City of Richardson v. Oncor Elec. Delivery Co.

539 S.W.3d 252
CourtTexas Supreme Court
DecidedFebruary 2, 2018
DocketNo. 15-1008
StatusPublished
Cited by91 cases

This text of 539 S.W.3d 252 (City of Richardson v. Oncor Elec. Delivery Co.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Richardson v. Oncor Elec. Delivery Co., 539 S.W.3d 252 (Tex. 2018).

Opinion

Justice Green delivered the opinion of the Court.

This case involves a dispute between a city and a utility over who must pay relocation costs to accommodate changes to public rights-of-way. The City of Richardson negotiated a franchise agreement with Oncor Electric Delivery Company LLC, requiring Oncor to bear the costs of relocating its equipment and facilities to accommodate changes to public rights-of-way. Richardson later approved the widening of thirty-two public alleys. Oncor refused to pay for the relocation of its equipment and facilities to accommodate these changes. While the relocation dispute was pending, Oncor filed an unrelated case with the Public Utility Commission (PUC), seeking to alter its rates. That case was resolved by settlement, and the resulting rate change was filed as a tariff with the PUC. Richardson enacted an ordinance consistent with the tariff, which included the following pro-forma provision: "Retail Customer, or the entity requesting such removal or relocation, shall pay to Company the total cost of removing such Delivery System Facilities." Oncor relied on this language to support its refusal to pay relocation costs.

We must decide whether a pro-forma provision in a tariff, which sets the rates and terms for a utility's relationship with its retail customers, trumps a prior franchise agreement, which reflects the common law rule requiring utilities to pay *255public right-of-way relocation costs. We conclude that the provision at issue does not conflict with either the prior franchise agreement or the common law and that the franchise agreement controls as to the relocation costs at issue. Accordingly, we reverse the judgment of the court of appeals and reinstate the trial court's judgment in favor of Richardson.

I. Background

In 2002, the Public Utility Regulation Act (PURA), which established a comprehensive regulatory system for public utilities, was amended to implement a competitive retail market for electricity in Texas. Public Utility Regulation Act, 76th Leg., R.S., ch. 405, § 39, 1999 Tex. Gen. Laws 2543, 2558 (current version at TEX. UTIL. CODE. tit. 2); Oncor Elec. Delivery Co. LLC v. Pub. Util. Comm'n of Tex. , 507 S.W.3d 706, 708 (Tex. 2017). PURA requires each electricity utility to separate its business activities into three units: (1) a power generation company,1 (2) a retail electric provider,2 and (3) a transmission and distribution utility (TDU).3 TEX. UTIL. CODE § 39.051(b). Under PURA, TDUs continue to be regulated by the PUC following deregulation. Id. § 33.001 (establishing the PUC's jurisdiction over an electric utility); id. § 31.002(6) (defining "electric utility" to include TDUs, but expressly excluding power generation companies and retail electric providers); Oncor , 507 S.W.3d at 709. Oncor is a TDU created as part of TXU Electric Company's unbundling. Oncor , 507 S.W.3d at 709-10.

As a home-rule city, Richardson has "exclusive original jurisdiction over the rates, operations, and services of an electric utility in areas in the municipality," which is in Dallas and Collin Counties, as well as "exclusive control over and under the public highways, streets, and alleys of the municipality." TEX. UTIL. CODE § 33.001; see TEX. TRANSP. CODE § 311.001. This exclusive jurisdiction over electric utilities and public rights-of-way gives home-rule cities authority to grant franchises to utilities for the transmission and distribution of electricity, by which a utility obtains use of a city's streets, alleys, highways, and public grounds. TEX. UTIL. CODE §§ 14.008, 33.001; TEX. TRANSP. CODE § 311.071. A utility's use of these public rights-of-way is "subject to the direction of the governing body of the municipality." TEX. UTIL. CODE § 181.043.

In 2006, pursuant to this statutory authority, the Richardson City Council approved Ordinance No. 3559 (the "Franchise Ordinance"), granting TXU Electric Delivery Company, predecessor to Oncor, a franchise to use Richardson's public rights-of-way for the transmission and distribution of electric power. As required to make the franchise effective, TXU formally accepted the Franchise Ordinance in writing; therefore, the Franchise Ordinance, along with TXU's written acceptance, became the Franchise Contract.4

*256By nature, a franchise agreement represents the unique conditions a city requires of a utility in exchange for the utility's right to operate within the city. Here, the Franchise Contract incorporated a conventional right-of-way ordinance (the "ROW Ordinance") requiring the utility, upon written notice from Richardson, to remove or relocate "at its own expense" any facilities placed in public rights-of-way. In pertinent part, the Franchise Contract reads:

Chapter 20, Article V of the City Code of Ordinances [ROW Ordinance], as now existing or as the same may be adopted, supplemented, amended or revised ("Construction in the Public Rights-of-Way Ordinance"), is incorporated by reference. The Electric Delivery Utility shall comply with all ordinances, rules and regulations of the City to the extent that such City ordinances, rules and regulations do not conflict with the provisions of this Franchise. This Franchise agreement shall in no way impair the rights, obligations or remedies of the parties under [PURA], or other state or federal law....
....
The City reserves the right for any reason whatsoever to use, to change the grade of, construct, install, repair, alter, maintain, relocate, modify, close, reduce, or widen (collectively "to change") any Public Right-of-Way, within the present or future limits of the City. At the City's request the Electric Delivery Utility shall relocate or remove Facilities in order to accommodate such change of any Public Right-of-Way.5

The incorporated ROW Ordinance reads, "If the city gives written notice, a person shall, at its own expense, temporarily or permanently remove, relocate, change, or alter the position of person's facilities that are in the public rights-of-way within 120 days...."

The ROW Ordinance, and its incorporation into the Franchise Contract, is not unique. Rather, it reflects a longstanding common law principle that "a utility forced to relocate from a public right-of-way must do so at its own expense." Sw. Bell Tel., L.P. v. Harris Cty. Toll Rd. , 282 S.W.3d 59

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Bluebook (online)
539 S.W.3d 252, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-richardson-v-oncor-elec-delivery-co-tex-2018.