14 P.3d 525 (N.M. 2000), 25,893, In re Adjustments to Franchise Fees Required by Electrical Utility Industry Restructuring Act of 1999

Docket Nº:25,893.
Citation:14 P.3d 525, 129 N.M. 787, 2000 -NMSC- 35
Opinion Judge:[7] The opinion of the court was delivered by: Serna, Justice
Party Name:In the Matter of ADJUSTMENTS TO FRANCHISE FEES REQUIRED BY the ELECTRICAL UTILITY INDUSTRY RESTRUCTURING ACT OF 1999. County of Bernalillo, New Mexico, Appellant, v. New Mexico Public Regulation Commission, Appellee, and El Paso Electric Company, Public Service Company of New Mexico, Texas-New Mexico Power Company, New Mexico Industrial Energy Cons
Attorney:Sheehan, Sheehan & Stelzner, P.A., Timothy M. Sheehan,Kim A. Griffith, Albuquerque, NM, for Appellant., Stacey J. Goodwin, Associate General Counsel, Santa Fe, NM, for Appellee., Keleher & McLeod, P.A., Clyde F. Worthem, Sarah D. Smith, Bill R. Garcia, Albuquerque, NM, Hinkle, Cox, Eaton, Coffiel...
Judge Panel:MINZNER, C.J., BACA, FRANCHINI, and MAES, JJ., concur.
Case Date:November 15, 2000
Court:Supreme Court of New Mexico
 
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Page 525

14 P.3d 525 (N.M. 2000)

129 N.M. 787, 2000 -NMSC- 35

In the Matter of ADJUSTMENTS TO FRANCHISE FEES REQUIRED BY the ELECTRICAL UTILITY INDUSTRY RESTRUCTURING ACT OF 1999.

County of Bernalillo, New Mexico, Appellant,

v.

New Mexico Public Regulation Commission, Appellee,

and

El Paso Electric Company, Public Service Company of New Mexico, Texas-New Mexico Power Company, New Mexico Industrial Energy Consumers, Southwestern Public Service Company, and New Mexico Attorney General, Intervenors.

No. 25,893.

Supreme Court of New Mexico

November 15, 2000

Page 526

[129 N.M. 788] Sheehan, Sheehan & Stelzner, P.A., Timothy M. Sheehan,Kim A. Griffith, Albuquerque, NM, for Appellant.

Stacey J. Goodwin, Associate General Counsel, Santa Fe, NM, for Appellee.

Keleher & McLeod, P.A., Clyde F. Worthem, Sarah D. Smith, Bill R. Garcia, Albuquerque, NM, Hinkle, Cox, Eaton, Coffield & Hensley, Jeffrey L. Fornaciari, Gary W. Larson, Rubin, Katz, Salazar, Alley & Rouse, Donald M. Salazar, Santa Fe, NM, for Intervenors.

OPINION

SERNA, Justice.

{1} The County of Bernalillo appeals pursuant to NMSA 1978, § 62-11-1 (1993), challenging the New Mexico Public Regulation Commission's final order in NMPRC Case 3071 with regard to the Electric Utility Industry Restructuring Act of 1999, NMSA 1978, §§ 62-3A-1 to -23 (1999, as amended through 2000) (Restructuring Act). In Case 3071, the Commission, on its own motion, granted utilities a delay in the implementation of franchise fee adjustments. The County asserts that this order was contrary to NMSA 1978, § 62-3A-18(A) (1999). The County argues that this section took effect immediately on April 8, 1999, under the Restructuring Act's emergency clause, 1999 N.M. Laws, ch. 294, § 24, and that the Commission unlawfully extended compliance by investor-owned utilities until December 31, 1999, and until March 31, 2000, for rural electric cooperatives. El Paso Electric Company, Public Service Company of New Mexico (PNM), Texas-New Mexico Power Company, New Mexico Industrial Energy Consumers, Southwestern Public Service Company and the New Mexico Attorney General intervened. We review only the County's contention that the Commission's action violated the principle of separation of powers. We do not disturb the Commission's order.

Page 527

[129 N.M. 789]I. Facts and Background

{2} In City of Albuquerque v. New Mexico Public Service Commission, 115 N.M. 521, 533, 854 P.2d 348, 360 (1993) (citation omitted), this Court described franchise fees in relation to utilities:

In exchange for granting a franchise, a municipality may exact consideration from the utility, usually in the form of a franchise fee. This may equal some percentage of the utility's gross revenues or net earnings, or it may equal some other proportion of the utility's income derived from providing service in the municipality.

The cost of the franchise fee may then be passed on by the utility to its customers. See GTE Southwest Inc. v. Taxation & Revenue Dep't, 113 N.M. 610, 617, 830 P.2d 162, 169 (Ct.App.1992). The Legislature, through Section 62-3A-18(A), directs that "[a] franchise fee charge shall be stated as a separate line entry on a public utility's or distribution cooperative utility's bills and shall only be recovered from customers located within the jurisdiction of the government authority imposing the franchise fee." The Commission opened Case 3071 on its own motion without any parties before it. In its final order, the Commission found that utilities could not comply with Section 62-3A-18(A) without making rate adjustments because many of the utilities include franchise fees in their base rates. The Commission relied on NMSA 1978, § 62-3A-4(D) (1999), to grant a delay. Section 62-3A-4(D) states that "[t]he commission may delay customer choice and other dates established in the Electric Utility Industry Restructuring Act of 1999 by up to one year upon finding that an orderly implementation of customer choice cannot be accomplished without the delay." In its final order for Case 3071, the Commission found:

Most electric utilities regulated by the Commission have included franchise fees in base rates in the past; therefore, a majority of the electric utilities' billing practices do not conform with the new statutory requirements. Because conformance with the new law may require differing rate adjustments for each electric utility, in accordance with Section [62-3A-]4(D) the Commission finds that it is in the public interest to grant a variance and extension of time for implementation of Section [62-3A-18(A)]. The Commission further finds that this delay will allow for the orderly and proper implementation of line item franchise fee charges on utility bills as part of the transition to customer choice.

{3} The County filed a motion to intervene to amend, vacate or suspend the final order of Case 3071. This motion was deemed denied by operation of law. The County argues that the Legislature, through Section 62-3A-18(A), mandated that, as of April 8, 1999, utilities may no longer recover franchise fee charges from customers outside the jurisdiction of government authorities imposing such fees. The County further argues that the Commission improperly contravened this directive in the final order without providing for refunds or credits. The County asserts that this action is beyond the scope of the Commission's authority and encroaches on the province of the Legislature in violation of separation of powers doctrine as articulated by Article III, Section 1 of the New Mexico Constitution. Further, the County maintains that the final order was arbitrary and capricious because the Commission did not give proper notice or allow a hearing. Finally, the County asserts that the Commission lacked evidence to support its findings. The County contends that this Court must compel the Commission to order the utilities to refund franchise fees which they improperly collected.

{4} Previously, the County, as an intervenor, raised the same issue in an unrelated rate matter, Case 2761, before the Commission. This Court vacated the Commission's final order for Case 2761 in State ex rel. Sandel v. New Mexico Public Utility Commission, 1999 -NMSC- 019, ¶ 30, 127 N.M. 272, 980 P.2d 55. On remand, the parties negotiated a proposed settlement of Case 2761 which they presented to the Commission for approval. The County objected to...

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