And Okla. Energy Results LLC. v. Corp. (In re Okla. Gas & Elec. Co.)

417 P.3d 1196
CourtSupreme Court of Oklahoma
DecidedApril 24, 2018
DocketNo. 115,029; (with No. 115,030)
StatusPublished
Cited by8 cases

This text of 417 P.3d 1196 (And Okla. Energy Results LLC. v. Corp. (In re Okla. Gas & Elec. Co.)) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
And Okla. Energy Results LLC. v. Corp. (In re Okla. Gas & Elec. Co.), 417 P.3d 1196 (Okla. 2018).

Opinions

KAUGER, J.:

¶1 This case involves an order of the Oklahoma Corporation Commission that granted Oklahoma Gas & Electric Company pre-approval to install pollution-control devices at one of its power plants. The order raises two issues: 1) whether res judicata precluded the Commission from pre-approving OG&E's capital expenditure; and 2) whether the Commission could grant pre-approval under Okla. Const. art. 9, § 181 and 17 O.S. 2011 § 151 et seq . rather than 17 O.S. 2011 § 286(B).

¶2 We hold that although res judicata did not preclude the Commission from pre-approving *1199the expenditure, it lacked authority outside of 17 O.S. 2011 § 286(B)2 to do so.

FACTS

¶3 Pursuant to the Clean Air Act and other federal statutes,3 the United States Environmental Protection Agency set certain emission limits that affect coal and natural gas facilities operated by Oklahoma Gas & Electric Company ("OG&E"). These emission requirements must be met by January 4, 2019, and OG&E consequently prepared an environmental compliance plan.4 The plan involved a rate base proposal to add 1.1 billion dollars for a number of construction projects at various OG&E facilities and included the installation of "dry scrubbers"5 at the Sooner Power Plant.

¶4 On August 6, 2014, OG&E submitted an application to the Oklahoma Corporation Commission (the "Commission") seeking pre-approval of the environmental compliance plan and a recovery rider to recoup its expenditures through rate adjustments.6 The Commission denied this application because OG&E failed to demonstrate that its plan would be fair, reasonable, and non-prejudicial to ratepayers.7 The Commission noted that OG&E failed to consider alternative energy sources such as wind and electric power. It also took issue with the fact that future environmental regulations had been ignored. Concluding that OG&E failed to demonstrate the financial benefit of its plan over potential alternatives, the Commission denied authorization. OG&E moved to modify the order, requesting that the projects be approved without a recovery in rates until the reasonableness of the costs could be determined in a later proceeding. The Commission declined to modify its final order.

*1200¶5 In the 2014 application, OG&E sought the Commission's authorization under 17 O.S. 2011 § 286(B).8 Section 286(b) provides that an electric utility may seek the Commission's approval to make capital expenditures on equipment that is necessary to comply with environmental regulations. If the Commission approves the plan, the purchased equipment is presumed used and useful and the utility may adjust its rates to recover the costs of the expenditure.

¶6 After OG&E's first application was denied, it filed a second application with the Commission on February 6, 2016.9 The 2016 application involved only installation of the dry scrubbers with projected costs of roughly 490 million dollars. OG&E sought approval of the decision to install the scrubbers, but did not seek a determination on the reasonableness of cost recovery. It explicitly stated that any cost recovery would be addressed in a later proceeding.10 The final order entered by the Commission, which is presently at issue, approved OG&E's decision to install the scrubbers. The Commission found that the decision "[was]-no more or no less-reasonable."11

¶7 Unlike the 2014 application, which sought approval under 17 O.S. 2011 § 286(B), the 2016 application sought approval under Okla. Const. art. 9, § 1812 and 17 O.S. 2011 § § 151 et seq .13 The Oklahoma Constitution, art. 9, § 18 grants the Commission general authority to supervise, regulate, and control transmission companies like OG&E. It further grants the Commission authority to promulgate and enforce rules, regulations, and requirements. Title 17 O.S. 2011 § 152 similarly provides that the Commission "shall have general supervision over all public utilities, with power to fix and establish rates and to prescribe and promulgate rules, requirements and regulations." In its final order, the Commission concluded that while pre-approval under § 286(B) raises issues about cost recovery, pre-approval under Okla. Const. art. 9, § 18 and 17 O.S. 2011 § 152 does not.14

¶8 Seeking review of the Commission's order pre-approving installation of the scrubbers, Oklahoma Energy Results, LLC., and Sierra Club, Inc. ("Appellants"), filed a Petitioner in Error. This Court retained jurisdiction and now vacates the Commission's order.15

STANDARD OF REVIEW

¶9 The Oklahoma Constitution, art. 9, § 20 grants this Court the power to review decisions of the Commission.16 It envisions two standards of review. When a "constitutional question is implicated," a de novo standard is applied.17 In all other appeals, a more deferential standard is applied, and we "determin[e] whether the Commission adequately performed its duty under federal and state law and whether the Commission's findings *1201are supported by substantial evidence."18 Because the Commission granted pre-approval pursuant to Okla. Const. art. 9, § 18, we review its decision de novo .

I.

Res Judicata Did Not Preclude The Commission From Pre-Approving OG&E's Capital Expenditure.

¶10 Both the 2014 and 2016 applications sought the Commission's approval to install the dry scrubbers. The Appellants have consequently argued that the second order was barred under the doctrines of claim and issue preclusion, or res judicata. We disagree.

¶11 The Commission may exercise legislative, judicial, or executive power.19 When it exercises judicial power, the Commission is functionally a court of record, and judicial doctrines such as res judicata are applicable.20 When it exercises legislative power, however, res judicata is not applicable.21

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Bluebook (online)
417 P.3d 1196, Counsel Stack Legal Research, https://law.counselstack.com/opinion/and-okla-energy-results-llc-v-corp-in-re-okla-gas-elec-co-okla-2018.