant to the Commission’s decision. Nevertheless, the Commission refused to permit witness Booth to offer evidence showing how the loss of this revenue would affect Haywood’s ability to serve its remaining customers.
The Commission’s decision to exclude this evidence not only violates rules of evidence, it is in direct contravention of the Commission’s obligations under G.S. 62-2 to “promote adequate, reliable and economical utility service to all of the citizens and residents of the State.” The Commission’s decision not to consider any evidence on any harm that its decision may have on Haywood and its remaining customers was a fortiori a decision that the Commission can order a transfer of customers under G.S. 62-110.2(d)(2) without regard to the financial effect of that decision on Haywood. Haywood respectfully suggests that the Commission’s decision to ignore the financial effect of its order on Haywood is in direct conflict with G.S. 62-2.
It is clear that the economic effect on an electric supplier of a transfer of its customers to another electric supplier is not one of the expressly delineated grounds for transfer under G.S. 62-110.2(d)(2). It is also clear that Haywood is a nonprofit corporation, established pursuant to statute: it is owned by and dependent upon its consumer-members. G.S. 117-16 (providing that “[t]he corporate purpose of each corporation formed hereunder shall be to render service to its members only, and no person shall become or remain a member unless such person shall use energy supplied
While we hold that this evidence is admissible pursuant to G.S. 62-65, we note that the weight to be accorded to the testimony lies within the Commission’s sound discretion. See State Ex Rel. Utilities Comm. v. Eddleman, 320 N.C. 344, 358 S.E.2d 339 (1987); Utilities Comm. v. Town of Pineville, 13 N.C. App. 663, 672, 187 S.E.2d 473, 478 (1972). We conclude that Mr. Booth’s testimony does not constitute “incompetent, irrelevant, immaterial and unduly repetitious or cumulative evidence.” G.S. 62-65(a). Accordingly, we hold that the Commission erred by excluding this testimony. G.S. 62-94(b)(4).
VI. Conclusion
Summarizing, we hold that the Commission erred in transferring the facilities of M-B Industries from Haywood EMC to Duke. Accordingly, we remand for entry of an order vacating that portion of the Commission’s 5 October 1992 order transferring M-B Industries from Haywood EMC to Duke and for further proceedings not inconsistent with this opinion. We further hold that the Commission erred in excluding the testimony of expert witness Booth as to the financial impact on Haywood EMC of the transfer of customers. As to the other issues brought forward in these appeals, the Commission’s decision is affirmed.
Affirmed in part, reversed in part and remanded.