Case Information
*1 I’
The Attorney General of Texas Smeptember 10, 1985 JIM MATTOX
Attorney General
Supreme Court Building [2548] APSE. TX. 7a71+ P. 0. Box 12548 Mr. Philip F. Riclcetts Public Utility Colmoission of Texas Chairman of the C~xmnission Opinion No. JM-353 Re: Authority of the Public Telex 9101874.1367 [51214752501] Telecopier 512/475-0266 Austin, Texas 7:x157 Shoal Creek :3oulevard Suite 400N 7800 Utility Commission of Texas to certificate facilities of co- generators making retail sales
of electricity 714 Jackson, Suite 700 Dallas, TX. 75202.4506 Dear Mr. Ricketts: 214i742.8944
You ask whether the Public Utility Commission of Texas [PUC] has 4824 Alberta Ave., Suite 160 El Paso, TX. 79905-2793 [91515333484] authority under section 49(a) of the Public Utility Regulatory Act, article making retail sale:; of electricity. V.T.C.S., to certificate facilities of cogenerators 1446c. IOOt Texas. Suite 7W Houston. TX. 77002-3111 [71312235886] produces both elfictric energy and steam, heat, or some other form of useful energy that it uses for its own industrial purposes. 16 U.S.C. federal law before addressing your specific question. A cogenerator We will proTide some background about cogenerators and relevant 1796(18)(A) (19i32); Federal Energy Regulatory Commission V. ace Broadway, Suite 312 Mississippi, 456 U.S. 742, 750 n. 11 (1982); Attorney General Opinion Lubbock. TX. 79401-3479 uw-45 (1979). Cogenerators may produce excess electricity, which they aw747.5238 traditionally hax.e been unable to market because electric utilities
have been relucl.a.ut to purchase from them. Id. Some intrastate 4309 N. Tenth, Suite S utilities have refused to connect with other syzms to avoid being McAllen. TX. 78501.1665 subject to the full range of federal regulation. American Paper 512/682-4547 Institute V. American Electric Power, 461 U.S. 402, 422 n. 12 (1983). 200 Main Plaza, Suite 400 San Antonio. TX. 78205-2797 [51212254191] enacted provisions encouraging increased use of excess electricitv produced by a ccgenerator. Federal Energy Regulatory Commission v: As part of 1978 legislation designed to conserve energy, Congress
Mississippi, 9~; Public Utility Regulatory Policies Act of 1978, 16 U.S.C. 1824a-3 (1982). The statute directs the Federal Energy An Equal OppOrtunitYI Regulatory Commission [FFRC] to promulgate rules setting rates for Affirmative Action Employer
purchases and sales of electric energy between "qualifying" cogenerators. FISRC is to establish the size, fuel use, and fuel efficiency requixments of a "qualifying cogeneration facility." 16 U.S.C. 5796(18)(D) (1982). Its rules are to require that electric utilities offer to buy electricity from and sell it to cogenerators; state regulatory agencies are required to implement these rules. 16 U.S.C. §824a-3 (,a:~ , (0, (h) (1982). Qualifying cogeneration facilities may be exempted by FERC rule from *2 0X-353) Mr. Philip F. Ricketts - P#lge 2
State laws and ::ogulations respecting the rates, or respecting .:Ile financial or organizstional regulation, of electric utilities . . . if the Commission determines such exemption is necessary to encourage cogmleration. . . .
16 U.S.C. 3824a-3(c) (1982).
In light of 16 U.S.C:. section 824a-3, the Texas Legislature amended the Public Utilit:ies Regulatory Act [PURA]. Senate Bill No. 605 amended the definitions of "public utility" in subsection 3(c) of article 1446~. V.T.C.S., as follows:
(12) The tern 'public utility' or 'utility,' when used in this Act, includes any person, corporation, rive,c authority, cooperative corpora- tion, or any csnnbination thereof, other than a municipal corporation or a water supply or sewer service corporatfon. or their lessees, trustees, and receivers, now or hereafter owning or opera- ting for compenf,ation in this state equipment or facilities for:
(1) producing, generating, transmitting, dis- tributing, sell.ing, or furnishing electricity ('electric utilj.ties' hereinafter) provided. how- ever, that this E:efinition shall not be construed to apply to or -include a qualifying small power producer or qual:.fying cogenerator, as defined in Sections 3(17)(D) and 3(18)(C) of the Federal Power Act, as- amended (16 U.S.C. Sections 796(17)(D) and 726(18)(C)). . . . (Emphasis added).
Acts 1981, 67th Leg., ch. 31. at 70; codified at V.T.C.S. art. 1446c, 03, subsection (c) (added l.anguage emphasized). The Bill Analysis to Senate Bill No. 605 states in part
The [CogeneratiNx1] Task Force determined that a need exists to modify Texas law to comply with the federal mandate that the states act in such a way that cogenerato.:s will not be treated as 'public utilities.' Potential cogenerators have not fully pursued production of electric power by co- generation due to the PUC designation as 'public utility.' Give~l the opportunity to sell surplus power back to t,h,e utility companies, industrials and private individuals would have the incentive to actively develop cogeneration plants, sources of valuable energy.
Mr. Philip F. Ricketts - Pa8e 3 (JM-353)
Bill Analysis to Senate B:J.l No. 605 prepared for House Committee on State Affairs, filed in Bj.ll File to Senate Bill No. 605. 67th Leg., Legislative Reference Libr,s:cy (1981).
The 1981 amendment to subsection 3(c) removed cogenerators from the definition of "public utility," and therefore rendered many PUPA provisions inapplicable to :wch entities.
The question you present is whether the 1981 amendment to section 3(c) rendered article VII: of PURA (sections 49 through 62). which governs certificates of ~:onvenience and necessity, inapplicable to qualifying cogenerators. At the time the legislature added the language regarding cogeneretors to section 3(c), article VII of PURA contained the following language:
Sec. 49. For the purposes of this article only: (a) 'Retail public utility' means any person, corporation, [water supply or sewer service corporation,] m~~n.icipality, political subdivision or agency, or cooperative corporation, now or hereafter operaMng. maintaining, or controlling in Texas facilit:Les for providing retail utility service. 'Public utility' does not include any (b) corporat?on, municipality, political sub-
person, division or ag&cy, or cooperative corporation under the jurisd;ction of the Railroad Commission. [For the purpos& of this article only. 'public utility' includ~:s a water supply or se&r service corporation]. (Emphasis and brackets added).
Art. 1446c, §49 (language Ln brackets added by Acts 1979, 66th Leg., ch. 57, 54, at 95; unde:r:.ined language deleted by Acts 1983, 68th Leg., ch. 263, 524 at 1222,).
The point of content:ton in the briefs submitted to us is whether the exemption of cogenera’rors from the definition of "public utility" in section 3(c) automatically exempted cogenerators from the defini- tion of "retail public utility" in section 49. Those who take the position that a cogenerator can no longer be a "retail public utility" argue that "retail publfc utility" in section 49 is a subset of "public utility- in section 3(c) and that "retail public utilityW can, therefore, be no broader than "public utility" except insofar as section 49 explicitly broafdens the section 3(c) definition of "public utility." Since section 49 does not list cogenerators as "retail public utilities," they e,rgue, cogenerators cannot be "retail public utilities." Those on the other side of the issue argue that "retail public utility" in secticn 49 is to be read without reference to the *4 (JM-353) Mr. Philip F. Ricketts - Page 4
definition of "public utility" in section 3(c). Thus, because the legislature did not amend section 49 to exclude cogenerstors. they argue, cogenerators can sl:ill be "retail public utilities." Neither interpretation is fatuous; nor is either interpretation wholly satisfactory.
Logic and good draf'ting would dictate that, having already defined "public utility," the authors of PURA would define "retail public utility" as a "public utility" with the characteristic "retail." The language of section 49, however, suggests that they did not do so. If the authors of the act had intended to define "retail public utility" as a subset of "public utility" in section 3(c), they could have simply written,
A 'retail public utility' is a public utility that provides retail :;ervices . . . . For the purposes of this Act only, municipalities . . . are public utilities.
Instead, the definition of "retail public utility" consists of a seemingly comprehensive list of included entities, as if it were written from scratch. Aloo, the language in section 49 is not con- sistent with the language in section 3(c). For example, section 49 uses "municipality," while section 3(c) uses "municipal corporation." Thus, both the structure and wording of section 49 suggest that section 49 was originally ,tiritten without reference to section 3(c).
Another reason for assuming that article VII was written without reference to section 3(c) is that the term "public utility" appears repeatedly in article VI:: -- "retail public utility" appears only twice -- in provisions that logically apply to all entities that must obtain a certificate of convenience and necessity under article VII. Applying the section 3(c:s definition of "public utility" to those provisions would exclude "retail public utilities" from the scope of those provisions. We think such a reading would be nonsensical. The supreme court came to the s.nme conclusion& City of Coahoma v. Public Utility Commission, 626 S.W.2d 488 (Tex. 1981). In Coahoma the court considered whether "pub1.i.c utility" in section 53 included a municipality, which is- not a "public utility" as defined in section 3(c) but is a "retail pu>:Lic utility" under section 49. The court held that "public utility" in section 53 included a "retail public utility," because, given the obvious purpose of article VII, it would be unreasonable to conclude that the legislature meant "public utility" as defined in s'ection 3(c) when it used the term "public utility" in section 53. Thus,, Coahoma supports the argument that article VII was written without reference to section 3(c).
Given the wording of article VII and the sensical construction of the article, we think it is reasonable to conclude that the legisla- ture did not Intend "rel:ail public utility" in section 49 to be *5 Mr. Philip F. Ricketts - PiIge 5 (JM-353)
limited by the definiticln. of "public utility" in section 3(c). Further, we think that when the legislature exempted cogenerators from the definition of "public Iutility" in section 3(c), it assumed that the amendment would not wempt cogenerators from the definition of "retail public utility" jn section 49. The bill analysis of that amendment indicates that the legislature's intent was to give co- generators "the opportunity to sell surplus power back to the utility companies." Bill Analysi:; to Senate Bill No. 605, supra, (emphasis added). Nothing in the 1c:gislative history indicates that the legis- lature intended to encourage cogenerators to make retail sales of electricity. Also, the bil:L analysis states that the amendment was to bring Texas law into complL.ance with the federal mandate. The mandate of the federal law on it:; face is that state regulation should not discourage cogenerators fwm selling electricity to and buying elec- tricity from utility companies See also 16 U.S.C. §824a-3(a) (1982). --*
Although the question is a difficult one, we conclude that the Public Utility Commissior~ of Texas has jurisdiction to require a qualifying cogenerator making or planning to make retail sales to obtain a certificate of cowenience and necessity.
SUMKARY The Public ‘Jtility Commission of Texas has jurisdiction under the Public Utilities Regulatory Act, article 1446c, V.T.C.S., to promulgate a rule requiring qualiEying cogenerators making or planning to make retail sales to obtain a cer- tificate of convenience and necessity.
JIM MATTOX Attorney General of Texas TOM GREEN
First Assistant Attorney C:eneral
DAVID R. RICBARDS
Executive Assistant Attorney General
ROBERT GRAY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Ccmmittw
Mr. Philip F. Ricketts - Page 6 (JM-353)
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Prepared by Sarah Woelk
Assistant Attorney General
APPROVRD:
OPINION COMMITTEE
Rick Gilpin, Chairman
Steve Davis
Tony Guillory
Mary Keller
Jennifeq Riggs
Sarah Woelk