In Re West River Elec. Ass'n, Inc.
[¶ 1.] Rapid City intends to expand its waste water treatment plant. West River Electric Association, Inc. (WREA) and Black Hills Power, Inc. (BHP) are in a dispute over the right to provide the increased electric service necessary for the expansion. WREA contends that it has the right to provide the new service because the plant is located within its service territory. BHP contends that it has the right to provide new service as the plant grows because it has provided the past service at that “location.” The Public Utilities Commission (PUC) ruled that BHP’s statutory right to continue to serve a “location” did not include the right to increase the electricity provided because the new load required changes in BHP’s distribution system. The circuit court reversed, concluding that the right to continue to serve a “location” meant the right to serve a geographical location. Therefore, the court held that BHP was entitled to provide the increased load at the plant. We affirm the circuit court.
FACTS AND PROCEDURAL HISTORY
[¶ 2.] In 1975, the Legislature enacted the “Territory Act,” SDCL ch. 49-34A, which completely revised the electric utilities’ territories in which they provide electrical service. This Act was adopted to reduce wasteful spending and the duplication of services in the industry. The Act gave the PUC the power to assign specific service areas to each utility. These areas were geographically defined and provided boundaries in which each utility enjoyed the right to provide exclusive service.
[¶ 3.] However, the Act also authorized utilities to continue to serve existing “locations” where they were serving “a customer.” It provided, “[e]ach electric utility has the exclusive right to provide electric service at retail at each and every
location
where it is serving
a customer
as of March 21, 1975,” even if that location was in another utility’s territory.
[¶ 4.] The Rapid City waste water treatment plant is one such frozen customer. The land on which the plant is situated is within the territory that was assigned to WREA. However, BHP was providing service to that location on March 21, 1975. Therefore, BHP had the “exclusive right” to continue to provide service at that “location.” This dispute developed because the plant’s need for electricity has increased, and the parties are unable to agree whether providing the increased load is within this statutory right to provide service at a “location.”
[¶ 5.] The origin of this dispute actually began to develop in the 1960s. In 1965, the city purchased forty acres of land for the waste water treatment plant. Because WREA was already providing electric service to that area, it constructed a 3-phase primary voltage distribution line to con
[¶ 6.] However, in 1967, pursuant to the territory law in effect at that time, voters in Rapid City approved a city council proposal to change service providers and “accept service from Black Hills Power & Light for furnishing power to the new waste water treatment plant [then] under construction.” Consequently, in 1967, BHP also built a primary distribution line to the plant, and BHP became the exclusive provider of electricity at the plant through one service point (Service Number One).
[¶ 7.] In 1973, Rapid City purchased an additional eighty acres of land. This land is adjacent to the original forty acres on which the plant is located. The new land was important to the City because it provided access to Rapid Creek: “because that’s where after they’ve treated the water where it goes and they planned to grow as the city did.... [T]hey bought extensive land so that they’d have that taken care of as they then grew into the future.”
[¶ 8.] BHP continued to service the plant via Service Number One from 1967 until 1987. In 1987, BHP installed a second service point at the plant (Service Number Two). BHP did not consult with WREA when this installation occurred. Although WREA subsequently learned of Service Number Two, it took no action at that time to contest BHP’s right to provide that new service.
[¶ 9.] Now, Rapid City is in the process of expanding the plant further. Consequently, four new electric service points will be installed. These are referred to as Service Numbers Three, Four, Five, and Six. This expansion will require new transformers and the extension of primary voltage wires. The new service points will, however, be located at the same plant on the original forty acre site.
[¶ 10.] BHP claims the right to provide all needed service at all six service points. However, WREA also claims the right to provide the new service added, or to be added, including the 1987 addition of Service Number Two. WREA contends that BHP’s provision of service to Service Numbers Two through Six violates a second provision of the Territory Act. That provision generally prohibits one utility from rendering or extending service into the assigned service area of another utility.
[¶ 11.] On a petition for declaratory ruling, the PUC agreed with WREA, determining that WREA had, the right to provide the new service at Service Numbers Two through Six. It concluded that “the [statutorily protected] ‘location’ served by Black Hills at the Plant as of March 21,1975, was [only] such service as could be provided by means of the primary distribution line and transformer installed at such time to serve Service Number One without the necessity for extending primary voltage lines.” (Emphasis added.) Because the PUC' ruled that the right to serve a “location” was restricted to that level of service available under the distribution system that existed in 1975, it concluded that “[t]he Plant is within West River’s assigned service territory and West River has the right to provide all electric service at retail to the Plant with the exception of the service provided by Black Hills to Service Number One, which Black Hills was providing as of March 21, 1975.”
[¶ 12.] The circuit court reversed the PUC’s interpretation of the term “loca
The 120 Acres is an undivided parcel of real property, that is not divided by a public road, a body of water, or other natural geographic features, and has never been legally platted or subdivided by Rapid City, and, as such, comprises a uniform “location” where Black Hills has served a customer since 1967.
The court ultimately declared that BHP had the right to provide the new service at the Rapid City waste water treatment plant because it was within the contiguous 120 acre tract.
[¶ 13.] WREA and the PUC appeal the circuit court’s decision and raise the following questions: (1) whether BHP is rendering or has extended service within WREA’s territory in violation of the second sentence of
Whether the legislature intended the word “location” to be a geographically based concept, or whether it intended that the right to serve a “location” was limited to the level of service that was provided by means of the distribution system existing on March 21, 1975.
ANALYSIS AND DECISION
[¶ 14.] The Territorial Act, found in SDCL ch. 49-34A, “evidences a legislative intent for [the] PUC to have broad inherent authority in matters involving utilities in this state.” In
re Northern States Power Co.,
[¶ 15.] Statutory construction is an exercise to determine legislative intent. In analyzing statutory language:
[W]e adhere to two primary rules of statutory construction. The first rule is that the language expressed in the statute is the paramount consideration. The second rule is that if the words and phrases in the statute have plain meaning and effect, we should simply declare their meaning and not resort to statutory construction.
Goetz,
Each electric utility has the exclusive right to provide electric service at retail at each and every location where it is serving a customer as of March 21,1975, and to each and every present and future customer in its assigned service area. No electric utility shall render or extend electric service at retail within the assigned service area of another electric utility unless such other electric utility consents thereto in writing and the agreement is approved by the commission consistent with § 49-34A-55. However, any electric utility may extend its facilities through the assigned service area of another electric utility if the extension is necessary to facilitate the electric utility connecting its facilities or customers within its own assigned service area[.]
(Emphasis added.)
[¶ 17.] The first sentence of this statute grants two rights. First, it grants the exclusive right to continue to serve each and every location where a utility was serving a customer on March 21, 1975. Second, it grants the right to serve each and every present and future customer in the utility’s assigned service area. In a previous ease involving this language we observed that:
By the terms of this statute, the Legislature provided two specific types of protection. First, it assured that each utility would be granted all future service rights within its designated service area; and second, it protected individual service existing at the time the franchise was granted.
In re Clay-Union Elec. Corp.,
[¶ 18.] WREA and the PUC support their position by emphasizing our foregoing reference to the phrase “individual
service.”
They also rely on the legislative prohibition on the “extension of
service
” in the second sentence of
[¶ 19.] The PUC concedes that the dictionary definition of a “location” is “[a] place where something is or could be located; a site.” Nevertheless, it insists that its limiting construction is reasonable and consistent with the Territorial Act’s objectives. According to the PUC, its “narrow construction of the term ‘location’ [is] appropriate .... Application of the term in a given case should be
centered on the electric distribution system ”
since the original territory assignments were “based on the electric distribution system and not on customer property boundaries or customer choice.” However, we observe that
[¶ 20.] The PUC and WREA also argue that “the term ‘location’ should be ... construed
in pari materia
both with the term ‘extended electric service’ in the second sentence of
[¶ 21.] We also believe that the PUC’s and WREA’s interpretation of “location” fails to give due regard to the plain meaning and effect of the phrase “exclusive right to provide service at each and every location where it is serving a cus tomer.As we have previously stated:
The intent of a statute is determined from what the legislature said, rather than what the courts think it should have said, and the court must confine itself to the language used.
Words and phrases in a statute must be given their plain meaning and effect. When the language in a statute is clear, certain and unambiguous, there is no reason for construction, and the Court’s only function is to declare the meaning of the statute as clearly expressed.
Martinmaas v. Engelmann,
[¶ 22.] In this case, the ordinary meaning of the word “location” is a geographical area. Black’s Law Dictionary defines “location” as: “1. The specific place or position of a person or thing.... 3.
Real Estate.
The designation of the boundaries or a particular piece of land, either on the record or on the land it
[¶ 23.] We have previously recognized this geographically centered basis for the Act. In
Clay-Union,
[¶ 24.] We also note that shortly after the Territory Act was passed, the PUC itself declined to limit “location” service rights to some level of service or some distribution system that was in existence in 1975. Instead, the PUC utilized the geographically-based definition, concluding that the right to provide service to a new manufacturing plant, built partially on the site of what had previously been a farmhouse and trailer, “constituted the same location” within the meaning of
[¶ 25.] We acknowledge the PUC’s argument that because it is an administrative agency, it is not bound by stare decisis,
3
and therefore it can redefine
[¶ 26.] We conclude that the plain meaning of the phrase “the exclusive right to provide electric service at retail at each and every location where it is serving a customer” contains no restriction that limits that right to only provide a level of electric service under some type of distribution system that the PUC identifies today. Rather, “location” denotes a place where something is or could be located; a site. Therefore,
[¶ 27.] Affirmed.
Notes
.
. Although we reversed on other grounds, the PUC's view of the statute shortly after it passed is instructive.
. In the judicial setting, previously decided questions of law involving similar fact situations often provide precedential value, embodying the concept of stare decisis. Both
. The PUC indicates that utility policy has changed since the 1975 Act. In a conclusion of law, the PUC attempts to justify its new interpretation, reasoning:
In the Commission’s opinion, [today's] construction is bolstered by the elapse of twenty-seven years since passage of the 1975 Territory Act. Early in the territorial consolidation process, there may have been greater justification to weigh decisions in favor of an expansive definition of "location” to enable the serving utility to avoid a stranding and wasting of an investment undertaken in good faith without knowledge of the potential stranding effect of territory assignments. As time passes, however, investments in facilities made prior to 1975 have undergone normal depreciation, and less justification eventually remains to apply an expansive reading of “location” and increase the scope of anomalous services to recover fully depreciated or almost fully depreciated costs.
. BHP asks this Court adopt the reasoning of the circuit court and an Illinois appellate court, which held that:
In order to constitute a separate location, there must be some feature of the area in question which would set it apart from the surrounding parcels. A public road, a bodyof water, or a legal division (such as platting or subdividing the land) all could serve to distinguish one location from the surrounding area.
Coles-Moultrie Elec. Coop. v. Illinois Commerce Com'n,