June 21 2011
DA 10-0337
IN THE SUPREME COURT OF THE STATE OF MONTANA
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.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. CDV 09-127
Honorable Kathy Seeley, Presiding Judge
COUNSEL OF RECORD:
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
Submitted on Briefs: April 6, 2011
Decided: June 21, 2011
Filed:
__________________________________________
Clerk
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Justice Michael E Wheat delivered the Opinion of the Court.
¶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
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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
1
MGD did not participate in the PSC or District Court proceedings.
2
The Tariff, effective July 1, 2003, establishes guidelines and procedures for customers choosing
between the default electricity supplier (NWE) and competitive electricity suppliers, including
requirements that public agency customers, such as the City, notify NWE at least thirty business
days prior to any market supply deliveries. Midsized customers, such as Benefis, are required to
give notice at least ten business days prior to choosing a competitive supplier.
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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.
¶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
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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
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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
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person, rather than an individual meter or point of delivery, because such interpretation was
consistent with the plain meaning of the term “customer” and the legislature’s intent to
protect the rights of customers who chose to continue to receive electricity from private
suppliers, such as ECP, after the Reintegration Act was enacted.
¶17 On appeal, NWE and the PSC argue the Tariff has the force of law; the legislature is
presumed to be acquainted with existing law; and, therefore, because the City and Benefis
did not comply with the Tariff’s notice provisions, NWE could not legally grant their
untimely request to change electricity suppliers. NWE and the PSC further argue the PSC’s
interpretation of § 69-8-201(2), MCA (2007), avoids the absurd result that a customer could
fit into both §§ 69-8-201(2)(a) and (b), MCA (2007), and is consistent with the legislative
intent behind the Reintegration Act that NWE become a vertically-integrated utility, with
customer choice being eliminated in order to achieve that end.
¶18 In interpreting a statute, a court’s duty “ ‘is simply to ascertain and declare what is in
terms or in substance contained therein, not to insert what has been omitted or to omit what
has been inserted.’ ” Spoklie v. Mont. Dept. of Fish, Wildlife & Parks, 2002 MT 228, ¶ 24,
311 Mont. 427, 56 P.3d 349 (quoting § 1-2-101, MCA). A court must attempt to implement
the intent of the legislature when interpreting a statute by looking to the plain meaning of the
words used. MM&I, LLC v. Bd. of Co. Commrs. of Gallatin Co., 2010 MT 274, ¶ 44, 358
Mont. 420, 246 P.3d 1029. Absent statutory definitions, the plain meaning of the words used
controls. Spoklie, ¶ 25. In discerning the plain meaning, the words used shall be reasonably
and logically interpreted, so as to give them their usual and ordinary meaning. MM&I, ¶ 44.
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¶19 The Reintegration Act does not specifically define the term “customer.” However, it
uses the term “customer” with other terms in several definitions, all of which contemplate
entities or persons, rather than individual meters, including “customer-generator,” which
means “a user of a net metering system,” § 69-8-103(6), MCA (2007); “large customer,”
which means, “for universal system benefits programs purposes, a customer with an
individual load greater than a monthly average of 1,000 kilowatt demand in the previous
calendar year for the individual load,” § 69-8-103(15), MCA (2007); “low-income
customer,” which means “those energy consumer households and families with incomes at or
below industry-recognized levels that qualify those consumers for low-income energy-
related assistance,” § 69-8-103(17), MCA (2007); and, “retail customer,” which means “a
customer that purchases electricity for residential, commercial, or industrial end-use
purposes and does not resell electricity to others,” § 69-8-103(23), MCA (2007).
¶20 In addition, the Tariff upon which the PSC’s and NWE’s arguments rely contains
definitions incorporating the term “customer,” all of which refer to an entity or person, rather
than an individual meter. For example, the Tariff defines an “individual customer” as “a
person or entity separately identified in the Utility’s billing system as the person or entity to
which bills will be sent for service to one or more metered or unmetered accounts”; a “large
customer” as “an existing retail customer with an actual average monthly Billing Demand for
the previous calendar year, or a new customer’s estimated annual average monthly demand
equal to or greater than 5,000 kilowatts”; a “mid-sized customer” as “[a]n existing retail
customer with an actual average monthly Billing Demand for the previous calendar year, or a
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new customer’s estimated annual average monthly demand, of at least 50 kilowatts and less
than 5,000 kilowatts”; and, a “small customer” as “[a] retail customer with an actual average
monthly Billing Demand for the previous calendar year, or a new customer’s estimated
annual average demand, less than 50 kilowatts.”
¶21 Further, the term “customer” ordinarily and usually means “a person who purchases
goods or services from another; buyer; patron” or “a person one has dealings with.” Random
House Webster’s College Dictionary 328 (2d ed., Random House 1999). By contrast, the
term “meter” ordinarily and usually means “an instrument for measuring and recording the
quantity of something . . . .” Id. at 832. The treatment of the term “customer” by the
Reintegration Act and Tariff and its plain meaning all indicate that it means an entity or
person, such as Benefis, rather than an individual meter.
¶22 Finally, we are not persuaded by the PSC’s argument that under § 69-8-201(2), MCA
(2007), “customer” must mean an individual meter, rather than an entity or person, in order
to maintain mutually exclusive classes. This argument is erroneously based upon the Tariff
notice provisions, which have no application here. Where administrative rules are in conflict
with or inconsistent with a statute, the statute prevails. Section 2-4-305(6)(a), MCA. The
Tariff went into effect in July 2003 (before the Reintegration Act was enacted) and imposes
notice requirements on consumers choosing between a competitive electricity supplier and
default supplier. The Tariff notice requirements regarding choosing electricity supply
service are inconsistent with the clear deadline established by § 69-8-201(2), MCA (2007),
that a customer not purchasing electricity from a public utility on October 1, 2007, be
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allowed to continue to purchase electricity from a competitive supplier. The Tariff is
inapplicable.
¶23 We cannot insert into § 69-8-201(2), MCA (2007), what has been omitted. Spoklie,
¶ 24. Had the 2007 Montana Legislature intended that individual meters receiving electricity
from an electricity supplier on October 1, 2007, be permitted to continue to do so, but
individual meters receiving electricity from NWE on October 1, 2007, be required to
continue purchasing electricity from NWE, it should have stated so. Instead, the Legislature
plainly stated that customers who were receiving all of their electricity from a supplier, such
as ECP, on October 1, 2007, could continue doing so. Interpreting “customer” as an entity or
person, rather than an individual meter, comports with the plain language of the term, its
usage within the Reintegration Act and Tariff, and the legislative intent that those persons or
entities who had elected to receive their electricity from a competitive supplier, pursuant to
the Deregulation Act, be allowed to continue to do so.
CONCLUSION
¶24 The District Court correctly determined that under § 69-8-201(2), MCA (2007), the
term “customer” means an entity or person, rather than an individual meter and, accordingly,
correctly permitted the City and Benefis to receive electricity from ECP at the disputed
meters.
¶25 Affirmed.
/S/ MICHAEL E WHEAT
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We Concur:
/S/ JAMES C. NELSON
/S/ PATRICIA COTTER
/S/ JIM RICE
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