City of Torrington v. Smith

• Decision Date: 28 December 2016
• Docket Number: S-16-0107
• Parties: CITY OF TORRINGTON, a Wyoming municipal corporation, Appellant (Petitioner), v. Leroy P. SMITH, Z & W Mill Inc., Russell Zimmer, Torrington Conservative Citizens, a Wyoming corporation, and Wyoming Public Service Commission, Appellees (Respondents).
• Court: Wyoming Supreme Court

386 P.3d 336

2016 WY 126

CITY OF TORRINGTON, a Wyoming municipal corporation, Appellant (Petitioner),

v.Leroy P. SMITH, Z & W Mill Inc., Russell Zimmer, Torrington Conservative Citizens, a Wyoming corporation, and Wyoming Public Service Commission, Appellees (Respondents).

S-16-0107

Supreme Court of Wyoming.

December 28, 2016

Representing Appellant: James A. Eddington, Jones & Eddington Law Offices, Torrington, Wyoming.

Representing Appellee Public Service Commission: Peter K. Michael, Wyoming Attorney General; John G. Knepper, Chief Deputy Attorney General; Ryan T. Schelhaas, Division Deputy Attorney General; Karl D. Anderson, Senior Assistant Attorney General; Michael M. Robinson, Senior Assistant Attorney General. Argument by Mr. Robinson.

Representing Appellees Leroy P. Smith, Z & W Mill Inc, Russell Zimmer, and Torrington Conservative Citizens: No appearance.

Before BURKE, C.J., and HILL, DAVIS, and FOX, JJ, and Donnell, D.J.

FOX, Justice.

[¶1] The City of Torrington (the City) sought judgment declaring that it has the authority to set rates for electricity it provides to customers outside its corporate limits, and that it has broad discretion to utilize revenues from the provision of electricity for other City expenses. The district court determined that the Public Service Commission (PSC) has the exclusive jurisdiction to set rates for electricity provided by municipalities to customers outside the municipality's limits and declined to rule on the question of the City's expenditure of electricity revenues, holding that there was no justiciable controversy regarding that issue. We affirm.

ISSUES

[¶2] 1. Does the Public Service Commission have the exclusive jurisdiction to set rates for electricity provided to customers outside the municipality's limits?

2. Is there a justiciable controversy regarding the City's use of revenues from the sale of electricity?

FACTS

[¶3] The City owns and operates an electric utility that provides electrical service to approximately 3,500 customers. Twenty-three percent of those customers are outside the City limits.

[¶4] The City sued Appellees Leroy P. Smith, Z & W Mill Inc., Russell Zimmer, and Torrington Conservative Citizens (collectively, the Citizens Group), seeking judgment declaring that it was authorized to set rates for electrical services it provided to customers outside the City limits, and that it had discretion to use revenue from the sale of electrical services for other City expenses. The Citizens Group moved to dismiss the action, arguing that the City had not presented a justiciable controversy. The district court denied the motion and ordered that the PSC be joined in the action

[¶5] On cross motions for summary judgment, the City claimed that the laws authorizing municipalities to enact ordinances and enter into contracts to provide electricity outside municipal limits, Wyo. Stat. Ann. §§ 15–7–201, 15–7–203, and 15–7–204(a)(iii) (LexisNexis 2015), grant it the power to set rates for all of its customers, whether in or out of its municipal borders. The PSC claimed that the power to set rates outside municipal borders is exclusively vested in the PSC pursuant to Wyo. Stat. Ann. §§ 37–1–101(a)(vi)(C) and (H)(II) (LexisNexis 2015). The district court found that the PSC "has jurisdiction over the rates and aspects of the City's electric utility service provided to customers outside the City's corporate limits...." The district court also concluded that there was not a justiciable controversy between the City and the Citizens Group and declined to rule on the question of whether the City was properly utilizing revenues from the sale of electricity. The City timely filed this appeal.

STANDARD OF REVIEW

[¶6] We review a grant of summary judgment deciding a question of law de novo and afford no deference to the district court's ruling. In re Estate of Meyer , 2016 WY 6, ¶ 15, 367 P.3d 629, 634 (Wyo. 2016) ; Mont. Food, LLC v. Todosijevic , 2015 WY 26, ¶ 10, 344 P.3d 751, 754–55 (Wyo. 2015). Interpretation of statutory language is a question of law, which we also review de novo. Best v. Best , 2015 WY 133, ¶ 8, 357 P.3d 1149, 1151 (Wyo. 2015).

DISCUSSION

I. Does the Public Service Commission have the exclusive jurisdiction to set rates for electricity provided to customers outside the municipality's limits?

[¶7] The district court concluded that "the PSC has the authority to review and establish just and reasonable rates for all the City's electric utility services provided to customers outside of the City's corporate limits." The City asserts on appeal that the district court erred as a matter of law, and it contends that Wyo. Stat. Ann. §§ 15–7–201 (allowing a city to enter into contracts to provide electricity to customers outside corporate limits), 15-7-203 (ratifying contracts for supply of electricity outside corporate limits), and 15-7-204(a)(iii) (granting a city the power to enact ordinances "providing for the rates to be charged customers of electric current") give the City the authority to set electric utility rates for its customers outside the City's corporate limits. The PSC argues that statutory language granting it "general and exclusive power to regulate and supervise" public utilities in Wyoming, Wyo. Stat. Ann. § 37–2–112 (LexisNexis 2015), and excluding only services provided within city limits from that grant, Wyo. Stat. Ann. § 37–1–101(a)(vi)(H)(II), vest it with the exclusive jurisdiction to set those rates.

In interpreting statutes, this Court must endeavor to find the reasonable intent of the drafters. We begin by examining the ordinary and obvious meaning of the words employed according to their arrangement and connection. When a statute is sufficiently clear and unambiguous, we give effect to the plain and ordinary meaning of the words and need not invoke our longstanding rules of statutory construction.

Best , 2015 WY 133, ¶ 8, 357 P.3d at 1151–52 (citations omitted). "All statutes must be construed in pari materia; and in ascertaining the meaning of a given law, all statutes relating to the same subject or hav[ing] the same general purpose must be considered and construed in harmony." Thunderbasin Land, Livestock & Inv. Co. v. Cty. of Laramie Cty. , 5 P.3d 774, 779 (Wyo. 2000) ; see also In re Estate of Meyer , 2016 WY 6, ¶ 21, 367 P.3d at 636 ; Wyo. Cmty. Coll. Comm'n , 2001 WY 86, ¶ 16, 31 P.3d 1242, 1249 (Wyo. 2001). "Moreover, we strive to avoid an interpretation that produces an absurd result, or that renders a portion of the statute meaningless." Seherr – Thoss v. Teton Cty. Bd. of Cty. Comm'rs , 2014 WY 82, ¶ 19, 329 P.3d 936, 945 (Wyo. 2014) (citations omitted); see also Powder River Basin Res. Council v. Wyo. Oil & Gas Conservation Comm'n , 2014 WY 37, ¶ 42, 320 P.3d 222, 234 (Wyo. 2014).

[¶8] Wyo. Stat Ann. § 37–2–112 grants the PSC the "general and exclusive power to regulate and supervise every public utility within the state...." The parties do not dispute that the City is a "public utility" because it "owns, operates, leases, controls ... [any] plant, property or facility for the generation, transmission, distribution, sale or furnishing to or for the public of electricity for light, heat or power...." Wyo. Stat. Ann. § 37–1–101(a)(vi)(C).

[¶9] In reviewing PSC rate-setting decisions, we have explained that "PSC is required to give paramount consideration to the public interest in exercising its statutory powers to regulate and supervise public utilities. The desires of the utility are secondary." PacifiCorp v. Pub. Serv. Comm'n of Wyo. , 2004 WY 164, ¶ 13, 103 P.3d 862, 867–68 (Wyo. 2004) (citations omitted). Rates shall be "just and reasonable," Wyo. Stat. Ann. § 37–3–101 (LexisNexis 2015), and the PSC is empowered to determine whether rates meet this requirement. See Wyo. Stat. Ann. § 37–2–121 (LexisNexis 2015). The rationale underlying this grant of power to the PSC, and utility regulation in general, is known as the "regulatory compact."

In general, the compact is a theoretical agreement between the utilities and the state in which, as a quid pro quo for being granted a monopoly in a geographical area for the provision of a particular good or service, the utility is subject to regulation by the state to ensure that it is prudently investing its revenues in order to provide the best and most efficient service possible to the consumer. In exchange, the utility is allowed to earn a fair rate of return on its rate base.

PacifiCorp . , 2004 WY 164, ¶ 28, 103 P.3d at 871 (citations omitted); see also 64 Am. Jur. 2d Public Utilities § 16 (2011).

[¶10] The Wyoming legislature carved out a limited exception to the PSC's "general and exclusive power to regulate and supervise" utilities for "public utilities owned and operated by a municipality of the state of Wyoming, except as to that portion of a municipality owned and operated public utility, if any, as may extend services outside the corporate limits of a municipality ...." Wyo. Stat. Ann. § 37–1–101(a)(vi)(H)(II) (emphasis added). The legislature's intent is clear. The PSC has general and exclusive power to regulate utility services, except to the limited extent that a municipality provides such services to customers within its corporate limits. The City argues that "if the parties agree to rates in a contract, there is no need for the PSC to review, approve, regulate or supervise [the City] and its customers." This may be true with respect to those customers who reside within the City limits, and who have the opportunity to influence municipal decisions, such as setting rates for utility services, when they cast their ballot. However, customers outside the City limits have no means to influence municipal decisions because they have no vote in municipal elections. As the PSC points out, "[w]ithout regulatory oversight from the [PSC], municipalities could subsidize their residents' rates through increased rates on non-residents' services."

[¶11] "The purpose of the authority of the...