Public Service Company of New Mexico v. NEW MEXICO PUBLIC UTILITY …

• Decision Date: 13 October 1999
• Docket Number: No. 25,386.,25,386.
• Court: New Mexico Supreme Court
• Parties: PUBLIC SERVICE COMPANY OF NEW MEXICO, Appellant, v. NEW MEXICO PUBLIC UTILITY COMMISSION, City of Gallup, Gallup Joint Utilities, and Pittsburg & Midway Coal Mining Co., Appellees.

992 P.2d 860

128 N.M. 309

1999 NMSC 40

PUBLIC SERVICE COMPANY OF NEW MEXICO, Appellant, v. NEW MEXICO PUBLIC UTILITY COMMISSION, City of Gallup, Gallup Joint Utilities, and Pittsburg & Midway Coal Mining Co., Appellees.

No. 25,386.

Supreme Court of New Mexico.

October 13, 1999.

Rehearing Denied November 23, 1999.

Sarah D. Smith, Albuquerque, Keleher & McLeod, P.A., Richard B. Cole, Patrick V. Apodaca, Claudia Gayheart Crawford, Albuquerque, for Appellant.

Stacey J. Goodwin, Santa Fe, Miller, Stratvert & Torgerson, P.A., Alan Konrad, Marte Lightstone, Albuquerque, Margot J. Steadman, Corrales, for Appellees.

OPINION

MINZNER, Chief Justice.

{1} The Public Service Company of New Mexico (PNM) appeals an order of the New Mexico Public Utility Commission¹ directing the wheeling of electric power. We need consider only one of the issues raised by PNM on appeal: whether the City of Gallup and Gallup Joint Utilities (collectively "Gallup") as well as the Pittsburg & Midway Coal Mining Co. lack the authority under the New Mexico Public Utilities Act (NMPUA), NMSA 1978, §§ 62-1-1 to 62-6-26.1, 62-8-1 to 62-13-15 (1941, as amended through 1997, prior to 1998 amendment),² to seek a wheeling order from the Commission. We conclude this issue is dispositive and that the Commission lacked statutory authority to enter the order it issued, because the City of Gallup is not an "interested electric utility" under Section 62-6-25(B). Therefore, we vacate the Commission's order.

I.

{2} PNM provides retail electric power to the McKinley Mine, a strip coal mine owned by Pittsburg & Midway and located about fifteen miles northwest of Gallup. On March 25, 1975, PNM and Pittsburg & Midway entered into a facilities agreement whereby PNM agreed to build, own, and operate an electric transmission line and other facilities necessary for the delivery of electric power to the mine. Pursuant to the 1975 agreement, PNM built the Y-P line, which extended 10.4 miles from PNM's Yah-Ta-Hey switching substation to the mine. Pittsburg & Midway agreed to pay for power and energy costs, including a monthly minimum demand, as determined by PNM's 5B Industrial Power Service Tariff. Pittsburg & Midway also agreed to pay a monthly rental fee of 1.5% of the total installed cost of the Y-P line and support facilities.

{3} The 1975 agreement accorded Pittsburg & Midway an option to purchase the Y-P line. Pittsburg & Midway exercised this option and the parties agreed to a price and other terms of purchase. Pursuant to the purchase terms, PNM was obligated to satisfy all the regulatory requirements imposed upon the sale by the Commission and the Federal Energy Regulatory Commission (FERC). From the record, it is not clear whether the 1975 agreement contemplated that PNM would wheel power on behalf of another power provider in the event Pittsburg & Midway sought to purchase electric power from another power provider; however, in the Y-P-line sales agreement, PNM agreed to address wheeling issues and to secure interconnection agreements.

{4} On January 7, 1998, Pittsburg & Midway and Gallup entered into an "Agreement in Principle," under which Pittsburg & Midway would sell the Y-P line to Gallup after it acquired the line from PNM. Pittsburg & Midway also agreed that after the transfer of the Y-P line, it would purchase from Gallup all the power it needed for the McKinley Mine. For its part, Gallup agreed to purchase the mine's full power requirements from the Arizona Public Service Company (APS), an Arizona public utility. From the record, it appears that Pittsburg & Midway and Gallup intended that PNM would wheel APS power to PNM's Yah-Ta-Hey substation.

{5} Like Pittsburg & Midway, Gallup is a PNM customer. Under the terms of a 1992 agreement, PNM provides Gallup electric power at four points of delivery; the agreement contemplates that other points of delivery may be established upon mutual consent. At no time have PNM and Gallup agreed that the Yah-Ta-Hey substation would be a delivery point under the 1992 agreement.

{6} On January 7, 1998—the same day that Pittsburg & Midway and Gallup entered into their Agreement in Principle—Pittsburg & Midway and Gallup filed with the Commission a Joint Complaint and Petition for Declaratory Order Regarding Service Statutes and Abandonment of Facilities. The Joint Complaint alleged that PNM had failed to fulfill its obligations under both the 1975 agreement and the Y-P-line sales contract and that PNM had obstructed Pittsburg & Midway's efforts to secure power from suppliers that provided electric power at lower prices. The Joint Complaint also alleged that PNM had prevented Gallup from providing electric power to Pittsburg & Midway. The Joint Complaint contained several prayers for relief, including a request for a declaratory order finding, among other things, that Pittsburg & Midway was not obligated to purchase electric power from PNM according to its 5B Industrial Power Service Tariff, that Gallup was entitled to provide Pittsburg & Midway with electric power, that PNM should be required to wheel Gallup-purchased power over PNM's transmission system to the McKinley Mine, and that PNM should be required to enter into an agreement with Gallup regarding an interconnection of the Yah-Ta-Hey substation. The Commission ordered the parties to brief the question whether the Joint Complaint stated a cause of action within the Commission's jurisdiction.

{7} Without holding a full evidentiary hearing, the Commission issued a Final Order on September 11, 1998. Among other things, this order required PNM to wheel power on behalf of Gallup. The order also required PNM to deliver the power to Gallup at the Yah-Ta-Hey substation as a new point of delivery and to complete the sale of the Y-P transmission line to Pittsburg & Midway. On September 22, 1998, PNM filed a Notice of Appeal as well as a Motion for Emergency Stay of Order Pending Appeal. This Court denied the motion for stay, but we remanded the cause to the Commission to consider the matters raised in that motion.

{8} On November 30, 1998, after a full evidentiary hearing, the Commission considered the remanded cause and issued a Final Order on Remand. This order required PNM to negotiate and execute a contract with Pittsburg & Midway for the sale of the Y-P line and to wheel power to Gallup at the Yah-Ta-Hey substation according to the 1992 agreement between Gallup and PNM and the terms of FERC Order 888.³ The Commission conditioned the wheeling requirement upon its consistency with Part II of the Federal Power Act (FPA), 49 Stat. 838 (1935) (codified as amended in scattered sections of 16 U.S.C.§ 791a-825r), as well as with FERC regulations, opinions, and tariff provisions.

{9} On September 25, 1998, before the Commission considered the remanded cause, PNM filed with FERC a petition for a declaratory order. See Public Serv. Co., 87 Fed. Energy Reg. Comm'n Rep. (CCH) ¶ 61,032, at 61,108 (1999). In its petition, PNM asked FERC to declare that both the FPA and FERC orders preempt the September 11, 1998 order of the Commission. See id. On November 16, 1998, Gallup filed a late motion to intervene in FERC's action on the petition, and FERC ultimately accepted Gallup's motion. See id. at 61,108, 61,113. On December 28, 1998, after the Commission issued its Final Order on Remand, PNM filed an application with FERC seeking an order authorizing the sale of the Y-P line to Pittsburg & Midway. See id. at 61,108. On January 26, 1999, Gallup and Pittsburg & Midway filed a joint motion to intervene in FERC's action on PNM's application. See id.

{10} On April 5, 1999, FERC issued an order. See id. at 61,108. In the order, FERC "conclude[d] that [PNM] ... demonstrated that the sale of the Y-P Line is consistent with the public interest," id. at 61,113, and conditionally approved the sale. See id. at 61,114. FERC refrained from addressing PNM's preemption arguments "in light of [FERC's] decision ... to set for hearing ... the issue of whether the [1992] [PNM]-Gallup Agreement ... already requires [PNM] to transmit third-party power to Gallup at the Yah-Ta-Hey Substation." Id. at 61,110. Specifically, FERC "f[ound] that the language of the ... Agreement [was] ambiguous" and "believe[d] it appropriate to set this contract interpretation dispute... for a trial-type evidentiary hearing before an administrative law judge." Id. at 61,111. It was so ordered. See id. at 61,113-14. The record does not contain the final disposition of the administrative law judge.

{11} On December 15, 1998—fifteen days after the Commission issued its Final Order on Remand—PNM filed a Supplemental Notice of Appeal in this Court, which has jurisdiction over direct appeals from the Commission. See § 62-11-1. In its motion, PNM asked this Court to consolidate its appeal from the Final Order on Remand in its prior appeal. In this Opinion, we review only the Commission's Final Order on Remand. The prior Order was vacated earlier.

{12} In general, we "shall vacate and annul the order complained of if it is made to appear to the satisfaction of the [C]ourt that the order is unreasonable or unlawful." Section 62-11-5. As the party appealing from the Commission's order, PNM has "the burden... to show that the order appealed from is unreasonable, or unlawful." Section 62-11-4. This Court has previously explained the "unreasonable or unlawful" standard of review as follows:

On appeal, this Court determines whether the Commission's "order is supported by substantial evidence, is neither arbitrary nor capricious, and is within the Commission's scope of authority." El Vadito de los Cerrillos Water Ass'n v. New Mexico Pub. Serv. Comm'n, 115 N.M. 784, 787, 858 P.2d 1263, 1266 (1993); accord Attorney Gen. v. New Mexico Pub. Serv. Comm'n, 101 N.M. 549, 553, 685 P.2d 957, 961 (1984)

.... [W]e defer to "Commission decisions requiring expertise in highly technical areas, such as utility rate determinations," howev...