El Paso Elec. Co. v. N.M. Pub. Regulation Comm'n.El Paso Elec. Co. v. N.M. Pub. Regulation Comm'n.
Law Offices of Randall W. Childress, P.C., Randall W. Childress, Stacey J. Goodwin, Santa Fe, NM, Tucker Law Firm, P.C., Steven L. Tucker, Santa Fe, NM, for Appellant.
Robert Y. Hirasuna, Santa Fe, NM, for Appellee.
Stelzner, Winter, Warburton, Flores, Sanchez & Dawes, P.A., Nann M. Winter, Albuquerque, NM, Thomas R. Figart,, Las Cruces, NM, Bryant, Schneider-Cook Law Firm, P.A., Daniel A. Bryant, Ruidoso, NM, for Intervenors.
JUDGES
PATRICIO M. SERNA, Justice. WE CONCUR: CHARLES W. DANIELS, Chief Justice, PETRA JIMENEZ MAES, Justice, RICHARD C. BOSSON, Justice, EDWARD L. CHÁVEZ, Justice.
AUTHOR: PATRICIO M. SERNA.
OPINION
SERNA, Justice.
BACKGROUND
{2} EPE is an electric utility company that operates in southern New Mexico. At issue in this case are agreements EPE has with Doña Ana and Otero counties (Counties) regarding franchises granted for the use of county rights-of-way to deliver electricity to county residents and businesses.2 These franchise agreements, codified as county ordinances, impose upon EPE fees for the rights granted. Prior to 1999, EPE passed on franchise fees to all of its customers as part of the base rate for electricity. Since 1999, franchise fees have been collected by EPE through line item charges to customers within the jurisdictions of the respective counties.
{3} The franchise agreement between EPE and Doña Ana County, signed March 9, 1999, requires EPE to pay annually two percent of gross receipts and $105,000 “for and in consideration of the granting of this Agreement, and as rental and/or tax for the occupation and use or easement and right of way over, upon, and beneath the County Property[.]” The Otero County agreement requires EPE to pay annually, “[f]or and in consideration of the right, privilege and franchise herein granted,” “a street rent which is equal to two (2%) percent of the gross receipts of the sale of electricity[.]” The total amounts collect from ratepayers and paid to the Counties by EPE since 2004, and at issue in this appeal, are $288,987 in Otero County and $5,366,804 in Doña Ana County.
{4} The Commission initiated an investigation into these two franchise agreements and issued an order to show cause, dated December 10, 2009, requiring EPE to demonstrate “why the Commission should not find that the franchise fees or taxes imposed under the [Counties‘] franchise ordinances are unlawful under New Mexico statutes, and if so, why the Commission should not” require EPE to immediately stop collecting the fees from customers and refund any fees already collected. No public hearing was ever scheduled on this matter. The Commission issued the Final Order on January 26, 2010, concluding that it had jurisdiction because “franchise fees are rates that are charged in connection with it [sic] utility service and thus are subject to the jurisdiction of the Commission.” The Final Order required EPE to stop passing through franchise fee charges and to refund to the ratepayers the amounts collected since 2004.
{5} On February 22, 2010, a panel of this Court granted an emergency stay of the Commission‘s order pending resolution of this appeal on the merits and granted the Counties’ motion to be added as parties. This case is before us pursuant to
DISCUSSION
Standard of Review
{6} The Commission, though a constitutionally created body,
{7} Our de novo review of the Commission‘s jurisdiction requires us to engage in statutory construction. “When construing statutes, our guiding principle is to determine and give effect to legislative intent.” NMIEC, 2007-NMSC-053, ¶ 20. “[W]e strive to read related statutes in harmony so as to give effect to all provisions[.]” Id. Unless an ambiguity exists, we apply statutes as written. Albuquerque Bernalillo Cnty. Water Util. Auth. v. N.M. Pub. Reg. Comm‘n (ABCWUA), 2010-NMSC-013, ¶ 52, 148 N.M. 21, 229 P.3d 494.
Commission Jurisdiction Over Public Utility Rate Making
{8} The Legislature mandated public utility regulation in the Public Utility Act (PUA),
{9} The PUA defines “rate” as
every rate, tariff, charge or other compensation for utility service rendered or to be rendered by a utility and every rule, regulation, practice, act, requirement or privilege in any way relating to such rate, tariff, charge or other compensation and any schedule or tariff or part of a schedule or tariff thereof.
{10} This Court does not interfere when the Commission exercises its expertise in rate cases. See id. ¶¶ 18, 19 (concluding that the Commission had jurisdiction over tariff filed because the Legislature “has specifically provided that the [Commission] may review local land use laws affecting utilities” when reviewing rate cases); Cnty. of Bernalillo v. N.M. Pub. Reg. Comm‘n (In re Adjustments to Franchise Fees), 2000-NMSC-035, ¶ 18, 129 N.M. 787, 14 P.3d 525 (holding that the Commission had jurisdiction to review rates, and thus delay implementation of
{11} We have vacated, however, Commission orders issued in excess of its jurisdiction. See N.M. Elec. Serv. Co. v. N.M. Pub. Serv. Comm‘n, 81 N.M. 683, 685, 472 P.2d 648, 650 (1970) (finding no implied authority for the Commission to treat monies refunded to utility as a rate that the Commission could order passed through to customers); see also Plains Elec., 1998-NMSC-038, ¶ 12 (stating that the conveyance of land “which does not affect the utility services provided by” the utility was outside the Commission‘s jurisdiction over the sale of utility facilities); United Water, 121 N.M. at 275, 280, 910 P.2d at 909, 914 (concluding that the Commission improperly exercised jurisdiction over a municipality that had “not elected to submit itself to . . . regulation“); Morningstar Water, 120 N.M. at 585, 904 P.2d at 34 (holding that the Commission may only exercise jurisdiction over utilities expressly included in the scope of the PUA); Summit Props., Inc. v. Pub. Serv. Co. of N.M., 2005-NMCA-090, ¶¶ 11, 13, 138 N.M. 208, 118 P.3d 716 (stating that the Commission has no jurisdiction over “contracts a utility enters into with private parties” as the claims arising under those contracts “are not related to the reasonableness of any rates established by the Commission“). The disposition of this case turns, therefore, on whether or not franchise fee charges are properly considered rates and thus fall within the Commission‘s jurisdiction.
Franchise Agreements and Franchise Fee Charges Are Not Rates
{12} Under
{13} While
A franchise granted by a municipality to a public utility merely entitles the utility to use the municipality‘s streets and rights of way to construct and operate its facilities and distribution system—that is, to run its pipes, poles, wires, and cables, and to operate its towers, transformer stations, and other necessary structures. . . . In exchange for granting a franchise, a municipality may exact consideration from the utility, usually in the form of a franchise fee. . . . If the municipality chooses to forego some or all of this financial remuneration . . . that is up to the municipality and the utility and is a matter of local concern.
115 N.M. 521, 533, 854 P.2d 348, 360 (1993) (internal citations omitted). Unlike rates, franchise agreements and the fees imposed thereby are a matter of local concern, whether that locality is a county or municipality. Franchise fees are not expenses measured on a state-wide scale that contribute to a utility‘s profit; they are monies collected by the utility, in an amount contracted for with a local government, and passed through to that local government.
{14} The similar treatment of franchise fee charges and gross receipts taxes supports the conclusion that the Legislature intended to remove franchise fee charges from the utility rates.
{15} Nor are franchise fees taxes that the Commission may consider when setting rates.
{16} Contrary to the Commission‘s suggestion, franchise fees also do not come within the Commission‘s jurisdiction by analogy to fuel and purchased power adjustment clauses, over which the Commission does have jurisdiction under
{17} Our conclusion today does not leave franchise agreements and related charges passed on to public utility customers free from review. The proper method for challenging the costs imposed by the ordinances is the local democratic political process. See City of Sunland Park v. N.M. Pub. Reg. Comm‘n, 2004-NMCA-024, ¶ 25, 135 N.M. 143, 85 P.3d 267 (stating that the Commission “was created to serve as a watchdog for the public interest” but that it did not have jurisdiction where not vested by the Legislature, which entrusted the public good to a municipality). Additionally, the validity of the ordinance itself may be challenged in a court properly vested with jurisdiction, as noted by the Commission in its Final Order. See, e.g., Chavez v. City of Albuquerque, 1998-NMCA-004, ¶ 34, 124 N.M. 479, 952 P.2d 474 (noting that the proper venue for challenging an ordinance is the district court). If the franchise agreements between EPE and the Counties are unlawful or unreasonable, it is for a body other than the Commission to decide.
CONCLUSION
{18} The Commission improperly construed its jurisdiction over rates to include franchise fee charges, pursuant to local franchise fee ordinances, on ratepayer bills. The Final Order is hereby vacated and annulled.
{19} IT IS SO ORDERED.
PATRICIO M. SERNA, Justice
WE CONCUR:
CHARLES W. DANIELS, Chief Justice
PETRA JIMENEZ MAES, Justice
RICHARD C. BOSSON, Justice
EDWARD L. CHÁVEZ, Justice
Topic Index for El Paso Elec. Co. v. N.M. Public Relations Comm‘n, Docket No. 32,183
ST STATUTES
ST-AP Applicability
ST-IP Interpretation
ST-LI Legislative Intent
PU PUBLIC UTILITIES
PU-EL Electric
PU-RM Rate Making
AL ADMINISTRATIVE LAW AND PROCEDURE
AL-AA Administrative Appeal
AL-LI Legislative Intent