City of Richardson v. Oncor Elec. Delivery Co.
| Decision Date | 02 February 2018 |
| Docket Number | No. 15-1008,15-1008 |
| Citation | 539 S.W.3d 252 |
| Parties | CITY OF RICHARDSON, Texas, Petitioner, v. ONCOR ELECTRIC DELIVERY COMPANY LLC, Respondent |
| Court | Texas Supreme Court |
Hannah Wilchar, Thomas Lane Brocato, Lloyd Gosselink Rochelle & Townsend, P.C., Austin, for Amicus Curiae Steering Committee of Cities Served by Oncor.
Scott N. Houston, Texas Municipal League, Austin, for Amicus Curiae Texas Municipal League.
Amy Davis, Office of the Attorney, Austin, Brantley D. Starr, Deputy First Assistant Attorney General Office of the Attorney General, Austin, James E. Davis, Kellie E. Billings-Ray, Office of the Attorney General, Austin, Jeffrey C. Mateer, First Assistant Attorney General, Austin, Priscilla M. Hubenak, Office of the Attorney General of Texas Environmental Protection & Admin Law, Austin, W. Kenneth Paxton Jr., Attorney General of Texas Office of the Attorney General, Austin, for Amicus Curiae The Public Utility Commission of Texas.
Wallace B. Jefferson, Susan S. Vance, Alexander Dubose Jefferson & Townsend LLP, Austin, Clarence A. West, Austin, Peter G. Smith, Victoria W. Thomas, Nichols Jackson Dillard Hager & Smith, LLP, Dallas, Roger D. Townsend, Alexander Dubose Jefferson & Townsend LLP, Houston, for Petitioner.
Robert K. Wise, Andrew James Szygenda, Lillard Wise Szygenda PLLC, Dallas, Howard V. Fisher, Oncor Electric Delivery Company, Dallas, John C. Stewart, Oncor Electric Delivery Company LLP, Fort Worth, for Respondent.
This case involves a dispute between a city and a utility over who must pay relocation costs to accommodate changes to public rights-of-way. The City of Richardson negotiated a franchise agreement with Oncor Electric Delivery Company LLC, requiring Oncor to bear the costs of relocating its equipment and facilities to accommodate changes to public rights-of-way. Richardson later approved the widening of thirty-two public alleys. Oncor refused to pay for the relocation of its equipment and facilities to accommodate these changes. While the relocation dispute was pending, Oncor filed an unrelated case with the Public Utility Commission (PUC), seeking to alter its rates. That case was resolved by settlement, and the resulting rate change was filed as a tariff with the PUC. Richardson enacted an ordinance consistent with the tariff, which included the following pro-forma provision: "Retail Customer, or the entity requesting such removal or relocation, shall pay to Company the total cost of removing such Delivery System Facilities." Oncor relied on this language to support its refusal to pay relocation costs.
We must decide whether a pro-forma provision in a tariff, which sets the rates and terms for a utility's relationship with its retail customers, trumps a prior franchise agreement, which reflects the common law rule requiring utilities to pay public right-of-way relocation costs. We conclude that the provision at issue does not conflict with either the prior franchise agreement or the common law and that the franchise agreement controls as to the relocation costs at issue. Accordingly, we reverse the judgment of the court of appeals and reinstate the trial court's judgment in favor of Richardson.
In 2002, the Public Utility Regulation Act (PURA), which established a comprehensive regulatory system for public utilities, was amended to implement a competitive retail market for electricity in Texas. Public Utility Regulation Act, 76th Leg., R.S., ch. 405, § 39, 1999 Tex. Gen. Laws 2543, 2558 ; Oncor Elec. Delivery Co. LLC v. Pub. Util. Comm'n of Tex. , 507 S.W.3d 706, 708 (Tex. 2017). PURA requires each electricity utility to separate its business activities into three units: (1) a power generation company,1 (2) a retail electric provider,2 and (3) a transmission and distribution utility (TDU).3 TEX. UTIL. CODE § 39.051(b). Under PURA, TDUs continue to be regulated by the PUC following deregulation. Id. § 33.001 (); id. § 31.002(6) (); Oncor , 507 S.W.3d at 709. Oncor is a TDU created as part of TXU Electric Company's unbundling. Oncor , 507 S.W.3d at 709–10.
As a home-rule city, Richardson has "exclusive original jurisdiction over the rates, operations, and services of an electric utility in areas in the municipality," which is in Dallas and Collin Counties, as well as "exclusive control over and under the public highways, streets, and alleys of the municipality." TEX. UTIL. CODE § 33.001; see TEX. TRANSP. CODE § 311.001. This exclusive jurisdiction over electric utilities and public rights-of-way gives home-rule cities authority to grant franchises to utilities for the transmission and distribution of electricity, by which a utility obtains use of a city's streets, alleys, highways, and public grounds. TEX. UTIL. CODE §§ 14.008, 33.001; TEX. TRANSP. CODE § 311.071. A utility's use of these public rights-of-way is "subject to the direction of the governing body of the municipality." TEX. UTIL. CODE § 181.043.
In 2006, pursuant to this statutory authority, the Richardson City Council approved Ordinance No. 3559 (the "Franchise Ordinance"), granting TXU Electric Delivery Company, predecessor to Oncor, a franchise to use Richardson's public rights-of-way for the transmission and distribution of electric power. As required to make the franchise effective, TXU formally accepted the Franchise Ordinance in writing; therefore, the Franchise Ordinance, along with TXU's written acceptance, became the Franchise Contract.4
By nature, a franchise agreement represents the unique conditions a city requires of a utility in exchange for the utility's right to operate within the city. Here, the Franchise Contract incorporated a conventional right-of-way ordinance (the "ROW Ordinance") requiring the utility, upon written notice from Richardson, to remove or relocate "at its own expense" any facilities placed in public rights-of-way. In pertinent part, the Franchise Contract reads:
The incorporated ROW Ordinance reads, "If the city gives written notice, a person shall, at its own expense, temporarily or permanently remove, relocate, change, or alter the position of person's facilities that are in the public rights-of-way within 120 days...."
The ROW Ordinance, and its incorporation into the Franchise Contract, is not unique. Rather, it reflects a longstanding common law principle that "a utility forced to relocate from a public right-of-way must do so at its own expense." Sw. Bell Tel., L.P. v. Harris Cty. Toll Rd. , 282 S.W.3d 59, 62 (Tex. 2009) ; see also State v. City of Austin , 160 Tex. 348, 331 S.W.2d 737, 741 (1960) ().
The Legislature adopted this principle in the Texas Utilities Code. Section 37.101(c) of PURA provides that "[t]he governing body of a municipality may require an electric utility to relocate the utility's facility at the utility's expense to permit the widening or straightening of a street." TEX. UTIL. CODE § 37.101(c). Section 181.047(c) of the Utilities Code contains almost identical language: "The governing body of the municipality may require the electric utility to relocate a pole or line, at the utility's own expense, to allow the widening or straightening of a street." Id. § 181.047(c).
Between 2006 and 2010, Oncor complied with this provision of the Franchise Contract. Richardson points to thirty-four instances in which Richardson asked Oncor to accommodate changes to public rights-of-way and Oncor did so at its own expense.
In 2010, Richardson approved the widening of thirty-two public alleys, requiring the relocation of approximately 150 electric utility poles and facilities (the "Alley-Relocation Project"). This time, Oncor refused to pay for the relocation, claiming it had no obligation to do so. While the cost allocation of this relocation was still in dispute, Oncor filed an unrelated case with the PUC, seeking to alter its rates, operations, and services. Tex. Pub. Util. Comm'n, Application of Oncor Elec. Delivery Co., LLC for Authority to Change Rates, Docket No. 38929 (Aug. 26, 2011). That case was resolved by a settlement negotiated between Oncor and the Steering Committee of Cities Served by Oncor (the "Steering Committee").6 The PUC approved the settlement, and Richardson enacted Ordinance No. 3823, adopting Oncor's tariff (the "Tariff") as modified by the settlement.
"Tariff" is defined as "the schedule of a utility ... containing all rates and charges stated separately...
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