South Utah Valley Electric v. Payson City

2021 UT 68, 502 P.3d 272
CourtUtah Supreme Court
DecidedDecember 9, 2021
DocketCase No. 20190774
StatusPublished
Cited by1 cases

This text of 2021 UT 68 (South Utah Valley Electric v. Payson City) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
South Utah Valley Electric v. Payson City, 2021 UT 68, 502 P.3d 272 (Utah 2021).

Opinion

2021 UT 68

IN THE

SUPREME COURT OF THE STATE OF UTAH

SOUTH UTAH VALLEY ELECTRIC SERVICE DISTRICT Appellant, v. PAYSON CITY, SPANISH FORK CITY, AND SALEM CITY Appellees.

No. 20190774 Heard September 16, 2021 Filed December 9, 2021

On Interlocutory Appeal

Fourth District, Utah County The Honorable Kraig Powell No. 180400994

Attorneys: Mark O. Morris, Elizabeth M. Brereton, Parker A. Allred, Salt Lake City, for appellant Phillip J. Russell, Gary A. Dodge, Mitchell Stephens, Justin L. James, Salt Lake City, for appellees

CHIEF JUSTICE DURRANT authored the opinion of the Court, in which JUSTICE HIMONAS, JUSTICE PEARCE, JUSTICE PETERSEN, and JUDGE CHRISTIANSEN FORSTER joined.

Having recused himself, ASSOCIATE CHIEF JUSTICE LEE does not participate herein; COURT OF APPEALS JUDGE MICHELE CHRISTIANSEN FORSTER sat.

CHIEF JUSTICE DURRANT, opinion of the Court: Introduction ¶1 South Utah Valley Electric Service District (District) was established in 1985, at the request of the Utah County Commission, S. UTAH VALLEY ELEC. SERV. DIST. v. PAYSON CITY Opinion of the Court

to provide affordable electricity to rural areas in southern Utah County. As the population of southern Utah County has grown, neighboring municipalities have expanded, annexing areas within the District. Three cities, Payson City, Spanish Fork City, and Salem City (collectively, Cities), provide electricity to their residents and want to provide electricity to customers in areas they have annexed within the District. The District fears that losing customers to the Cities will make it impossible to maintain its financial obligations and continue to provide affordable electric service to its remaining customers. ¶2 This fight dates back twenty-five years, when this court considered a nearly identical conflict between the District1 and Spanish Fork in 1996. In Strawberry Electric Service District v. Spanish Fork City, we held that Spanish Fork could provide electricity to customers within annexed portions of the District but only once they had complied with Utah Code section 10-2-424 (1996)—requiring Spanish Fork to ―pay [the District] ‗the fair market value of those facilities dedicated to provid[ing] service to the annexed area[s].‘‖2 Since the Strawberry decision, the Cities and the District entered multiple agreements in an attempt to resolve their differences, but those efforts ultimately failed, and the parties filed suit against each other in 2018. ¶3 Central to the dispute between the Cities and the District is a disagreement over which statutory provisions govern the requirements the Cities must satisfy in order to take over service to electric customers in annexed portions of the District. The Cities argue that Utah Code section 10-2-421, an amended and renumbered version of former section 10-2-424, is the only applicable statutory requirement, requiring that the Cities either receive consent from the District or pay reimbursement costs prior to serving any of the District‘s customers. From the Cities‘ perspective, there have been no significant changes to the law since the Strawberry decision, and that holding determines the outcome of this dispute.

__________________________________________________________ 1 The District was originally known as the Strawberry Electric Service District. 2 918 P.2d 870, 880 (Utah 1996) (second and third alterations in original) (quoting UTAH CODE § 10-2-424 (1996)).

2 Cite as: 2021 UT 68 Opinion of the Court

¶4 The District counters that section 10-2-421 applies only to its electric customers outside of its boundaries,3 and the Cities are required to comply with the statutory process to withdraw an area from the District that is set forth in Utah Code sections 17B-1-501– 513 before providing electricity to any customers within the District. The District argues that because the Legislature amended relevant statutes in the years following Strawberry, and the Strawberry Court did not address the arguments the District now brings based on those statutory revisions, Strawberry does not resolve the current dispute. ¶5 The district court ruled in favor of the Cities, holding that compliance with section 10-2-421 is the only precondition to the Cities‘ taking over service to electric customers in annexed areas of the District. Because the plain text of section 10-2-421 supports the district court‘s interpretation, we affirm. Background ¶6 The District was established in 1985, following the enactment of the Utah Electric Service District Act (Act), becoming Utah‘s first electric improvement district. Under the Act, an electric improvement district could be formed at the request of a county commission in areas that had not been served by an investor-owned utility, municipal agency, or electrical cooperative in the preceding five years.4 Any electric improvement district formed under the Act would be ―a public utility . . . subject to the jurisdiction of the Public Service Commission.‖5 The year the Act went into effect, the Utah County Commission successfully petitioned for the creation of the District. ¶7 The District is a political subdivision. It does not operate for profit and relies on revenue from its electric customers and bond sales to support its infrastructure and prepare for anticipated

__________________________________________________________ 3 Although its primary purpose is to serve electric customers within its boundaries, an electric improvement district may also sell ―services to consumers residing outside [its] boundaries.‖ UTAH CODE § 17B-2a-403(1)(d). The District currently serves electric customers outside of its boundaries in parts of Mapleton, Spanish Fork City, Santaquin, and Benjamin. 4 Utah Electric Service District Act, 1985 UT S.B. No. 7. 5 Id.

3 S. UTAH VALLEY ELEC. SERV. DIST. v. PAYSON CITY Opinion of the Court

growth. The District is one of just two electric improvement districts in Utah today. Other electricity providers include electrical cooperatives, electrical companies, counties, and municipalities. ¶8 In the 1990s, a conflict arose between the District and its growing neighbor, Spanish Fork City, as Spanish Fork annexed areas within the District. Like the argument now before us, Spanish Fork and the District disagreed about what was required of Spanish Fork in order to provide electricity to customers in the parts of the District that Spanish Fork had annexed. The conflict reached this court in 1996. We held that Spanish Fork could ―lawfully invade [the District‘s] service area‖ but only after paying reimbursement costs outlined in former Utah Code section 10-2-424 (1996),6 which has been replaced with current Utah Code section 10-2-421. ¶9 Since Strawberry, the population inside the District has continued to grow, and the Cities have annexed more areas within its boundaries. Additionally, the District issued bonds in 2002 ―for the purpose of acquiring, constructing, and completing improvements and extensions to its electric service system.‖ The District and the Cities have entered into multiple agreements and negotiations, but ultimately, these agreements have failed, leading to the parties filing suit against each other in 2018. The Cities and the District differ on many points—including the extent to which each party breached past agreements, which agreements are currently in effect, which customers the Cities have taken from the District, and what reimbursements are due. ¶10 While the conflict between the District and the Cities was simmering, the Legislature amended several relevant sections of the Utah Code.

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2021 UT 68, 502 P.3d 272, Counsel Stack Legal Research, https://law.counselstack.com/opinion/south-utah-valley-electric-v-payson-city-utah-2021.