COMPETITIVE ENERGY v. PUBLIC UTILITIES

• Decision Date: 30 January 2003
• Parties: COMPETITIVE ENERGY SERVICES LLC et al. v. PUBLIC UTILITIES COMMISSION et al.
• Court: Maine Supreme Court

818 A.2d 1039

2003 ME 12

COMPETITIVE ENERGY SERVICES LLC et al. v. PUBLIC UTILITIES COMMISSION et al.

Supreme Judicial Court of Maine.

Argued: September 10, 2002.

Decided: January 30, 2003.

Donald J. Sipe, Esq. (orally), Preti Flaherty Beliveau Pachios & Haley, LLC, Portland, (for CES), Eric J. Bryant, Esq. (orally), Office of the Public Advocate, Augusta, for appellants.

Mitchell M. Tannebaum (orally), Lisa Fink, Esq., Maine Public Utilities Commission, Augusta, William Harwood, Esq. (orally), Scott D. Anderson, Esq., Verrill & Dana, LLP, Portland, (for BHE), R. Scott Mahoney, Esq., Central Maine Power, Augusta, for appellees.

Panel: SAUFLEY, C.J., and CLIFFORD, RUDMAN, CALKINS, and LEVY, JJ.

LEVY, J.

[¶ 1] Competitive Energy Services, LLC and the Public Advocate appeal from an order issued by the Public Utilities Commission approving Bangor Hydro-Electric Company's petition for reorganization arising out of the creation of an affiliate, Emera Energy Services, Inc. (EES). Competitive Energy also appeals from the Commission's approval of an employee lease agreement between Bangor Hydro and EES. Competitive Energy and the Public Advocate contend that the plain language of 35-A M.R.S.A. § 3206-A(2) (Pamph.2002) prohibits the formation of EES. Competitive Energy also asserts that the employee lease agreement violates 35-A M.R.S.A. § 3205(3) (Pamph.2002), which prohibits a transmission and distribution utility from giving preferential treatment to an affiliated competitive electricity provider. We affirm the Commission's order approving Bangor Hydro's petition to reorganize and affiliate with a competitive electricity provider, and dismiss as moot the portion of Competitive Energy's appeal challenging the employee lease agreement.

I. BACKGROUND

[¶ 2] Maine's act to restructure the State's electric industry (the Restructuring Act)¹ required that, as of March 1, 2000, investor-owned electric utilities must have divested their generation assets and activities. Because the Restructuring Act allowed the investor-owned electric utilities to keep their transmission and distribution assets, the former electricity providers were transformed into transmission and distribution utilities (T & D utilities) fully regulated by the Commission. The divested generation assets and activities then became controlled by competitive electricity providers, which were licensed by the Commission. One of the purposes of the Restructuring Act was to create a competitive market in which Maine's citizens would be able to comparison shop among various competitive electricity providers for their personal and commercial electricity generation services.

[¶ 3] As a result of the Restructuring Act, Bangor Hydro, one of Maine's three investor-owned electric utilities at the time, sold its generation assets and became a T & D utility. Soon after, Bangor Hydro agreed to sell all of its stock to become a subsidiary of Emera, Inc. (Emera), a Nova Scotia holding company. The Commission approved the merger on January 5, 2001.

[¶ 4] Around October 2001, Emera formed EES, a competitive electricity provider, to engage in energy sales in Maine. EES and Bangor Hydro, while both subsidiaries of Emera, have different reporting routes to their holding company. On November 12, a Bangor Hydro employee, Calvin Bell, began working full-time for EES under a six-month Lease of Management Employees Agreement (Lease Agreement) entered into by Bangor Hydro and EES. On December 5, Bangor Hydro filed a petition with the Commission requesting approval of a proposed reorganization arising out of the creation of an affiliate, EES, pursuant to 35-A M.R.S.A. § 708 (1988 & Pamph.2002),² as well as approval of the Lease Agreement, pursuant to 35-A M.R.S.A. § 707 (1988 & Pamph.2002).³ [¶ 5] Consequently, Competitive Energy, the Public Advocate,⁴ four other organizations, and one individual⁵ petitioned to intervene. At a December 13 case conference, the seven parties were granted intervenor status, and the Public Advocate raised the threshold issue of whether section 3206-A(2)⁶ prohibits Bangor Hydro and Emera from affiliating themselves with a competitive electricity provider in Maine.⁷ The Commission issued a January 8, 2002, order in which it found that section 3206-A(2) does not apply in situations where the purchasing entity creates an affiliated competitive electricity provider subsequent to the purchasing entity's acquisition of a T & D utility. The Commission therefore concluded that section 3206-A(2) does not prohibit EES from selling electricity to retail customers in Maine because EES was created after Bangor Hydro had been acquired by Emera.

[¶ 6] On February 5, Competitive Energy filed a notice of appeal from the January 8 order, and the Public Advocate filed its notice of appeal on February 15. We dismissed the appeal because the appeal was filed more than twenty-one days after January 8. See M.R.App. P. 2(b)(3). Our order did not address the interlocutory nature of the Commission's January 8 order.

[¶ 7] On March 21, the Commission approved with conditions Bangor Hydro's petition to reorganize and affiliate itself with EES, and also approved the Lease Agreement. Competitive Energy and the Public Advocate filed timely notices of appeal. In their notices, the parties referred to the Commission's interpretation of section 3206-A(2) in the January 8 order as incorrect and unlawful. Competitive Energy alone appealed the part of the March 21 order which approved the Lease Agreement. We consolidated the two appeals.

[¶ 8] On April 25, Bangor Hydro filed a motion to dismiss the part of Competitive Energy's appeal that involves the Commission's January 8 order which concluded that section 3206-A(2) does not prohibit EES from selling electricity to retail customers in Maine. Five days later, Bangor Hydro filed a request with the Commission asking it to remove four of the five conditions imposed on the Lease Agreement in the March 21 order and approve a termination of the Lease Agreement so that Mr. Bell could become a full-time employee of EES. On June 11, the Commission issued an order in which it treated Bangor Hydro's April 30 request "as a new petition," rescinded the four conditions as no longer necessary once the Lease Agreement terminated, approved the termination of the Lease Agreement as it applied to any Bangor Hydro employee, and stated in a footnote that "any future employee lease arrangement will require Commission approval."

II. ISSUES PRESENTED

[¶ 9] The following issues are presented: (1) whether the dismissal of Competitive Energy's appeal of the January 8 order precludes the Commission's interpretation of section 3206-A(2) from being considered in this appeal of the March 21 order because the March 21 order does not mention or otherwise address section 3206-A(2); (2) whether section 3206-A(2) prohibits Bangor Hydro from having an affiliated competitive electricity provider in Maine; and (3) whether the March 21 approval of the Lease Agreement is rendered moot by the June 11 order of the Commission approving the termination of the agreement and, if not, whether the agreement is consistent with section 3205(3) of the Restructuring Act, which prohibits a T & D utility and its employees from giving preferential treatment to an affiliated competitive electricity provider.

III. DISCUSSION

A. Effect of the Law Court's Dismissal of the Appeal from the Commission's January 8 Order

[¶ 10] Bangor Hydro contends that this appeal is untimely with regard to the issue addressed in the Commission's January 8 order because the order was a final determination of the potentially dispositive issue of the Commission's interpretation of section 3206-A(2), and the present appeal was not filed within 21 days of the January 8 order. See M.R.App. P. 2(b)(3). Competitive Energy and the Public Advocate respond that because the January 8 order merely decided a threshold legal issue concerning the Restructuring Act, their appeal from the March 21 order is the proper vehicle to challenge the Commission's interpretation of section 3206-A(2), even though the March 21 order does not address the issue.

[¶ 11] When an order by the Commission decides some general questions of law and fact, but leaves open future actions by the Commission and does not approve specific requests, the order is not a final judgment. Mech. Falls Water Co. v. Pub. Utils. Comm'n, 381 A.2d 1080, 1087 (Me.1977). A final judgment lies "`in its effect in concluding the rights of the party appealing; if his rights are concluded so that further proceedings after the ruling cannot affect them, there is a final judgment.'" Murphy v. Maddaus, 2002 ME 24, ¶ 13, 789 A.2d 1281, 1285 (quoting Hazzard v. Westview Golf Club, Inc., 217 A.2d 217, 222-23 (Me.1966)). When an appeal is made from a final judgment, "any claim of error in the record" is subject to appellate review. M.R.App. P. 2(b)(4).

[¶ 12] Applying the Mechanic Falls criteria, the January 8 order is not a final judgment because it approved none of the specific requests in Bangor Hydro's December 5 petition and left open the issue as to whether the Commission would (1) grant permission to Bangor Hydro to reorganize and affiliate with EES, and (2) approve the Lease Agreement. Instead, the January 8 order merely decided one question of law: whether section 3206-A(2) prohibits Bangor Hydro from affiliating itself with a competitive electricity provider in Maine. Because the January 8 order decided a threshold legal issue and is part of the record of this appeal, the issue of whether section 3206-A(2) prohibits Bangor Hydro from affiliating with a competitive electricity provider in Maine may be addressed in this appeal.

B. The Commission's Interpretation of Section 3206-A(2)

Section 3206-A(2) provides in pertinent part:

2. Prohibition; divestiture. If, after the effective date of this section, 10% or more of the stock of an investor-owned

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