In Re Declaratory Ruling of Northwestern Public Service Co.
[¶ 1] On January 3, 1995, the Public Utilities Commission (PUC) authorized Northwestern Public Service Company (NWPS) to replace Northern Electric Cooperative (NEC) as supplier of electricity to Hub City, Inc. NEC appealed to the circuit court, Fifth Judicial Circuit. There, the PUC’s decision was overturned. The PUC and NWPS appeal to this Court. Here, the circuit court is affirmed.
BACKGROUND
[¶ 2] In 1977 Safeguard Automotive Corporation (Safeguard) operated a manufacturing plant in the Aberdeen Industrial Park. The plant was located in the assigned service area of NWPS. Its electrical needs were served by that utility.
[¶3] That same year a division of Safeguard, Safeguard Metal Casting (Division), planned to build an addition, a foundry, onto the manufacturing plant. The foundry too would be within the assigned service area of NWPS. However, due to a rate advantage offered by NEC, Division petitioned the PUC for relief from its obligation to take service from NWPS.
[¶ 4] Division’s petition was based on
[¶5] On December 21, 1977, an “Agreement For Electric Service” (Agreement) was entered into obligating Division to purchase a minimum of 2000 kilowatts of electric power per month from NEC at a specified rate. The term of the agreement was set at five years. After that time, either party could terminate the agreement by giving twelve month’s written notice.
[¶ 6] In 1986 Division’s foundry ceased operations. The physical plant was converted to use as a warehouse. In 1989 Safeguard’s successor, Hub City, Inc. (Hub City) purchased the foundry site from Division. It continued to be used as a warehouse until 1993 when Hub City began to move in some of its production processes.
*927 [¶7] In June 1993 Hub City informed NEC that it wanted to be served electricity by one supplier, NWPS, at the manufacturing plant and foundry addition, and asked NEC to coordinate with NWPS to accomplish single utility service. The cost of electricity from NWPS would be below the cost incurred through NEC. In March 1994 Hub City notified NEC to end electric service to the foundry site as of June.
[¶ 8] In May 1994 NWPS petitioned the PUC for a declaratory ruling framing the issue this way:
[¶ 9] Should Hub City be allowed to terminate the former Safeguard Metal Casting Division electric service agreement with Northern Electric Cooperative, Inc., and receive electric service from Northwestern Public Service Company for its total plant?
[¶ 10] NEC intervened. The case was submitted on stipulated facts and affidavits (regarding the intent of the parties to the Agreement). The PUC decided in favor of NWPS, concluding that a switch in suppliers was justified by “significant changes in circumstances,” and that the agreement provided Division (and its successor, Hub City) a contractual right to terminate NEC as its electric supplier.
[¶ 11] On appeal to circuit court, the PUC’s decision was reversed. First, the circuit court read certain provisions of
[¶ 12] NWPS and the PUC appeal.
ISSUES
[¶ 13] The issues are (1) whether the PUC predicated its decision on a mistake of law, and (2) whether the PUC acted in excess of its authority. These are issues of law fully reviewable without deference to legal conclusions drawn by either the PUC or the circuit court.
See Egemo v. Flores,
MISTAKE OF LAW
[¶ 14] The resolution of the first issue turns on the legislative intent of various provisions of Chapter 49-34A of the South Dakota Codified Laws. In reading these statutes we are guided by certain familiar rules. The intent of the legislature is “derived from the plain, ordinary and popular meaning of statutory language.”
Whalen v. Whalen,
[¶ 15] In 1975 the legislature enacted the “South Dakota Territorial Integrity Act” (Act), now codified at Chapter 49-34A. The policy underlying the Act was “elimination of duplication and wasteful spending in all segments of the electric utility industry.”
Matter of Certain Territorial Elec. Boundaries (Mitchell Area),
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[¶ 16] The Act contains several provisions whereby electrical consumers may have their provider changed.
[¶ 17] In 1977 Hub City’s predecessor availed itself of one of these provisions,
Notwithstanding the establishment of assigned service areas for electric utilities provided for in §§ 49-34A-43 and 49-34A-44, new customers at new locations which develop after March 21, 1975, located outside municipalities as the boundaries thereof existed on March 21,1975, and who require electric service with a contracted minimum demand of two thousand kilowatts or more shall not be obligated to take electric service from the electric utility having the assigned service area where the customer is located if, after notice and hearing, the public utilities commission so determines after consideration of the following factors:
(1) The electric service requirements of the load to be served;
(2) The availability of an adequate power supply;
(3) The development or improvement of the electric system of the utility seeking to provide the electric service, including the economic factors relating thereto;
(4) The proximity of adequate facilities from which electric service of the type required may be delivered;
(5) The preference of the customer;
(6) Any and all pertinent factors affecting the ability of the utility to furnish adequate electric service to fulfill customers’ requirements.
[¶ 18] The PUC and NWPS focus on this statute and suggest that after NEC was assigned and service extended, Division and its successors retained a right to be assigned to the service area of NWPS upon the PUC’s determination of changed circumstances. We disagree.
[¶ 19] By reading
[¶20] The “retained right” alluded to by the PUC and NWPS is illusive when reading
[¶ 21] To subscribe to the “retained right” theory of the PUC and NWPS would be to ascribe an intent to the legislature contrary to the policy underlying the Act. The result: duplication of services and wasteful spending, the precise evils the Act was designed to avoid. In this case NEC lines would be stranded. NWPS would incur the expense of extending lines to the site. The change
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would cost NWPS $5,400 and waste NEC’s capital investment of $80,065. Ultimately these costs would be passed on to the customers of the utilities. We do not believe the legislature intended such a result and decline to read
[¶22] The PUC and NWPS also assert that the PUC may authorize a change in electrical providers pursuant to its implied powers where there is a change of circumstances.
[¶ 23] This Court has recognized that the PUC has certain implied powers. In the
Matter of Northern States Power Co.,
[¶24] The standard of guidance under
[¶ 25] The PUC’s declaratory ruling in this case falls outside the scope of its implied powers. First, the conditions which exist in this case are not in
[¶ 26] The circuit court is affirmed on this issue.
EXCESS AUTHORITY
[¶ 27] The second issue concerns whether the PUC exceeded its authority by interpreting and enforcing the electric service agreement between Hub City and NEC.
[¶ 28] There are two types of electric utilities involved in this ease. NEC is a rural electric cooperative. NWPS is a public utility. Chapter 49-34A provides that the PUC has different authority over each type of utility. A “public utility” is defined as:
any person operating, maintaining or controlling in this state equipment or facilities for the purpose of providing gas or electric service to or for the public in whole or in part,.... However, the term does not apply to an electric or gas utility owned by a municipality, political subdivision, or agency of the state of South Dakota or any other state or a rural electric cooperative as defined in § 47-21-1 for the purposes of §§ 49-34A-2 to 49-34A-4, inclusive, §§ 49-34A-6 to 49-34A-41, inclusive, and § 49-34A-62[.]
[¶ 29] ‘While the expertise of the administrative agency is recognized, the agency
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must lend credence to the guidelines established in the statutes.”
Matter of Certain Territorial Electric Boundaries (Mitchell Area),
The commission shall regulate to the extent provided in this chapter every public utility as defined herein. The commission may promulgate rules pursuant to chapter 1-26 in furtherance of the purposes of this chapter concerning:
(1) Procedures and requirements for applications for rate and tariff changes;
(2) Requirements for gas and electric utilities to maintain and make available to the public and the commission records and information;
(3) Requirements and procedures regarding customer billings and meter readings;
(4) Requirements regarding availability of meter tests;
(5) Requirements regarding billing adjustments for meter errors;
(6) Procedures and requirements for handling customer disputes and complaints;
(7) Procedures and requirements regarding temporary service, changes in location of service and service interruptions;
(8) Standards and procedures to ensure nondiscriminatory credit policies:
(9) Procedures, requirements and record-keeping guidelines regarding deposit policies;
(10) Procedure, requirements and record-keeping guidelines regarding customer refunds;
(11) Policies for refusal of gas or electric service;
(12) Policies for disconnection and transfer of gas and electric service;
(13) Customer payment plans for delinquent bills; and
(14) Requirements regarding advertising.
[¶ 30] The PUC is not a court, and cannot exercise purely judicial functions.
Application of Dakota Transportation, Inc.,
As a general rule administrative agencies, boards, and commissions cannot consider, or adjudicate, contractual rights and obligations between parties. Hence they cannot pass on the validity of, or enforce, nor can administrative agencies, boards, or commissions change or annul contracts, except where they have been granted power by organic or valid statutory enactment to do so.
Williams Elec. Coop.,