Prairie Land Electric Cooperative, Inc. v. Kansas Electric Power Cooperative, Inc.

323 P.3d 1270, 299 Kan. 360, 2014 Kan. LEXIS 244
CourtSupreme Court of Kansas
DecidedMay 16, 2014
DocketNo. 102,630
StatusPublished
Cited by27 cases

This text of 323 P.3d 1270 (Prairie Land Electric Cooperative, Inc. v. Kansas Electric Power Cooperative, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prairie Land Electric Cooperative, Inc. v. Kansas Electric Power Cooperative, Inc., 323 P.3d 1270, 299 Kan. 360, 2014 Kan. LEXIS 244 (kan 2014).

Opinion

The opinion of the court was delivered by

Moritz, J.:

We granted review in this declaratory judgment action to consider a unique contract question involving three parties, one of which entered into two separate “all-requirements” contracts, agreeing to purchase all of its wholesale electricity needs from each of the other two parties. The district court ruled in favor [361]*361of the supplier that entered into the first all-requirements contract, and tire Court of Appeals reversed the district court.

Simply stated, the parties have presented the court with two seemingly irreconcilable contracts. Nevertheless, we are not asked to determine whether any party breached its obligations under either contract, but to consider which party has superior rights under the competing contracts. We conclude that under the facts of this case, the party that chose to enter into two temporally overlapping all-requirements contracts must meet its obligations under its contract with the first supplier before it may comply with any obligations under its contract with tire second supplier. Consequently, we reverse the Court of Appeals’ decision and affirm the district court’s judgment.

Factual and Procedural Background

Prairie Land Electric Cooperative, Inc. (Prairie Land) purchases wholesale electricity from multiple suppliers and distributes that electricity to retail consumers within a certified service area in northwest and north central Kansas. The Kansas Corporation Commission establishes the boundaries of Prairie Land’s certified service area. Within its certified service area, Prairie Land’s distribution system consists of all the “facilities, transmission lines, distribution lines and substation equipment as owned and operated by Prairie Land.” The dispute in this case arises from Prairie Land’s decision to enter into temporally overlapping, long-term all-requirements contracts with two different wholesale electricity suppliers.

The Sunflower Contract

Nearly 50 years before the current litigation arose, Prairie Land entered into an all-requirements contract with Sunflower Electric Power Corporation (Sunflower). The Sunflower Contract, entered into in February 1958, remains in effect until April 2021 and in relevant part provides:

“1. General. [Sunflower] shall sell and deliver to [Prairie Land] and [Prairie Land] shall purchase and receive from [Sunflower] all electric power and energy ivhich [Prairie Land] shall require for the operation of [Prairie Land’s] system to the extent that [Sunflower] shall have such power and energy available, provided, however, that [Prairie Land] shall have the right to continue to purchase electric [362]*362power and energy under any existing contract or contracts with a supplier other than [Sunflower] during the remainder of the term thereof. [Prairie Land] shall terminate, if [Sunflower] shall, with tire approval or at the direction of the Administrator of tire Rural Electrification Administration (hereinafter called the ‘Administrator’), so request, any such existing contract or contracts with a supplier other than [Sunflower] at such times as it may legally do so, provided [Sunflower] shall have sufficient electric power and energy available for [Prairie Land].” (Emphasis added.)

In a letter dated June 1958, Sunflower acknowledged that Prairie Land continued to purchase some of its energy requirements from the Western Light and Telephone Company (Centel). In the letter, Sunflower advised Prairie Land it was “agreeable ... to permitting [Prairie Land] to continue purchasing some of its electric power and energy requirements from [Centel], solely for the purpose of supplying the power and energy requirements of those portions of your distribution system which are presently being served by [Centel].” Sunflower later agreed to permit Prairie Land to purchase power from Centel to serve a new delivery point in Rooks County. In doing so, Sunflower advised Prairie Land that Sunflower did not have the capacity to provide power to that particular delivery point.

The KEPCo Contract

In September 1977, Prairie Land entered into a second all-requirements contract with Kansas Electric Power Cooperative, Inc. (KEPCo). The KEPCo Contract remains in effect until December 31, 2020, and in relevant part after its August 16, 1978, amendment, provides:

“1. General. [KEPCo] shall sell and deliver to [Prairie Land] and [Prairie Land] shall purchase and receive from [KEPCo] all electric power and energy which [Prairie Land] shall require for the operation of [Prairie Land’s] system to the extent that [KEPCo] shall have such power and energy and facilities available; provided, however, that [Prairie Land] shall continue to purchase electric power and energy under any existing contract or contracts with a supplier other than [KEPCo] during the remainder of the term thereof. [Prairie Land] shall terminate, if [KEPCo] shall, with the approval or at tire direction of tire Administrator of tire Rural Electrification Administration (hereinafter called the ‘Administrator’), so request, any such existing contract or contracts with a supplier other than [KEPCo] at such times as it may legally do so, provided [KEPCo] shall have [363]*363sufficient electric power and energy and facilities available for [Prairie Land]. Provided, however, that [Prairie Land] may continue to utilize power and energy generated from those facilities owned by [Prairie Land] at the time of [Prairie Land’s] execution of the [KEPCo] Wholesale Power Contract, and provided further, that in the event of an emergency power outage(s) which affects a member system during the term of [the KEPCo Contract] [Prairie Land] may take power and energy from a power suppher(s) other than [KEPCo] on an emergency, short term basis.” (Emphasis added.)

With this general language, the KEPCo Contract recognized Prairie Land’s right to continue to purchase electric power and energy under Prairie Land’s “existing contract” with Sunflower and did not attempt to limit the geographic scope of that preexisting contract or its future impact. Notably, as discussed, Prairie Land’s preexisting contract with Sunflower obligated Prairie Land to purchase all of the requirements for Prairie Land’s “system” from Sunflower. But inexplicably, in paragraph 6(b) of the KEPCo Contract, KEPCo sought to temporally and geographically limit Prairie Land’s obligation to Sunflower to “those areas of [Prairie Land’s] system presently served” with power procured from Sunflower:

“If [Prairie Land] is presently a member of Sunflower Electric Cooperative, Inc. (hereinafter called ‘Sunflower’) and intends to retain its membership in Sunflower and to continue to procure from Sunflower its power requirements for those areas of its system presently served with power procured from Sunflower, [Prairie Land] and [KEPCo] agree that all of [Prairie Land’s] power requirements to serve those areas of [Prairie Land’s] system other than those served with power procured from Sunflower at the time of execution of this contract, shall be furnished to [Prairie Land] by [KEPCo] pursuant to this Wholesale Power Contract.” (Emphasis added.)

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

Related

In re Estate of James
Court of Appeals of Kansas, 2022
Sewell and Lawson
Court of Appeals of Kansas, 2021
In re Marriage of Nelson
475 P.3d 1284 (Court of Appeals of Kansas, 2020)
First Security Bank v. Buehne
Court of Appeals of Kansas, 2020
Fairfax Portfolio v. Carojoto
Supreme Court of Kansas, 2020
Schmitendorf v. Taylor
468 P.3d 796 (Court of Appeals of Kansas, 2020)
Straightline HHD v. Smart E-Solutions
Court of Appeals of Kansas, 2020
Ritter v. Gas-Mart USA, Inc.
Court of Appeals of Kansas, 2020
Law Co. Building Associates v. Law
444 P.3d 376 (Court of Appeals of Kansas, 2019)
Law Company Building Associates v. Law
Court of Appeals of Kansas, 2019
Matter of Marriage of Whildin
444 P.3d 373 (Court of Appeals of Kansas, 2019)
In re Marriage of Whildin
Court of Appeals of Kansas, 2019
Community First Nat'l Bank v. Nichols
443 P.3d 322 (Court of Appeals of Kansas, 2019)
Lopez v. Sedgwick County D.A.
Court of Appeals of Kansas, 2019
Fairfax Portfolio v. Carojoto
Court of Appeals of Kansas, 2019
Jayhawk Pipeline v. MWM Oil Co.
Court of Appeals of Kansas, 2018
Hoffman v. City of Topeka
Court of Appeals of Kansas, 2018
Trear v. Chamberlain
425 P.3d 297 (Supreme Court of Kansas, 2018)

Cite This Page — Counsel Stack

Bluebook (online)
323 P.3d 1270, 299 Kan. 360, 2014 Kan. LEXIS 244, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prairie-land-electric-cooperative-inc-v-kansas-electric-power-kan-2014.