Untitled Texas Attorney General Opinion

r; THE ATTCBIRXEY GENERAL 057 TEXAS Octo~ber 28, 1986 Ms. Peggy Rosson Opinion No. JM-571 Chairman Public Utility Commission Re: Whether a municipality is re- of Texas quired by section 16 of article 7800 Shoal Creek Blvd. 1446c, the Public Utility Regula- Suite 400N tory Act, to file a ten-year fore- Austin, Texas 78757 cast for assessments of land re- sources for its service area Dear Ms. Rosson: You ask the following questions: 1. Are muni:ipalities required by section 16(c) of the Pub!.icUtility Regulatory Act to file a ten year forel:astfor assessments of load and resources for their service areas? 2. If the answer to the first question is in the affirmative, ,what remedies are available for the failure of s,municipality to file such a ten year forecast? The Public Utility Regulatory Act (hereinafter PURA or the Act), article 1446~. V.T.C.S., establishes a comprehensive regulatory system over the rates, services, and operations of public utilities. city of Sherman V. Public Utility -Commission of Texas, 643 S.W.2d 681, 683 (Tex. 1983). Prior to I&sage of the Act, Texas' municipalities played a ma-jar role in th'z regulation of public utilities. Id. In response to municipalities' concerns over state-wide regulation, the legislature retained munic:lpalregulation within municipal boundaries, see art. 1446c, $917, 21, :!I!, and exempted municipally-owned utilities from many of the Act's gen~!ralregulatory provisions. See art. 1446c, 553(c), 17(e). Because of these exemptions and because of the complexity of the Act, delzerminingwhich provisions of the Act apply to municipalities can be d:lfficult. The section of the A#:t about which you inquire, section 16(c), provides, in part: p. 2542 Ms. Peggy Rosson - Page 2 (JM-571) Every 8enerati.ngelectric utility in the state shall prepare anT transmit to the commission by December 31, 198:;,and every two years thereafter a report specifying at least a lo-year forecast for assessments of load and resources for its service area. Tke report shall include a list of facilities whict. will be required to supply electric power during the forecast periods. The report shall be in a form prescribed by the commission. (Emphasis added). V.T.C.S. art. 1446, 916(c) Your request requires a determination of whether "generating electric utility" includes municipal utilities. Although no inflexible rule governs the construction of statutes, the dominant principle lo to give effect to the intent of the legislature. City of Sherzm V. Public Utility Commission of Texas, 643 S.W.2d at 684. The language of the statute is the primary guideline in determining legislative intent. Id. When the language of a statute is ambiguous, however, the courts consider the history of the subject matter, the purposes to be accomplished, the problems to be remedied, and the results to be obtained. -Id. By .its terms, section 16(c) applies to all "generating electric utilities." The Act, in section 3(c), defines the terms "public utility" and "utility" to exclude municipal utilities: The term 'public utility' or 'utility,' when used in this Act, includes any person, corpora- tion, river autharity, cooperative corporation, or any combination thereof, other than a municipal corporation or 6. water supply or sewer service corporation. . . . (Emphasis added). If section 16(c) is depensient on this section for meaning, section 16(c) cannot apply to muxlcipally-owned utilities. The scope and purpose of section 16(c), however, prevent such a superficial analysis of the question at hand. Eecause section 16(c) refers specifically to a "generating electric utility" rather than simply to a "public utiilty" or "utility." zhe section is ambiguous. Accordingly, analysis of section 16(c) cannot rest on its language alone. Arguably, if the legislature intended section 16(c) to apply to municipally-owned utilitie~~,it would have expressly included munici- palities. See, e.g., art. :L446c.527(f). Several Texas courts, how- ever. have held that municioalities are covered bv orovisions of the Act which do not refer expressly to municipalities.' See, e.g., City of Coahoma V. Public Utility Commission of Texas, 626 S.W.2d 488 (Tex. 1981); San Antonio Independent School District V. City of San Antonio, p. 2543 Ms. Peggy Rosson - Page 3 (m-571) 614 S.W.2d 917 (Tex. Civ. App. - Eastland 1981, writ ref'd n.r.e.), cert. denied, 106 S. Ct. 347; City of Lubbock V. South Plains Electric Cooperative, Inc., 593 S.k'.2d 138 (Tex. Civ. App. - Amarillo 1979, writ ref'd n.r.e.); --Southwestern Public Service Company V. Public Utility Commission of Texai:,578 S.W.2d 507 (Tex. Civ. App. - Austin 1979, writ see also Attorney General Opinion JM-353 (1985). In these cases, the courts refused a blind application of the exclusionary definition in section 3(c). For example, in San Antonio Independent School District V. City of San Antonio, the court addressed the scope of section 48 of the Act, a section which deals with "payments made in lieu of taxes by a public utility to a municipality by which it is 'owned.. . ." (Emphasis added). A strict application of the section ,3(c)definition of "public utility" would render section 48 meaningless. The court held that section 48 does not depend on section 3(c: for meaning and that section 48 clearly applies to municipally-owned utilities. 614 S.W.2d at 919. The cases which discuss the applicability to municipalities of the Act's provisions regarding certificates of public convenience and necessity are of particular importance in determining the scope of section 16(c). Section l(i(Ic)influences the factors considered in section 54(c), regarding certification proceedings. See V.T.C.S. art. 1446~. 116(f). It is now well-established that muniFipalities must comply with section 50(2) of the Act, a section which requires "retail public utilities" to obta:.n certificates of public convenience and necessity orior to extend::ng service to an area served by another retail &biic utility. City of Lubbock V. South Plains- Electric e itive, Inc., 593 S.,t?!d at 141-42; Southwestern Public Service P Y v. Public Utility Commission of Texas, 578 S.W.2d at 510-11; see also Public Utility Co~&ssion of Texas V. South Plains Electric Cooperative. Inc.. 635 S.W:Zd 954, 95;6-57 (Tex. App. - Austin 1982, writ ref'd n.r.e.); City --of Brownsville V. Public Utility Commission of Texas, 616 S.W.2d 402 (Tex. Civ. App. - Texarkana 1981. writ ref'd n.r.e.). In City of Lubbock V. South Plains Electric Cooperative, Inc., the court noted that sect& 49 of the Act carves out a separate definition for "retail public utility" which expressly includes municipalities. Section 5(1(2)refers to retail public utilities but fails to expressly include aunicipalities. Application of the section 3(c) definition to section 50(2) would result in the exclusion of municipalitie5. The court .applied the section 49 definition rather than the section 3(c) def:tuition and held that municipalities must comply with section 50(2). 593 S.W.2d at 141-42. Section 16(c) is similar to section 50(2) in that section 16(c) applies to a specific category of utilities -- "8enerating electric utilitie5." Although this phrase is not define?, separately in the Act, as is the phrase "retail public utilities," a similar construction should apply. - See Attorney General Opinion JM-,353(1985). p. 2544 Ms..Peggy Rosson - Page 4 (JM-571) In determining whether section 50(2) applies to municipalities, the City of Lubbock court also focused on whether the certification process impinged upon the powers granted to municipalities under the Act. -See art. 1446~. 0$17(s), 21, 22. The court emphasized that [t]he authority to grant or deny certificates of public convenience and necessity is a separate, distinct and dif:Eerent jurisdictional power than the authority granted the City by the Act. 593 S.W.2d at 141. Similarly, in Southwestern Public Service Company V. Public Utility Commissionsof Texas, 578 S.W.2d at 511, the court emphasized that the original jurisdiction granted to municipalities under section 17(a) is "[slubject to the limitations imposed in this Act." 578 S.W.2d at 511; cf. City of Sherman V. Public Utility Commission of Texas, supra, at 684-85 (section 17(e) should not be construed to negate sectio:i 17(a)). Imulicit in these two court of appeals decisions is the conclusion 'that section 3(c) excludes municipalitie5 only in rec,ognition of, and only to the extent of, municipal powers granted elsewhere in the Act. It must be remembered that section 3(c) is a definitional provision - an aid to statutory construction -- not a grant of power. Cf. Hardin Water Supply Corporation V. City of Hardin. 671 S.W.Zd 505(Tex. 1984) (construed section 3(c) as a limit olisection 17(a) iurisdiction over a water company because sections 3:~). 3(c)(4),-ana 3(u) remove water supply corporations from definition of utilities). In City of Coahoma v. Public Utility Commission of Texas, 626 S.W.2d 488 (Tex. 1981), th; Texas Supreme Court relied primarily on legislative intent in refusing to appiy section 3(c) to section 53 of the Act. Section 53 is th? "grandfather clause" for certificates of convenience and necessity. By its terms, section 53 applies only to "public utilities." Becaur,emunicipalities must comply with section 50(2), however, it would 'xb intrinsically unfair to deny them the protection of section 53. In light of the overall purpose of the certificate provisions of the Act, the court concluded that the legislature could not hare intended to deprive "cities of the protection from encroachmeut afforded to public utilities under the Act." 626 S.W.2d at 491. These decisions focus on two things: (1) whether the legislature intended the provision in question to apply to municipalities and (2) how application of the particular provision would affect the limited regulatory powers granted to municipalities by the Act. Applying these standards tc section 16(c) compels the conclusion that the Texas courts would hold that section 16(c) applies to municipal- ities. As indicated, section 16(c) is vital to certification proceed- ings. See art. 1446~. §16(,f);see also 9554(d), 54(e). It would be exceedinxy difficult to develop a long-term statewide electrical p. 2545 Ms. Peggy Rosson - Page 5 (JM-571) energy forecast, as requirei by section 16(b) of the Act, without the inclusion of all electric service areas in the state. Moreover, application of section 16(1::1to municipalities in no way interferes with the powers granted to municipalities under the Act. You also ask what remedies are available to the Public Utility Commission to enforce section 16(c). Article XI (sections 71 through 77). of the Act contains thl?Act's enforcement provisions, In City of Lubbock v. South Plains Ele~~:ricCooperative, Inc., 593 S.W.2d at 142, the court held that [t]hese sections are applicable only to 'a public utility or any other person or corporation.' As such terms are de::inedwithin the Act, the City of Lubbock is not a public utility, corporation. [Citations omitted.]a p~'c'c"o"r"din"giy~ the trial court correctly found that under the Act, South Plains has no administrative remedy or action at law. (:Zmphasisadded). Unlike section 16(c), these sections do not create a separate category of entities affected. Nevertheless, the court noted that injunctive relief is available "to Isrotect the integrity of certificates of public convenience and necessity issued by a regulatory commission acting under legislative authority." 593 S.W.2d at 142. Accordingly, the commission could seek i,njunctiverelief to enforce section 16(c). The ccmaission may not, however. impose administrative sanctious under sections 71 through 77 o:i the Act without legislative action to include municipalities within those sections. SUMMARY Section 16(c) of article 1446~. the Public Utility Regulatory Act, applies to municipalities. The Public Utility Commission, however, lacks the authority to impose administrative sanctions to enforce section 16(c). The commission may seek injunctive relief :Eromthe courts. MATTOX Attorney General of Texas JACK HIGRTOWER First Assistant Attorney Gen.sral p. 2546 Ms. Peggy Rosson - Page 6 (JM-571) MARY KP.LLER Executive Assistant Attorney General RICK GILPIN Chairman, Opinion Committee Prepared by Jennifer Riggs Assistant Attorney General p. 2547 Ms. Peggy Rosson - Page 7 (.JM-571) RQ-807 JH- INDEX READINGS -- J.R. DRAFP ADMINISTRATIVE LAW CITIES AND TOWNS ENERGY POLITICAL SUBDIVISIONS PUBLIC UTILITIES RRNFdDIES STATE BOARDS, COMMISSIONS, E'PC. PUBLIC UTILITY COMMISSION STATUTORY CONSTRUCTION UTILITIES p. 2548