State v. Public Utility Com'n of Texas

• Decision Date: 16 September 1992
• Docket Number: 3-90-260-CV,Nos. 3-90-259-C,s. 3-90-259-C
• Citation: 840 S.W.2d 650
• Parties: STATE of Texas and Office of Public Utility Counsel, Appellants, v. PUBLIC UTILITY COMMISSION OF TEXAS and Central Power and Light Company, Appellees. STATE of Texas and Office of Public Utility Counsel, Appellants, v. PUBLIC UTILITY COMMISSION OF TEXAS and Houston Lighting and Power Company, Appellees.
• Court: Texas Court of Appeals

Page 650

840 S.W.2d 650

STATE of Texas and Office of Public Utility Counsel, Appellants, v. PUBLIC UTILITY COMMISSION OF TEXAS and Central Power and Light Company, Appellees.

STATE of Texas and Office of Public Utility Counsel, Appellants, v. PUBLIC UTILITY COMMISSION OF TEXAS and Houston Lighting and Power Company, Appellees.

Nos. 3-90-259-CV, 3-90-260-CV.

Court of Appeals of Texas Austin.

Sept. 16, 1992.

Rehearing Overruled Nov. 18, 1992.

Dan Morales, Atty. Gen., W. Scott McCollough, Asst. Atty. Gen., Austin, for State of Tex.

John L. Laakso, Stephen Fogel, Asst. Public Counsels, Austin, for Office of Public Utility Counsel.

Dan Morales, Atty. Gen., Karen Pettigrew, Norma K. Scogin, Asst. Attys. Gen., Austin, for Public Utility Com'n of Texas.

Davison W. Grant, Redford, Wray & Woolsey, Austin, for Central Power and Light Co.

Robert J. Hearon, Jr., Graves, Dougherty, Hearon & Moody, Austin, for Houston Lighting and Power Co.

Before POWERS, ABOUSSIE and JONES, JJ.

JONES, Justice.

Central Power and Light Company ("CP & L") and Houston Lighting and Power Company ("HL & P") applied to the Public Utility Commission (the "Commission") for deferred-accounting treatment of certain costs associated with a new nuclear power plant in Matagorda County, Texas, known as the South Texas Project. The Commission granted the applications, and the district court upheld the Commission's orders granting the requests. The State of Texas, on behalf of certain State agencies, and the Office of Public Utility Counsel ("OPC") appeal that judgment to this Court. We will affirm in part and reverse in part.

BACKGROUND

In 1972, HL & P, CP & L, the City of Austin, and the City of San Antonio began construction of a two-unit nuclear generating station in Matagorda County, Texas, known as the South Texas Project. Unit One of the South Texas Project ("STP-1") was completed and began commercial operation on August 25, 1988. Under standard accounting procedures, CP & L and HL & P would have stopped accruing Allowance for Funds Used During Construction ("AFUDC") at that time and would have begun charging operations and maintenance, depreciation, insurance, and taxes as expenses against income. HL & P and CP & L contend that in the interval between the time STP-1 was placed in service and the time the plant would be included in rate base (i.e., the "regulatory-lag" period), HL & P and CP & L would have incurred operating costs and carrying costs on their invested funds that they would never recover. Therefore, both CP & L and HL & P applied to the Commission for deferred-accounting treatment ("DAT") of such costs during the regulatory-lag period.

In Docket No. 8230 the Commission granted HL & P's request for DAT for a period from August 25, 1988, to no later than November 23, 1989. Later, in Docket No. 9010, the Commission extended HL & P's deferral period beyond November 23, 1989, until such time as the cost of STP-1 was reflected in rates approved by the Commission. In Docket No. 7560 the Commission granted CP & L's request for DAT for a period from August 25, 1988, to no later than February 15, 1990. By granting DAT during such time periods, the Commission allowed CP & L and HL & P to The State of Texas and OPC sought judicial review of the Commission's orders granting DAT to CP & L and HL & P. In the district court, Cause No. 467,589 involved the review of the Commission's orders in Docket Nos. 8230 and 9010 (i.e., the orders granting DAT to HL & P). Cause No. 467,587 involved the review of the Commission's order in Docket No. 7560 (i.e., the order granting DAT to CP & L). The district court upheld all three orders, and the State and OPC appealed to this Court. On appeal, Cause No. 467,587 has been assigned No. 3-90-259-CV, and Cause No. 467,589 has been assigned No. 3-90-260-CV. The causes were consolidated in this Court for purposes of oral argument, and the bases for our decisions in both will be set forth in this opinion.

capitalize their costs associated with STP-1 during those periods and carry them as separate assets on their balance sheets. The reasonableness of the amount of the costs was to be determined by the Commission in a separate ratemaking proceeding in which the balance-sheet asset consisting of the deferred costs would be reviewed using the same criteria as any other asset. ¹

JURISDICTION

Through a combination of five points of error, the State asserts that neither this Court nor the court below has jurisdiction to review the Commission's orders in Docket Nos. 8230, 9010, and 7560. First, the State argues that these orders are not final orders. The State further argues that even if the order in No. 8230 is final, the trial court erred in failing to rule that No. 9010 was void for want of jurisdiction because the two dockets involved similar issues of fact and law. In this regard, the State asserts that the appellees waived any argument that the two dockets involved different issues because in the process of seeking consolidation, the appellees claimed that the two dockets involved the same issues. Finally, the State argues that it is hindered in presenting this waiver argument on appeal because the trial court failed to enter conclusions of law.

1. Finality of the Orders

Only "[a] person who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision in a contested case is entitled to judicial review...." See Administrative Procedure and Texas Register Act ("APTRA"), Tex.Rev.Civ.Stat.Ann. art. 6252-13a, §§ 16, 19(a) (West Supp.1992); Public Utility Regulatory Act ("PURA"), Tex.Rev.Civ.Stat.Ann. art. 1446c, § 4 (West Supp.1992). Therefore, for a party to obtain judicial review of an administrative order, the order must be final and appealable. PACE v. Texas Air Control Bd., 725 S.W.2d 810, 811 (Tex.App.--Austin 1987, writ ref'd n.r.e.).

The State argues that the orders in Nos. 8230 and 7560 were not final because the Commission reserved the power to decide whether HL & P and CP & L should be granted DAT beyond November 23, 1989, and February 15, 1990, respectively. We disagree.

The relevant portion of the order in No. 8230 provided the following:

1. Houston Lighting and Power Company (HL & P or the Company) shall continue to accrue AFUDC on the Company's investment in the South Texas Nuclear Project-1 (STP-1) and to defer and capitalize the depreciation, operations and maintenance, insurance, and tax expenses associated with STP-1 from August 25, 1988, until the earlier of either the date rates which reflect those costs are effective or November 23, 1989. If by November 23, 1989, rates are not in effect that reflect the prudently incurred costs of the plant, HL & P may file a petition with the Commission alleging what extraordinary circumstances, if any, exist which would warrant an extension of the deferral period beyond November 23, 1989.

The relevant portion of the order in No. 7560 was essentially the same as that quoted A final administrative order is one that leaves nothing open for future disposition. PACE, 725 S.W.2d at 811. So long as matters remain open, unfinished, or inconclusive, there is no final decision. Id. However, final orders are not limited to the last order in a proceeding. Texas Gen. Indem. Co. v. Strait, 673 S.W.2d 334, 336 (Tex.App.--Corpus Christi 1984, writ ref'd n.r.e.). On the issue of finality of administrative orders, the Texas Supreme Court recently wrote:

above from No. 8230. Therefore, the remaining discussion on finality will focus only on No. 8230; however, the conclusions we reach apply to both.

Although there is no single rule dispositive of all questions of finality, courts should consider the statutory and constitutional context in which the agency operates, and should treat as final a decision "which is definitive, promulgated in a formal manner and one with which the agency expects compliance." 5 J. Stein, G. Mitchell & B. Mezines, Administrative Law 48-10 (1988). Administrative orders are generally final and appealable if "they impose an obligation, deny a right or fix some legal relationship as a consummation of the administrative process."

Texas-New Mexico Power Co. v. Texas Indus. Energy Consumers, 806 S.W.2d 230, 232 (Tex.1991).

Certainly the order in No. 8230 was formally promulgated. Further, it was both definitive and conclusive. The order left nothing open to dispute concerning HL & P's right to DAT for the stated period of time. Also, despite the State's argument to the contrary, this right was in no way affected by the provision in the order allowing the Commission to determine later if HL & P could defer expenses for a period beyond November 23, 1989. The order in No. 8230 did not authorize the Commission to reconsider its decision to grant HL & P's request for DAT for the period up to November 23, 1989; rather, it allowed the Commission to consider facts and circumstances that might exist after that date. Therefore, we conclude that the order in No. 8230 was both definitive and conclusive as to HL & P's right to DAT for the period from August 25, 1988, to no later than November 23, 1989. Cf. PACE, 725 S.W.2d at 811.

The State also points out that in No. 8230, the Commission reserved decisionmaking on whether HL & P should be granted DAT beyond November 23, 1989, even though HL & P requested such treatment until rates reflecting the deferred expenses were in effect. The State asserts that the denial of DAT for the full period requested meant that HL & P failed to carry its burden of proof before the Commission. The State argues that the Commission had no authority to allow HL & P to relitigate an issue it had previously lost.

In support of its argument, the State cites Coalition of Cities for Affordable Utility Rates v. PUC, 798 S.W.2d 560 (Tex.1990). In Coalition of Cities, the supreme court held "that the doctrines of res judicata and collateral estoppel bar a utility from relitigating...