Capital Elec. Co-op., Inc. v. Public Service Com'n of State of N.D.

• Decision Date: 03 July 1995
• Docket Number: No. 940401,940401
• Citation: 534 N.W.2d 587
• Parties: CAPITAL ELECTRIC COOPERATIVE, INC., Respondent and Appellee, v. PUBLIC SERVICE COMMISSION OF the STATE of NORTH DAKOTA, Respondent, and Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc., Applicant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 587

534 N.W.2d 587

CAPITAL ELECTRIC COOPERATIVE, INC., Respondent and Appellee, v. PUBLIC SERVICE COMMISSION OF the STATE of NORTH DAKOTA, Respondent and Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc., Applicant and Appellant.

Civ. No. 940401.

Supreme Court of North Dakota.

July 3, 1995.

Jan M. Sebby (argued), Pringle & Herigstad, PC, Minot, for respondent and appellee.

William P. Pearce (argued), Pearce & Durick, Bismarck, and Douglas W. Schulz (appearance), MDU Resources Group, Inc., Bismarck, for applicant and appellant.

NEUMANN, Justice.

This appeal involves a dispute under the Territorial Integrity Act, N.D.C.C. Secs. 49-03-01 et seq., over an extension of electric service to a new customer located outside municipal corporate limits. The disputants are Capital Electric Cooperative, Inc. (Capital Electric), a rural electric cooperative, and Montana-Dakota Utilities Co. (MDU), an electric public utility ¹ regulated under the Territorial Integrity Act. The North Dakota Public Service Commission (PSC) granted MDU's application for a certificate of public convenience and necessity to serve the customer. The district court reversed the PSC order because it granted the certificate without a customer request for service from MDU. MDU appealed the district court judgment. We affirm.

In October 1992, the North Dakota Department of Transportation (DOT) applied to Capital Electric for electric service for a headbolt heater in a DOT tractor at a storage shed at Sterling, an unincorporated community in Burleigh County. The parties agree the DOT location is outside the corporate limits of a municipality under N.D.C.C. Sec. 49-03-01.1. Capital Electric serves rural electric customers in the Sterling area, and in October 1993, Capital Electric constructed a 1,450 foot line from an existing service line west of Sterling to the DOT location. In November 1993, Capital Electric began providing electric service to the DOT location.

Since 1928, MDU and its predecessor have provided central station electric service to Sterling under a certificate of need issued by the PSC's predecessor, the Board of Railroad Commissioners. MDU also provides electric service to Sterling under a municipal street lighting agreement with the Sterling Township Board. MDU's central station electric system is 335 feet from the DOT location, and MDU has an alternate point of service 250 feet from the DOT location.

In December 1993, MDU applied to the PSC under N.D.C.C. Sec. 49-03-01.1 for a certificate of public convenience and necessity to extend service to the DOT location. Capital Electric moved to dismiss MDU's application, contending the PSC lacked jurisdiction under the Territorial Integrity Act because no customer had requested electric service from MDU. Although the DOT initially requested service from Capital Electric, evidence presented at the PSC hearing on MDU's application established the DOT did not have a preference for service from either Capital Electric or MDU. The PSC, with one Commissioner dissenting, denied Capital Electric's motion to dismiss and granted MDU's application for a certificate of public convenience and necessity to extend electric service to the DOT location.

Capital Electric appealed to the district court, which reversed the PSC's denial of Capital Electric's motion to dismiss. The court held the PSC lacked jurisdiction to entertain MDU's application, because the "Territorial [Integrity] Act has long been construed to require a customer's preference for regulated public utility service before the PSC exercises jurisdiction. During this period the legislature has not interfered and in fact this is a sign of acquiescence in such construction." MDU appealed from the district court judgment.

MDU contends the district court erred in holding the PSC did not have jurisdiction under N.D.C.C. Sec. 49-03-01.1 to entertain MDU's application, because the Act does not specifically require a customer request before the PSC can consider an application from a regulated public utility to extend electric service outside the corporate limits of a municipality. Capital Electric responds that a new customer's request for electric service from a regulated public utility is necessary to invoke the PSC's jurisdiction.

Jurisdiction is the power to hear and determine a proceeding. See Rudnick v. City of Jamestown, 463 N.W.2d 632 (N.D.1990). The PSC has only the powers and duties conferred upon it by the Legislature. N.D. Const., Art. V, Secs. 12, 13; Cass County Electric Coop., Inc. v. Northern States Power Co., 518 N.W.2d 216 (N.D.1994). Our analysis focuses on the statutory framework for resolving electric service disputes under the Territorial Integrity Act.

In construing the Act, our duty is to ascertain the intent of the Legislature. County of Stutsman v. State Historical Society, 371 N.W.2d 321 (N.D.1985). Statutes must be construed as a whole to determine the legislative intent, and they must be harmonized, if possible, to give full force and effect to each provision. Cass County Electric Coop., Inc. v. Northern States Power Co., 419 N.W.2d 181 (N.D.1988).

Before 1965, a rural electric cooperative was authorized to provide electric service in rural areas, see N.D.C.C. ch. 10-13, and an electric public utility could, without obtaining a certificate of public convenience and necessity, extend its service into "territory contiguous to that already occupied by it and not receiving similar service from another utility, or electric cooperative." 1959 N.D.Laws ch. 342, Sec. 1. ² See also N.D.R.C. of 1943 Sec. 49-0301 (1957 Supp.); Cass County Electric Coop., Inc. v. Otter Tail Power Co., 93 N.W.2d 47 (N.D.1958); Williams Electric Coop., Inc. v. Montana-Dakota Utilities Co., 79 N.W.2d 508 (N.D.1956). Under that law, the PSC generally did not have authority to consider an electric public utility's extension of service into a "contiguous" rural area, Application of Otter Tail Power Co., 169 N.W.2d 415, 417 (N.D.1969), and territorial disputes were usually resolved by the customer's preference. Cass County Electric Coop., Inc. v. Otter Tail Power Co., supra.

In 1965 the Legislature enacted the Territorial Integrity Act, 1965 N.D.Laws ch. 319, to require an electric public utility to obtain a certificate of public convenience and necessity before extending electric service outside the corporate limits of a municipality. N.D.C.C. Secs. 49-03-01 and 49-03-01.1. ³ The Act was adopted at the request of the North Dakota Association of Rural Electric Cooperatives to provide "territorial protection" for rural electric cooperatives and to prevent public utilities from "pirating" rural areas. Prepared Testimony of Clarence Welander, Chairman of North Dakota Association of Rural Electric Cooperatives, February 25, 1965 Minutes of Senate Industry, Business and Labor Committee regarding House Bill 724. The primary purpose of the Act was to minimize conflicts between suppliers of electricity and wasteful duplication of investment in capital-intensive utility facilities. Cass County Electric Coop., Inc. v. Northern States Power Co., 419 N.W.2d 181 (N.D.1988).

Under the Act, an electric public utility must secure a certificate of public convenience and necessity from the PSC before extending service to new customers outside the corporate limits of a municipality; however, rural electric cooperatives may extend service to new customers in rural areas without securing a certificate of public convenience and necessity from the PSC. Cass County Electric Coop., Inc. v. Wold Properties, Inc., 249 N.W.2d 514 (N.D.1976); Tri-County Electric Coop., Inc. v. Elkin, 224 N.W.2d 785 (N.D.1974); Montana-Dakota Utilities Co. v. Johanneson, 153 N.W.2d 414 (N.D.1967). Although we have never said the Act gives rural electric cooperatives a preference for electric service in rural areas, it does allow cooperatives to serve customers in rural areas unless an electric public utility obtains a certificate of public convenience and necessity from the PSC. Wold Properties, supra; Application of Otter Tail Power Co., supra.

As originally enacted, section 3 of the Act precluded the PSC from issuing a certificate of public convenience and necessity to an electric public utility to extend its service beyond the corporate limits of any municipality unless the rural electric cooperative nearest the proposed service area consented to the extension. 1965 N.D.Laws ch. 319, Sec. 3. ⁴ In Johanneson, supra, we held section 3 was unconstitutional, because it delegated legislative powers to cooperatives to determine who furnished electric service in rural areas. However, after explaining the differences between electric public utilities and rural electric cooperatives, we concluded there was a valid justification for the different treatment of public utilities and cooperatives regarding regulation of service in rural areas. We therefore held the remainder of the Act did not unlawfully discriminate against public utilities and was constitutional. We also concluded that the unconstitutional provision, section 3, was severable from the remainder of the Act.

The Territorial Integrity Act therefore explicitly gives the PSC jurisdiction to hear and determine an electric public utility's application for a certificate of public convenience and necessity to extend service to areas outside the corporate limits of a municipality. However, the narrower issue in this case is not whether the PSC has such jurisdiction, but whether the Act requires a customer request for electric service from a public utility in order to invoke the PSC's jurisdiction.

In Application of Otter Tail Power Co., supra, we outlined criteria for the PSC to consider in rendering a decision on an electric public utility's application for a certificate of public convenience and necessity. In that case, a customer asked an electric public utility to provide service to a rural area, and...