PRESENT: Hassell, C.J., Lacy, Keenan, Koontz, and Lemons, JJ.,
and Carrico 1 and Stephenson, S.JJ.
NORTHERN VIRGINIA ELECTRIC COOPERATIVE
v. Record No. 021998
VIRGINIA ELECTRIC & POWER COMPANY,
D/B/A DOMINION VIRGINIA POWER, ET AL.
OPINION BY
SENIOR JUSTICE ROSCOE B. STEPHENSON, JR.
February 28, 2003
OLD DOMINION ELECTRIC COOPERATIVE, ET AL.
v. Record No. 022023
VIRGINIA ELECTRIC & POWER COMPANY,
D/B/A DOMINION VIRGINIA POWER, ET AL.
FROM THE STATE CORPORATION COMMISSION
In these consolidated appeals of right, we decide whether
the State Corporation Commission (the Commission) erred in
determining which of two utilities is the proper provider of
electric power service to a customer whose property lies partly
within the certificated service territory of each utility.
I
A
Appellant, Northern Virginia Electric Cooperative (NOVEC),
is an electric power distribution cooperative organized and
existing under the Utility Consumer Services Cooperatives Act,
1
Chief Justice Carrico presided and participated in the
hearing and decision of this case prior to the effective date of
his retirement on January 31, 2003.
Code § 56-231.15 et seq., and is a Virginia public service
corporation. Appellant, Old Dominion Electric Cooperative (Old
Dominion), is a utility aggregation cooperative organized and
existing under the Utility Aggregation Cooperatives Act, Code
§ 56-231.38 et seq., and is the exclusive wholesale electric
power supplier for NOVEC. Appellant, Virginia, Maryland and
Delaware Association of Electric Cooperatives (the Association),
is comprised of all the electric power distribution cooperatives
operating in Virginia, Maryland, and Delaware.
Appellee, Virginia Electric & Power Company (VEPCO), doing
business as Dominion Virginia Power (Dominion Power), is a
Virginia public service corporation authorized to transact
business as an electric utility in the Commonwealth. Additional
appellees are the Smithsonian Institution (Smithsonian), United
States General Services Administration (GSA), and the
Commission.
B
A brief summary of the relevant facts will suffice.
Smithsonian is developing a National Air and Space Museum Annex
(the Annex) adjacent to Dulles International Airport.
Smithsonian proposes to open the Annex to the public in December
2003, a date that will coincide with the centennial celebration
of the Wright brothers' first powered flight.
2
The Annex is composed of a main building and a separate
parking lot and is located on land owned by GSA. Approximately
two-thirds of the entire site on which the Annex is located lies
within Dominion Power's certificated service territory.
However, approximately 95% of the main building is in NOVEC's
certificated service territory. Additionally, it is projected
that over 95% of the Annex's electric service load will be
located in NOVEC's certificated service territory.
In order to obtain electric power from Dominion Power,
Smithsonian installed its own service line. The line extends
for one-quarter of a mile from a location at the main building
and within NOVEC's certificated service territory to a point
just across the territory border and within Dominion Power's
certificated service territory. Smithsonian's project manager
testified that the service line was designed to enable
Smithsonian to receive electric power from Dominion Power.
Dominion Power, with NOVEC's consent, has been providing
temporary electric power service to the Annex during
construction. The record shows that both Dominion Power and
NOVEC are capable of providing reliable electric power service
to the Annex. Smithsonian, however, has requested that Dominion
Power be its service provider. The parties concede that it
would be contrary to the public interest for both utilities to
serve Smithsonian, and the Commission agrees.
3
II
On September 17, 2001, NOVEC filed a petition for
declaratory judgment with the Commission, seeking a declaration
that the Annex is within its certificated service territory and
that, therefore, it possesses the exclusive right under the
Utility Facilities Act, Code § 56-265.1 et seq., to provide
electric power service to the Annex. NOVEC also sought an
injunction prohibiting Dominion Power from providing such
service. 2 On October 12, 2001, Dominion Power filed an answer
and counter-petition, seeking a declaration that it has the
statutory and legal obligation to provide electric power service
to the Annex. 3
Thereafter, a Commission examiner conducted a public
hearing. Upon the evidence and argument heard ore tenus and the
parties' post-hearing briefs, the hearing examiner issued her
report on March 20, 2002. The hearing examiner found that a
combination of the "point-of-use" and the "geographic-load-
center" tests should be utilized to resolve this territorial
dispute. The hearing examiner further found that:
2
Subsequently, Old Dominion and the Association were
granted leave to participate in the proceeding in support of
NOVEC.
3
The United States Department of Justice accepted the
Commission's invitation to respond to NOVEC's petition and filed
a response on behalf of Smithsonian and GSA in support of
Dominion Power.
4
1. NOVEC has the right and the obligation to provide
electric service to the new Smithsonian museum
facility[,] including the hangar, the main central
utility plant, four air handling unit areas, and the
IMAX theatre; and
2. [Dominion Power] has the right and obligation to
provide service to the parking lot unless it transfers
that territory to NOVEC.
The hearing examiner recommended that the Commission enter
an order that: (1) adopts the findings of the report; (2) grants
NOVEC's petition for declaratory judgment; (3) denies Dominion
Power's counter-petition; (4) directs Dominion Power, Old
Dominion, and NOVEC, in consultation with Smithsonian, to submit
a plan, within 30 days of the date of the final order, detailing
how and when NOVEC would begin providing electric power service
to the Annex; (5) enjoins NOVEC, Old Dominion, and Dominion
Power to work cooperatively to accommodate a timely and
efficient transfer of service; (6) directs NOVEC, Old Dominion,
and Dominion Power to file a joint progress report bimonthly
until completion of the transfer; and (7) dismisses the matter
from the Commission's docket after completion of the transfer. 4
On May 1, 2002, the Commission issued its final order,
rejecting the hearing examiner's recommendations. The
Commission denied NOVEC's request for relief and, instead,
4
NOVEC, Old Dominion, and the Association filed comments in
support of the hearing examiner's report and urged the
Commission to adopt it. Dominion Power and Smithsonian filed
objections to the report.
5
granted Dominion Power's counter-petition, allowing Dominion
Power to provide electric power service to the Annex. Northern
Virginia Electric Cooperative, Etc., Case No. PUE-2001-00512.
These appeals ensued.
III
A
It is firmly established that a decision by the Commission
comes to this court with a presumption of correctness.
The Constitution of Virginia and statutes enacted by
the General Assembly thereunder give the Commission
broad, general and extensive powers in the control and
regulation of a public service corporation. The
Commission is charged with the responsibility of
finding the facts and making a judgment. This court
is neither at liberty to substitute its judgment in
matters within the province of the Commission nor to
overrule the Commission's finding of fact unless we
can say its determination is contrary to the evidence
or without evidence to support it.
Campbell County v. Appalachian Pow. Co., 216 Va. 93, 105, 215
S.E.2d 918, 927 (1975). Additionally, the Commission's decision
"is entitled to the respect due judgments of a tribunal informed
by experience," and we will not disturb the Commission's
analysis when it is " 'based upon the application of correct
principles of law.' " Lawyers Title Insurance Corp. v. Norwest
Corp., 254 Va. 388, 390-91, 493 S.E.2d 114, 115 (1997) (quoting
Swiss Re Life Co. Am. v. Gross, 253 Va. 139, 144, 479 S.E.2d
857, 860 (1997)). However, the Commission's decision, if based
6
upon a mistake of law, will be reversed. First Virginia Bank v.
Commonwealth, 213 Va. 349, 351, 193 S.E.2d 4, 5 (1972).
B
The Utility Facilities Act establishes the framework for
the granting of certificates of public convenience and necessity
authorizing utilities to provide exclusive service in designated
territories. Code § 56-265.3 thereof prohibits a utility from
providing service unless it first obtains from the Commission
such a certificate. Code § 56-265.4 prohibits a utility from
providing service in another utility's certificated service
territory unless the utility proves to the Commission's
satisfaction that the other utility is incapable of providing
adequate service, but only after the other utility is given a
reasonable time and opportunity to remedy its inadequacy.
The Commission possesses broad discretion in determining
whether to grant a certificate of convenience and necessity, and
we must accept the Commission's findings unless they are
contrary to or unsupported by the evidence. Stafford Corps. v.
Corp. Comm., 220 Va. 559, 562, 260 S.E.2d 226, 228 (1979). A
certificate of public convenience and necessity, we have held,
is a valuable property right entitled to protection by the
courts. Culpeper v. VEPCO, 215 Va. 189, 193-94, 207 S.E.2d 864,
867-68 (1974).
IV
7
A
NOVEC contends that "[t]he Commission's decision is
erroneous as a matter of law" because it "contradicts the
Utility Facilities Act's plain mandate that utilities shall not
serve customers' facilities that are located in other utilities'
service territories." Relying upon Code §§ 56-265.3 and –265.4,
NOVEC asserts that "no utility is allowed to invade the service
territory of another utility unless the certificated utility
cannot provide adequate service, after being given notice and an
opportunity to cure the deficiency." Thus, NOVEC asserts, the
Commission's decision destroyed its valuable property right.
NOVEC further contends that, based upon Commission
precedent, the "point-of-use" test should be applied to decide
this territorial dispute. Application of this test, NOVEC
asserts, would give it the right to provide electric power
service to the Annex because 95% of the facility lies within its
certificated service territory. NOVEC also asserts that
Dominion Power and Smithsonian manipulated the delivery point so
Smithsonian could receive its electric power service from
Virginia Power.
NOVEC relies upon two Commission cases: Prince George
Electric Cooperative, Etc., Case No. PUE-1996-00295, 1998 S.C.C.
Ann. Rep. 344 (the Prince George Case), and Petition of Kentucky
Utilities Company, Etc., Case No. PUE-1996-00303, 1999 S.C.C.
8
Ann. Rep. 368 (the Kentucky Utilities Case). In the Prince
George Case, a new customer began construction of a mineral
processing plant on a tract of land located wholly within the
certificated service territory of Prince George Electric
Cooperative (Prince George). The customer, however, desired
electric power service from VEPCO, and it purchased a narrow
strip of land, 4,380 feet long and 30 feet wide, that just
extended into VEPCO's service territory. VEPCO delivered
electric power service to the customer through the narrow
corridor to a point of use located in Prince George's service
territory. Prince George Case, 1998 S.C.C. Ann. Rep. at 344.
The Commission, after comparing the "point-of-use" and the
"point-of-delivery" tests, concluded that the point-of-use test
would best ensure the integrity of the certificated service
territories. The Commission reasoned that the point-of-delivery
test would destroy the essence of exclusive service territories
by permitting customers, through manipulation of delivery
points, to avoid receiving service from a utility that was
allotted the territory in which the customer was located. In
adopting the point-of-use test, however, the Commission made
plain that the test is not absolute and stated the following:
While we do not here adopt any absolute test and will
always consider the practical realities of each
situation, we intend to ensure that our decisions
enforce the Code's requirement of strong protection
9
for the exclusive service territories of utilities in
Virginia.
Id. at 349.
In the Kentucky Utilities Case, Kentucky Utilities Company
(Kentucky Utilities) served Sigmon Coal Company (Sigmon Coal) in
Kentucky Utilities' exclusive service territory. Sigmon Coal
installed facilities that allowed it to connect with Powell
Valley Electric Cooperative (Powell Valley) at a single
consolidated delivery point located in the adjacent service
territory allotted to Powell Valley. Powell Valley and Sigmon
Coal subsequently constructed additional facilities that enabled
Sigmon Coal to discontinue all service from Kentucky Utilities.
Kentucky Utilities Case, 1999 S.C.C. Ann. Rep. at 369.
The Commission ruled that Kentucky Utilities should serve
all of Sigmon Coal's facilities. The Commission concluded that,
if Sigmon Coal had been "allowed to avoid its electric provider
based on manipulation of its delivery point, the protection and
certainty that the Utility Facilities Act was designed to
provide to territorial grants would be diminished, if not
significantly eroded." Id. at 376.
B
Dominion Power contends that, when the facts of this case
are viewed in the light of the deferential standard we apply to
the Commission's decisions, NOVEC and Old Dominion cannot
10
prevail. Dominion Power further contends that the Commission's
decision does not violate the Utility Facilities Act or destroy
NOVEC's property right because NOVEC "never possessed an
exclusive right to serve the new museum." Dominion Power also
disputes NOVEC's contention that the Commission simply adopted a
"customer choice" test in deciding this case. According to
Dominion Power, the Commission based its decision on the
"practical realities" of the situation, as well as the
customer's stated preference.
V
A
In support of her recommendations to the Commission, the
hearing examiner concluded that "the combination of a point of
use and geographic load center analysis should be considered to
resolve the territorial dispute under the facts presented in
this case." The "geographic-load-center" test was discussed in
a Colorado case addressing issues similar to those in the
present case. See Public Service Co. v. Public Util. Com'n, 765
P.2d 1015, 1019 (Colo. 1988). Under the geographic-load-center
test, the utility that serves the majority of a customer's load
is permitted to serve the entire load, regardless of territorial
boundaries. Id.
B
11
The Commission did not adopt the hearing examiner's report.
Instead, it determined that Dominion Power is entitled to
provide electric power service to the Annex. After discussing
the relevant statutes and other authorities previously set forth
herein, the Commission stated that, "where two public utilities
hold certificates of public convenience and necessity to serve
real property that lies in both utilities' allotted service
territories[,] . . . we must consider the practical realities of
[the] situation." This conclusion, the Commission noted, is
consistent with the Prince George Case.
The Commission observed, however, that, "[u]nlike the
customer in Prince George, the Smithsonian did not manipulate
its land purchase to reach into [Dominion Power's] service
territory to place a meter." The Commission concluded,
therefore, that, "[u]nder these circumstances, both NOVEC and
[Dominion Power] have the right and duty to provide electric
service to this new customer if requested to do so." The
Commission added, however, that the utilities "were also both at
risk that the customer would request service from one rather
than the other," but that "no other factors or practical
realities necessitat[ed] a conclusion that the customer must
take service from NOVEC." The Commission agreed with the
hearing examiner and the parties that "it is impractical to
12
require that electric service be extended by both NOVEC and
[Dominion Power] to the Smithsonian museum."
The Commission, therefore, held the following:
[G]iven no extenuating circumstances or other
practical considerations, where the facilities of a
new customer straddle the contiguous service territory
boundaries of two utilities, and with the absence of
manipulation, that customer may request service from
the utility of its choice. Section 56-234 of the Code
of Virginia directs every utility to "provide adequate
service and facilities at reasonable and just rates to
any person, firm, or corporation along its lines
desiring same." 5
VI
We do not think that the General Assembly, in enacting the
Utility Facilities Act, could have envisioned the peculiar facts
and circumstances of the present case. Consequently, the
Commission, as the tribunal informed by experience, was required
to exercise its broad discretion in order to fashion a fair,
reasonable, and practical resolution of the issue at hand. When
we accord to the Commission's decision the presumption of
correctness to which it is entitled, it is clear that the
Commission's decision must be affirmed. Finding that the
5
NOVEC and Old Dominion assert that Code § 56-234 is
limited in scope to issues involving rates and that the
Commission erroneously used this statute to "supersede" the
operation of the Utility Facilities Act. We reject this
assertion and, in doing so, rely upon two non-rate cases in
which we noted that Code § 56-234 required a public utility to
furnish adequate service to its customers. Henderson v. Central
Telephone Co., 233 Va. 377, 379, 355 S.E.2d 596, 597 (1987);
13
decision is supported by the law and the evidence, we will
affirm the Commission's order.
Affirmed.
Tidewater Utilities v. Norfolk, 208 Va. 705, 711, 160 S.E.2d
799, 803 (1968).
14