Kansas Power and Light Co. v. State Corp. Com'n

Citation237 Kan. 394,699 P.2d 53
Decision Date10 May 1985
Docket NumberNo. 57425,57425
CourtKansas Supreme Court
PartiesKANSAS POWER AND LIGHT COMPANY, Appellee, v. The STATE CORPORATION COMMISSION of the State of Kansas, and the C & W Rural Electric Cooperative Association, Inc., Appellants.

Syllabus by the Court

1. Courts are not required to give deference to an administrative agency's interpretation of a statute if the interpretation merely involves statutory construction of a non-technical question of law.

2. The primary rule of statutory construction is to give effect to the statute's clear meaning. If the statute is ambiguous, the court shall determine the legislative intent of the statute and give it effect, absent a constitutional impediment.

3. The grandfather clause of K.S.A. 66-1.172 of the Retail Electric Suppliers Act is examined and it is held: The district court did not err in determining the statute was ambiguous and therefore open to determination of the legislative intent. The purpose of the grandfather clause is to protect the investment of utilities which have previously built lines and facilities and rendered service in a territory awarded by RESA exclusively to another. To authorize such an encroaching utility to build new lines and expand its service in the territory within which it is permitted to continue to serve by sufferance is in direct conflict with the express purpose and goal of RESA to avoid duplication. Even though the customer here is the same customer C & W was authorized to continue serving, it is obvious from the sharply increased demand that this is not a continuation of previous service, but a new service requiring a major new expenditure. C & W is entitled continue to serve its previous customer at the same rate as before and thus recover its cost of installation, but KP & L, holder of the only certificate of authority, is entitled to build its line and provide service for the new increased demand.

John K. Rosenberg, Gen. Counsel, Regulatory Affairs, Topeka, argued the cause and was on brief for appellee Kansas Power and Light Co.

Bernard R. Phillips III, Staff Counsel, Topeka, was on brief amicus curiae for Kansas Elec. Cooperatives, Inc.

Jeff Kennedy, Asst. Gen. Counsel, Kansas Corp. Com'n., Topeka, argued the cause, and Brian J. Moline, Gen. Counsel, Topeka, was with him on brief for appellant KCC.

Wayne W. Ryan, of Ryan & Ryan, P.A., Clay Center, argued the cause and was on brief for appellant C & W Rural Elec. Co-op. Ass'n, Inc.

HERD, Justice:

This is an appeal from a district court judgment vacating and remanding an order of the Kansas Corporation Commission (KCC). The KCC order denied a Kansas Power and Light (KP & L) application to construct an electric line extension in northern Riley County, concluding C & W Rural Electric Cooperative Association, Inc., (C & W) should continue to serve the area under the grandfather clause of K.S.A. 66-1,172.

Until recently, the northern area of Fort Riley military reservation was privately owned farmland. C & W held a certificate of authority to serve the area. The U.S. Government acquired the area in the 1960's by eminent domain in order to extend the northern boundaries of Fort Riley. C & W then filed an application to cease operations in this area, which was granted on January 31, 1967. As a result, C & W no longer holds a certificate of authority to serve the fort. Fort Riley expanded its operations into this territory by establishing a marina, a water well, and a gunnery range. In spite of having no certificate of authority, C & W applied for line extension authority to serve each of the fort's new facilities. The applications were granted as follows: The water well extension line was approved on May 16, 1969; the gunnery range extension line was approved on October 10, 1969; and the marina extension line was approved on June 19, 1974.

During this time, KP & L held the only county-wide certificate of convenience and necessity for electrical service for all of Riley County. In spite of this, on October 1, 1975, Fred Adam, director of utilities for the KCC, advised C & W and KP & L that both utilities had an obligation to serve the army at Fort Riley on request. In his letter to C & W, Mr. Adam stated that "both companies have equal rights and responsibilities to serve."

This was the situation when the Retail Electric Suppliers Act, K.S.A. 66-1,170 et seq., (RESA) became effective on July 1, 1976. The legislative intent of the Act is to divide "the state into territories within which retail suppliers are to provide the retail electric service." K.S.A. 66-1,171. The statutes direct the KCC to divide the state into exclusive electrical service areas and direct how the boundaries of the areas should be determined. The act contains a grandfather clause which is the nexus of this litigation. It provides:

"Each retail electric supplier shall continue to have the right to serve all customers being served by it on the effective date of this act, except that such suppliers, by agreement approved by the commission, may otherwise provide for electric service to such customers." K.S.A. 66-1,172(a).

After the passage of RESA, C & W filed an application for a certificate of authority for the three areas in Fort Riley it had authority to serve prior to 1967. The commission held C & W was not entitled to reinstatement of its territory. Instead the KCC found that KP & L was the exclusive authorized electric supplier in Fort Riley on the effective date of RESA. No appeal was taken from this order. C & W has continued to serve the three metering points in the northern area of Fort Riley. The existing line of C & W is capable of delivering seventy-five kilowatts of electricity. However, it actually delivers only thirty-five kilowatts.

In 1983, Fort Riley decided to build a new tank gunnery range in the same area as the old gunnery range, which was served by C & W. The new range required electrical service from a different delivery point and at a higher demand than that provided by C & W. Fort Riley requested the new service from KP & L.

The increase in the size of the gunnery range requires 1450 kilowatts of electricity, which is substantially greater than that which C & W can currently provide. For C & W to provide the additional electricity will require its line to the fort be rebuilt at a cost of $735,000.00. The cost is $538,929.00 for KP & L to provide the service.

On March 1, 1983, KP & L filed an application for authority to build a 9.32 mile transmission line to serve the expanded gunnery range. C & W subsequently applied to the KCC for a certificate of authority to serve the area it had been serving. The applications were consolidated and set for hearing. The KCC issued its order on October 25, 1983, denying the applications of both KP & L and C & W. The KCC determined C & W was entitled to continue serving Fort Riley from the three metering points since C & W would be required to merely increase its capacity rather than appreciably extend its lines in order to serve the new gunnery range. The basis for this finding was a set of maps stipulated to by the parties which indicated the proposed gunnery range fully encompassed the present gunnery range, which C & W served. In order to maintain the integrity of KP & L's certificate, the order specifically forbid C & W from encroaching any further into KP & L's territory. After a motion for rehearing was denied, KP & L appealed the order to the district court. The district court held the grandfather clause of RESA entitled C & W to continue serving the electrical load existing on the effective date of RESA with only those facilities in place at that time. Thus, the added electrical demand of the new gunnery would be furnished by KP & L with C & W continuing to furnish its original service. This appeal followed.

The facts in this case are not in dispute. Rather, the entire case is dependent upon the statutory construction of RESA. We have held:

"The ruling of an administrative agency on questions of law, while not as conclusive as its findings of fact, is nevertheless persuasive and given weight, and may carry with it a strong presumption of correctness, especially if the agency is one of special competence and experience." Kansas Bd. of Regents v. Pittsburg State Univ. Chap. of K-NEA, 233 Kan. 801, Syl. p 4, 667 P.2d 306 (1983).

There is no question the KCC is an agency of special competence and experience. The question here, however, is not technical, but statutory construction of a question of law. Thus, the district court is not required to give deference to the KCC's interpretation of the grandfather clause of the RESA. Rather, the court is obligated to apply the established rules of statutory construction, the first of which is to give effect to the statute's clear meaning. If the statute, however, is ambiguous and unclear, the court shall determine the legislative intent of the statute and give it effect absent a constitutional impediment. No constitutional question is raised.

In support of its interpretation that the grandfather clause only authorized C & W to serve its customers at the load existing on the effective date of RESA with only those facilities in place at the time of RESA, the district court found the grandfather clause to be ambiguous. This authorized the district court to look to the legislative intent of the act. The ambiguity cited by the district court arises from two provisions in the grandfather clause which are conflicting. K.S.A. 66-1,172 provides a utility shall have the right to continue to serve customers...

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