United for Mo. v. Mo. Pub. Serv. Comm'n (In re KCP&L Greater Mo. Operations Co. for Permission)

• Citation: 515 S.W.3d 754
• Decision Date: 20 December 2016
• Docket Number: WD 79550 (,C/w WD 79551)
• Court: Missouri Court of Appeals
• Parties: In the MATTER OF the APPLICATION OF KCP&L GREATER MISSOURI OPERATIONS COMPANY FOR PERMISSION AND APPROVAL OF A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY AUTHORIZING IT TO CONSTRUCT, INSTALL, OWN, OPERATE, MAINTAIN AND OTHERWISE CONTROL AND MANAGE SOLAR GENERATION FACILITIES IN WESTERN MISSOURI; United for Missouri; Office of Public Counsel, Appellants, v. Missouri Public Service Commission, KCP&L Greater Missouri Operations Co., and Missouri Division of Energy, Respondents.

515 S.W.3d 754

In the MATTER OF the APPLICATION OF KCP&L GREATER MISSOURI OPERATIONS COMPANY FOR PERMISSION AND APPROVAL OF A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY AUTHORIZING IT TO CONSTRUCT, INSTALL, OWN, OPERATE, MAINTAIN AND OTHERWISE CONTROL AND MANAGE SOLAR GENERATION FACILITIES IN WESTERN MISSOURI;

United for Missouri; Office of Public Counsel, Appellants,

v.Missouri Public Service Commission, KCP&L Greater Missouri Operations Co., and Missouri Division of Energy, Respondents.

WD 79550 (

C/w WD 79551)

Missouri Court of Appeals, Western District.

Opinion filed: December 20, 2016

Motion for Rehearing and/or Transfer to Supreme Court Denied January 24, 2017

Application for Transfer Denied May 2, 2017

David C. Linton, for Appellant United for Missouri

Lera Shemwell, Counsel for Appellant Office of Public Counsel

Shelley E. Brueggemann, for Respondent Missouri Public Service Commission

Roger Steiner, for Respondent KCP&L Greater Missouri Operations Company

Alexander J. Antal, for Respondent Missouri Division of Energy

Before Division Three: Thomas H. Newton, Presiding Judge, Cynthia L. Martin, Judge and Edward R. Ardini, Jr., Judge

EDWARD R. ARDINI, JR., JUDGE

United for Missouri, Inc., ("UFM") and the Missouri Office of the Public Counsel ("OPC") (collectively "Appellants") appeal the Report and Order of the Missouri Public Service Commission ("Commission") that granted KCP&L Greater Missouri Operations Company ("GMO") a certificate of convenience and necessity ("CCN") under section 393.170.¹ Although Appellants raise different points and arguments, there are primarily two issues to be addressed by this court: (A) whether the order is unlawful, i.e. , void ab initio , because the due process rights of the public were violated, and (B) whether the order is unlawful and unreasonable because the proposed pilot solar plant is not "necessary or convenient for the public service." Because we find that the Commission's decision to grant GMO's application for a CCN is not void ab initio , unlawful, or unreasonable, we affirm the Report and Order of the Commission.

I.

GMO is an "electrical corporation" and a "public utility" subject to regulation by the Commission under chapters 386 and 393. GMO filed an application for a CCN to construct, own, and operate a solar electric generation facility at their "Greenwood" site in rural Jackson County, Missouri. The Missouri Division of Energy and UFM, among others, were allowed to intervene. A hearing on the application was held before the Commission. The Commission granted GMO's application in its Report and Order. UFM and OPC each filed an Application for Rehearing, and the Commission issued its order denying each. This appeal follows.²

The proposed solar plant is a pilot project that would provide the company with the opportunity to "gain experience and skills in operating a utility-scale solar plant with an ultimate goal of increasing GMO's use of solar power." The plant is not needed to serve GMO's current customers but will provide an additional three megawatts of electrical power. Because of the plant's small size, GMO would not be able to discontinue the use of any of its nonrenewable electric generation sources, but it would offset an estimated 5,000 tons of carbon dioxide that would otherwise be emitted by a coal-fired plant.

The cost of the proposed solar plant is small relative to GMO's current rate base and its $180 million in annual capital expenditures. GMO intends to pay the cost of the solar plant from its available funds but ultimately recover those costs from its ratepayers. The ratepayers would benefit from the federal Investment Tax Credit, which would offset thirty percent of the plant's cost. Additional facts are set forth throughout the opinion.

II.

UFM raises two points on appeal, first alleging that the Commission's Report and Order is unlawful and then alleging that the Report and Order is unreasonable, while OPC combines both issues into a single point. Because several points and arguments overlap, we will address in a consolidated manner the following issues necessary to resolve the matter on appeal: (A) whether the order is unlawful, i.e. , void ab initio , because the due process rights of the public were violated, and (B) whether the order is unlawful or unreasonable because the plant is not "necessary or convenient for the public service."

A. Due Process

OPC alleges that the Commission's order is unlawful because the Commission violated the due process rights of the public. Specifically, OPC draws attention to the following: the Commission did not require the parties to submit prefiled written testimony pursuant to its standard process, and the parties were given only ten business days from the Commission's scheduling order to prepare for the hearing.

In an administrative proceeding, "[d]ue process is provided by affording parties the opportunity to be heard in a meaningful manner. The parties must have knowledge of the claims of his or her opponent, and have a full opportunity to be heard, and to defend, enforce and protect his or her rights." Harter v. Pub. Serv. Comm'n , 361 S.W.3d 52, 58 (Mo. App. W.D. 2011) (citations and inner quotation marks omitted). The authority of the Commission as well as the procedures and rules it follows are set out in chapter 386 and 4 CSR 240–2.010 et seq .See id . at 59.

OPC complains that the parties were not required to submit prefiled written testimony and were given only ten business days to prepare for the hearing before the Commission. As to the Commission's decision to not require that testimony be prepared in advance, 4 CSR 240–2.130(9) provides that "the [C]ommission ... may direct that testimony be taken live rather than prepared in advance." As to the requirements related to hearing notice, 4 CSR 240–2.110(1) provides that "[t]he [C]ommission shall set the time and place for all hearings and serve notice as required by law." Section 386.390.5 requires ten days' notice prior to a hearing, four days less than the notice provided to the parties here. Thus, the Commission followed established rules and procedures relating to evidence and hearing notice.

More generally, the parties were given the opportunity to be heard in a meaningful manner—they had knowledge of the claims before the hearing notice was issued and, despite the lack of prepared testimony, a full opportunity to be heard and defend, enforce, and protect their rights at the hearing. See id . at 58. The record on appeal reveals that the parties engaged in discovery, including the depositions of witnesses; presented a Non–Unanimous Stipulation of Agreed Upon Facts; filed written position statements regarding the joint list of issues; made opening statements; presented and cross-examined witnesses; offered rebuttal testimony; and filed written briefs at the conclusion of the case. The due process rights of the public were not violated by the Commission's decision to not require that testimony be prepared in advance nor because only ten business days' notice was provided prior to the hearing.

B. Necessary or Convenient

The next issue to be reviewed is whether the Commission's Report and Order is lawful and reasonable.

1. Standard of Review

Pursuant to section 386.510, the appellate standard of review of a [Commission] order is two-pronged: first, the reviewing court must determine whether the [Commission]'s order is lawful; and second, the court must determine whether the order is reasonable. The burden of proof is upon the appellant to show that the order or decision of the [Commission] is unlawful or unreasonable. The lawfulness of [the Commission's] order is determined by whether statutory authority for its issuance exists, and all legal issues are reviewed de novo . An order's reasonableness depends on whether it is supported by substantial and competent evidence on the whole record, and the appellate court considers the evidence together with all reasonable supporting inferences in the light most favorable to the Commission's order. The Commission's factual findings are presumptively correct, and if substantial evidence supports either of two conflicting factual conclusions, the Court is bound by the findings of the administrative tribunal.

State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n , 120 S.W.3d 732, 734–35 (Mo. banc 2003) (citations and inner quotation marks omitted). The "findings of the Commission are [prima facie ]" lawful and reasonable, and the burden is on the appellant to prove the order is invalid. State ex rel. Intercon Gas, Inc. v. Pub. Serv. Comm'n , 848 S.W.2d 593, 597 (Mo. App. W.D. 1993).

2. Discussion

Both Appellants allege that the Commission's Report and Order is unlawful because GMO did not meet its burden to prove that the solar plant is necessary or convenient for the public service, and the Commission's Report and Order is unreasonable. UFM alleges that the Commission's decision is unreasonable, or not based on substantial and competent evidence and thus arbitrary and capricious, because it was based solely on unsupported public opinion, political, and public policy speculation rather than a demonstrated public need. OPC argues that (1) the internally inconsistent manner in which the Commission addressed the evidence renders its order arbitrary and capricious, and (2) the Commission abused its discretion because there is no competent and substantial evidence to support its decision. Appellants also both argue that speculative evidence cannot be "substantial and competent."

a. Legal Background

"The lawfulness of [the Commission's] order is determined by whether statutory authority for its issuance exists, and all legal issues are reviewed de novo ." AG Processing , 120 S.W.3d at 734 (citations omitted). Section 393.170.3 provides: "The [C]ommission shall have the power to grant the permission and approval [to construct an electric plant] whenever it shall after due hearing determine that such construction ... is...