Williamson v. Klingman

• Decision Date: 14 February 2012
• Docket Number: No. DA 11–0382.,DA 11–0382.
• Parties: Dr. Paul WILLIAMSON, Rev. Dr. Vern Klingman, Patricia Klingman, Russell L. Doty, James T. and Elizabeth Gruba, Leo G. and Jeanne R. Barsanti, Petitioners and Appellants, v. MONTANA PUBLIC SERVICE COMMISSION and Northwestern Energy, Respondents and Appellees.
• Court: Montana Supreme Court

2012 MT 32
272 P.3d 71
364 Mont. 128

Dr. Paul WILLIAMSON, Rev. Dr. Vern Klingman, Patricia Klingman, Russell L. Doty, James T. and Elizabeth Gruba, Leo G. and Jeanne R. Barsanti, Petitioners and Appellants,
v.
MONTANA PUBLIC SERVICE COMMISSION and Northwestern Energy, Respondents and Appellees.

No. DA 11–0382.

Supreme Court of Montana.

Submitted on Briefs Nov. 23, 2011.Decided Feb. 14, 2012.

[272 P.3d 74]

For Appellants: Russell L. Doty, Attorney at Law, Billings, Montana.

For Appellee Montana Service Commission: James C. Paine, Special Assistant Attorney General, Montana Service Commission, Helena, Montana.

For Appellee Northwestern Energy: Monica J. Tranel, Tranel, McCarter & Morris, PLLC, Helena, Montana.Justice JAMES C. NELSON delivered the Opinion of the Court.

[364 Mont. 129] ¶ 1 Appellants are a group of individuals who filed a complaint with the Montana Public Service Commission (Commission or PSC) against NorthWestern Energy (NorthWestern or NWE) concerning NorthWestern's provision of street lighting services. The PSC dismissed the complaint on the ground that the four named complainants lacked standing under § 69–3–321, MCA. Appellants then filed an amended complaint in which they named four additional complainants.

[272 P.3d 75]

The PSC decided that Appellants were procedurally barred from amending their complaint. Moreover, the PSC stated that [364 Mont. 130] it was not persuaded to reconsider its earlier ruling on standing in any event. Appellants sought review in the Thirteenth Judicial District Court, Yellowstone County. The District Court affirmed, and Appellants have now brought the case to this Court.

¶ 2 There are two issues on appeal: (1) whether the four original complainants have standing to pursue their complaint in the PSC under § 69–3–321, MCA, and (2) whether the PSC properly rejected the amended complaint. As to the first issue, we affirm the PSC's and the District Court's conclusions that the original complainants lack standing. As to the second issue, we conclude that the PSC's and the District Court's rationales for rejecting the amended complaint were incorrect, and we accordingly reverse and remand for further proceedings as detailed below.

BACKGROUND Street Lighting Service

¶ 3 Title 7, chapter 12, part 43 of the Montana Code Annotated contains provisions relating to the creation of special improvement districts for lighting streets and highways. Section 7–12–4301(1), MCA, authorizes the council of any city or town to create such districts. Once a street lighting district is created, the city or town council may arrange to have the posts, wires, pipes, conduits, lamps, or other suitable and necessary appliances procured and erected by contract, by the street commissioner, or by any other official of the city or town. Section 7–12–4308(1)(a), MCA. The costs of installing, maintaining, and supplying electrical current for the street lighting system are to be borne, in whole or in part, by the owners of property within the lighting district. Sections 7–12–4301(1)(b), –4321, MCA. The city or town council is authorized to assess and collect these costs by special assessment against said property. Section 7–12–4301(1)(c), MCA.

¶ 4 Under § 69–3–306(1), MCA, the PSC has authority to prescribe “classifications of the service of all public utilities.” Such classifications may take into account the quantity used, the time when used, and any other reasonable consideration; and each public utility is required to conform its schedule of rates, tolls, and charges to such classifications. Section 69–3–306(1), MCA. Pursuant to this statute, the PSC has approved a number of customer classes for NorthWestern. The electric rates assessed each customer class vary based on cost-of-service studies and are designed to generate sufficient monies to meet the class revenue requirement. Examples of NorthWestern's customer classes include residential (governed by Tariff Schedule REDS–1), small commercial (Tariff Schedule GSEDS–1), large commercial (Tariff [364 Mont. 131] Schedule GSEDS–2), irrigation (Tariff Schedule ISEDS–1), and street and area lighting (Tariff Schedule ELDS–1).

¶ 5 NorthWestern directly bills the members of the street and area lighting class for the provision of street lighting service. Included within this class are municipalities, such as the City of Billings and the City of Missoula, which pay the street lighting bills to NorthWestern. Property owners in the street lighting districts do not pay NorthWestern directly for the provision of street lighting service. But, as discussed below, Appellants contend that the property owners ultimately pay for the service because the city assesses the property owners within each district for the costs of the street lighting, as reflected by separate lines on their property tax bills. In addition, Appellants allege that persons residing outside the street lighting districts help defray, in general property taxes, the costs of street lighting.

Appellants' Claims

¶ 6 Appellants brought this action seeking various types of relief. Primarily, they would like the PSC to require NorthWestern to replace existing high pressure sodium (HPS) street lights with light emitting diode (LED) street lights. Appellants contend that “[a]doption of new energy saving infrastructure technologies, such as LEDs, can play an important role in helping the United States and the State of Montana to achieve

[272 P.3d 76]

their goals to become more energy independent and to generate less CO2 [carbon dioxide].” Appellants further contend that the costs of LED street lights “have now dropped to a level where we will waste more money and energy in the long run by waiting for future improvements and price cuts in LED luminaires than to move forward with LED street lighting projects.”

¶ 7 Prior to the commencement of the instant action, the PSC initiated a proceeding to “investigate the technical and economic feasibility and possible adoption of rules related to the installation by regulated electric utilities of [LED] street and area lighting.” The PSC held an informal roundtable in April 2009. Various parties participated or provided comments, including NorthWestern, Montana–Dakota Utilities Co., and two of the complainants in the present case. NorthWestern and Montana–Dakota advised the PSC that, according to their analyses, “the costs of converting their existing street and area lighting to LED luminaires exceed the benefits at this time” and “payback periods could often exceed the life of the luminaire.” The utilities also cited “legal and administrative problems” with adopting a street lighting rule. Ultimately, the PSC concluded that “LED technology is a promising technology, but is currently at a [364 Mont. 132] developmental stage that does not warrant a mandatory street and outdoor lighting conversion program.” Thus, the PSC elected “not [to] pursue an LED street and outdoor lighting rulemaking at this time.” The PSC noted, however, that NorthWestern and Montana–Dakota are both “obligated to acquire cost-effective energy efficiency and conservation in their resource planning processes.” Accordingly, the PSC stated that it expected the utilities to “continue to monitor the technical and economic aspects of LED technology” and to “include consideration of LED lighting technology along with other energy efficiency alternatives when the utilities develop and submit their resource planning filings.”

¶ 8 Appellants commenced the instant action in February 2010. While acknowledging the 2009 proceedings, Appellants distinguish the present proceeding on several grounds. Primarily, they contend that the cost-benefit analysis which NorthWestern presented to the PSC in 2009 failed to include consideration of so-called “ownership overcharges.” In this regard, Appellants allege that many of the poles, mast arms, luminaires, and wiring of NorthWestern-owned street lights (which Appellants refer to collectively as “the street lighting infrastructure”) have been fully paid for—i.e., that NorthWestern has already recouped the full cost of these assets—and that NorthWestern customers should not have to continue paying “ownership charges” for them. (Appellants note that “ownership charges” do not include charges for the energy used, for transmission and distribution of that energy, and for billing, maintenance, and other such expenses.) Appellants further allege that in Billings alone, NorthWestern has collected millions of dollars in ownership charges beyond the cost of the street lighting infrastructure. Appellants opine that the same thing has occurred in other Montana cities and counties served by NorthWestern. They argue that NorthWestern should be required to disgorge these “ownership overcharges,” which could then be used to defray the installation costs of switching to more energy efficient LED lighting.

¶ 9 Thus, while the utility companies asserted in the 2009 proceedings that “the costs of converting their existing street and area lighting to LED luminaires exceed the benefits at this time,” Appellants argue here that the costs of conversion are substantially reduced or eliminated when the alleged ownership overcharges are factored into the equation. Appellants observe that their complaint “narrowly addresses the cases where a mandatory conversion [to LED technology] is warranted.” For instance, based on their analysis of various street lighting districts in Billings, Appellants allege that the [364 Mont. 133] City of Billings is paying $60,742 per month in ownership overcharges and that these funds could instead be used to “pay for new energy efficient LED lighting without an increased cost to North Western's customers ” (emphasis in original). Appellants conclude that Billings taxpayers would pay roughly 80 percent less for street lighting if the wrongful ownership charges were eliminated and the already-collected overcharges were used to pay for new LED lights. Again...