Lamb County Electric Cooperative, Inc. v. Public Utility Commission of Texas Bailey County Electric Cooperative Association Mobil Exploration & Producing U.S., Inc. Southwestern Public Service Company Texaco Exploration and Production, Inc.

Court of Appeals of Texas·Decided January 11, 2001·No. 03-00-00113-CV·Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

444444444444444 NO. 03-00-00113-CV 444444444444444

Lamb County Electric Cooperative, Inc., Appellant

v.

Public Utility Commission of Texas; Bailey County Electric Cooperative Association; Mobil Exploration & Producing U.S., Inc.; Southwestern Public Service Company; Texaco Exploration and Production, Inc., Appellees

44444444444444444444444444444444444444444444444444444444444444444 FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT NO. 99-03368, HONORABLE W. JEANNE MEURER, JUDGE PRESIDING 44444444444444444444444444444444444444444444444444444444444444444

Lamb County Electrical Cooperative, Inc. (the “Cooperative”) sued the Public

Utility Commission (the “Commission”) to set aside a final order issued by the Commission in

a contested case. Southwestern Public Service Company (“SPS”), a prevailing party in the

contested case, intervened in the lawsuit in defense of the Commission’s order. The Cooperative

appeals now from a trial-court judgment affirming the order. We will reverse the judgment and

the order and remand the cause to the Commission.

The controversy has a rather complex procedural element that we will summarize

as briefly as possible. The Public Utility Regulatory Act of 1975 established a new regulatory

regime for public utilities. The newly constituted Commission began licensing retail public

utilities as exclusive providers of electric power in designated geographical areas (“service

areas”). The monopoly right to provide such power was evidenced by the Commission’s certificates of convenience and necessity issued to the utilities. The monopoly right was and is

protected by statutes prohibiting a utility’s interference with another public utility’s operations

within its service area. See generally Public Utility Regulatory Act (“PURA”), 75th Leg., R.S.,

ch. 166, § 1, Tex. Gen. Laws, 713, 786, 787, 789 (Tex. Rev. Civ. Stat. Ann. art. 1446c, §§ 50,

53, 60 since repealed and codified at Tex. Util. Code Ann. § 37.051, .056, .156 (West 1998 &

Supp. 2000)); see also Bradley J. Toben, Certificates of Convenience and Necessity under the

Texas Public Utility Regulatory Act, 29 Baylor L. Rev. 115, 116 (1976).

DOCKET 42

In a 1976 proceeding before the Commission (“Docket 42"), the Cooperative and

SPS obtained their respective certificates of convenience and necessity. Their designated service

areas shared, to a large extent, a common boundary. Certain of SPS’s distribution lines, erected

before 1976, lay across the new boundary and served a number of oil wells situated in the

Cooperative’s assigned service area. The wells were combined in two production units, one

operated by Texaco, Inc. (“Texaco”) and the other by Amoco Production Company (“Amoco”).

Anticipating such situations, the Commission had promulgated a rule that encompassed, within

a utility’s certificate of convenience and necessity, a 400-foot corridor through which a utility

might lawfully continue its pre-1976 service over existing lines, even within another utility’s

service area. In Docket 42, however, SPS was expressly denied such a corridor in deference to

a contract entered into by SPS and the Cooperative to adjust the situation on their own terms.

See Tex. Rev. Civ. Stat. Ann. art. 1446c, § 56 (since repealed) now codified at Tex. Util. Code

2 Ann. § 37.155 (West 2000). The Commission approved and incorporated the contract in its final

order in Docket 42, providing as follows in the agency’s Conclusion of Law Number Seven:

If any distribution lines of Southwestern Public Service Co. . . are located outside the service area boundaries as shown on Staff Exhibits 1 through 15, pursuant to agreement by the parties, [SPS is] granted a Certificate of Convenience and Necessity for the facility itself only insofar as such facility is utilized to serve customers presently being served. [SPS] is not granted a Certificate of Convenience and Necessity for a 400-foot corridor as provided by the Commission Rule .056(b)(b)(B).

(Emphasis added.) We will refer to this determination hereafter as “Conclusion of Law Number

Seven.” The parties’ disagreement about the meaning and effect of Conclusion of Law Number

Seven lies at the center of the present litigation.

DOCKET 2991

On December 27, 1979, the Cooperative initiated Commission Docket 2991,

requesting a cease-and-desist order requiring SPS to terminate its electric service to “consuming

facilities” within the Cooperative’s service area. The Cooperative alleged that SPS had

expanded service over its distribution lines to Texaco and Amoco in violation of Conclusion of

Law Number Seven. The alleged violation consisted of SPS’s providing additional electric

power over new lines built by Texaco and Amoco to serve “thirty or more new oil field loads”

owned by Amoco and “six new loads” owned by Texaco in another unitized field. (Emphasis

added.)

In a final order issued January 8, 1981, the Commission did not expressly rely

upon, reject, distinguish, or assign meaning to Conclusion of Law Number Seven, the basis for

3 the Cooperative’s allegation that the additional “loads” over and above the 1976 “loads” were

a violation of the final order in Docket 42 and Conclusion of Law Number Seven. Instead, the

Commission simply refused the Cooperative’s request for a cease-and-desist order on the single

ground that the public interest dictated that SPS be allowed to continue service over Amoco’s

and Texaco’s newly constructed lines. The rationale for this conclusion was as follows: (1)

customer-owned distribution lines were an established practice in developing oil fields and

necessary for their proper development in various respects; and (2) Amoco’s and Texaco’s lines

were “energized” from SPS’s distribution lines at points within the areas “grandfathered” to SPS

in Conclusion of Law Number Seven.

DOCKET 14454

On July 24, 1995, the Cooperative initiated Commission Docket 14454, the

contested case now before us. The Cooperative requested a cease-and-desist order prohibiting

SPS’s supplying power within the Cooperative’s service area by means which the Cooperative

alleged were unlawful and in violation of Conclusion of Law Number Seven. The Cooperative’s

petition alleged the following particulars regarding SPS’s conduct:

1. SPS was using its “grandfathered” distribution lines to supply electric power

to (a) new facilities, (b) new facilities of new customers via pre-1976 customer facilities, and

(c) pre-1976 customers who had acquired additional facilities from other SPS customers;

moreover, SPS had expanded, upgraded, and now utilized differently its “grandfathered”

distribution lines.

4 2. SPS was supplying new facilities unlawfully over customer-owned lines built

to connect with SPS power at points within the SPS service area or points along its

“grandfathered” distribution lines.

3. SPS had constructed new distribution facilities across the shared boundary to

connect with consuming facilities within the Cooperative’s service area.

4. SPS was unlawfully providing power to former Cooperative customers who

had discontinued Cooperative service

5. SPS was metering within its service area power supplied by SPS to “individual

consuming facilities” that were unlawfully “submetered” in the Cooperative’s service area.

Free access — add to your briefcase to read the full text and ask questions with AI

Lamb County Electric Cooperative, Inc. v. Public Utility Commission of Texas Bailey County Electric Cooperative Association Mobil Exploration & Producing U.S., Inc. Southwestern Public Service Company Texaco Exploration and Production, Inc., (Tex. Ct. App. 2001).

Lamb County Electric Cooperative, Inc. v. Public Utility Commission of Texas Bailey County Electric Cooperative Association Mobil Exploration & Producing U.S., Inc. Southwestern Public Service Company Texaco Exploration and Production, Inc. (Lamb County Electric Cooperative, Inc. v. Public Utility Commission of Texas Bailey County Electric Cooperative Association Mobil Exploration & Producing U.S., Inc. Southwestern Public Service Company Texaco Exploration and Production, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

City of El Paso v. El Paso Electric Co.
851 S.W.2d 896 (Court of Appeals of Texas, 1993)
Public Utilities Board v. Central Power & Light Co.
587 S.W.2d 782 (Court of Appeals of Texas, 1979)
Calvert v. Fort Worth National Bank
356 S.W.2d 918 (Texas Supreme Court, 1962)
Lenape Resources Corp. v. Tennessee Gas Pipeline Co.
925 S.W.2d 565 (Texas Supreme Court, 1996)
Barr v. Resolution Trust Corp. Ex Rel. Sunbelt Federal Savings
837 S.W.2d 627 (Texas Supreme Court, 1992)
Railroad Commission of Texas v. Home Transportation Co.
670 S.W.2d 319 (Court of Appeals of Texas, 1984)
Al-Jazrawi v. Texas Board of Land Surveying
719 S.W.2d 670 (Court of Appeals of Texas, 1986)
Westheimer Independent School District v. Brockette
567 S.W.2d 780 (Texas Supreme Court, 1978)
Public Utility Commission v. Gulf States Utilities Co.
809 S.W.2d 201 (Texas Supreme Court, 1991)
Cousins v. Sovereign Camp, Woodmen of the World
35 S.W.2d 696 (Texas Supreme Court, 1931)
Magnolia Petroleum Co. v. New Process Production Co.
104 S.W.2d 1106 (Texas Supreme Court, 1937)
Wortham v. Walker
128 S.W.2d 1138 (Texas Supreme Court, 1939)
Texas & New Orleans Railroad v. Railroad Commission
200 S.W.2d 626 (Texas Supreme Court, 1947)
Hyatt v. Radio Station WLOU
354 S.W.2d 415 (Court of Appeals of Texas, 1962)