1998 -NMSC- 38, Plains Elec. Generation and Transmission Co-op., Inc. v. New Mexico Public Utility Com'n

• Decision Date: 08 October 1998
• Docket Number: No. 23816,23816
• Citation: 126 N.M. 152,967 P.2d 827,1998 NMSC 38
• Parties: , 1998 -NMSC- 38 In the Matter of Staff's Petition for Order to Show Cause Why Plains Electric Generation and Transmission Cooperative, Inc.'s Transactions Involving McKinley Paper Company Do not Violate the Public Utility Act, PLAINS ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE, INC., Appellant, v. NEW MEXICO PUBLIC UTILITY COMMISSION, Appellee.
• Court: New Mexico Supreme Court

Page 827

967 P.2d 827

126 N.M. 152, 1998 -NMSC- 38

In the Matter of Staff's Petition for Order to Show Cause Why Plains Electric Generation and Transmission Cooperative Inc.'s Transactions Involving McKinley Paper Company Do not Violate the Public Utility Act PLAINS ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE INC., Appellant, v. NEW MEXICO PUBLIC UTILITY COMMISSION, Appellee.

No. 23816.

Supreme Court of New Mexico.

Oct. 8, 1998.

Rehearing Denied Nov. 5, 1998.

Carpenter & Nixon, L.L.P., Richard N. Carpenter, Sunny J. Nixon, Santa Fe, for Appellant.

New Mexico Public Utility Commission, Lee W. Huffman, Santa Fe, for Appellee.

Cohen & Cohen, P.A., David S. Cohen, Robert Y. Hirasuna, Santa Fe, for Amicus El Paso Electric Company.

Keleher & Mcleod, P.A., Robert H. Clark, Gary J. Van Luchene, Albuquerque, for Amicus Public Service Company of New Mexico.

Rubin, Katz, Salazar, Alley & Rouse, P.C., Donald M. Salazar, Serina M. Garst, Santa Fe, for Amicus Texas New Mexico Power Company.

Tom Udall, Attorney General, Charles F. Noble, Jeff Taylor, Assistant Attorneys General, Santa Fe, for Amicus New Mexico Attorney General.

Steven S. Michel, Santa Fe, for Amicus New Mexico Industrial Energy Consumers.

OPINION

SERNA, Justice.

¶1 Plains Electric Generation and Transmission Cooperative, Inc. (Plains) appeals from the Final Order of the New Mexico Public Utility Commission¹ (Commission) in Case 2522. The Commission fined Plains $8000 and suspended an additional fine of $72,000, subject to compliance with the Final Order, for violations of specific provisions of the New Mexico Public Utility Act (PUA), NMSA 1978, §§ 62-1-1 to 62-13-14 (1984, as amended through 1996, prior to 1999 amendment). See NMSA 1978, § 62-9-5 (1983, repealed effective July 1, 2003) (abandonment of service); NMSA 1978, § 62-6-19(B)(2) (1982) (authorizing Commission investigation of Class II transactions); see also Affiliate Transactions, NMPUC Rule 450.7 (1989) (requiring prior written Commission approval of a general diversification plan in order for a utility to engage in Class II transactions).

¶2 We address the following issues: (1) whether Plains' conveyance of land for the McKinley Paper Company (MPC) site without prior Commission approval constituted an abandonment of a "facility" in violation of Section 62-9-5; (2) whether Plains' investment in building non-utility facilities for MPC in exchange for MPC's promise to reimburse Plains over time through charges for steam and water service constituted a Class II transaction, as defined by NMSA 1978, § 62-3-3(K)(3) (1993, prior to 1996 & 1999 amendments), for which prior Commission approval was required under Rule 450.7; (3) whether Plains' investment in Satellite Connection (SatCon), a division of Plains, was also a Class II transaction requiring prior Commission approval; and (4) whether the Commission correctly determined that Plains violated its Certificate of Convenience and Necessity (CCN) when it provided or agreed to provide non-utility services to MPC. We conclude that the Commission relied on improper findings and conclusions with respect to all four issues. Thus, we do not address Plains' argument that the Commission's Final Order constitutes impermissible retroactive adjudicatory rulemaking. We annul and vacate the Final Order.

Facts and Background

¶3 Plains is a cooperative membership corporation that provides wholesale electric service to its thirteen members, who then resell the electric services to the public. The Commission regulates the rates Plains charges public utilities for the purchase and delivery of electric service. The Plains Escalante Generating Station (PEGS), which produces most of Plains' electricity, occupies between 600 and 700 acres of a 2564-acre site. Although within the rate base, most of the total acreage is vacant land. Plains conveyed 41 acres of vacant land within the PEGS site to McKinley County for $51,000; McKinley County then leased the land to MPC, which constructed a plant to manufacture recycled liner board. The Commission found that Plains' conveyance of the 41 acres constituted abandonment of utility facilities without prior approval in violation of Section 62-9-5.

¶4 One of the issues before this Court is whether Plains engaged in Class II transactions with respect to agreements with MPC, a New Mexico corporation owned by Australian Paper Manufactures. Plains, Australian Paper Manufactures, and one of Plains' distribution members, Continental Divide Electric Cooperative, Inc., reached several agreements concerning MPC. Plains, at its own expense, agreed to construct facilities, including a backup steam boiler and transmission facilities, for the use and benefit of MPC. Plains also agreed to provide non-utility services to MPC, including the provision of steam and 450 acre feet of water annually. Continental Divide Electric Cooperative agreed to provide electric service to MPC. In return, MPC promised to return Plains' investment through rates for steam and water services.² The Commission found that the agreements between Plains and MPC involved Plains' purchase of a "security" in MPC, as defined in Section 62-3-3(F), thus constituting a Class II transaction, as defined in Section 62-3-3(K)(3), without prior approval in violation of Rule 450.7.

¶5 Beginning in 1988, Plains provided non-utility, satellite-delivered television programming to rural electric consumers through SatCon, an unincorporated division of Plains. Following financial losses, Plains requested the Commission's approval to sell SatCon. In 1994, the Commission authorized Plains to sell SatCon. The Commission concluded that Plains' investment in and transactions with SatCon constituted Class II transactions, in violation of Rule 450.7, which required prior Commission approval.

¶6 The Commission concluded that, in contravention of its CCN for the PEGS site, Plains committed six additional violations of the PUA. The Commission found that Plains used public utility property to provide MPC with non-utility services. The Commission identified the following violations: (1) the easements which Plains granted to MPC across the PEGS site; (2) Plains' agreement to provide steam service from PEGS to MPC; (3) Plains' agreement to sell water rights; (4) Plains' agreement to provide interim water service to MPC; (5) Plains' agreement to treat and dispose of wastewater produced by MPC; and (6) Plains' authorization which allowed MPC to perform site preparation work and access to that site across PEGS' property (site license).

Standard of Review

¶7 Plains, as the party appealing from the Commission's Final Order, has the burden "to show that the order appealed from is unreasonable, or unlawful." NMSA 1978, § 62-11-4 (1965, repealed effective July 1, 2003). On appeal, this Court determines whether the Commission's "order is supported by substantial evidence, is neither arbitrary nor capricious, and is within the Commission's scope of authority." El Vadito de los Cerrillos Water Ass'n v. New Mexico Pub. Serv. Comm'n, 115 N.M. 784, 787, 858 P.2d 1263, 1266 (1993); accord Attorney Gen. v. New Mexico Pub. Serv. Comm'n, 101 N.M. 549, 553, 685 P.2d 957, 961 (1984). We do not substitute our judgment for that of the Commission, and we view the evidence in the light most favorable to the Commission's Final Order. PNM Elec. Servs. v. New Mexico Pub. Util. Comm'n (In re Application of PNM Elec. Servs.), 1998-NMSC-017, p 11, 125 N.M. 302, 961 P.2d 147. "Substantial evidence requires that the appellate court review the whole record to determine whether there is substantial evidence to support the decision made by the Commission." Attorney Gen., 101 N.M. at 553, 685 P.2d at 961. Although we defer to "Commission decisions requiring expertise in highly technical areas, such as utility rate determinations," we grant less deference "when reviewing determinations outside the realm of the Commission's expertise." El Vadito, 115 N.M. at 787, 858 P.2d at 1266.

Did Plains' conveyance of vacant land for the MPC site constitute abandonment of a facility requiring prior Commission approval?

¶8 In 1993, Plains sold 41 acres of vacant land located within the 2564-acre PEGS site. The Commission found that this sale constituted an abandonment which requires Commission approval, relying on Section 62-9-5: "No utility shall abandon all or any portion of its facilities subject to the jurisdiction of the [C]ommission ... without first obtaining the permission and approval of the [C]ommission." The Commission determined that the definition of "facility" includes undeveloped, vacant land, that land owned by a utility within a rate base is a facility, and that the sale of property results in abandonment. We find the Commission's reasoning unpersuasive.

¶9 The PUA establishes and authorizes the Commission to exercise regulatory jurisdiction over public utilities. See NMSA 1978, § 62-6-4(A) (1996, repealed effective July 1, 2003); El Vadito, 115 N.M. at 787, 858 P.2d at 1266. However, the Commission's "power over public utilities reaches no farther than what is statutorily authorized." United Water N.M., Inc. v. New Mexico Pub. Util. Comm'n, 1996-NMSC-007, 121 N.M. 272, 277, 910 P.2d 906, 911.

In construing a statute, our primary focus is to ascertain and give effect to the intent of the [L]egislature. Our interpretation of legislative intent comes primarily from the language used by the [L]egislature, and we will consider the ordinary meaning of such language unless a different intent is clearly expressed.

Roberts v. Southwest Community Health Servs., 114 N.M. 248, 251, 837 P.2d 442, 445 (1992) (citation omitted) (construing provisions of the Medical Malpractice Act).

¶10 In order to determine whether Plains needed Commission approval to convey a portion of its property pursuant to Section 62-9-5, the initial question is whether the vacant 41 acres is part of the PEGS "facility." Both the title to ...