Northern States Power Co., Matter of, No. 17793

• Court: Supreme Court of South Dakota
• Writing for the Court: AMUNDSON; MILLER
• Citation: 489 N.W.2d 365
• Docket Number: No. 17793
• Decision Date: 29 July 1992
• Parties: Util. L. Rep. P 26,237 In the Matter of the Complaint of NORTHERN STATES POWER COMPANY Against Sioux Valley Empire Electric Association for Provision of Electric Service to Myrl and Roy's Paving.

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489 N.W.2d 365 Util. L. Rep. P 26,237 In the Matter of the Complaint of NORTHERN STATES POWER
COMPANY Against Sioux Valley Empire Electric
Association for Provision of Electric
Service to Myrl and Roy's Paving. No. 17793. Supreme Court of South Dakota. Argued May 26, 1992.
Decided July 29, 1992.

Alan F. Glover of Denholm, Glover & Britzman, Brookings, for appellant Sioux Valley Empire Elec. Ass'n.

Warren May of May, Adam, Gerdes & Thompson, Pierre, for appellee Northern States Power Co.

Mark Barnett, Atty. Gen., Douglas Eidahl, Asst. Atty. Gen., Pierre, for appellee South Dakota Public Utilities Com'n.

AMUNDSON, Justice.

Sioux Valley Empire Electric Association, Inc. (Sioux Valley) appeals from trial court's order affirming the decision of the Public Utilities Commission (PUC) in favor of Northern States Power Company (NSP). We affirm.

FACTS

Myrl and Roy's Paving (Company) is a construction company which operates a quarry located in the southeast quarter of Section 27, Township 101 North, Range 48 West, Minnehaha County, South Dakota. The southeast quarter of Section 27 is divided in half by the 16th line. The area designated as the north half of the southeast quarter of Section 27 is NSP's exclusive assigned electric service territory. The area designated as the south half of the southeast quarter of Section 27 is Sioux Valley's exclusive assigned electric service territory. The record indicates that the 16th line, running east and west separating NSP's assigned service area from Sioux Valley's assigned service area, ran through the approximate center of Company's quarry operation. Based on the present location of Company's equipment, the evidence established that fifty-nine percent of the

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electric load was to be consumed in NSP's territory, and forty-one percent was to be consumed in Sioux Valley's territory. This establishment of exclusive territory was by agreement between NSP and Sioux Valley dated January 19, 1976, and approved by PUC in accordance with SDCL 49-34A-43.

Company conducts its construction operation through the use of movable machinery and equipment, and the record reveals that at the present time, Company contemplates moving its operation entirely into Sioux Valley's territory at some time in the not too distant future.

In 1985, Sioux Valley constructed a single phase electric distribution line within its assigned service area to provide electricity to an office trailer used by Company's predecessor, Higman Sand and Gravel. Sioux Valley transferred the account to Company in 1989. Company subsequently determined that single phase service was not adequate to operate all of its equipment and thus utilized its own portable oil-fired electric generator to provide the equivalent of three-phase electric service for its equipment.

In August, 1990, Company representatives while shopping for a three-phase power source from a utility, contacted both NSP and Sioux Valley in regards to providing same to the quarry site. NSP made two separate proposals to Company: First, to build four and one-half miles of three-phase at an estimated cost of $216,000 and a minimum annual fee of $60,000 to Company for five years; or, second, to provide service from NSP's site in Rowena, South Dakota. NSP subsequently evaluated the first proposal and determined no annual fee would be necessary. Sioux Valley proposed construction of three-phase service for approximately $57,000, with no annual fee to Company. Company then accepted Sioux Valley's bid and entered into a service agreement with Sioux Valley.

Under the terms of this agreement, Company was to extend a private line from its electrical trailer, which currently is on the 16th line, to a newly constructed transformer in Sioux Valley's territory. Then, instead of using the electrical trailer to distribute electricity to all the machinery in the quarry, Company would distribute all the electricity through the transformer in Sioux Valley's territory. Thus, while all the same equipment and electric needs remained in NSP's territory, Company moved its connection point so all of the electricity would flow through Company's newly constructed private line connected to the newly located transformer in Sioux Valley's territory.

On March 11, 1991, NSP filed a petition with the PUC, alleging that Sioux Valley was rendering electric service to Company in NSP's exclusive territory. Sioux Valley denied NSP's allegations and a contested case hearing was held before the PUC on April 12, 1991. PUC found in favor of NSP and awarded it the exclusive right to serve Company, with Chairman James Burg (Burg) dissenting.

Sioux Valley appealed PUC's decision to trial court. Trial court heard oral arguments on October 3, 1991, and made its ruling from the bench affirming PUC's decision. Sioux Valley appeals.

ISSUES

1. Whether PUC and trial court erred in finding that Sioux Valley was extending or rendering electric service in NSP's territory?

2. Whether PUC and trial court erred in awarding NSP the exclusive right to serve Company?

STANDARD OF REVIEW

This court reviews the record of administrative agencies in the same manner as the circuit court. SDCL 1-26-37; Appeal of Hendrickson's Health Care, 462 N.W.2d 655 (S.D.1990); Peery v. Department of Agriculture, 402 N.W.2d 695 (S.D.1987); Application of Northwestern Bell Tel. Co., 382 N.W.2d 413 (S.D.1986). Since the circuit court affirmed PUC's findings of fact and conclusions of law in their entirety, our review is of the agency's findings and conclusions. Matter of Midwest Motor Exp., Inc., Bismarck, 431 N.W.2d 160 (S.D.1988).

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Conclusions of law are given no deference on appeal and are freely reviewable. SDCL 1-26-36; Hendrickson's, 462 N.W.2d at 656; Karras v. State, Dept. of Revenue, 441 N.W.2d 678 (S.D.1989); Sharp v. Sharp, 422 N.W.2d 443 (S.D.1988). Questions of fact, however, are given greater deference. SDCL 1-26-36. This court does not substitute its judgment for PUC's on the weight of evidence pertaining to questions of fact unless PUC's decision is clearly erroneous, or is arbitrary, capricious, or characterized by an abuse of discretion or a clearly unwarranted exercise of discretion. Finck v. Northwest School Dist. No. 52-3, 417 N.W.2d 875 (S.D.1988); Permann v. Dept. of Labor, Unemp. Ins. D., 411 N.W.2d 113 (S.D.1987); Appeal of Templeton, 403 N.W.2d 398 (S.D.1987); Anderson v. Western Dakota Insurors, 393 N.W.2d 87 (S.D.1986). We will not reverse an agency decision unless we are left with a definite and firm conviction that a mistake has been committed. Finck, 417 N.W.2d at 878; Matter of Midwest, 431 N.W.2d at 162; Dakota Harvestore v. S.D. Dept. of Revenue, 331 N.W.2d 828 (S.D.1983); Fraser v. Water Rights Commission, Etc., 294 N.W.2d 784 (S.D.1980). With these standards of review in mind, we address PUC's findings...