The City of Great Falls v. Mont. Dep't of Pub. Serv. Regulation

• Decision Date: 21 June 2011
• Docket Number: No. DA 10–0337.,DA 10–0337.
• Citation: 2011 MT 144,361 Mont. 69,254 P.3d 595
• Parties: The CITY OF GREAT FALLS, Benefis Health Care, Inc., and Electric City Power, Inc., Petitioners and Appellees,v.MONTANA DEPARTMENT OF PUBLIC SERVICE REGULATION, Public Service Commission, and Northwestern Energy, Respondents and Appellants.
• Court: Montana Supreme Court

361 Mont. 69

254 P.3d 595

2011 MT 144

The CITY OF GREAT FALLS, Benefis Health Care, Inc., and Electric City Power, Inc., Petitioners and Appellees,

v.MONTANA DEPARTMENT OF PUBLIC SERVICE REGULATION, Public Service Commission, and Northwestern Energy, Respondents and Appellants.

No. DA 10–0337.

Supreme Court of Montana.

Submitted on Briefs April 6, 2011.Decided June 21, 2011.

For Appellants: Jim Paine, Special Assistant Attorney General, Helena, Montana (Public Service Regulation and Public Service Commission), Scott M. Stearns and Thomas J. Leonard, Boone Karlberg, P.C., Missoula, Montana (NorthWestern Energy), Jason Williams, Attorney at Law, Butte, Montana (NorthWestern Energy).For Appellee: John Alke, Hughes, Kellner, Sullivan & Alke, PLLP, Helena, Montana (Benefis Health Care, Inc.).For Amicus: Lisa A. Speare and John Walker Ross, Brown Law Firm, P.C., Billings, Montana.Justice MICHAEL E. WHEAT delivered the Opinion of the Court.

[361 Mont. 70] ¶ 1 The Montana Public Service Commission (PSC) and NorthWestern Energy (NWE) appeal from an order of the First Judicial District Court, Lewis and Clark County, reversing the PSC's Final Order No. 6964 (Final Order).

¶ 2 The sole issue on appeal is whether the District Court erred in interpreting § 69–8–201(2), MCA (2007), as granting Benefis Health Care, Inc. (Benefis), the right, after October 1, 2007, to use a supplier of electricity, other than NWE, for all of its delivery points.

BACKGROUND

¶ 3 The 1997 Montana Legislature enacted the Electric Utility Industry Restructuring and Customer Choice Act, Title 69, chapter 8, MCA (1997) ( “Deregulation Act”), with the intent of affording Montana consumers the ability to choose their electricity supplier in a competitive market. The Deregulation Act forced the public utility, Montana Power Company, to separate its generation assets from its distribution assets. NWE acquired the distribution assets. Under the Deregulation Act, NWE, the default supplier, was required to provide electricity to all customers who could not obtain it on the open market.

¶ 4 In 2007, the legislature enacted the Electric Utility Industry Generation Reintegration Act, Title 69, chapter 8, MCA (2007) (“Reintegration Act”), which returned NWE to a vertically-integrated utility that owned its own generation facilities and sold electricity to consumers at the PSC-regulated rates. While a captive customer base was essential to the success of the Reintegration Act, it did not completely eliminate customer choice and expressly preserved supply choices made by electricity consumers who, relying on the Deregulation Act, obtained their electricity from a competitive supplier. The scope of the surviving customer choice carved out by the Reintegration Act is the subject of this appeal.

¶ 5 As a result of the Deregulation Act, the City of Great Falls (City) established Electric City Power, Inc. (ECP) to purchase wholesale electric energy. The PSC licensed ECP as an electricity supplier. ECP then entered into supply contracts with retail customers, including the City, Benefis, and Southern Food Group, LLC, d/b/a Meadow Gold Dairies (MGD).¹ NWE was the default electricity supplier in the area served by ECP through September 2007.

¶ 6 In accordance with the Reintegration Act, NWE became the public utility obligated to provide electricity to that area on October 1, 2008. Between September and December 2007, ECP notified NWE that certain points of delivery owned by the City, Benefis, and MGD should be included among the meters and/or points of delivery served by ECP. NWE, relying upon notice provisions contained in the PSC Tariff Sheet No. 64.1, Schedule ECCGP–1 (Tariff), refused to allow ECP to provide the requested electricity supply service.² On October 1, 2007, the City, Benefis, and MGD were receiving electricity supply service from ECP at all of their meters, except those that NWE refused to transfer.

¶ 7 Following NWE's denial of their request, the City, Benefis, and ECP filed a complaint with the PSC, challenging the lawfulness of NWE's refusal to allow ECP to provide electricity supply to the meters in dispute. On December 9, 2008, the PSC issued its Final Order, which concluded ECP could not provide electricity supply service to the disputed meters. Critical to this appeal, the PSC based its decision upon its interpretation that “customer,” as contained in § 69–8–201(2)(a) and (b), MCA (2007), meant an individual meter or point of delivery, rather than an entity or person.

[361 Mont. 72] ¶ 8 The City, Benefis, and ECP appealed the Final Order. The District Court reversed, finding error in the PSC's statutory interpretation, and remanded the matter to the PSC to allow all of the City's and Benefis' meters to receive electricity supply service from ECP. NWE and the PSC appeal. The City and ECP take no position on appeal.

STANDARD OF REVIEW

¶ 9 Initially, we must resolve what standard of review to apply. The PSC urges us to adopt a deferential standard of review where we determine “whether the agency's conclusion is incorrect with deference to the agency's conclusions of law that are reasonable when the statute is ambiguous or subject to multiple interpretations.” The PSC asserts that our current standard of review (whether the agency's/district court's conclusions of law are correct, Ray v. Mont. Tech of the U. of Mont., 2007 MT 21, ¶ 24, 335 Mont. 367, 152 P.3d 122) is based upon a false assumption that only one correct interpretation of a statute exists and ignores an administrative agency's special expertise.

¶ 10 This Court has previously addressed how the concept of deference to administrative agency decisions applies in statutory construction, concluding that where the meaning of a particular statute is in doubt, and an administrative agency has ascribed a particular meaning to that statute “through a long and continued course of consistent interpretation, resulting in an identifiable reliance,” such administrative agency considerations are not binding upon courts, but are entitled to a “ ‘respectful consideration.’ ” Mont. Power Co. v. Mont. Pub. Serv. Commn., 2001 MT 102, ¶ ¶ 24–25, 305 Mont. 260, 26 P.3d 91 (quoting Doe v. Colburg, 171 Mont. 97, 100, 555 P.2d 753, 754 (1976)). Accordingly, we decline to expand the amount of deference with which we review an agency's findings and conclusions of law.

¶ 11 This Court applies the same standards as the district court when reviewing its determination regarding an agency decision. Ray, ¶ 24. Under the Montana Administrative Procedure Act, a court reviewing an agency decision “may reverse or modify the decision if substantial rights of the appellant have been prejudiced because: (a) the administrative ... conclusions ... are: (i) in violation of constitutional or statutory provisions.” Section 2–4–704(2), MCA. Accordingly, we review the agency's interpretations, as well as the district court's conclusions of law, for correctness. Mont. Power Co., ¶ 21.

DISCUSSION

¶ 12 Whether the District Court erred in interpreting § 69–8–201(2), MCA (2007), as granting Benefis the right, after October 1, 2007, to use a supplier of electricity, other than NWE, for all of its delivery points.

¶ 13 Section 69–8–201(2), MCA (2007), the statute in dispute, provides as follows:

(a) A retail customer that has an individual load with an average monthly demand of less than 5,000 kilowatts that is not purchasing electricity from a public utility on October 1, 2007, may continue to purchase electricity from an electricity supplier. The retail customer may subsequently purchase electricity from a public utility subject to commission rule or order, but the customer may not, at a later date, choose to purchase electricity from another source.

(b) A retail customer that has an individual load with an average monthly demand of less than 5,000 kilowatts and that is currently purchasing electricity from a public utility may not choose to purchase electricity from another source after October 1, 2007.

¶ 14 In interpreting § 69–8–201(2), MCA (2007), the PSC considered the Tariff notice provisions, which state in relevant part:

(2) All retail customers can choose their supplier of electricity according to the terms and procedures provided in this Schedule and, if applicable, a written contract with the utility. All choice customers may also return to Default Supply service in accordance with the terms of this Schedule.

...

(5)(d) Mid–Sized Customers electing to choose a competitive supplier must notify the Utility in writing (including e-mail and fax) at least 10 business days in advance. A Mid–Sized Customer may provide written notice through a selected supplier.

...

(7)(c) Public agency customers electing market supplies must notify the Utility in writing (including e-mail and fax) at least 30 business days in advance of any market supply deliveries. A public agency customer may provide written notice through a selected supplier.

¶ 15 The PSC determined that because the City and Benefis did not comply with the Tariff notice provisions and notify NWE within specified periods of time prior to October 1, 2007, the meters in dispute automatically defaulted to NWE. Based upon its application of the Tariff, the PSC concluded that, under § 69–8–201(2), MCA (2007), the City and Benefis were purchasing electricity from both a public utility (NWE) and an electricity supplier (ECP) on October 1, 2007. The PSC determined that § 69–8–201(2)(a) and (b), MCA (2007), create and require distinct and mutually exclusive classes and that the term “ customer” must refer to an individual meter and/or point of delivery in order to maintain the distinct classes.

¶ 16 The District Court reversed, concluding that the plain language of § 69–8–201(2), MCA (2007), trumped the Tariff and required “customer” to be defined as an entity or person, rather than an individual meter or point of delivery, because such interpretation was consistent...