### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-0 4 -00 593 -CV

Lam b Co unt y El e c tr ic Co ope r at ive , I nc . , A ppe lla nt

v. P ubl ic Utility Com m ission of T exas , Appellee

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 98TH JUDICIAL DISTRICT NO. GN302903 , HO NORAB LE DARLENE B Y RNE , JUDGE PRESIDI NG

O P I N I O N

L amb C ounty

El e c tr ic Coo pe rativ e (t

he “ Coo pe rativ e ” ) a sse rt e d to t he Pub lic Ut ili ty Commi ssion (the “Commission”) that Southwestern Public Service Company (“Sout hwester n”) ha d exceede d the scope of its c ertifica tes of convenie nce and nece ssity and was improper l y p ro v i d ing elec tricity to customers inside the Cooper ative’s se rvice are a. The Commi ssion refe rre d the matter to the State Offic e of Administrative Hea ring s for a contested- case hear ing be fore an administrative law j ud g e . T he jud g e c on c lud e d th a t th e se rv ic e Southw e ste rn wa s p ro vid ingwa s c on sis te nt w ith its cer tificates. The Com mission adopted the judge ’s proposal in its final order. The Coope rative appea led the orde r of the Commission, and the district court aff irmed the Commi ssion’s or der. The Cooperative a

ppeals the district c ourt’s j udg ment, and we will affirm the judg ment of the dis tr ic t c ourt
.As a pre liminary matter, we note that some of the information pre sented in this backg round 1 section come s from undisputed portions of the pa rties’ b ri efs. See Tex. R. App. P . 38.1(f) (explaining that c ourts “will acc ept as true ” fa cts stated in brief s unless fac ts are c ontradicte d). 2 BACK GR OUND Th is a pp e a l ha s a

c omp le x a

nd le ng thy

pr oc e dura l hi sto ry

or ig inatin g in t

he 19 70 s. To fac ilitate the dis cu s s i o n of the issues ra ised in this appeal, we will provide a brie f summary of the pr oc e dura l hi sto ry

of thi s c a se and

of vario us ch ang e s th a t oc c ur re d in the e ne rg y

mark e t in the 19 70 s. Prior to 1975, utili ties were allowed t o ch o o se the a rea s and customer s that they

wa nte d to pr ov ide se rv ic e to, wh ic h me ant that mor e tha n on e uti lity

might b e pr ov idi ngse rv ic e to the same g ener al ar ea. Howeve r, the manne r in which a uti l i t y ’s custom ers we re se lected w as 1 signific antly

altere d as a r esult of the passag e of the Publi c Utility Reg ulatory

Act and the formation of the Commission i n 1975. See Act of J u ne 2, 1975, 64th L eg ., R.S., ch. 721, 1975 Tex. Gen. L aws 2327, 2327-52 ( curr ent ver sion at Tex. Util . Code Ann. §§ 11.001-64 .158 (West 2007 & Supp. 2008). The Ac t cre ated a new r egul at o ry s ch eme f or public utiliti es, under which the Commi ssion beg an licensingutilit ies to serve power to a p articula

r ar ea. See Lamb County Elec

. Coop. v. Public Util. Comm’n of Tex. , No. 03-00-00113- CV, 2001 Tex. App. L EXI S 173, at *2 (T e x. Ap p. —Aus tin

Jan. 11 , 2 00 1, no pe t.) (n ot d e sig nate d f or p ub li c a tio n) . In o the r w or ds , g e ne ra lly sp e a kin g , a

sin g le uti lity

wa s g iven

the a uth or ity to p ro vid e a ll o f t

he e le c tr ic ity

to customers located inside a spec ific g eog raphic al re g ion. This reg ion was ca lled a ser vice a rea . To bec ome a de signated provider , utilit ies wer e re q u i red to a pply for a nd obtain a

cer tificate of convenie nce a

nd nece ssity

from the Commission. Id. ; see also Tex. Uti l

. CodeTh is a pp e a l w a s not af

fe c te d by the re c e nt de re g ulatio n of the Te xas util ity mark e t be c a

us e 2 the l eg islature ex cluded, temporarily , this reg ion and others from the tra nsition t o competition. See Te x. Ut il. Cod e Ann. §§ 39 .4 01 -. 46 3 ( Wes t 20 07 ) ( e xclu din g c e rt a in util iti e s f ro m th e tr ans iti on

to c omp e tit ion

and pr ov idi ngtha

t th os e uti lit ie s w ill c ontin ue to b e “ re g ulate d und e r t radit iona l c os t of se rv ic e re g ulatio n” ); id . § 41.052 (West 2007) (prohibiting utilit y not pa rticipating in customer c ho ic e fr om c ha

rg ingunre g ulate d p ri c e s) ; se e als o Cen te rP oin t Ene rg y Ho us ton El e c ., LLC v. G ulf Coast Coalition of

Citi es , 252 S.W .3d 1, 7-12 (Tex. App.—Austin Apr. 17, 2008, pet. filed) (op. on reh’ g ) (de scribing transition from re g ulated to der egulated mar ket). 3 Ann. § 37.051 (West 2007) (re quiring utilit y to obtain permit befor e dire ctly or indirec tly

providing service to public). That mea nt that electr icity

providers that desired to continue pr oviding se rvice 2 to an ar ea the y

had bee n servinghad to apply to the Commi ssion for a c ertificate. To make a pp ro vin g the a

pp lic a tio ns and

e sta bli sh ingthe se rv ic e are a s mor e e ff ic ie nt, the Commiss ion consolidated the c ases so that a pplications for ne i ghboring service are as we re

c on sid e re d in

the same do c ke t. B e c a

us e a uti lity mig ht re qu e st a se rv ic e are a that w a s to o la rg e to

c on sid e r i n o ne do c ke t, i t w a s p os sib le that a uti lity mig ht b e a

pa rt y to m ore tha

n o ne do c ke t. D u r in g th e d o c k e ts , th e b o u n d ar ie s f o r th e n e ig h

b o r in g s e r

v ic e ar e a s w e r e e s ta

b li s h e d , and the boundarie s wer e often ref lected in c ertification maps submitt ed by utilit ies. Once the service are as

wer e esta blished, utili ties were prohibited from int erf eringwith the operations of another utility by providing service within that util ity ’s servic e ar ea. See Tex. Util

. Code Ann. § 37.156 (West 2007) (listing ac tions Com mission m ay take if utility

interfe res with oper ations of another utilit y ). As discussed pre viously , prior to the passa g e of the Act, it was n ot uncommon for

m o re t h an o ne utility

to provide ser

vice to the same g ener al ar ea. B eca use the Commission was eff ectively dividing the State into distinct service are as, it was possible that the boundar ies established by

the Commiss ion might e f f e c tively prohibit a utilit y

from continuing to provide ser vice4

to some of its pre vious c ustomers if the Commi ssion plac ed those customers inside anothe r utility ’s service are a. This would ef fec tively strand a utility ’s power

lines within the service are a of a nother uti lity and de pr ive the str and e d u til ity of any e c on omi c be ne fi t fr om havin g ins ta lle d th e po we r l ine s. To ameliorate this pote ntially inequitable result, the leg islature and the Commi ssion established se v er al re medies. F or example, the leg islature ena cted se ction 37.155 of the utilities code, which allowed utilities to enter into ag ree ments specif y i n g the ar eas a

nd customers to be

serve d by eac h utilit y . Id. § 3 7. 15 5 ( Wes t 20 07 ); see also Public Utils. Bd. v. Cent. Power &Light Co. , 587 S.W .2d 782, 784 (Tex. Civ. App.—Corpus C hristi 1979, writ ref’ d n.r.e.) (desc ribing how afte r passag e of Act, C ommissi on require d utilit ies to enter into neg otiations reg ardingtheir ser vice

are a s und e r re g ulatio n)

. F ur the r, se c tio n 37. 15 5 pro vid e d that thos e ty pe s of ag re e me nts are “ va lid and enf orce able” and “shall be incorporated into the appropriate area s of ce rtification” a s long a s the Commi ssion approves the a g ree ments. Tex. Util

. Code Ann. § 37.155. In other wor ds, rather than limit ing the ir servic e area s to disti nct re g ions, the utili ties were allowed to neg otiate their own

arr ang ements r ega rd i n g t h e ar eas a nd customers that e ach utility could serve . I f the utilities were

a ble to r e a c h a g re eme nt s and if the Com mis sio n a

pp ro ve d th e a g re e me nts , th e a g re e me nts

e sta bli sh e d th e se rv ic e are a s f or the uti lit ie s. The Commission also provided an additi o n al remedy when it promulg ated the

corr idor rule. See Co mm is s io nRu le 0 5 2

. 0 2

. 0 5

. 0 5 6 ( b ) ( 6 ) ( B ) ( 1 9 76) ( c u r r e n t v e r s io na t 1 6 T e x. Ad min . Co de § 2 5. 10 1( e )( 1) -( 3) (20 08 )). Th e c or ri do r r ule sp e c if ic a lly a pp lie d to sit

uatio ns in which the bounda

ries cr eate d in the cer

tification docke ts stranded a utilit y ’s pre -existi ng distribution lin e ins ide ano the r util ity ’s ne wl y de sig nate d s e rv ic e are a . Ess e nti a lly , the ru le a llo we d a utili ty toTh e or ig ina l c or ri do r r ule pr ov ide d a s f

oll ow s: 3 (b) Cer tificates f or Exis ting Ser

vice Ar ea F or purp os es of

g ra nti ngCe rt if

ic a te s o f C on ve nie nc e and Ne c e ssi ty

fo r t ho se fac iliti es and a

rea s which a utility

was providingser v i ce o n September 1, 1975, or was a ctively

eng ag ed in the construc tion, inst allation, extension, i mprovement of, or addition to, any

fac ility actua lly used or to be use d in pr oviding public utility service on Se p te mb e r

1 , 1 9 7 5 , u n le s s f

o u n d b y th e Co mm is s io nto b e o th e r w is e , the fo llo wi ngru le s sh a ll p re va il f or c e rt if ic a tio n p ur

po se s:

. . . (6)( B) The fa ciliti es an d s ervice ar ea bounda ry for the f ollowing ty

pes of utilities providing distribution or collection service to any ar ea , o r actively

eng ag ed in the construction, instal l ation, extension, i mprovement of, or addition to such fac iliti es or the utilities sy stem as of September 1, 1975, shall be limited, un le ss o the rwi

se found by the com mission, to the facilit ies and the area which lie withi n 2 0 0 feet of any point along a distri bution line , which is specif ically deeme d to inc lude servic e drop lines, for e lectric al utiliti es. (Empha sis added). Com mis sio n Ru le 05 2. 02 .0 5. 05 6( b) (6 )( B ) ( 19 76 ); see 16 Tex. Admin. Code § 2 5

. 1 0 1 (e) (1)- (3) (2 00 8) ; s e e als o P u b lic Utils. Bd. v. Cent. Power & Light Co. , 587 S.W .2d 782, 785 (Tex. Civ. App.—Corpus Christi 1979, writ ref’d n.r .e.) ( discussing c orridor r ule). 5 continue providing l imited service throug h the strande d line. Id. Under the rule, a utilit y was g iven a certifica tion

f o r a 4 0 0

- f o o t w id e c o r

r id o r ( 2 0 0 f e e t o ne it h e r s id e o f th e li n e ) w it

h in w h ic h the stranded utility

was allowed to provide service to customers insi de another ut ility ’s servic e ar ea. Id. The a uthorization given unde r the rule essentially constituted a ty pe of dua l cer

tification allowing

a pa rt ic ula r s e rv ic e are a

to b e se rv e d b y

mor e tha n o ne uti lity . Th e ru le a

uto matic a lly a

pp lie d to a ll

cer tification docke ts unless the Commi ssion provided otherwise

. 3

Pr ior to t he pa ssa g e of

the Ac t, i t w a s com mon

fo r i nv e sto r- ow ne d u til iti e s to on ly provide ser

vice to the more population-dense por tions of a county , wh il e e le c tric cooper atives, which6

we re ow ne d b y

the c us tom e rs that the y

se rv e d, pr ov ide d e le c tr ic ity to t he are a s o f a

c ounty , g e ne ra lly the ru ra l r e g ion s, that w e re le ss e c on omi c a lly a pp e a lin g to t

he inv e sto r- ow ne d u til iti e s. The dichotomy

in service slowly

erode d over ti m e, an d investor-owne d utilit ies beg an providingservice to more rur al reg ions. One ty pe of r ural a rea that beg an obtaining service fr om i nv e sto r-owned ut il ities wa s o il f ie lds . T his c ha

ng e re su lte d, in p art , b e c a us e oil fi e ld op e ratio ns be g an u sin g e le c tr ic ity rathe r t ha n r e lyingon

natur a l g a s. Starting in the 1960s, Southwester n, which is an inves t o r- owned utility , beg an buildin g el ec tric distribution li nes that could de liver ele ctricity to oil fields. Shortl y

there afte r, Southwestern beg an providingserv ic e to oil field operations in counties throug hout Texas, including counties that we re a lso served by the Cooperative. To mit ig a te so me of

the ex pen se of

c on str uc tin g a ll o f t

he dis tr ibutio n li ne s and

to lessen the r isk of investing in distribution lines for customers that might not w ant to use its services in t he futur e , Southw e ste rn ins ta lle d s ome of the wi ri ngbu t a lso a llo we d th e oil fi e ld o pe ra tor s to build their own l ines that could connect t o Southwestern’s gr id. The point at which Southwester n’s customers attached to its g rid was c alled a de livery point. After the elec tricity passed the de livery point, it t rave led alongthe oil field operator’s lines to wher e the e lectric ity was ne eded. After Southwestern had installed some of these distribution li n e s, the Act wa s passed. As requir ed by

the Act, Southwester

n and the Cooper ative applied fo r certificates to c ontinue provi d in g s e r

v ic e to th e ir c u s to me r s . A t th a t ti me , b o th So u thw e s te r n an d th e Co o p e r a tive wer e pr ov idi ng e le c tr ic ity to pa rt s of many c ounti e s in Te xas, inc lud ing thr e e c ounti e s re le van t t o this

a pp e a l: Co c hr an, Ho c kle y , a nd L a mb c ounti e s.Some time afte r the initiation of the docket, the doc ket number w as cha ng ed fr om ECH-6 4 to 8. 7

All of the Cooperative’s servic e ar eas w ere established in two docket s befor e the Commi ssion. See Tex. P ub. Util. Com m’n, Ap pli c ati on of B ail ey Co un ty El e c tri c Coo

p e t al

. Con c e rn ing

Ce rti fic ati on in B ail e

ye t al

. , Docke t No. ECH-6 (“D ocket 8”) (J une 29, 1976) (Orde r); 4 Tex. P ub. Util. Com m’n, Ap pli c ati on of Ba ile

y Cou nty El e c tri c Coo

p et a l. Concerning the Counties of C oc hran e t al

. , Docke t N o. 42 (“D ocket 42” ) (Oc t. 8, 1976) (Or der) . Although the Cooperative’ s service are as we re de termined in those two docke ts, the dockets also e stablis h ed service are as for other utilit ies, including Southwestern. Among other counties, docket 8 addre ssed servic e ar eas f or L a mb C ounty , a

nd do c ke t 42 a dd

re sse d s e rv ic e are a s f

or Coc hr an a

nd Ho c kle y Counti e s. At the conc lusion of the dockets, S o u t h western and the Cooper ative obtained

cer tificates of

convenie nce a

nd neces s i ty
. See Lamb County Elec . Coop. , 2 0 0 1 T e x . A p p . LE X IS 173, at *2. The final order in doc ket 8 stated that prior to the issuance of

the orde r, the Cooper ative, Sou thw e ste rn , a

nd oth e r util iti e s “ re a c he d a

n a g re e me nt and e nte re d a sti pu latio n a s to the are a s to be ser ved by them” and that the cer

tificates issued wer e in ac corda nce w ith those ag ree ments. See Tex. Ut i l

. C o de Ann. § 37.155. Prior to the c ertification procee ding, Southweste rn had be en prov i d i n g s erv i ce t o Am o co P ro d u ct i o n , I n c. , t h ro u gh a d el i v ery p o i n tl o ca t edwi t h i nS o u t h we s t ern’s service are a in Hale County

. As descr ibed pre viously , the customer ha d connec ted to the deliver y point via lines it had cons t ru ct ed

. The c ustomer’s lines orig inated in Hale County but terminated in L amb County . Consequently , Southwestern had be en providingelec tricity to structures located inside what is now the Coopera tive’s servic e ar ea.The scope of the a g ree ments entere d into by the parties during the two docke ts is an issue 5 in this case. 8

As wi t h d o ck et 8, the final orde r in docke t 42 established servic e ar eas f or the Cooperative, Southweste rn, and other uti lities. Prior to cer tification, Southwestern wa s providing service to severa l customers that ar e now located within the Cooperati v e’s service a rea . Lamb County El ec. Coop. , 2001 Tex. App. L EXI S 173, at *3. I n fac t, severa l of Southwestern’s previously installed distribution lines crosse d the common border established during doc ket 42. Id.

The fina l order a l s o i n corporated the r eport a nd rec ommendations of the hea ring examiner that orig inally

considere d the issues in the docke t. See id. at *2-3. In the re p o rt , the

e xami ne r s tate d th a t th e uti lit ie s h a d e nte re d int o a g re e me nts re g ard ing the a bil ity of the uti lit ie s to provide ser

vice to customer s within the service are a of other utilit ies. Fur ther, the r eport stated that as par t of the ag ree ments, the utilit ies agreed to wa ive any rig ht to provide servic e to customers throug h the cor

ridor rule . Additionally , conce rning the rig ht to provide servic e in another utilit y ’s service are a, the r eport e x plained that “[t]he ag ree ment[s] would allow the parties to ke ep existi ng customers but would prohibit taking a new custo m er o u t s i d e of c ertificated ar eas” and we re “re stricted to servic e of e x isting customer s.”

Although the Commi ssion’s final order incorporated t he ex aminer’ s repor t, the order sp e c if ic a lly re pe a te d a

c on c lus ion found i n th e e xami ne r’ s r e po rt that he lpe d d e fi ne the uti lit ie s’

re sp e c tiv e se rv ic e are a s. Th is c on c lus ion (“ c on c lus ion

7” ) p ro vid e s a s f

oll ow s:

I f any distribution l ines of Southwestern . . . a re loc ated outside [its] service are a bo un da ri e s . . . , p ur su ant t o a g re e me nt b y the pa rt ie s, such utiliti es ar e gra nted a 5We n ote tha t in the re c or d in

thi s c a se and

in t he va ri ou s st a tut e s and

ru le s g ov e rn ingthi s 6 case , the word “ fac ility ” is used in ver y differ ent contexts. For ex ample, the phr ase “ consuming fac ility ” is used to refer to an oil well or other simil ar struc ture that uses e lectric ity . Howeve r, one of the Cooperative’ s witnesses testified that the word “ fac ility ” in conc lusion 7 refe rs to a strande d distribution l ine. I n p art ic ula

r, Am oc o Pr od

uc tio n Co . a

nd Te xac o, I nc ., bu ilt

ne w l ine s c arr

yingpo we r t o 7 we lls that w e re a dd e d to the ir oil fi e lds a ft e r S ou thw e ste rn ob ta ine d it s c e rt if

ic a te s. Te x. Pub . U til

. Comm’n, Pe tit ion of L am b Co un ty El e c . Co op ., In c ., for

Ce as e an d D esis t O rd

e rs A ga ins t Southwestern Pub. Serv. Co. within Hock ley and Cochran Count ies , Docke t No. 2991 (De c. 6, 1980) (Examiner’s Report). Although some of t he customers that Southwestern wa s providing pow er to ha d added ne w 8 elec t ri c wi re s to their various intere sts, none of the c ustomers’ g eog raphic interests had inc rea sed in siz e. In other wor ds, althoug h the customers w ere supply ing pow er to a re as t h at di d not have service befor e, those a

rea s were locat ed wi t h in the pree x isting g eog raphic al boundar ies of the c us tom e rs ’ i nte re sts
. 9 Ce rt if ic a te of Conve nie nc e and Ne c e ssi ty fo r t he fa c ili ty itself only

insofar a s such 6 fac ility is util ized to serve custome rs pre sently being serve d. Such utilit ies are not g rante d a Certific ate of

Convenience and Ne cessity for a 400-foot cor

ridor as provided by

the Commiss ion Rule.

See Tex. Util . Code Ann. § 37.155. No pa rty appea led this determination by the Commiss ion. Severa l y ear s after

the Commiss ion issued its final orders in dock et s 8 and 42, the Cooperative le arne d that some of the c ustomers in its service area that wer e obtaining power from Sou thw e ste rn had

a dd e d a dd iti on a l po we r l ine s to the ir e xistin g po we r- lin e ne tw or ks in o rd e r t o pr ov ide po we r t o n e w o il w e lls and e qu ipm e nt. Lamb County Elec. Coop. , 2 0 0 1 T e x . A p p . LE X IS

7 173, at *4. Be cause Southwestern wa s still deliveringelec tricity to those customers throug h delivery points, the addition of the new lines a nd new e quipmen t m ea n t t h at the oper ators we re obta ining

mor e e le c tr ic ity

fr om S ou thw e ste rn

tha n th e y ha d at th e tim e th e Co mm is si on iss ue d it s o rd e rs in dockets 8 an d 4 2 an d that the elec tricity from Southwestern w as beingsent to a larg er a rea . 810 Af te r l e arn inga

bo ut t he inc re a se in se rv ic e , the Coo pe ra tiv e fi le d a

c omp la int

wi th the Commi ssion a

nd asked the Commi ssion to issue a cea se-a nd-desist o rd er i nstructing Southwestern to stop providing e lectric ity to“consuming fac iliti es” loc ated inside the Cooper ative’s service are a. Id. a t * 4 ; T e x. Pu b

. U ti l. Comm’n, P etition of L amb County Elec. Coop., Inc ., for Cease and De

sist Orders Against Sout hwestern Pub. Serv . Co. wit hin Ho ck ley and Cochran Counties , Docke t No. 2991 (“D ocket 2991”) (Dec. 6, 1980) (Ex aminer’ s Report). The Commi ssion addre ssed the mer its of the contested c ase in doc ket 2991.

At the end of

docket 2991, the C o m m i s s i o n conclude d that Southwestern wa s authorized to provide ser

vice, includingservice over the new lines, to t hose customer s that it had been providing service to w hen it obtaine d its c ertificate. Docke t 2991 (Jan. 8, 1981) (F inal Orde r) (adoptingrec ommendation an d re p o rt of hea ring examiner); Docke t 2991 (Dec . 6, 1980) (E xami ne r’ s r e po rt ); see Lamb County Elec. Coop. , 2 0 0 1 T e x . A p p . L E X IS 1 7 3 , a t* 5

. E s s e n t i a l l y, the Com mis sio n re a so ne d that the a dd iti on a l se rv ic e wa s pr op e r b e c a us e it w a s in

the pu bli c int e re st to allow Southwestern to provide e lectric ity to its cu s t o m er s t hat will be used to powe r both new and old consuming fac iliti es. In particula r, the Commission deter

mined that customer- owned powe r lines are nece ssary

for the de velopment of oil fields and that “ the public intere st dictated that [S outhwestern] be allowed to c ontinue service over [t he] newly constructe d lines.” Lam b Co un ty E l ec. Coop. , 2 0 0 1 T e x. A p p . L E X I S 1 7 3 , a t * 5

. Co n s e qu e n tl y , th e Co mm is s io n d id n o t is s ue a

cea se-a nd-desist order

. I n 1 99 5, the Coo pe rativ e fi le d a no the r c omp la int

wi th t he Com mis sio n, wh ic h a lso

c on te nd e d th a t So uthwe ste rn wa s su pp lyingpo we r i n a

mann e r t

hat e xce e de d th e sc op e of itsThe Commission t empora rily abate d docket 14454 to allow Southwestern to apply for dua l 9 c e rt if ic a tio n to the dis pu te d a

re a . D oc ke t 14 45 4 ( Ap r. 1, 19 96 ) ( Or de r o n Ce rt if ie d I ssu e s) ; see Tex. P ub. Util. Com m’n, Application of Southw estern Pub. Serv. Co. to Ame nd Certificated Service Area to Provide for Dual Certification in Hockley and Cochran Counties, Texas , Docke t No. 16738 (“D ocket 16738” ) (De c. 9, 1996) ( Orde r Separ ating Docke t). Essentially , the Commiss ion rea soned that this would be the most prac tical way to resolve the dispute. Docke t 14454 (Apr. 1, 1996) (Orde r on Certified I ssues). Ultimately , the Commiss ion gr anted dua l cer tification, Docke t 16738 (A pr . 2 9, 19 98 ) ( Or de r) , b ut f or re a so ns no t r e le va

nt t o th is a

pp eal , So uthwe ste rn

su bs e qu e ntl y moved to dismiss the dual-c ertifica tion docket and withdre w its dual-ce rtification applicat ion,

11 c e rt if ic a te s and a g a in a sk e d the Com mis sio n to iss ue a c e a se -a nd -d e sis t or de r. I n its compla int , the Cooperative asser

ted that Southwestern ha d expanded its service to new customer s located inside the Cooperative’s servic e ar ea a nd had impermissibly

util ized customer-owne d lines to provide service to customers located inside t h e C o o p er ative’s se rvice are a. Te x . Pub. Util. C omm’n, Petition of L amb County Elec. Coop., I nc., for a Cease and De

sist Order against Sout hwestern Pub. Serv. Co. , Docke t No. 14454 (“D ocket 14454” ) (July 24, 1995) (Petition). Spe cifically , the Cooperative wanted the Commi ssion to preve nt Southweste rn from providing service to hundreds of consuming fac iliti es located within the Cooperative’ s service are a. The Commi ssion addresse d the merits of the c ontested ca se in docke t 14454.

Du ri ngd o c k e t1 4 4 5 4 , s e v e r a l o i l

- f i e l d o p e r a t o r s w h o w e r e b u yi n g e l e c t r i c ity from Southwestern, inc l u d i ng Texaco Exploration & Production, Inc. (“ Texaco”) and Apa che Corporation, interve ned. When consider ing the merits of t he claims raised, the Commi ssion stated that the order i n docket 42 was “decide dly ambig uous” on t he issue of w hether Southwestern wa s restri ct ed t o providing elec tricity to consuming f

acilities that it was providing service to prior to cer tification or whe ther Southwester n may enlar g e its service to new consumingfac iliti es pr ov ide d that th e ne w f

a c ili tie s b e lon g e d to its pr e e xistin g c us tom e rs . Lamb County Elec. Coop. , 9Do c ke t 16 73 8 ( F e b. 16 , 1 99 9) (O rd e r Gr anti ng Mo tio n to With dr aw and Di smi ss) . A ro un d th e same

time, the C ommissi on reinstated doc ket 14454. See Docke t 14454 (Jan. 22, 1999) (Supplemental Preliminary

Orde r). This Court also conclude d that the ca se should be re manded f or an a dditional reason. As 10 discussed pre viously , in docket 2991, the Commission conclu d ed that Southwestern had the rig ht t o c o n t i nu e p r o v i d i n g s e r

v i c e t o c e rt a i n c u s t o m e r s l o c a t e d i n s i d e t h e C o o p e r a t i v e ’ s s e r v i c e ar e a . In light of that o rd er , t h is Court remanded the case to allow the Commiss ion to consider evide nce reg ardingwhether the Cooperative’s claims in docke t 14454 were barr ed by the doctrine of res judicata due to the Commission’s prior determination. Lam b Co un ty El e c . Co op . v . Pu bli c Ut il. 12 20 01 Te x. Ap p. L EX I S 17 3, a t *7 ; see, e .g. , D oc ke t 14 45 4 ( Ap r. 1, 19 96 ) (O rd e r on Ce rt if ie d I ssu e s) (desc ribing order

in docket 42 as a

mbiguous). I n response to a motion by Southwestern, the Commission sum marily dis p o sed of the ca se in favor

of Southwestern a

nd denied the Coope rative’ s reque st f or a ce ase- and-de sist order. See Do c ke t 14 45 4 ( Jan. 21 , 1 99 9) (O rd e r) ; se e als o 16 Tex. Admin. C o d e § 2 2.182 (2008) (explaining c ircumstance s in which summary dispositi on is a

ppropriate ). The Cooper ative appe aled the Commiss ion’s deter

mination, and the district c ourt aff irmed the Commission’s order. Howe ver, t h i s C o u rtr e v e r s e d t h e C o m m i s s i o n ’ s o r d e r an d c o n c l u d e d

t h a t , b y d i s m i s s i n g t h e c a s e s u m m ar i l y, the Commiss ion preve nted the Cooperative from havingan evide ntiary hear ing r eg ardingthe meaningof the Commission’s order in docke t 42 and whethe r the orde r allow ed for the ty pe of expansion that the Cooperative took issue with. Lamb County Elec. Coop. , 2 0 0 1 T e x . A p p . LE X IS 173, at *15-16. In particula r, this Court reasone d that beca use the pre -existi ng ag ree ment betwee n S o u t h wester

n and the Cooper ative wa s incorporated into the Commi ssion’s docket 42 orde r and beca use the Commission s tated that the mea ning of its o rd er i n d ocket 42 wa s ambig uous, the Commi ssion should have allowed the Cooperative to prese nt evidence reg ardingthe under standing of the pa rt ie s. Id. at *16. 10Comm’n of Tex. , N o. 03 -0 0- 00 11 3- CV , 2 00 1 T e x. Ap p. L EX I S 17 3, at *2 4 ( Te x. Ap p. —A us tin

Jan. 11 , 2 00 1, no pe t.) (n ot d e sig nate d f or pu bli c a tio n) ; see Barr v . Resolution Trust Corp. , 837 S.W .2d 627, 628 (Tex. 1992) (explaining that doc trine of r es judicata prohibits relitigation of claims that have alrea dy been fully adjudicate d). On remand, the Commiss ion ultim ately conclude d that the doctrine did not apply to this case beca use the circ umstances had chang ed from the time that the Cooperative made its initial determinations in d o ck et 2 9 9 1. Docke t 24229 (May 23, 2003) (Or d e r )

. T h a t d e te r

mi n a ti o nh a s n o t b e e na p p e a le d

. Co n s e q

u e n tl y , w e ma

k e n o a d ditional de te rm inatio n r e g ard ingthe do c tr ine in t his a pp e a l. 13 After this Court remanded the case to the Commi ssion, the Comm ission assigned the

case a new docket number, docket 24229, and ref err ed the case to the State Offic e of A dminist rative Hea ring s for a

n evidentiar

y hear ing. See Tex. P ub. Util. Com m’n, Remand of Docke t No. 14454 ( Pe tit ion of L am b Co un ty El e c . Co op ., In c . fo r a Ce as e an d D esis t O rd e r A ga ins t So uth weste rn Public Servic e Co.) , Docke t No. 24229 (“D ocket 24229” ) (Sept. 28, 2001) ( Preliminary Orde r). Duringthe proc eeding, t h e ad m i nistrative law judg e soug ht to answer whether Southwestern had violated the ter

ms of its certificates issued in dockets 8 and 42. Southwestern, the Cooper ative, Apa che Corpor ation, and T ex aco a ll participated in the ev i d en t i ary

hear ing. A fter the hear ing c oncluded, the a dminist rative la w judg e issued a pr op os a l f

or de c isi on . D oc ke t 24 22 9 ( Ma r. 6, 20 03 ) ( P rop os al for De c isi on ). Whe n r e a c hin g his deter mi n a ti o n , th e a d

mi n is tr a ti v e la w ju d g e considere d evidenc e re levant to asc erta ining the me aning of the orde rs i n the t wo dockets and the intent of t he par ties when they

enter ed ag ree ments reg arding service s that may be provided. After revie wing the evidenc e, the judg e conc luded that Southwestern had bee n authorized to continue providing service to i ts customers that wer e located in the Co o p e r a t i v e ’ s s e r

v i c e ar e a an d a l s o b e e na

u t h o r i z e d t o p r o v i d e s e r

v i c e t o m e e tt h o s e c u s t o m e r s’ futur e ne e ds . In o the r w or ds , th e jud g e re a so ne d th a t So uthwe ste rn ’s c e rt if ic a te s a llo wed

it t o14

provide “ service to new oil field loads of e x isting customer s from the ser vice de livery

points it had at the time of the or igina l cer tification.” F urther, the adminis t ra t i v e l aw judge conclude d that the evidenc e indicate d that the ut iliti es i ntended f or Southwestern to provide service to “new c onsuming fac iliti es” loc ated inside L amb, Cochra n, and Hoc kley counties “ove r customer -owne d lines from the points of service cer

tificated to [Southwestern] in 1976.” Finally , in lig ht of the prec eding , the j u d g e r e c o m m e n d e d

d e n yi n g t h e C o o p e r a t i v e ’ s r e qu e s tf o r a c e a s e - an d

- d e s i s t o r d e r . S p e c i f i c a l l y, the jud g e surm ise d th a t be c a us e Southw e ste rn ’s c e rt if ic a te “ e nc omp a sse d th e ser vi c e c ur re ntl y in dispute,” “a

cea se and de sist order [was] inappropriate.” Th e Com mis sio n ad op te d the a dmi nis tr a tiv e law jud g e ’s pr op os a l and a lso iss ue d it s own finding s and conc lusions. Docket 24229 (May 23, 2003) (Or der) . Specific a ll y , th e Commission found that in docke ts 8 and 42, it was the intention of the pa rties that Southwestern “ would continue to provide ser

vice to its oil field customers . . . and the c ustomers would continue to use c ustomerow ne d li ne s to e ne rg iz e existin g and futur e we lls and

re late d p e tr oc he mic a l f

a c ili tie s w ith in t

he ir le a se s and un its , in c lud ingthe po rt ion s o f t he le a se s and

un its that exte nd e d in to [the Coo pe ra tiv e ’s ] g eog raphic service are a.” Id. ; see Tex. Nat. R es. C ode Ann. § 101.011 (West 2001) (explaining that oil “ un it” may

be de ve lop e d w he n p e op le wi th i nt eres ts in oil or g a s f ie lds a g re e to p oo l th e ir interests for

purpose of rec overing or conserving oil and gas)

. Simi larly , the Commiss ion concluded that in doc kets 8 and 42, Southwestern was “g rante d a [certificate] to serve the exist ing a nd future needs of its oil company

customers via c ustomer-owne d lines in the porti ons of their oil field lea ses and units that extended into g eog raphic are as of ne ighbor ing utilities, including [the Cooperative].”15 After the Commiss ion issued its final orde r, the Cooper ative soug ht judicial review of the orde r. See Tex. Util. Code Ann. § 15.001 (West 2007) (stating that party to p ro ceeding befor e Commissi on is entitled to judi cial review); Tex

. Gov’t C ode Ann. § 2001.171 (West 2000) (e xpla ini ng

t h a t a f t e r e xha us tin g a dmi nis tr a tiv e re me die s, pa rt y a g g ri e ve d b y

fi na l a g e nc y

de c isi on is entitled to judicia l r eview of decision). Southwester

n, Texaco, and A

pache Corporation interve ned in s up po rt

of the Com mis sio n’ s o rder. T he dis tr ic t c ourt a ff ir me d th e Com mis sio n’ s o rd e r i n it s

e nti re ty , a nd the Coo pe rativ e fi le d th is a pp e a l.

STA ND AR

D O F RE VI EW Severa l of the Cooperative’ s issues conce rn the propriety of th e C ommissi on’s order , finding s, and c o n cl u s ions. W hen re viewing these ty pes of de terminations, we e mploy the

su bs tanti a l- e vid e nc e sta

nd ard to a sc e rt a in whe the r t

he Co mmi ssi on ’s a c tio ns are a de qu a te ly supported by

the evidenc e pre sented. Te x . Util. Code Ann. § 15.001 (stating that judicial revie w of ag ency act i o n i s under substantial-e vidence standard) ; Tex. Gov’t Code Ann. § 2001.174 (West 2000) (allowingcourt to re verse ag ency deter mination if it i s not s u p p orted by substantial evidenc e). U nder this standar d, we a re pr ohibited from subst i t u t i n g o u r judg ment for the Commi ssion’s “as to the we ight of the eviden ce o n q u estions committed to age ncy discretion,” Citi es of Abilene, San Angel o , & Vernon v. P ublic Util. Comm’n , 146 S.W .3d 742, 748 (Tex. App.—Austin 2004, no pet.) (c iting Te x . Gov’t Code Ann. § 2001.174 ), beca use the Commi ssion “is the sole judge of t he weight to be accor ded the testimony of ea ch witness,” Central Power & Light v. Public Util. Comm’n , 36 S.W .3d 547, 561 (Tex. A pp.—Austin 2000, pe t. denied), and bec ause the Commi ssion “may acc ept or re

ject in whole or in part the te stimony of the va riousI n making these statements, we are mindful that the admini strative law judge postulated 11 in a fo otn ote i n h is p ro po sa l th a t if he ha d to c ho os e , h e wo uld c on c lud e that “ no e nf

or c e a ble c o ntrac t was re ache d betwee n” Southwestern a nd the Cooperative. See Docke t 24229 (Mar. 6, 2003) (P ro po sa l f

or De c isi on ). Th e fi nd ing s by the Com mis sio n sta te its de te rm inatio n that the pa rt ie s d id 16 witnesses who testify ,” City of Cor p u s C h r isti v. Public Util. Comm’n , 188 S.W .3d 681, 695 (Tex. App.— Au s t i n 2 0 0 5, pet. denied) . I n making this determination, we a re not a sked to verif

y whether “the a g ency rea ched the corr ect conclusion, but whether some rea sonable basis exis ts in the

rec ord for

the ag ency ’s ac tion.” Id. I n fa ct , the evidenc e may actua lly preponde rate ag ainst the Commi ssion’s finding a

nd be upheld a s long a s there is e noug h evidenc e to sug g es t that the Commi ssion’s “deter

mination was within the bounds of rea sonablene ss.” Id. We w ill sustain the ag ency ’s order if the evidenc e is suc h that rea sonable minds c ould ha ve rea ched t h e c o n clus ion that the ag ency

must have re ache d in order to justify its action. Texas He alth Faciliti es Comm’n v. Charter Medic al-Dallas, Inc. , 665 S.W .2d 446, 453 (Tex. 1984).

DI SCU SSIO N As a pr e lim ina

ry matte r, we no te the un iqu e pr oc e dura l po sture of thi s c a se and

no te the issues that we a

re not c onfronted w ith today . I n this case, we are not called upon to determine, de novo, whether the utilit ies in this case actua lly enter ed into a g ree ments reg ardings er v i ce t hat may be provide d by

eac h utilit y . I n dockets 8 a nd 42, the Commiss ion expl icitly deter mined that the pa rt ie s h a d e nte re d in to t

ho se ty pe s of ag re e me nts , an d no part y c on te ste d th os e de te rm inatio ns . Fur ther, we are not char g ed with the task of de termining , on our own, what the terms of the ag ree ments were . Rather, we are primarily fac ed with the task of de termi ning whether the Commi ssion’s inter

pretation of the order s and cer tificates issued in dockets 8 and 42, a s found in the various finding s and conc lusions in docke t 24229, is suppor ted by substantial evidence

. Se e Pu bli c 11enter

into ag ree ments and that those ag ree ments wer e approved by the C ommissi on in dockets 8 a nd 42. Id. (May

23, 2003) (Or der)

. We are also m i n d fu l of the holding in Public Utils. Bd. v. Central Power & Light Co. , 587 S.W .2d 782. I n that case , the C ommissi on held a hear ing r eg ardingthe scope of an a g ree ment enter ed into betwee n three utilit ies. Id. at 785. Howeve r, prior to re solution by the Commiss ion, two of the uti lit ie s so ug ht a

te mpo ra ry inj un c tio n f

ro m a dis tr ic t c ourt

and pr e se nte d th e same argume nts made be fore the Commiss ion. Id. The a ppellate c ourt deter

mined that the district court ha d jur isd ic tio n o ve r t

he re lie f so ug ht, wh ic h re qu ir e d the c ourt to c on str ue the a g re e me nt e nte re d in to by the utiliti es and that had bee n approve d by the Commiss ion. Id. at 787-88. Although the appe llate cour t in Public Utils. Bd. he ld t hat th e dis tr ic t c ourt

ha d th e a uth or ity to c o n s tr u e , o n it s o w n , th e te r

ms o f th e a g r e e me n t, th e s it u a ti o n p r e s e n te d in th a t c a se diffe rs signific antly from thi s case . I n Public Utils. Bd. , no finding s of fa ct or c onclusions of law ha d been issued by the Commiss ion prior to the district court’s involveme nt, and the ca se conc erne d a temporar y injunction, not an appea l from a f inal administrative orde r. 17 Util. Comm’n v. Houston Lighti ng & Power Co. , 645 S.W .2d 645, 647 (Tex. App.—Austin 1986, ref ’d n.r.e .) (e x plaining that Comm ission has authority to interpret its prior orde rs). The Coope ra tive raises se ven issues on appe al. In its first issue, the Cooperative contends that the Commission’s six th c onclusion in docket 24229, which states that Southwestern was g rante d a ce rtificate to serve the future ne eds of its customers that a re loc ated i nside the Cooperative’ s service are a, is err oneous and inc onsistent with rele vant g overning law. In its second issue, the Cooperative argues that sever al of the Commission’s findings and c onclusions forming the basis for its ultimate determination ar e not supported by substantial e vidence

. I n its thi rd issue, the Cooperative c ontends that the Commissi on’s orde r in docket 2 4 229 is inconsistent with prior Commi ssion prece d ent. I n its fourth issue, the Cooperative asser ts that the Commi ssion erre d by failing to conclude that Southwestern’s rig ht to provide servic e in the Cooperati v e’ s s er v i ce are a had expired as a

matter of la

w. In its fifth issue, the Cooperat i v e co n t en ds that the Commis sionI n it s b ri e f, the Coo pe rativ e state s it s se c on d is su e a s fol low s: “ Th e Tr ia l Co ur t e rr e d in 12 that rea sonable minds could not differ on the fa ct t h at there was no a g ree ment betwee n [Sou thw e ste rn ] an d [th e Coo pe rativ e ] wh ic h wou ld al low the us e of

c us tom e r- ow ne d li ne s to c ro ss cer tification boundarie s.” One of the a ppellee s interpre ts this s tatement as me aning that no ag ree ments were rea ched in doc kets 8 and 42 and notes that that argument constitutes “ a reve rsal of the position” that the Cooperative had pre viously taken, whic h seeme d to acknowle dg e the e x istence of the a g ree ments betwee n the parties. For rea sons w e previously discussed and in light of the fa ct that th e fo c us of the re ma ind e r o f t he Coo pe ra

tiv e ’s dis c us sio n und e r t

his iss ue dis pu te s th e a

bil ity of Southwestern to provide service to additional locations inside the Cooperative’ s service are a, we c on str ue the iss ue a s a tta c kin g the sc op e of the a g re e me nts and

no t th e e xiste nc e of

the a g re e me nts the mse lve s. 18 err ed by failing to issue a ce ase- and-de sist order . I n its six th issue, the Cooperative a rg ues that the Com mis sio n e rr e d by fa ili ng to pr op e rl y c on sid e r t he burd e n o f p ro of

wh e n ma kin g its ult imate deter mination. Finally , in its last issue, the C ooperative insists that the Commiss ion erre d by failing to impose some form of sanc tion on Sout hwe s t er n for failing to produc e evide nce that the Com mis sio n h a d r e qu e ste d. F or e a se of re a din g , w e wi ll a dd re ss t he Coo pe rativ e ’s se c on d is su e fi rs t

and the n a dd re ss t he re ma ini ngiss ue s in the or de r that the y we re pr e se nte d b y

the Coo pe ra

tiv e in i ts br ie fs . A lso , b e c aus e th e iss ue s are re late d, we wi ll a dd re ss t he Coo pe rativ e ’s sixthand se ve nth issues toge ther.

The Com m ission ’s F ind ings an d Conclus ions Are Sup ported by Su bstantial E vidence

I n its second issue, the Cooperative argues that the Commission erred by deter mining that So uthwe ste rn

and the Coo pe rativ e e nte re d in to a g re e me nts a llo wi ngSouthw e ste rn to i nc re a se the level of service that it pr ovided to c ustomers located inside the Cooperative’ s service are a. In 12 particula r, t he C ooperative asser

ts that sever al of the Commission’s findings in docke t 24229 that

se rv e a s th e ba sis fo r t

hat ul tim a te c on c lus ion

are no t su

pp or te d b y su bs tanti a l e vid e nc e . We wi llThe Cooper ative also ra ises another argument conce rning the C ommissi on’s finding s and 13 conclusions in docket 24229. Spec ifically , the Cooperative asser ts that by adopting the finding s and conclusions, the Commissi on violated “the substantial evidentiar y standard which is to be ac corde d to orig inal Docke t 8 and 42.” I n making this arg ument, the Cooperative ignor es the proc edura l posture of this case . Had any party appea led t he C ommissi on’s determinations from dockets 8 and 42, thos e dete rminations woul d have be en re viewed f or substantial evidenc e. Howe ver, those doc kets wer e not appe aled. Ra the r, in d oc ke t 24 22 9, the Com mis sio n w a s re qu ir e d to int e rp re t th e de te rm inatio ns ma de in t ho se dockets a ddressingthe ag ree ments in order to de termi n e wh ether the Cooperative was providing se rv ic e that e xce e de d th e a uth or ity g ra nte d to it b y

its c e rt if ic a te s. Th e int e rp retati on s made in docket 2422 9 ar e wh at has bee n appea led, and we are , there fore , limit ed to a c onsideration of whether those interpre tations are suppor ted by substantial evidence

. 19 addre ss the specific finding s and the c onclusion below, but g ener ally the Cooperative argues that the Commi ssion’s determinations ar e not supported by any evidenc e in t h e rec ord and that all of the

e vid e nc e pe rt a ini ngto t

he a g re e me nts a c tua lly

c uts a g a ins t th os e de te rm inatio ns . 13 To r e s o lv e th is issue , we will g roup re lated dete rminations and addr ess them tog ether

.
F ind ings 16 an d 17

I n finding s 16 and 17, the Commission discussed t he geog raphic boundarie s of the oil field leases a

nd units that S outhwestern ha d been providing service to. The Commission found that those boundarie s had not incre ased in size since the or igina l cer tification proce eding but did find t h a tt h e nu mb e r

o f c o n s u m i n g f

a c i l i t i e s i nt h o s e ar e a s r e qu i r i n g e l e c t r i c i t y h a d i n c r e a s e d

. In pa rt ic ula r, the Com mis sio n f

ound a s f oll ow s:
16. Th e g e o g r a

p h ic ar e a s e n c o mp a s s in g th e p o rti o n s o f a ll th e u n it s an d

le ases serve d by [S outhwestern] that extend into [ the Cooperative’s] service a rea have not chang ed since 1976, except that one has de cre ased in size.20

17. Thoug h the g eog raphic are a of the portions of the lea ses or unit s serve d by [S outhwestern] that extend into [ the Cooperative’s] service a rea have n o t been enlar g ed since 1976, the number of wells and re lated petr o chemica l fac iliti es po pu latin g the se pr op e rt ie s h a s in c re a se d d ur ingthi s p e ri od , a s wo uld be re a so na

bly e xpe c te d o f o il f

ie ld o pe ratio ns . These f in d i n gs are consistent with the testimony of var ious witnesses. One of Southwestern ’s witnesses, Mitch Elmore, testified that none of the c ustomers that wer e re ceiving power from Southwestern ha d incre ased the siz e of the ir fields or units locate d inside the Cooperative’ s service are a. I n fac t, E lmore testified that only one oil field had c hang ed in size and that it ha d decr ease d rathe r than incre ased in size. Howeve r, Elmore did testify that the number of wells and other

consuming fac iliti es needing elec tricity within the various lease s and units, including those locate d inside the Cooperative’s service are as, had incr ease d since the time that the c ertificates

wer e g rante d. Moreove r, one of Texaco’s witnesse s, S t an l ey Davis, testified it was c ommon kn ow le dg e in the oil ind us tr y a t the tim e of c e rt if

ic a tio n that “ the de ve lop me nt of a la rge lease involved chang es over

time, including dr illing new w ells and plug g ing old we lls.”

F ind ings 18, 19, 26, an d 27

I n finding s 18, 19, and 26, the Commission m ad e determinations reg ardingthe prac tice of de livering elec tricity to oil field operator s at delivery points and allowing the oper ators to car ry the elec tricity

over the ir own powe r lines. Moreove r, in finding 27, the Commiss ion deter mined that in dockets 8 and 42, the Cooperative did not contest the propriety of Southwestern providing service to its customers in t h e manner desc ribed a bove. Specif

ically , the Commiss ion fo un d, in r e le va

nt p art , a s f

oll ow s:21

18 . I t is we ll- e sta

bli sh e d p e tr ole um i nd

us tr y pr a c tic e fo r oil c omp anie s to in sta ll the ir own cu s tomer-owne d elec tric distribution sy stems in the oil field units and leases that t h ey ar e d ev el o p i n g. 19 . I t is we ll- e sta

bli sh e d pe tr ole um i nd

us tr y pr a c tic e fo r o il c omp anie s to have the ir customer- owned e lectric distribution s y stems ener g ized and serve d b y a sing le power su pp lie r at a pr ima ry de liv e ry po int

.

. . . 26. The re cords in Doc ket Nos. [8] and 42 re flec t [ Southwes t er n ’s ] long sta nding and continuing prac tice of se rving oil field operators at a primar y delivery point, from wh ic h th e op e rator s c on ne c t th e ir ow n li ne s to se rv e sp e c if ic wel ls a nd re late d o il production fa cilities. 27 . T he c on tin

uation of [ Southw e ste rn ’s ] lon g -s tand ingmann e r o f s e rv ingits customers who wer e the ope rators of the oil field units and lease s was uncontr overte d and ac quiesce d to by

[t he Cooperative] i n the orig inal cer tification proce eding s.
These f indings a re support ed by

substantial evidence . Duringdocket 24229, Sa m H un te r, a

wi tne ss f or Southw e ste rn

wh o pa rt ic ipate d in the ne g oti a tio ns be tw e e n the pa rt ie s in dockets 8 a

nd 42, testified that “oil field electric service has alway s been unique in that rather than the utilit y’s lines , the oil

op e ra tor s’ lin es g o to t

he sp e c if ic oil fi e ld p ro du c ingfa c ili tie s. ” (E mph a sis added) . Evidence was a lso introduced showingthat Southwestern’s e x perie nce wi t h providing elec tricity to oil fields was consistent with the pattern describe d above. Specifica lly , Hunter state d that Southwestern beg an providing service to the co unties in dispute in the 1940s and that in the 19 50 s a nd 19 60 s, Southw e ste rn

e ng ag e d in

the e xpe ns ive un de rt a kin g of e re c tin g e le c tr ic dis tr ibutio n li ne s to pr ov ide se rv ic e to t he are a s in qu e sti on . F ur

the r, Hu nte r t e sti fi e d th a t be c a

us e the under taking was so expensive and be cause there was no assura nce that the oil market in Texas would co n ti nu e b e in g p r o f it a b le o r th a t th e o il f

ie ld c u s to me r s w o u ld c o n ti nu e to use and purcha se ele ctricity , Southwestern ran its power lines alongthe per imeter of the oil fields and22

allowed the c ustomers to attach to the lines

. Evidence of this prac tice wa s also prese nted to the Commi ssion whe n Southwestern applied to a mend its a pplications in doc kets 8 and 42. I n particula r, Southwestern pre sented testimony and evide nce that the oil field operators it was providing service to inside the Cooperative’ s service are a built their own distribution lines throug hout the ir lease s and that Southwestern deliver ed its elec tricity to “one point of ser

vice.” Moreove r, in attac king the evidentiar y basis for these finding s, the Cooperative does not argue that it objected to the pr ospect of Southweste rn continuing to pr ovide servic e to customers via preexi s ti n g d e li v e r

y p o in ts an d

a ll o w in g th o s e c u s to me r s to tr an s f e r p o w e r o v e r th e ir own distribution l ines. Simi larly , in making its cla ims on appeal, the Co o p er at i v e d o es not deny that Southwestern had be en providing service to oil field operators in this manne r for some time, nor does the Cooperative d en y t h at afte r ce rtification, some of the se oper ators we re loc ated within the Cooperative’ s service are a. F inally , we also note t hat t he C ooperative did not beg in disputi ng the pr op ri e ty of Southw e ste rn

pr ov idi ngse rv ic e to c us tom e rs ins ide the Coo pe ra tiv e ’s se rv ic e are a

un til y ear s after

the Commiss ion had issued its final order s in dockets 8 and 42.

F ind ings 22, 24, an d 25

I n fi nd ing s 22 a

nd 25 and pa

rt of fi nd ing 24 , the Com mis sio n fo un d th a t in do c ke ts 8 and 42, Southwestern was g iven the authority to c ontinue providing service to customers that we re loc a te d o uts ide of

its se rv ic e are a

and tha t So uthwe ste rn

and the Coo pe ra

tiv e e nte re d in to a gr e e m e nts in those dockets allowingSouthwestern to continue pr oviding se rvice to customers that we re loc ated inside the Cooperative’s servic e ar ea. Spec ifically , the Commiss i o n found, in rele vant par t, as fo llo ws :23

22 . In D oc ke t N o. [8], So uthwe ste rn wa s c e rt if

ic a te d to c on tin

ue t o ser ve oil fi e ld loa ds in [the Coo pe rativ e ’s ] se rv ic e are a thr ou g h c us tom e r- ow ne d li ne s.

. . . 24 . In D oc ke t N o. 42 , th e pa rt ie s a g re e d [th a t So uthwe ste rn ’s c e rtifi c a te ] wo uld include the r ight to continue to se rve customers t hat it was pre sently servingoutside o f i t s g e o g r a

p h i c s e r v i c e ar e a b o u n d ar y. 25. I nme e ti n g s a mo n g th e p arti e s to D o c k e t N o s . [8 ] an d 4 2 th e r e w a s g e n e r al agr ee m ent betwe en [Sout hwester n] and the neg otiating r epre sentative for the c oope rativ e s, inc lud ing[the Coo pe ra tiv e ], th a t [Southw e ste rn ] wo uld c on tin ue to provide oil field service from primary delivery points via oil field operator c ustomerow ne d li ne s in c lud ing the po rt ion s of the op e ra tin g un its or

le a se s th a t e xten de d in to a neig hboring utilit [y ’]s service a rea . These finding s are consistent with the terms of the or ders issued in docke ts 8 and 42 and with testimony

that was pre sented to the Commission.

Do c k e t 8 Prior to cer

tification, Southwestern ha d b ee n d el iveringelec tricity to Amoco thr ough a delive ry

po int in H a le County , a

nd Am oc o h a d b uil t li ne s th a t c arr ie d th e e le c tr ic ity to consuming fac iliti es l ocate d in L amb County . Duringdocket 8, Hunte r testified that Southwester n was providingservice to are as outside o f i t s b o undarie s found on the ce rtification maps a nd that by filing its application Sout hwester n was spec ifically

seekingauthority

to continue provid ing service to customers that it was ser ving immediate ly

prior to ce rtification. After hear ing te stimony and conside ring the evidenc e p re s en t ed, the Commission i ssued its order in doc ket 8 stating that Southwe s t er n and the Cooperative had e ntere d into an agree ment reg ardingthe servic e that they

c ou ld p ro vid e . T hat a g re e me nt wa s inc or po rate d int o the fi na l or de r i n d oc ke t 8 a nd , th e re fo re , it sWe note that this testim ony is inconsistent with the Comm ission’s ulti mate dete rmination 14 that So uthwe ste rn ’s c e rt if ica tes all ow it t o in c re a se the le ve l of se rv ic e that it

pr ov ide s to its customers that are located inside the Cooperative’ s service are a in orde r to meet its customers’ f uture ne e ds . Al th oug h th is t e sti mony do e s n ot d ir e c tly

su pp or t th a t de te rm inatio n, fo r r e a so ns that w ill be more thoroug hly

explored later in the opinion, we conclude that the C ommissi on’s deter mination reg ardingfuture ne eds is supported by other e vidence

. Smit h provided similar testimony in docket 16738, the dual-certific ation docket that wa s 15 e ve ntu a lly dis mis se d. I n that doc ke t, S mith s tate d th a t So uthwe ste rn ha d “ the ri g ht t o c on tin

ue to serve any well that was in—that wa s elec trified” be fore the nee d for c ertification. 24 acc ompanying c ertifica

te. Specific ally , the orde r stated that the pa rties to the docket were entitled to cer tificates f or “a rea s which they

have a g ree d” to serve

. Additionally , during docket 2991, De lbert Smith, t he g ener al m anag er of the Cooperative, te stified reg arding th e agr ee ment betwee n the par ties in docket 8 and state d that the ag ree ment allowed for Southwestern to c ontinue providing elec tricity to its oi l field customers a nd that th e Coo pe rativ e did no t hav e any ob je c tio n to Southwe ste rn c on tin uin g to pr ov ide se rv ic e to i ts prior customer s an d allowing the customers to distribute the e lectric ity to consuming f

acilities loc a te d in sid e the Coo pe rativ e ’s se rv ic e are a . In p art ic ula r, Smit h te sti fi e d a s f

oll ow s: Q: So then y ou are not objecting to the service by Southw estern to Amoc o at the pr ima ry me te ri ngpo int

in H a le Cou

nty if Am oc o ta

ke s th a t pow e r t

hr ou g h it s customer- owned lines a

nd uses it for the load that exis ted as of the c ertification date? A: Okay . Serving any

load that exist ed prior to c ertification. Q: Yo u h a ve no ob

je c tio n to that? A: We h a ve no ob

je c tio n to that. 14 Q: So, and then likewise with Texaco, you have no obj ec t i o n t o the servic e, the delivery of powe r by

Southwestern to Texaco for Texaco’s use at Well 1 and 2? A: No , th a t’ s w hat th e a g re e me nt w a s. We h a ve no pr ob le m w iththat. 1525 S mi th ’s test imo ny

wa s a lso e c ho e d b y

ano the r o f t

he Coo pe ra

tiv e ’s wi tne sse s, Donald Stubbs, who was a f i el d enginee r for

the Cooperative. I n docket 24229, Stubbs stated that the utiliti es in docke t 8 ma de arr ang ements allowingconsuming fac iliti es to continue re ceiving service from the utility

that it was obtaining service from at the time of c ertification. Further more, in d oc ke t 24 22 9, Hunte r t e sti fi e d th a t th e Com mis sio n g ra nte d c e rt if

ic a te s that a llo we d u til iti e s to

c on tin ue pr ov idi ngse rv ic e to p re e xistin g c us tom e rs wh e n it is su ed it s o rd e r i n d oc ke t 8. Th is statement is a lso c onsistent with the testimony of David Hudson, anothero f S o uthwestern’ s witnesses, who testified that the parties to docket 8 ag ree d to allow Southwestern to continue se rving its preexist ing c ustomers whose lea ses or units wer e now, at least, p ar t ially located inside the boundarie s of another

utilit y ’s servic e ar ea. Finally , in docket 24229, whe n descr ibing testimony that he had p r o v ided in docket 8, Hunte r c omm e nte d th a t th e re wa s n o “ind ica tion o f a ny dis pu te c on c e rn ing[Sou thw e ste rn ’s ] continuation of ele ctric se rvice to oil field customers at existi ng points of delivery who use c ustomero w n e d l i n e s ” an d t h e n t r an s f

e r t h e p o w e r t o v ar i o u s p art s o f t h e i r o i l f i e l d l e a s e s o r u n i t s . S i m i l ar l y, in t he pr op o s a l f

o r d e c i s i o n i n d o c k e t 2 4 2 2 9 , t h e a dm i n i s t r a t i v e l aw j u d g e n o t e d t h a t i n d o c ke t 8 “ther e wa s no indication of any dispute conce rning [S outhwestern’ s] continuation of electric se rvice to oil f ie ld c u s to me r s a t e xis ti n g p o in ts o f d e li v e r y w h o u s e c u s to me r - o w n e d li n e s to s e r v e the portions of their lea ses o r u n i t s that ext end outside [Sout hwester n’s] ge og raphic service are as.” Docke t 24229 (Mar. 6, 2003) (Proposal for Dec ision).26

Dock et 42 I n Southw es t er n ’s application in docket 42, it sought per mission t o continue providing s e r

v ic e to “ e xis ti n g c u s to me r s p r e s e n tl y s e r v e d

. ” Si mi la

r ly , d u r in g d o c k e t 4 2 , H u nter te sti fi e d th a t So uthwe ste rn wa s se e king perm is sio n to c on tin ue se rv ingthe c us tom e rs that it had provide d power

to for y ear s. Furthe rmore, in doc ket 42, when c ross-examining one of Southwestern’s witness es , the Cooperative acknow ledg ed that af ter c ertifica

tion, Sout hwester

n would be providingservice to customers insi de the Cooperative’ s service are as t hat us e their ow n dis tr ibutio n li ne s.

After consideringthe evidenc e and testimony prese nted, the Commi ssion issued a n order in doc ket 42 stating that the parties had ente red into ag ree ments reg ardingthe servic e that ea ch may provide a nd that Southwestern wa s specific ally g iven a c ertificate to continue providingservice to its “customers pre sently being serve d” that ar e now located within the Coope rative’ s service are a. Docke t 42 (Oct. 8, 1976) ( Orde r).

Fur thermore , during docket 24229, Southwestern asked the Cooperative to pr oduce

a c op y of the or ig ina l a

pp lic a tio n th a t it

fi le d in do c ke t 42 . A lth ou g h th e Coo pe rativ e wa s una ble to p roduce a c opy

of the a pplication that it origina lly signe d, the Cooperative did produce an unsigne d copy , which acknow ledg ed the r ight of other utilities, including Southwestern, to c ontinue providing service to “pre mises” that they had bee n servingprio r t o ce rt ification and de fined

“ pr e mis e s” a s in c lud ingthe de liv e ry po int s th a t ut ili tie s us e to pr ov ide se rv ic e to oil fi e ld o pe rator s. Spe c if ic a lly , th e a

pp lic a tio n d e fi ne d p re mis e s a s f oll ow s:Hu n t er als o testified that it wa s customary in the oil industry for the operator of a 16 particula r oil field to chang e, and the Cooperative se emed to ac knowledg e the c ontinuing natur e of the ri g ht t o p ro vid e se rv ic e to tho se are a s w he n Sm ithstate d d ur inghis te sti mony

that owne rs hip c ha ng e s w ou ld n ot i mpa c t So uthwe ste rn ’s a uth or ity to p ro vid e se rv ic e to t

ho se are a s. 27 whe n an elec tric utility

furnished se rvice to a per son at one point from whic h such pe rs on dis tr ibute s e le c tr ic se rv ic e ov e r its lin e s to o il, g a s, or wate r w e ll i ns ta llatio ns , ‘p re mis e s’ sh a ll be the po le or fa c ili ty a t wh ic h po int tit le to the e le c tr ic ity pa sse s to such other pe rson, re g ardle ss of the point or poi nts at which such service is meter ed.

Mo re ov e r, duri ngthat do c ke t, Hunte r t e sti fi e d th a t th e ph ra se “ c us tom e rs pr e se ntl y be ingse rv e d” fo un d in

the fi na l or de r i n d oc ke t 42 re fe rr e d to the op e rator s of oil le a se s a nd un its that ha d b e e n o bta ini ngthe ir po we r f ro m So uthwe ste rn

and that ha d b e e n d istri bu tin g the e le c tr ic ity obtained to consuming fac iliti es located inside their lea ses and units over po we r lines that the

o p e r a t o r s h a d

i n s t a l l e d

. A d d i t i o n a l l y , H u n t e r t e s t i f i e d t h att h e o r d e r

w a s i n t e n d e d

t o a u th o r iz e S ou th wes ter n to c on tin

ue pr ov idi ngse rv ic e to t

ho se oil le a se s a

nd un its and that th e re wa s “ no t a sin g le vo ic e in o pp os iti on to t he c on tin uatio n o f [So uthwe ste rn ’s ] elect ri c se rv ic e to t he oil fi e ld operators at exist ing pr imary delivery points.” Also, Hunter state d that “the re was a g ener al

16 ag ree ment” between Sout hwester n and all of t he cooperatives to the various proc eeding s, including the Cooperative, “that [Sout hwester n] would continue to provide” ser vice to oil fields “from primary delivery points via the oil f ield operator customer- owned lines” “in the same manner that it had been doing fo r a lo n g ti me . ” A d d it io n a ll y , H u n te r te s ti f ie d th a t d u r in g th e me e ti n g s w it

h th e v arious cooper atives involved, Southwestern e x plained that if the coopera tives did not ag ree to allow Sou thw e ste rn

to p ro vid e se rv ic e to i ts o il- fi e ld c us tom e rs , So uthwe ste rn wo uld no t a g re e to l imi t it s

cer tification and instead w ould seek a cer tificate to provide service to the entire a rea .28 Th e fi nd ing s are a lso c on sis te nt w iththe te sti mony of Hu ds on and Smith in docket 24229. Althoug h he disputed the scope of the a g ree m en t, Smi th acknowle dg ed in docke t 24229 that the parties enter ed into a n ag ree ment in doc ket 42. Fur ther, Hudson testified that during do c ke t 42 , So uthwe ste rn

wa s und e r t

he a ssumpt ion

that it wo uld be a llo we d to c on tin ue to s e rv e oil field oper ations inside the Cooperative’ s service are a provide d that Southwestern wa s providing service to the sam e l ea s es and units that it was servingprior to ce rtification. More over, H udson stated that the pa

rties to docket 8 a g ree d to allow Southwestern to c ontinue servingits preexist ing customers e ven if they

wer e located inside the boundar ies of anothe r utility ’s servic e ar ea.

F indin gs 24 , 2 8, and 3 0 a nd C onc lusi on 6

I n the re maining portion of finding 24, the Commi ssion de termined that the utilities had wa ived their rig ht to rely upon the cor

ridor rule and found that there would have be en no re ason for the utilities to ag ree to waive that ri g ht unless they had bee n g iven the powe r in a c ollatera l ag ree ment to se rv e t h e g rowingneeds of its customers that wer e located inside another utilit y ’s

se rv ic e are a . In p art ic ula

r, the Com mis sio n f

ound , in re le va nt p art , a s f

oll ow s:
24. I n Docke t No. 42, the par ties ag ree d to waive the Commission’s corridor r ule.

. . . T he re is n o a

pp are nt r e a so n [So uthwe ste rn ] wo uld have a greed to forg o it s corr id or ri g hts un le ss i t c ou ld c on tin ue to s e rv e the g ro wi ngne e ds of its oil fi e ld customers that it was pr esently servingo u t s i d e of its g eog raphic service are a b o u n d ary . T h er e i s n o ap p ar en t re as o n [ S o u t h we s t ern ] wo u l d h av e a gre edt o fo rgo its c or ri do r r ig hts un le ss i t cou ld co nti nu e to se rv e the g ro wi ngne e ds of its oil fi e ld c u s t o m e r s f

r o m i t s e x i s t i n g p o i n t s o f d e l i v e r y.

I n finding 2 8 , t h e C o m m i s s i o nre p ea t edi t s d et erm i n at i o nt h at t h e p ar t ies intended that South w e s te r

n b e a ll o w e d to p r o v id e s e r v ic e to o il f

ie ld o p e r a to r s , in c lu d in g th o s e inside the Cooperative’ s service are a, throug h delivery points; howe ver, the finding also included an a dditionalI n this iss ue, the Coope rative also urg es that finding 29 is not supported by substantial 17 evidenc e. When this Court remanded doc ket 14454 t o the Commiss ion, this C ourt instructed that in addition to remanding for c onsideration of the intent of the par tie s , the intention of the Commi ssion should also be considere d in the analy sis of the scope of the pre vious certific ates. Lamb County Elec. Coop. , 2001 Tex. App. L EXI S 173, at *18. I n light of this instruction, the Commiss ion issued finding 29, which is ne arly identical to finding 28, except that it substi tutes “the Commission” fo r “ the pa

rt ie s” a nd state s th a t it

wa s th e Com mis sio n’ s in te nti on that So uthwe ste rn

be a llo we d to pr ov ide the se rv ic e de sc ri be d in fi nd ing28. Gi ven tha

t w e ult imate ly

c on c lud e that f

ind ing28 is su pp or te d b y su bs tanti a l e vid e nc e and that the Com mis sio n sp e c if ic a lly inc or

po ra te d th e a g re e me nts be tw e e n th e Coo pe rativ e and Southw e ste rn

int o its fin a l ord e rs , we a lso c on c lud e that f ind ing29 is supported by

substantial evidence

. I n challeng ing the deter

mination that Southwestern was allowed to provide service to mee t 18 the future needs of

its c ustomers that wer e located inside the Cooperative’s terr itory , the Cooperative ref ers to a pr oposed ame ndment to the cer tification application filed by Southwestern and to a hear ing on the proposed amendment. Th e re quest was withdra wn bef ore the issuance of

the final or de r i n d oc ke t 42 . In the pr op os e d ame ndme nt, Sou thw e ste rn state d th a t it

de liv e re d e le c tr ic ity

to oil fi e ld o pe rator s at on e or mor e po int s and

no te d th a t in

the pa st , oi l f

ie ld o pe rator s w ou ld a sk Southwestern to move the loca tion of the de livery

points if a differ ent location wa s more ef ficient and e c on omi c a l. A c c or din g ly , So uthwest ern a sk e d f or the a bil ity to m od if y the de liv e ry

po int s if n e c e s s ar y.
29 deter mination stating that t he par ties intended that Southwestern be g iven the ability to provide service to cover

the nee ds of

future wells and other consuming fac iliti es inside the operator’s lea ses

or un its . Sp e c if

ic a lly , th e Com mis sio n f

ound a s f oll ow s:
28 . In d oc ke t N os . [8] a nd 42 , th e pa

rt ie s in te nd e d th a t [Southw e ste rn ] wo uld continue to provide service to its oil f ield operators at a primar y delivery point and the custom ers would continue to use customer-owned lines to energ ize ex isting and futur e we lls and

re late d p e tr oc he mic a l f a c ili tie s w ith in t

he ir leases and

un its , inc lud ingthe po rt ion s o f t he le a se s and un its that e xten de d in to [the Coo pe ra tiv e ’s ] g eog raphic service are a. 17 Finally , in findings 30 a

nd in conclusion 6, the Commissi on deter mined that the parties to docke ts 8 and 42 intended that S outhwestern would be allowed to provide service to c over the oper ators’

futur e elec tricity

needs, inc luding the ability to provide electricity to new c onsuming 18The Cooper ative arg ues t hat t his reque st demonstrates that there w as no ag ree ment allowing

Southwestern to expand the servic e that it provided to the a rea s in dispute. Essentially , the Cooperative c ontends that it would be unnecessar y to make this reque st if Southwestern alre ady had the ability to provide incre ased se rvice to the reg ion. I n the proposa l for decision in docket 24229, which w as adopte d by the Commiss ion, the administrative law judg e dete rmined that the a pplication was focused on the “ex tension of ser vice from new service points” and that by filing the amendment, Southwester n was attempting to clar ify “that it could provide se rvice to new consumingfac iliti es fro m n ew de livery points—rather tha

n s o l e l y f r o m e x i s t i n g d e l i v e r

y p o i n t s . ” D o c k e t2 4 2 2 9 ( M ar . 6 , 2 0 0 3 ) ( P r o p o s a l f o r D e c i s i o n )

. In other wor ds, the judg e conc luded that t he ame ndment was a reque st for an “ additional rig ht” that was not expressly

“included in the prior application” and not “a n indication that the ea

rlier a pplication did not include service to new fa cilities from exist ing de livery points.” The interpr etation of the proposed amendment a s reque sting a n additional rig ht disti nct from the ability to provide increase d service to exis ting customers is supported by substantial evidence

. Th e te rm s o f S ou thw e ste rn ’s or ig ina l a pp lic a tio n s ou g ht t

he a bil ity to c on tin ue pr ov idi ngse rv ic e to customers that would soon be loc ated inside the se rvice are as of other utilit i es . Fu rther, the application spec ifically

stated that Southwestern would apply for permission to install “additional ‘points of servic e’” when a customer r equests an a dditional delivery point, but the application made no mention of nee ding to a pply for pe rmission to provide electr icity to its customers throug h exis ting delivery points in amounts t hat exceede d the amount provided at the time of cer tification. I n relation to t he po ssi bil ity

of ins ta lli ngne w d e liv e ry

po int s, the pr op os e d a me ndme nt a sk e d f or “ the ri g ht t o service the o il and g as fields . . . whe ther such se rvice is render ed throug h the exist ing point of de liv e ry or a dif fe re nt p oin t of

de liv e ry re qu e sted by th e op erator of the oil and

g a s le a se in qu e sti on .” Whe n interp ret in g the e ff e c t of the pr op os e d ame ndme nt o n th e ri g hts or ig ina lly reque sted in Southwestern’s a pplication, the hea

ring s exa m iner in docke t 42 concluded that the amendment wa s a request t o “include a claim for certification of future points of delivery to exi sting petro-c hemical c ustomers, reg ardle ss of ce rtifi ed s ervic e ar eas.” I n other wor ds, the examiner surm ise d th a t by

re qu e sti ngthe a

bil ity to i ns ta ll n e w d e liv e ry

po int s, Southw e ste rn wa s tr y ingto avoid the nec essity

of obtaining the Commiss ion’s permission befor e beg inning installation. No party disputed that deter

mination. Finally , the i nterpre tation is consistent with testimony g iven by on e of Southw e ste rn ’s wi tne sse s. Hunte r te sti fi e d that the purp os e of the a me ndme nt “ wa s to ob ta in a pp ro va l to pr ov ide the oil fi e ld o pe rator s additional points of delivery

without the need to make a new f iling for a ce rtificate .” (Empha sis added). 30 fac iliti es located inside the operators’ oil f ield lease s or units. Specifica lly , the Commiss ion found

and c on c lud e d a s f

oll ow s:I n its re ply br ie f, the Coo pe rativ e take s issu e wi th the inc lus ion of the langua g e “ oil fi e ld 19 lease s and units” in conclusion six and with the Commissi on’s construc tion of dockets 8 and 42 a s g ranting Southwestern a c ertifica te to continue providingservice to “customers.” I n particula r, the Coo pe rativ e a sse rt s tha t nei the r of the or de rs in doc ke ts 8 or 42 g ra nte d the Coo pe ra

tiv e the ri g ht t o pr ov ide se rv ic e to l e a se s o r u nit s and fu rt he r c on te nd s th a t th e fi na l or de rs in the do c ke ts, pa rt ic ula rl y conclusion 7 fr om d o cket 42, certified “ distribution l ines,” not customer s, that Southwestern wa s allowed to continue to use

. Howeve r, we previously

conclude d that s u b s t antial evidenc e supports the Commission’s deter mination that Sout hwester n was cer tified to provide ser

vice to its customers in exist ence at the time of ce rtification, including the oper ators of oil field leases and units whose e lectric ity needs e xten de d in to p or

tio ns of the Coo perative ’s se rv ic e are a . M or e ov e r, in t his su bis su e , w e a lso conclude that substantial evidenc e supports the C ommissi on’s deter mination that Sout hwester n was g iven the author ity

to se rve the future needs of those operators. I n light of the se dete rminations, we c ann ot c on c lud e tha

t the Com mis sio n’ s c on str uc tio n o f i ts p ri or

or de rs or its inc lus ion

of the ph ra se “oil field l eases and units” in its determinations was inade quately supported by

the evidenc e prese nted. 31 30 . In Doc ket Nos . [8] an d 4 2, [Sou thw e ste rn ] wa s g ra nte d a CCN to c on tin

ue to se rv e the po rt ion s o f t

he oil fi e ld l e a se s a

nd un its op e rate d b y

[Sou thw e ste rn’ s] oi l company customers that extended into [the Cooperative’s] ge og raphic service are a, including the future ne e ds of the oil c omp any c us tom e rs c oin c ide nt wit h n or ma l oi l fi e ld d e ve lop me nt.

. . . 6. I n Docke t Nos. [8] and 42, [Sout hwester n] was gr anted a

[cert i fi ca t e of convenie nce a

nd nece ssity ] t o serve the exist ing a nd future needs of its oil company c us tom e rs via

c us tom e r- ow ne d li ne s in

the po rt ion s o f t

he ir oil fi e ld le a se s and

un its 19 that extended into geogra phic servic e ar eas of

neig hboring utilit ies, including [t he Co o p e r a ti v e ]. (Emphase s added)

.

These f indings a re suppor ted by substantial evidence . The order in docket 42 sp e c if ic a lly state d th a t Southw e ste rn wa s “ no t g ra nte d a Ce rt if

ic a te of Con ve nie nc e and

Ne c e ssi ty fo r a 40 0- fo ot c or

ri do r. ” Simi larl y , in

docket 42 , N e wt on , th e g e ne ra l ma na g e r f or South P la ins ,32

testified that all of the pa rties to docket 42 agreed to wa ive the cor ridor rule beca

use the pa

rties

cre ated their

o wn agr ee m ents reg ardingthe servic e that the utilities could provide. Smith echoed that te sti mony by sta

tin g , duri ng do c ke t 42 , that the pa rt ie s ha d e nte re d in to t

he ir ow n a g re e me nts that repla ced the corr idor rule.

I n docket 24229, when testify ing r eg ardingthe cor

ridor rule , Hunter state d that the parties a g ree d to waive the corridor rule that would otherwise have authorized a uti lity to continue

us ing a po we r lin e that ha d be c ome str and e d ins ide ano the r uti lity ’s se rv ic e are a . I n other wor ds, Southwestern ag ree d to give up the ability to serve customers located inside the cor ridor and to se rve

new c ustomers that mo v e i nto the corr idor. Moreove r, Hunter testified that from a

financ ial standp oint and in light of the e x pense of installing distribution li nes, it would make no sense for Sou thw e ste rn

to w a ive the c or

ri do r r ule and fo rg o expand ing its se rv ic e wi thi n th a t c or ri do r u nle ss Sou thw e ste rn

ha d o the rw ise re ta ine d th e ri g ht t o c on tin ue pr ov idi ngse rv ic e thr ou g h the po we r l ine s. F ur the r, Hu nte r t e sti fi e d th a t a lth ou g h So uthwe ste rn “ a g re e d to wa ive c or

ri do r ri g hts ,” it d id s o w ith the intention of continuing “to provide service to the oil f ield operators at the single primary delivery points on those dist ribution lines.”

Moreove r, in docke t 42, Hunter te stified that Southwestern wa s seekingpermission to continue to serve the customers to whic h it had historically provided ser

vice an d t o serve the

c us tom e rs ’ f

utu re ne e ds . T hat testimo ny is s up po rt e d b y

the state me nt p re pa

re d b y Ne wt on in do c ke t 42 that, in pa

rt , e xpla ine d the se rv ic e a g re e me nt be tw e e n Southw e ste rn and South Pla in s. I n th e state me nt, Ne wt on

re qu e ste d th a t So uthwe ste rn be g ive n a c e rt if ic a te to se rv e “ a dd iti on a l oi l field ty pe loads (pe troche mical) a s can be serve d without extension of i ts fac iliti es from its locationDuringdocket 24229, the Coope rative did refe r to and pre sent evidenc e indicatingthat 20 Southwestern wa s not allowed to provide e lectric ity to serve the nee ds of oil field opera tors that wer e in e xce ss o f w hat So uthwe ste rn wa s p ro vid inga t th e tim e of ce rt if ica ti on . F or

e xamp le , Sm ith testified that the ce rtificate s did not allow Sout hwester n to provide powe r to new c onsuming fac iliti es t hat wer e installed in the oil fields bec ause those f acilities wer e located within the Cooperative’ s singly -ce rtificate d are a. Similarly , Smit h testified t hat the ag ree ment betwee n the parties in docke t 42 was “intende d to be re stricted to a str an d ed d i s t ribution line’s use to provide 33 as it prese ntly

exis ts.” I n docket 24229, Hunter also explained that during the ea rlier doc kets there

wa s no “ op po sit ion

to t he oil op e rator s’ us e of

the [Sou thw e ste rn ] sup pli e d e le c tr ic se rv ic e to f ulf ill the oper ators cha

ng ing ne eds coinc ident with normal oil field production.” Hu ds on pr ov ide d s imi lar t e sti mony duri ngdo c ke t 24 22 9. He state d that in do c ke ts 8 and 42, Southwestern was given the authority to provide ser vice to future consuming fac iliti es adde d in the normal cour se of de velopment to the lease s and units o f S o u t h we stern’s c ustomers locate d ins ide the Coo pe rativ e ’s se rv ic e are a . M or e ov e r, Hunte r t e sti fi e d th a t th e c on sumin g fa cil it ies in d i s p u t e w er e a d d edi nt h e n o r m al co u rs e o f d ev el o p m en t
. Fu rt h erm o re , h e s t at edt h at al t h o u gh Southwes t er n ’s s ervic e would be limited to the distribution li nes and points of de livery it had previously

installed, the ag ree ment betwee n the utilit ies allowed customers to c ontinue their pra ctice of using and installing their own distribution lines to me et their curr ent and future n eeds.

Davis’s testimony

in docket 24229 also supports the de ter mi n a ti o n th a t Southwestern

wa s g i v e nt h e a

u t h o r i t y t o s e r v e i t s c u s t o m e r s ’ f

u tu r e n e e d s . A s m e n t i o n e d p r e v i o u s l y , D a v is testified that it was common for oil operators to add new consuming fac iliti es whe n they develope d an oil field. F urther, he stated that af ter Southwester

n beg an installing distribution points, Tex aco “made development plans based on the assumption that it would use elec tric powe r distributed over

c us tom e r o wn e d li ne s” wh e n it c on tin ue d to de ve lop its pr op e rt ie s. Moreove r, Davis stated that 20c on tin

ue d th e n- le ve l of

se rv ic e to t

he consum ingfa c ili tie s c on tr oll e d b y the n- sp e c if

ic c us tom e rs , then beingserve d.” More over, Stubbs testified that Southwestern’ s authorization t o serve customers within the Cooperative’ s service are a would diminish over time. I n particular, h e s t at ed that the cer tifications allowing for se rvice in another utility ’s t err itory wer e kept to a minimum and g iven with the belief that most of the c ertifica tions would expire due to ina ctivity

. Finally , Stubbs t estified that when the pa

rties beg an establishing their service are a boundarie s, the par ties did not consider the futur e de ve lop me nt of any oil fi e ld le a se or un it; ins te a d, he argue d that the pa rt ie s lo ok e d s ole ly to the distribution lines that wer e in place and the c onsuming fa cilities that were alre ady in exi stence
. Although this ty

pe of e vidence does not support the Commiss ion’s deter mination, as detailed previously , evidenc e in direc t oppositi on to this testimony was also prese nted to the Commiss ion. I n resolving the conf

licting testimony , the C ommissi on was free to acc ept or re ject the testimony

of the var ious witnesses when makinga dete rmination reg ardin g wh at i f any weig ht to give to the testimony of the various witnesses. See Cit y of Corpus Christ i v. Publi c Util. Comm’n , 188 S.W .3d 681, 695 (Tex. App.—Austin 2005, pet. denied). Mor eover , when r esolving the c o n f li c ting e vidence in f a vo r o f Southw e ste rn , the a dmi nis tr a tiv e law j ud g e a lso state d th a t H unte r w a s th e on ly wi tne ss who testified duringdocket 24229 that a ctively participated in the neg otiations betwee n the par ties in dockets 8 and 42. D ocket 24229 ( Mar. 6, 2003) (Proposal for Dec ision). I n its second issue, the Cooperative also contends that f inding 31 is not supported by 21 su bs tanti a l e vid e nc e . F ind ing 31 state s tha t “[w]it h one e xce pti on , [the Coo pe ra tiv e ] ha s f

a ile d to establish th at [ S outhwestern] is providing se rvice to any customer inconsistent with the ter ms of [S outhwestern’ s] C CN.” All of the r easons g iven s upporting the ot her disputed f indings a lso compel us to c on c lud e that f

ind ing31 is sup port e d b y su bs tanti a l e vid e nc e . M or e ov e r, we no te that, 34 the normal de velopment of an oil lease involved making signific ant cha ng es to the lea se, including

cre ating new we lls, and that Texaco believe d that it would be allowed to obtain all of its power needs fr om Sou thw e ste rn . F ina lly , Davis te sti fi e d th a t T e xac o d id n ot g e ne ra lly de ve lop pr op e rt ie s w ith split-dist ribution sy stems and that re quiring Texaco t o split wher e it obtained its elec tricity from at the time of ce rtification would not have benef itt ed T ex ac o financ ially

and would have been inconsistent with oil i ndustry prac tice at that time. For these re asons, we c onclude that a ll of the disputed finding s and conc lusion

are supported by

substantial evidence and, ac cording ly , o v err ule the Coopera

tive’s sec ond issue

on a pp e a l. 21reg ardingthe one e x ception, the f inding a lso states that Southwestern “a cknowledg ed th[ e] error and has ag ree d to discontinue service when [the Cooperative] i nforms it that [t he Cooperative] i s rea dy to provide ser

vice to this customer. Ac cording ly , no relief is require d to ad d re s s t h e isolated issue here .”

35 Conclusion 6 is Consis tent with Relevant Law

I n its second issue, the Coopera tive asser ted that conc lusion 6, i n ad d ition to ot her Commi ssion determinations, was not sup ported by substantial evidence . I n its first issue, the Cooperative a lso disputes the propriety of conc lusion 6. First, the C o o p er at ive contends that the authority g rante d under c onclusion 6 went be y on d th e cert if

ica tio ns that th e Coo pe ra tiv e re c e ive d in

do c ke ts 8 and

42 . A s su

pp or t f or thi s

asser tion, the Cooperative r efe rs t o the certification maps utiliz ed in the two docke ts that show the service are as of various utilit ies, including the Cooperative and Southwestern, at the time the utilities

or ig ina lly ob ta ine d th e ir c e rt if

ic a te s. Th e Coo pe rativ e no te s that the ma ps do no t make any

e xplic it ref ere nce to the ability of Southwestern to se rve the exis ting or future needs of the customers loc ated inside the Cooperative’s servic e ar ea.

Previously , we c oncluded that the va rious finding s that form the ba sis for conclusion 6 as we ll as conclusion 6 itself ar e supported by substantial evid en ce. I n light of that deter mination, we cannot conclude that conclusion 6 exceeds the limits of the ce rtifications g rante d in dockets 8 and 42.

Second, the Cooper ative compl a in s th a t b y a ll o w in g So uth w e s te r n to s e r v e the “ future needs” of the c ustomers at issue, the Commission has viol ated the dic tates of the u t i l i t i es code. Spe ci fi ca l l y , the Cooperative asser ts that the utili ties code r equire s cer tification for a

particula rWhen making its var ious assertions, the Coopera tive, on more than one occ asion, ref ers 22 to a prior docket as support for the proposition that by providing elec tric ser

vice to a r eg ion outside of its service are a throug h customer- owned line s , Southwestern contr avene d prior Commissi on prec edent. See Tex. P ub. Util. Com m’n, Complaint of Nuece s Elec. Coop. , Docket No. 4572 (Jul y 2, 1984) (Or der) . I n that prior docke t, the Commi ssion con cl u d ed that “a public utility may no t pr ov ide se rv ic e thr ou g h c us tom e r- ow ne d li ne s to a c on sumin g fa c ili ty loc a te d ou tsi de the pu bli c utilit y ’s ce rtificate d are a until the utilit y has re ceive d authority

to serve the are a.” Id. I n light of that statement, the Cooper ative insists that S outhwestern’ s service to customers located inside the Cooperative’ s service are a is improper.

36 are a , n ot f

or pa rt ic ula r c us tom e rs . A s su

pp or t f or thi s p ro po sit ion , th e Coo pe rativ e c ite s to

su bs e c tio n 3 7. 05 1( b) of

the uti lit ie s c od e , w hic h p ro vid e s a s f oll ow s:

Exc e pt a s o the rw ise pr ov ide d by thi s cha pte r, a re ta il e le c tr ic uti lity

may no t f ur nis h or make a va ila

ble re ta il e le c tr ic uti lity se rv ic e to an are a in whic h r e ta il e le c tr ic uti lity s e r v i c e i s b e i n g l aw f

u l l y f u r n i s h e d b y an o t h e r

r e t a i l e l e c t r i c u t i l i t y un le ss t heuti lit y fir st o bta ins a c e rti

fic atetha t in c lud

es th e ar e a in whi c h th e c on su mi ng fac ili ty is located

. Te x. Ut il. Cod e Ann. § 3 7. 05 1( b) (e mph a sis a dd e d) . F ur the r, the Coo pe ra

tiv e argue s th a t be c a

us e the Com mis sio n’ s in te rp re tatio n of the c e rt if ic a te s is su e d in

do c ke ts 8 and

42 pr ov ide s n o e xpre ss limit ati on on the future needs that Southwestern ca n serve or on the locations to which service may be provide d, the Commiss ion effe ctively issued an “ope n -e n d ed” c ertificate authorizing Southwestern to provide s er v i ce in the Cooperative’ s service are a that we re c onstrained solely by the nee ds and desires of S outhwestern’ s customers. Stated differ ently , the Cooperative asser ts that the Commiss ion’s conclusion would allow S outhwestern to further invade the Coope rative’ s service

are a and r eac h into area s n o t ex pressly “spec ified within [S outhwestern’ s] certification boundarie s.” 22The Cooper ative’s relianc e on this prior docke t is mi splace d. I n that docket, a utilit y soug ht to provide ser

v ice to an a

rea that it had not rec eived a cer tificate to ser

ve and be g an distributing elec tricity to that a rea befor e seeking permission from the Commi ssion. In this case, Southwester n was providingservice to the custom ers in dispute prior to the ne ed for cer tification and wa s g iven cer tificates a uth o rizing it to serve its pre exis ting c ustomers. Moreove r, the Commission determined, based on substantial e vidence , that the authorization encompa ssed the rig ht to serve the f uture ne eds of its pre exis ting customers. Cf. Ci ty of Coahoma v. Public Util. Comm’n , 626 S.W .2d 488, 490-92 (T ex . 19 81) ( c on c lud ingthat Cit y of Coa ho ma wa s e nti tle d to c on tin

ue pr ov idi ngse rv ic e to customers that it was se rving prior to passag e of A ct but wer e now l o ca ted in another utilit y ’s water district). 37 I n fur t h er suppor

t of its assertion that the Commissi on’s ac tions contravene the dictates of subsection 37.051(b), the Cooperative ref ers to Citi zens Coop Gin v. Ge neral Tel. Co. , 72 8 S. W.2 d 9 0 3 ( T e x. A p p . — A u s t i n 1 9 8 7 , n o w r i t ) , w h i c h i n v o l v e d a p r e d e c e s s o r t o subsection 37.051(b). I

n that case , Citi zens Coop Gin (the “Gin”) attempted to obtain new te lephone service from South Plains Telephone Cooperative (“Te lephone Coop”) rathe r than obtain the se rvice from its exi sting c arr ier, Ge nera l Telephone Company (“G ener al Tele phone”)

. Id. a t 90 4. To ob ta in the servic e, t h e Gi n installed telephone distribution lines in Telephone Coop’s se rvice are a that would connec t the Gin to the Coop’s distributi on netw o rk. Id. Af te r l e arn inga

bo ut t his , Gene ral Te lephone a sked the Commission t o issue a ce ase- and-desist order on the g round that Telephone Coop “ was providing service bey ond its certificated ar ea.” Id. at 905. The Commission denied t h e request. Id. On appe al, this Court concluded that the Commission erred by allowing Telephone Coop to provide service to the Gi n b ec au s e t h e statute in ef fec t at that time, like subsection 3 7

. 0 5 1 (b ), required that a utilit y seekingto provide ser

vice to an a

rea that has bee n

cer tificated to another utility must first obtain its own ce rtificate stating “ the ar ea in whic h the consuming facility is located.” Id. at 906 (e mphasis added)

.We note that the terms of section 37.155 allows utilit ies to enter into ag ree ments reg arding 23 the ar eas that the y will serve a nd reg ardingthe customers that they will serve. Te x . Util. Code Ann. 37.155 (West 2007) (explaining that ag ree ments may desig nate “ are as and c ustomers to be ser ved by the utiliti es”)

. 38

I n light of this l as t s t at ement, the Cooper ative ar g ues that this Court has mandated that if a uti lity se e ks to pr ov ide se rv ic e in an oth e r uti lity ’s se rv ic e are a , the uti lity mus t f ir st o bta in

a c e rt if ic a te tha t sp e c if ic a lly de sc ri be s th e g e og ra

ph ic loc a tio ns of th e c us tom e rs that th e uti lity is seekingto serve. F urther, the Cooperative c ontends that bec aus e t h e C o m m i ssion never issued a

cer tificate pr oviding that ty pe of g eog raphic specific ity , conclusion 6 is inconsiste nt with the

rea soning of

the Citi zens Coop Gin case . For sever al re asons, the Cooperative’s re liance on subse ction 37.051(b) is misplaced. First, subsec tion 37.051(b) applies to circ umstances t h at are not present in this case

. Subsection 37.051(b) a

pplies, by its ter ms, to situations in which a utilit y is attempting to provide service to anar e a

th a t i t h a s n o t b e e ng iv e na c e rti f ic a te to s e r

v e an d th a t h a s a lr e a dy

been

cer tificated to a

nother utility

. Tex. Util. Code Ann. § 37.051(b). Howeve r, those cir cumstance s are

no t p r e s e n t h e r e . I nth e p r e s e n t c a s e , p r io r to th e p a s s a g e o f

th e A c t, So u thw e s te r

nh a d b e en providing service to customers located i nside what is now the Cooper ative’s se rvice are a. More over, the Commiss ion found that prior to ce rtification and in accor dance with the utilit ies code , Southwestern and the Cooperative e ntere d into ag ree ments reg arding the servic e ea ch could pr ovide. See id. § 37.155. Th e Com mis sio n ap pr ov e d thos e a g re e me nts , an d the y we re inc or

po ra te d in to 23 the c e rt if ic a te s is su e d in

do c ke ts 8 a

nd 42 . In o the r w or ds , So uthwe ste rn wa s g ive n c e rt if

ic a te s to provide ser

vice to customer s in acc ordanc e with the t erms of the ag ree ments that Southwestern and39

the Cooperative enter ed into. F u r th e r , s u b s ta nti a l e v id e n c e supports the Commis sion’s interpre tation of the agree ments and cer tificates as allowing Southwestern to se rve the curr ent and future needs of its preexist ing c ustomers now located inside the Cooperative’s servic e ar ea.

Moreve r, eve n assumi n g t h at subsection 37.051(b) w ere applicable to the curr ent circ umstances, the pr ovision also specifica lly allows for e x ceptions to its requiremen t s i f t hey

are authorized by anther provision of t he utilities code. Id. § 37.051(b) (explaining that provision

a pp lie s “ [e]xc e pt a s o the rw ise pr ov ide d b y thi s c ha pte r” ). On e su c h e x cept io n is fo un d in section 37.155, which, as discussed previously , allows utilit ies to enter into ag ree ments reg arding the servic e that they

will provide. Id. § 37.155. I n light of the prec eding , we a lso conclude t h at t he Cooperative’s re liance on the Citi ze ns Coo p G in case is mispl ace d. I n that case , unlike the current case, Te lephone Coop wa s not g iven a c ertifica

te authorizing it to provide se rvice to customers in another utilit y ’s servic e ar ea. Moreove r, whe n stating that a utilit y was require d to obta in a cer tificate detailing the location of a proposed c onsuming fa cility befor e providing service to the fac ility , this Court di d not, as alleg ed by the Coo pe rativ e , im

po se any a dd iti on a l ge og ra ph ic re qu ir e me nt fo r c e rt if ic a tio n a nd wa s me re ly repe ating the mandate s of the pre dece ssor to subsection 37.051.

We also disag ree with the Cooperative’ s assertion that the Commission authoriz ed Southwestern to provide e ssentially unlimit ed service in the C ooperative’s s ervic e ar ea. I n issuing the var ious certific ates, the Commission complied with the provision of the utilit ies code allowing uti lit ie s to e nte r i nto a g re e me nts re g ard ing the ir se rv ic e are a s. F ur the r, a lth ou g h th e fi na l or de rs in dockets 8 a

nd 42 do not themselves provide the s pecif ic l imitations on the s ervic e that S outhwesternI t is worth noting that duringdocket 24229, Hunter testified that the c ertificates would not 24 authorize Southwestern to provide se rvice to are as beyond “the g eogr aphic area s of the units or lease s that exi sted in the 1975-1976 time fra me.” 40 could provide inside t h e C o o perative’s servic e ar ea, the Commi ssion found in docket 24229 that th e p ar ties’ intention when ente ring the ag ree ments was to allow Southwestern to pr ovide

se r v ic e to it s p r e e xis ti n g c u s to me r s s o th a t t h o s e c u s to me r s c o u ld

e n e r g iz e c o n s u mi n g f

a c il ities located “ within their leases a nd units.” Docke t 24229 (May 23, 2003) (Or der) . I n other wor ds, the Commi ssion found that the ag ree ments wer e limit ed by the customers that could be se rved a nd by the spec ific g eog raphic reg ions that could be serve d: service was li mited to customers in ex istence pr ior to c e rt if ic a tio n a nd to t ho se c us tom e rs ’ l e a se s and un its , w hic h h a d b e e n e sta bli sh e d b y

the tim e of ce rtification. Moreove r, the Commiss ion also found that the ag ree ments allowed Southwester n 24 to provide ser

vice throug h delivery points that had been used to pr ovide power to those customers in the past. Those de livery points were a lso ge og raphic ally fix ed. F or the se re a so ns , w e ov e rr

ule the Coo pe rativ e ’s fi rs t is su e on a pp e a l.

The Co m m iss ion ’s Or de r is N otInc ons ist e nt with it s P r iorP r e c e de nt

I n it s th ir d is su e , th e Coo pe ra tiv e c onte nd s tha t th e Com mis sio n’ s o rd e r i s inc on sis te nt w ithpr ior Com mis sio n pr e c e de nt. Spe c if ic a lly , the Coo pe rativ e argue s th a t in the pa st, the Commiss ion has looked to c ertifica tion maps to ascer

tain the scope of a c ertificate but aver s that in this case, the Commission i mproperly considere d other e vidence . Essentially , the Cooperative

a sse rt s th a t th e Com mis sio n s ho uld have lim ite d its co ns ide ratio n to the c e rt if ic a tio n ma

ps be c a us e they “ar e t h e primary

evidenc e to deter

mine cer tification ag ree ments.” F urther, the CooperativeI n it s f ir st i ssu e , the Coo pe rativ e a lso ra ise s argume nts c on c e rn ingthe c e rt if ic a tio n ma

ps . 25 I n particula

r, whe n challeng ing the basis of t he C ommissi on’s deter mination that Sout hwester n had been g iven the author ity

to provide future service to its customers located inside the Cooper ative’s territory , the Cooperative argues that the deter mination c annot be supported by substantial evidence be c a us e the ma

ps us e d d ur ingdo c ke ts 8 and

42 make no me nti on

of a llo wing Southw e ste rn

to p r o v i d e s e r

v i c e t o t h o s e c u s t o m e r s . F u rt h e r , t h e C o o p e r a t i v e s t a t e s t h a t t h e “ b e s t ” an d “ o n l y” evidenc e of the ag ree ment betwee n the utiliti es are the cer tification maps used in doc kets 8 and 42 41 argues that by consideringadditional information in this case, the Commission has violated its prior prec edent and failed to adequa tely explain its decision to diverg e fr om that prec edent. See F lores

v . E mp loy e es R e t. S

y s. , 74 S.W .3d 532, 539-40 (Tex. A pp.—Austin 2002, pet. denied) ( explaining that ag encie s are “not bound to follow its decisions . . . in the same wa y t h at a co u rt is bound by prec edent” but that c ourts fre quently require ag ency to e x plain inconsistent ag ency deter minations or explain why

ag ency depar ted fro m its previous policy). F inally , the Cooperative insists that the ce rtifi ca tion maps in thi s case unambig uously demonstrate that Southwestern was not g rante d

a ce rtificate to serve the “future needs” of var ious oil field operators. F or these r eason s , the Cooperative a

rg ues th at t h e C o mmissi on’s orde r is “ar bitrary , capr icious, and an illeg al and

unwar rante d exercise of

policy discretion.” I n making these a ssertions, the C ooperative relies on an unrelated prior Commi ssion docket, doc ket 24815. See Tex. Pub. Util. Comm ’n, Com pla int of F ay e tte El e c . Co op ., In c ., Ag

ain st the C ity of Schulenburg, Tex. , Docke t No. 24815 (“D ocket 24815” ) (Nov. 15, 2002) (F inal Orde r). I n that docket, the Commission was asked to de termine whe ther th e C ity of Schulenburgwas

encr oachingon another

utilit y ’s servic e ar ea. T o resolve the dispute, the location of the bounda ry betwee n the two utiliti es had to be considere d, and the Co m m ission analy zed the rele vant

c e rt i f i c a t i o nm a

p t o a s c e rt a i nt h e b o u n d ar y b e t w e e n t h e C i t y o f S c h u l e nb u r g an d t h e o t h e r u t i l i t y. 25and the f

inal order s in those dockets and f urt h er i n s ists that none of those items support the Commi ssion’s determinations. The Cooper ative also notes that Southwest er n play ed a sig nificant ro le in p re pa

ri ngthe ma

ps and , th e re fo re , co nt end s th at th e ma ps sh ou ld b e c on str

ue d a g a ins t Southwestern. The Cooper ative’s a

rg ument disreg ards the othe r evide nce pr esente d, including the de te rm inatio ns ma de in do c ke ts 8 and 42 and the te sti mony

and e vid e nc e pr e se nte d in

tho se do c ke ts as we ll as in docket 24229, that support the Commission’s determinations. Moreove r, t he fact that Southwestern pre pare d the maps would not seem to fore close the possibili ty that the maps we re not me ant t o in c lud e a ll o f t

he te rm s o f t

he a g re e me nts be tw e e n th e pa rt ie s. Th e Coo pe rativ e re fe rs to no case law or Commission poli cy requiringparties e ntering into a g ree ments under se ction 37.155 of the utilities code to provide a ll the details of the ag ree ment on a ce rtification map. See Te x. Ut il. Code A n n . § 3 7

. 1 5 5

. F u rth e r mo r e , a r e v ie w o f th e ma p s r e v e a ls th a t n o t a ll o f th e te r ms of the ag ree ments were incorpor ated into the maps. Spec ifically , the maps make no mention of Southwestern ag ree ing to wa ive the bene fits of the cor ridor rule

. Duringdocket 24229, the Coope rative’ s eng ineer ing se rvice s manag er a dmitted that there 26 was no dispute re g ardingthe boundar y betwee n the t wo ut iliti es and stated t hat he believed that the dispute was instead “about the intent of the line on the map” and about the sc ope of r ights that we re g iven during the ce rtification procee dings. Moreove r, t he maps wer e prepare d with the involvement of per sonnel from the Cooper ative and from Southwestern, a nd the per sonnel from both utiliti es v e r i f i e d t h a tt h e b o u n d ar

y l i n e s w e r e dr aw na c c u r a t e l y.

42 F or the re a so ns that f

oll ow , w e dis a g re e wi th t he Co op erativ e ’s a sse rt ion s and its

re lia nc e on do c ke t 24 81 5. F ir st, the ty pe of inf or matio n obta ine d fr om the ma p in do c ke t 24 81 5 is fundame ntally

differ ent than the ty

pe of infor

mation at issue in this case. I n docket 24815, the Commi ssion had to asce rtain the locat i o n of the bounda ry betwee n the City

of Schulenburgand

ano the r util ity

. I n mak ing thi s det e rm inatio n, the Com mis sio n r e a so ne d th a t it wa s mo re a

pp ro pr iate to use a map prepa

red during a prior cer

tification proce eding than a handwr itten de scription. I n the

curr ent case , howeve r, the g eog raphic al boundar ies betwe en Southwestern a nd the Cooperative are

no t in dis pu te ; r ather , the issue in this case is the extent to which Southwestern was g iven t he

26 authorit y to provide ser

vice to customer s inside the Cooperative’ s service are a. The fac t that

re so lut ion of the iss ue in d oc ke t 24 81 5 w a s a c c omp lis he d b y e xami nin g the c e rt if

ic a tio n ma

p w ou ldI t is worth noting that althoug h the Commi ssion made no specific ambig uity finding in the 27 fi na l or de r i n doc ke t 2422 9, the Com mis sio n pre vio us ly c ha ra c te ri zed the ri g hts re g ard ing the a bil ity to p ro vid e se rv ic e to c us tom e rs ins ide the Coo pe ra tive ’s se rv ic e are a

pr e vio us ly

g ra nte d to Southwestern as a

mbiguous. See Lamb County Elec . Coop. , 2001 Tex. App. L EXI S 173 at *16. 43 not seem to fore close utiliz ation of other e vidence for non- boundary disp u tes, particula

rly in the

c ir c ums tanc e s he re in wh ic h the re le va nt c e rt if ic a te s we re iss ue d de c a de s pr ior to the c ur re nt d isp ute and in which the f

inal order s in the ear lier docke ts approved a nd incorporated agr eeme nts that the uti lit ie s h a d e nte re d in to b ut d o n ot s pe c if y a ll o f t he de ta ils of

the a g re e me nts
. Additionally , in do ck et 24815, the Commiss ion concluded that its previous order “unambig uously

established the bounda

ry by means of a

map.” I n this case, the Comm ission made

27 no conclusion stating that the certification maps “unambig uously ” esta blished the extent to which the utiliti es in dockets 8 and 42 could provide service in another utility ’s servic e ar ea. F urther, w hen making its determinati o n i n docket 24815, the Commission did not ignor e all other additional information; in fac t, the Commi ssio n considere d the testimony from the pr evious ce rtification hear ing when makingits determination reg ardin g the boundar y . I n its findings, the Commission stated that the testimony demonstrated that the complaining utilit y approve d the map an d t he boundarie s written on the map.

S e c o n d , t h e C o o p e r a t i v e ’ s ar g u m e n ti g n o r e s t h e p r o c e d u r a l h i s t o r

y o f t h i s c a s e . In Lamb County Elec. Coop. , the Cooperative appea led the Commissi on’s orde r in docke t 14 454 that or ig ina lly

int e rp re te d th e e xten t to wh ich S ou thw e ste rn c ou ld p ro vid e inc re a se d s e rv ic e to the customers loc ated inside the Cooper ative’s se rvice are a. 2001 Tex

. Ap p . L EXI S 173. The Cooperative c omplained that i t was denied the opportunity to introduce e vidence reg ardingI n this iss ue, the Cooper ative only addre sses docket 42 and ag ain states that Southwestern 28 wa s n ot g ive n th e a

uth or ity to c on tin ue pr ov idi ngse rvi ce to c us tom e rs in L a mb C ounty be c a us e Southwestern had no stra nded lines in L amb County . Howeve r, we previous l y concluded that substantia l ev i dence supported the Commission’s determination that Southwestern wa s g iven the ri g ht t o c on tin

ue pr ov idi ngse rv ic e to i ts c ur re nt c us tom e rs in b oth

do c ke ts. 44 the circ umstances of

the ea rlier cer tification proce eding s and re g ardingthe ag ree ments rea ched by the p arti e s . I np arti c u la

r , th e Co o p e r a ti v e w an te d to in tr o d u c e c o p ie s o f

th e tr an s c r ip ts f

r o m the

c e rt if ic a tio n p ro c e e din g s and tes tim ony fr om w itn e sse s w ho he lpe d f or mul a te the a g re e me nts ref ere nced in the c ertifica

tion dockets. Id. a t *1 0, *1 5. I n lig ht of the Coo pe rativ e ’s c omp la int s, thi s C o u rt re m an d edth e c as e w i t h i n s t ru ct i o n s t h at t h e C o m m i s s i o nco n d u c t a n e v i d en t i ary h ea ri n g, and an e videntiary

hear ing w as held. Id. at *15. The Cooperative cannot now maintain a claim that the Com mis sio n sh ou ld no t have c on sid e re d the ve ry e vid e nc e the Coo pe ra tiv e fo ug ht s o v ig or ou sly to introduce. For

these re asons, including the fa ct that the maps did no t contain all of the ag ree ments betwee n the par ties, we c annot conc lude that the Commissi on’s dec ision to consider evidenc e beyond the maps and or ders f rom docke ts 8 and 42 was incons i s t ent wit h its prior pr e c e de nt.

So ut hwe s t e r n’ s A ut ho r iz a t io n D id N o t Ex pi r e a s a M a t t e r o f L a w

I n its fourth issue on appea l, the Cooperative argues that the Commiss ion erre d when it issued its orde r b ec au s e i t failed to conc lude that Southwestern’ s rig ht to continue providing service to customers located in another utilit y ’s servic e ar ea e x pired a s a matter of law. I n making 28 this assertion, the Cooperative contends that the r ight to continue providing service was a limited and45

a conditional rig ht that automatically expire d wh e n So uth w e stern violated the te rms of the a g ree ment by providing service that exceede d the amount of service provided at t he ti me of cer tification and by providing service to new consuming fac iliti es. As proof of t he li mited and conditional nature of the rig ht, the Cooperative r efe rs to the portion of conc lusion 7 fr om the order in docket 42 that stated that Southwestern wa s g iven the rig ht to continue providing service to f acilities “only insofar as such fac ility is util ized to serve customer s prese ntly being serve d.” For the re aso n s t h at follow, we cannot a g ree with the Cooperative. F irst, as pr e vio us ly

dis c us se d, Southw e ste rn and the Coo pe rativ e e nt ered in to vari ou s a g re e me nts pr ior to

cer tification, and those a g ree ments were incorporated into the part i es ’ cer tificates of

convenie nce

and ne c e ssi ty . In o the r w or ds , So uthwe ste rn wa s sp e c if

ic a lly c e rt if ica te d to pr ov ide e le c tr ic ity in

a c c or da nc e wi th t he te rm s o f t

ho se a g re e me nts
. Se c on d, we have pr e vio us ly de te rm ine d th a t su

bs tanti a l e vid e nc e su

pp or ts the deter mination that the ag ree ments allowed Southwester n to provide the ser

vice in dispute, i.e.,

s e r v i c e t o m e e tt h e f

u tu r e n e e d s o f

i t s c u s t o m e r s l o c a t e d

i n s i d e t h e C o o p e r a t i v e ’ s t e r r i t o r y. Th ir d, e ve n ass umi ng that Southwe ste rn ha d impe rm iss ibl y e xce e de d th e sc op e of its

cer tificate, w e fa il to see how that action would lead to an automatic expiration of t he portion of the

cer tificate a uthorizi ng Southwestern to provide se rvice to customers i n s id e th e Co o p erative’s servic e

are a . The Com mis sio n mad e no sp e c if ic de te rm inatio n sta tin g that So uthwe ste rn ’s c e rt if ic a te wo uld

e xpir e a uto matic a lly

if Southwes tern p ro vid e d s e rv ic e in a mann e r t hat e xce e de d th e sc op e of its

cer tificate. Mor eover , the utiliti es code provides spec ific prohibitio n s ag ainst the discontinuation of ser vi ce. S pec if

ic a lly , it state s th a t a

uti lity mus t “ pr ov ide c on tin

uo us and a de qu a te se rv ic e ” toThe testimony of Southwestern’ s witness, Hunter, a lso supports this deter mination. 29 Specifica lly , he testified that “[ c] er t i fi cation rig hts gr anted by the Commiss ion are enduring , they do not decline ove r time.” I n this iss ue, the Cooper ative also a rg ues t hat the Commissi on’s interpre tation of 30 co n c lu s io n7 e r

r o n e o u s ly g r an te d So u thw e s te r

n th e “ o p e n - e n d e d ” r ig h t t o “ v ir tu a ll y u n li mi te d expansion of customer base into [t he] Cooperative[’s] territory .” I n light of our pre vious discussion in issue one describing the limitations imposed on Southwestern’s a bility to provide ser

vice in the Cooperative’ s service are a, we must conclude that the Commission did not provide a n open-e nded rig ht of extension. 46 “eve ry consumer” that the utilit y was g iven a cer tificate to se rve, Tex. Util. Code Ann. § 3 7 .151 (West 2 0 0 7 ), an d m u s t not “discontinue, reduc e, or impair se rvice to any part of the holder’s

cer tificated se rvice are a” unle ss expl icit conditions not applicable to this case are met, id. § 37.152(a) (West 2007). Fur

thermore , althoug h one provision of the utilit ies code does allow for the re vocation of a cer tificate, it only allows revoc ation when the Commi ssion f inds that the utilit y nev er s tarted providing service or stopped providingservice to part or a ll of its certificated ar ea. Id. § 37.059(a) (We st 200 7)

. Th e Coo pe rativ e ha s n ot a lle g e d th a t So uthwe ste rn ha s st op pe d p ro vid ingse rv ic e to its customers; in fact, it has alleg ed just the opposite. Additionally , that provision doe s not describe any circ umstances in which a cer tif i ca te will automatically

expire; instead, it requires that the Commi ssion provide the utility with “notice a

nd [a] hear ing” befor e it may revoke a utility ’s

cer tificate. Id. 29

I n light of the prec eding , we cannot conclude that the Commi ssion erre d by failing t o c o n c l u d e t h a tS o u t h w e s t e r n ’ s c e rt i f i c a t i o n s h a d

e x p i r e d a s a m a t t e r o f l aw an d , a c c o r d i n g l y,

overr ule the Cooperative’s fourth issue. 3047

The Com m ission Did Not Abuse its Discre tion by Failing to Issu e a Ce ase and Desist Order

I n its fif th issue, the Cooperative argues that the Commi ssion e rre d by failing to issue

a ce ase -and- desist order pr ohibiting Southwestern f rom continuing to provide ser vice to the customers in dispute in this case a nd by ref using to orde r a tran s i tion process unde r which the

c us tom e rs in d isp ute wo uld be c ome the Coo pe ra

tiv e ’s c us tom e rs . M o r e o v e r , t h e C o o p e rativ e a sse rt s that a s a re su lt o f the Co mmissi on ’s fa ilure to a c t, S ou thw e ste rn ha s b e e n a llo we d to vio late

cer tification laws on a daily basis. Fur ther, the Cooperative c ontends that Southwestern’s violations have ha rmed the Co o perative and its customers who other wise would have become owner s and members of

the Cooperative. I n light of our deter

mination that the Comm ission’s order is supported by substantial evidenc e, including the portion stating that Southwestern was g iven the author ity to serve the exis ting a nd future ne eds of its customers that we re loc ated inside the Cooper ati v e’ s t er ri tory , we cannot c onclude that the Commi ssion e rre d by failing to issue a ce ase- and-de sist order or by failing to o rd e r a tr ans iti on

pr oc e ss. Ac c or din g ly , w e ov e rr ule thi s is su e on

a pp e a l.

The Co m m iss ion Di d No t D isr e ga r d t he Bur de n of P r oo f o r Er r by F ail ing to Iss ue Sanc ti ons

The C o o perative’s six th and seve nth issues originate from the issuanc e of a preliminary

order by the Commiss i o n i n d o cket 24229. See Docke t 24229 (Sept. 28, 2001) (P re lim ina

ry Or de r) . In ge ne ra l, t

he or de r s tate d th a t in

do c ke t 24 22 9 th e Com mis sio n mu st deter mine whether

Southwestern had e x cee ded the sc ope of its ce rtificate s. Howeve r, in the orde r, the C ommissi on also identified six ty pes of infor

mation that it believed would be he lpful in resolving the dispute betwe en Southwestern and t he C ooperative. The first five ty pes of infor

mation relate dSouthwestern was also unable to provide information reg ardinghow many petroc hemical 31 c on sumin g fa c ili tie s we re sti ll po we re d by natur a l g a s a t the tim e of c e rt if ic a tio n, bu t on e oil fi e ld customer pr esente d evidenc e that by the time of ce rtification, most oil field operators had conve rted t o e l e c t r i c i t y. 48 to the customers that Southwestern wa s providing se rvice to and the extent of that servic e at va rious times, i n cl u d i n g wh en S o u t h we s t ernwa s gi v en i t s ce rt i fi ca t es , wh en t h e C o m m i s s i o ni s s u edi t s o rder in docket 2991, whe n the Cooperative filed its petition in docket 14454, a nd when the Commission issued the prelimi nary order in docket 24229. I n particula r, t he Commissi on asked f or information

conce rning the “[i] dentification of the customers serve d by [S outhwestern],” “ [t ]he ge og raphic are a of the portions of the oil f

ield units in question that extended into [ the Cooperative’s] service a rea ,”

“ [t]he loa d b e ingse rv e d w ith[Sou thw e ste rn ] sup pli e d p ow e r w ith in t he po rt ion s o f t

he oil fi e ld u

nit s in ques ti o n

th a t e xte n d e d into [the Cooperative’s] service a rea ,” “[t]he location of the [Sout hwester n] distribution l ines and points of deliver y that extended into [ the C o o p er at i v e’s] service are a,” a nd “[t] he location of the customer- owned distribution lines and points o f d e live ry that extended into [ the Cooperative’ s] servic e are a but w ere serve d with [Southwestern]-supplied power .” I n addition, the order also stated that resolution of t he conflict betwee n the par ties should involve consideration of infor ma tio n r e g a

rd ing“ [a]n y

up g ra de s, inc lud ingins ta llatio n d a te s, a ff e c tin g [Sou thw e ste rn ’s ] distribution l ines and points of deliver y th a t e xte nded into [t he Coopera tive’s] service a

rea ” that we re

ma de a ft e r S ou thw e ste rn

wa s awa rd e d it s c e rt if

ic a te s. Duringdocket 24229, Southwester n admitted that it could not provide all of the information listed above . I n p ar t i cu l ar, Sout hwester n could not specify

what amount of elec tricity was de livered to the customers insi de the Cooperative’ s service are a. S t a t e d d i f f e r e n t l y, 31When ma king this a

rg ument, the Cooperative ref ers to seve ral fe dera l case s stating that 32 a g ran d fa t h er cl ause must be strictly construed a g ainst the person se eking to invoke it. See, e .g. , United States v. An Article of Drug ( Bentex Ulcerine ) , 469 F.2d 875, 878 ( 5th Cir. 1972) (desc ribing g r an d f a t h e r c l a u s e i nF o o d

an d D r u g A c te xe mp t i n g c e rt a i ndr u g s f r o m n e w “ e f

f e c t ive ne ss” require ments), cert. de nied , 41 2 U. S. 9 38 (1 97 3) ; United States v. Allan Drug Corp. , 357 F.2d 713, 49 Sou thw e ste rn

wa s una ble to s e g re g a te the a mou nt o f e le c tr ic ity

that w a s se nt t o e a c h in div idu a l oi l well or consuming fac ility

. Southwestern also stated that its inability to pr ovide that information wa s due, in part, to th e f

a c t t h a t i t h a d g o n e thr o u g h tw o “ c u s to me r a c c o u n ti n g s y s te m c h an g e s s ince 19 76 , a nd on ly the min imum r e qu ir e d da ta wa s mai nta ine d” a ft e r t he fi na l sw itc h. Al tho ug h it c ou ld not provide the load data re quested, Southwester n did provide, for

the time periods re quested, information re g ardingcustomers Southwester n was ser ving, the locations of oil field units and le a se s, the loc a tio n o f d ist ri bu tio n li ne s and

de liv e ry po int s, and

up g ra de s. Southwestern’s f

ailure to provide all o f

th e in f o r ma ti o n r e q u e s te d a n d Southwestern’s decision to eng ag e in ac counting sy stem chang es while the dispute be tween the parties wa s ong oing frame the Cooperative’ s six th a nd seventh issues on appe al. In its six th issue, the Cooperative r aises essentially

two sets of ar g uments. I n the first set, the Cooperative c ontends that when Southwester n was g iven the author ity to provide service to customers located inside the Cooperative’s servic e ar ea, Southwestern wa s merely g iven an e x ception to the trad i t i o n al require ments of ce rtification law. Specifica lly , the Cooperative argues that Southwestern w as g iven an e x ception to the re quirement of obtaining a ce rtificate to serve a n entire g eog raphic al are a. Fur ther, the Cooper ative insists that be c a us e Southw e ste rn

wa s me re ly

g ive n ane xce pti on , So uthwe ste rn ha d th e burd e n o f p ro vin g , in response to the Cooperative’ s alleg ations, “that eve ry element of

its service qua lifies under” the t er m s o f t he exception. Ad dit ion a lly , th e Coo pe rativ e c on te nd s th a t to fu lly c omp ly wi th i ts 32718 (10th Cir. 1966) (same ), cert. de nied , 3 85 U. S. 8 99 (1 96 6) ; United States v. 1,048,000 Capsules

( Afrodex) , 347 F. Supp. 768, 770 (S.D. Tex

. 1 972) (same), aff’d , 494 F.2d 1158 ( 5th Cir. 1974); Honey well Inc. v. U

nited States , 228 Ct. Cl . 591 (1981) (expl aining that provision of Arme d Service s P ro cu re m en tR egu l at i o nal l o we d co n t ra ct o r t o co n t i nu e ch ar gi n g re n t al co s t s u n d er t erm s o f l o n gterm lea ses that wer e ente red into prior to e ffe ctive date of reg ulation). I n making its arg ument, the Cooperative a lso refe rs to a fe dera l case conce rning an ex emption to a tax st atute in which the c ourt no te d th a t a

pe rs on c la imi ng to fal l wi thin “ an e xce pti on to a statut e ha s th e burd e n o f c le arl y bring ing himself w ithin it and must prove ever y fac t essential to the invocation of the exemption,” see H erren v . United States , 3 1 7 F

. Su p p . 1 1 9 8 , 1 2 0 3 ( S. D

. T e x. 1 9 7 0 ), aff’d , 443 F.2d 1363 (5th Ci r . 1 9 7 1 ) , an d to a c a s e s tati n g th a t an in d iv id u a l s e e k in g to inv o k e th e p r o te c ti o n o f an aff irmative def

ense a g ainst liabilit y

must affirmatively

prove the elements of that defe nse, see W ill iam s v . S

tate , 514 S.W .2d 772, 775, 777 (Tex. Civ. App.—Bea umont 1 9 74, writ ref

’d n.r.e .) (explaining that statutory provision suspended applica tion of re m ai n d er of

statute when g overnor decla res “ a county

to be a dr oug ht disa ster are a” but a lso noting that individual seeking protec tion of that provision must prove that all ele ments were satisfied). Howeve r, the Cooper ative’s r eliance on these c ases is misplaced. A lthough va rious parties in t his c a se have c ha

ra c te ri zed Southw e ste rn ’s ri g ht t o pro vid e se rv ic e to cu sto me rs loc a te d w ith in the Cooperative’s servic e ar ea a s a “g randf ather ri gh t , ” the r ight is dissimil ar f rom the ty

pe of g randf ather rig ht discussed in the case s the C ooperative cites t o, which conc ern a “[p] rovision in a new law or re g ulation exempti ng those alre ady i n o r a p ar t o f t he existi ng sy stem which is being regulated.” See Black’

s Law Dictionar

y 48 2 ( 6th

a br idg e d e d. 19 91 ); see, e .g. , S ave O ur Springs Al lia nc e v . City of A us tin , 149 S.W .3d 674, 679 n.1 (Tex. App.—Austin 2004, no pet.) (e x plaining tha t s t a tu t o r

y p r o v i s i o nw a s g r an d f

a t h e r c l a u s e b e c a u s e i te xe mp t e d

p l a t s f r o m l o c a l l an d- us e regulations enac ted af

ter orig inal application for development of

that plat was filed). I n this case, there is no statute or regulation that exem p t ed S o u t h wester n from new ly

cre ated r egulatory require ments; to the contra ry , Southwestern was g iven cer tificates to pr ovide servic e t o various customers a

nd are as af

ter c omply ing w ith the new statutory and re g ulatory

require ments, including the statutory

provision allowing utilities to enter into agree m en ts reg ardingthe servic e that they could provide. See Tex. Util . Code Ann. § 37.155

. Fu rt h er, no alleg ation was made that Sou thw e ste rn

did no t satis fy

a ll the ne w s tatut or

y and re g ulator y re qu ir e me nts pr ior

to o bta ini ngits c e rt if ic a te s. Mo re ov e r, no ta x sta tut e ha s b e e n a lle g e d to have be e n v iol a te d, and Southw e ste rn

is not seekingto invoke the protec tion of an af firmative de fense

. 50 burden, Southwester

n was re quired to provide a ll of the information re quested in the Commission’s preliminary

orde r, i n cl u d i ng the information re lated to the leve l of servic e provide d to customers over the y ear s, in order to show that i t h ad n o t violated the ter ms of the exception. Finally , theAl tho ug h it is n ot n e c e ssa

ry to d e c ide wh ic h part

y ha d the burd e n of pr oo f to r e so lve the se 33 issues, we do note that by initiating the administrative pr ocee dings a t i s s ue in this case, the Coo pe rativ e wa s e sse nti a lly dis pu tin g the se rv ic e pr ov ide d by ano the r uti lity . As a re su lt, it w ou ld seem log ical to assume tha t t h e C o o p erative bore the burden of proving that Southwestern wa s providing service in violation of the require ments of the utilities code. Cf. Tex. U t i l

. C o d e A nn. § 37.051(b) ( West 2007) (explaining that utility may not provide ele ctric se rvice to are a being lawfully serve d by another utilit y unless utilit y

first obtains a ce rtificate that includes ar ea in dispute). 51 Cooperative a

rg ues that by ultimately approving of the servic e that Southwestern w as providing , the Commi ssion erre d by

failing to require Southwestern to meet its burden. F or the re a so ns that f

oll ow , w e dis a g re e wi th the Coo pe ra tiv e ’s fi rs t se t of

argume nts
. Th e Coo pe rativ e ’s argume nts ig no re the fa c t th a t So uthwe ste rn , lik e the Coo pe ra tiv e , w a s g ive n it s

own ce rtificate s in dockets 8 and 42. I n other words, the Commiss ion determined that Southwestern complied with all of the va rious cer tification requir ements and issued Southwe s tern its own

c e rt if ic a te s a uth or izin g it t o s e rv e va

ri ou s c us tom e rs and

areas . I n ad dit ion , th e or de rs iss ue d in dockets 8 a

nd 42 specific ally

stated that the c ertificates awa rded w ere “non-e x clusive,” cf. 1 6 T e x. Admin. Code § 25.101(b)(1) (2008) (ex p l ai n ing that for ce rtificate s for ne w servic e ar eas, “ [a] ny

cer ti fi ca t e grante d . . . shall not be construe d to vest exclusive service . . . in a nd to the are a

c e rt if ic a te d” ), and

a s p re vio us ly

dis c us se d, state d th a t th e uti lit ie s h a d e nte re d in to a g re e me nts reg ard in g th e s e r

v ic e e a c h u ti li ty

c o u ld p r o v id e . Re g ar d le s s o f

w h e th e r So u thw e s te r

nb o r e the burden of providing the i nformation in question, substantial e vidence was pre sented supportingthe 33 Commi s s i o n’s deter

mination that the scope of the ag ree ments entere d into and, there fore , the

cer tificates issued in the prior docke ts encompasse d providing service to meet the cur rent a nd future

n e e d s o f S o u t h w e s t e r

n ’ s c u s t o m e r s t h a tw e r e l o c a t e d i n s i d e t h e C o o p e r a t i v e ’ s t e r r i t o r y.As discussed in footnote 10, this Court remande d d o cket 14454 to the Commission 34 wi th t he ins tr uc tio n th a t th e Com mis sio n c on sid e r the re s jud ic a ta argume nts ma de by the pa rt ie s. Lamb County Elec. Coop. , 2001 Tex. App. L EXI S 173, at *24. I n particula r, the Commission was to consider the Coope rative’ s assertion that the doc trine di d not apply in this case bec ause the re ha d been a materia l c hang e in c ircumstance s from the time that the Cooperative f irst complained about the servic e that Southwestern w as providing in docket 2991. In his proposal i n docket 24229, the administrative law judg e cha rac terized the six ty

pes of infor

mation r eq u es t ed as being “primar ily ” re levant to the re s judicata issue. Doc ket 24229 (Mar

. 6, 2003) (Proposal f or De cision). S p e c i f i c a l l y , t h e a dm i n i s t r a t i v e l aw j u d g e c o n c l u d e d t h a t “ i f t h e C o m m i s s i o nc o n c u r s w i t h t h e A LJ rega rding the scope of [Sout hwester n]’s original c ertification rights, the e ntire issue of c hang ed ci rc u m s t an ce s

— an d

t h e a l l ege d u n av ai l ab i l i t y o f da t a to fu l l y ad dre s s t h em

— i s m o o t
. ” A l t h o u gh the information re quested doe s seem to be more rele vant to the res judicata issue and althoug h that issue is not before this Court i n this a ppeal, in the interests of justice, w e will addre ss the information in r e la tio n to the iss ue of

wh e the r S ou thw e ste rn

wa s e xce e din g the sc op e of its c e rt if ic a te s. As support for this asser

tion, the Cooperative ref

ers to se vera l f

eder al ca ses explaining that 35 courts may

make ne g ative infe renc es ag ainst a party who destroy ed evidenc e if the pa rty was a war e of potential cla ims ag ai n s t i t an d of the potential re levanc e of the evidenc e. See, e .g. , Cap ar ott a v. Entergy Corp. , 16 8 F .3 d 75 4, 75 6 (5 th C ir . 1 99 9) ; Blinzler v. Marriott Int’l, Inc. , 81 F.3d 1148, 1158 (1st Cir. 1996). 52

Despite the f

act that Sout hwester

n was una

ble to produce all of the infor mation

re qu e sted , for the re a so ns a bo ve , w e c ann ot c on c lud e that th e Com mis sio n f a ile d to a de qu a te ly consider the burden of

proof whe n making its ult imate deter mination. I n its seventh issue an d i n i ts second set of a rg uments in its s ix th issue, the Cooperative e ssentially

asser ts that the C ommissi on err ed by failing to impose some kind of sanction on Southwestern for failing to produce all the i nformation requested in the previous order and that the dis tr ic t c ourt

e rr e d b y a ff ir min g the Com mis sio n’ s d e c isi on to not imp os e sanc tio ns . First, the 34 Cooperative c ontends that bec ause some o f t he information was lost after the initiation of do c ke t 14 45 4, the Com mis sio n s ho uld have i nf e rr e d th a t th e inf

or matio n w a s unf

a vo ra ble to South we s tern’s c ase a

nd, there fore , favor able to the Cooper ative’s c ase. Cf. Mc Mi lli n v . S

tate 35 Farm Lloyds , 180 S.W

. 3 d 183, 198 (Tex. App.—Austin 2005, pet. denied) ( explaining thatI n sup po rt of his argume nt, the Coo pe ra tiv e c ite s to se ve ra l f

e de ra l c a se s st a tin g that c ourt s 36 may impose appropr iate reme dies when e vidence spoilation occurs. See, e .g. , Vodusek v. Bayliner Marine Corp. , 71 F .3 d 1 48 , 1 56 (4 th C ir . 1 99 5) ; Schmid v. M ilwaukee Elec . Tool Corp. , 13 F.3d 76, 78-79 (3d Cir. 1994). 53 “ sp oli a tio n in str

uc tio n te lls the jur

y that, if a pa

rt y ha s c on tr ol o ve r a

pie c e of e vid e nc e and

fa ils to reta in or produce it, the jury should pr esume that the evidenc e would have been unf avora ble to the party who controlled the evi d en ce ”)

. Be cause the Commiss ion did not specifically make the sug g ested infe renc e, the Cooper ative asse rts that the Commiss ion committed rever sible err or.

Alternatively , the Cooperative contends that even if the Commiss ion did not err by failing to make the infe renc e pre viously descr ibed, the Commiss ion erre d by failing to order a

nother ty pe of sa nction for f

ailing to pr oduce a ll the information reque sted in the preliminary order

. See

36 Trevino v. Ortega , 9 69 S.W. 2d 95 0, 951, 95 3 ( Te x. 19 98 ) ( e xpla ini ngthat c ourt s ma y imp os e sanctions for “ spoilation of evidence ”). For example, the Cooperative sug g ests that the Commiss ion could have deter

mined that Southwestern failed to meet it s burden of proof reg ardingits certification rig hts. F urther, the Cooperative c ontends that the Commissi on’s fa ilure to sanction Southwestern prejudice d the Cooperative.

As support for its arg uments, the Cooperative cites to the rule of civil proce dure al l o wi n g fo r t he imposition of sanctions for discove ry abuses. See Te x. R. C iv. P. 2 15 .3 . A s a pr e lim ina ry matte r, we no te tha

t it is n ot e nti rely cle ar t

hat th e ru le s o f c ivi l pr oc e dure a pp ly to Commi ssion procee dings. See A EP Tex. Cent. Co. v. Public Util. Comm’n , 258 S.W .3d 272, 298-99 ( T e x . A p p . —

A u s t i n2 0 0 8 , p e t
. f

i l e d ) ( P a t t e r s o n , J

. , c o n c u r r i n g an d d i s s e n t i n g ) ( o p . o nr e h ’ g )

. In54

fac t, the Commi ssion has its own ru l e re gar d i n g the ty pes of sa nctions that may

be imposed for discovery abuses. See 16 Tex. Admin. C ode § 22.161 (2008)

. Re g ard le ss o f w hic h bod y of law g ov e rn s th e a

bil ity of the Com mis sio n to imp os e sanctions, t he C ommissi on has di scre tion when deciding whether to impose sanctions. See Te x. R. Civ. P . 215.3 (explaining that c ourts “may” impose appr opriate sanctions for e ng ag ing in discove ry abuse) ; 16 Tex. Admi n. Code § 22.161(b), ( d) (statingthat administrative l aw judg es and Com mis sio n “ may ” imp os e sanc tio ns ); see also Tex. Gov’ t Code Ann. § 311.016 (W es t 2 0 0 5) (e xpla ini ngthat w or d “ may ” “ c re a te s dis c re tio na ry a uth or ity or

g ra nts pe rm iss ion

or a po we r” ); c

f. Mc Mi lli n , 180 S.W .3d at 199 (re cog nizi ng that appellate courts re view dec ision to i mpose discover y

sanc tio ns un de r a

bu se of dis c re tio n stand ard be c a

us e “ tr ia l judg e s ar e in the be st pos iti on to e va luate the of te n c omp le x fa c ts a

nd e qu iti e s o f d isc ov e ry dis pu te s and de te rm ine wh e the r d isc ov e ry a bu se has in fac t occur

red, the relative culpability and har m of such conduct, and the c redibility of a pa rty ’s attempts to ex plain delay s and unre sponsiveness”)

.

F or the re a so ns tha

t f oll ow , w e c on c lud e that th e Com mis sio n d id n ot abu se its discretion. See Bowden v. Phillips Petroleum Co. , 247 S.W .3d 690, 696 (Tex. 2008) (explaining that

on ly a c tio ns that are arb itr ary , unr e a so na ble , o r w ith ou t r e fe re nc e to a ny g uid ingpr inc ipl e s c on s t i tut e abuses of discretion). As discussed previously , during both doc kets 8 and 42, Southwestern a nd the Cooperative e ntere d into ag ree ments conce rning what customer s an d are as ea ch would ser ve, see Tex. Util . Code Ann. § 3 7

. 1 5 5 , an d the Commiss ion determined that those ag ree ments allowed Southwestern to serve the exist ing and future ne eds of its pree x isting customer s that were located inside the Cooperativ e’s service a rea . Fur ther, that de termination was supporte d by substantial55

evidenc e. For these rea sons, inf ormation reg arding the chang e in the amount of elec tri ci t y b eing delivere d to the are a in dispute and information demonstrating the number of c onsuming fa cilities being serve d prior to ce rti fi cation were unne cessa ry to resolve the c ontroversy of whe ther Sou thw e ste rn

wa s e xce e din g the sc op e of its c e rt if ic a te s. Moreve r, even assuming that the prior de termination does not re solve the issue, we would still be unable to c onclude that the Commi ssion a bused its discr etion by

failing to impose a sanction on Southwestern. The Commi ssion’s ru l es s t at e that the Commiss ion may impose a sanction that is “appr opriate a nd justified.” 16 Tex. A dmin. Code § 22.161(c)

. Simi larly , the rules of civil pr ocedur e allow for the imposit ion of sanctions that ar e “a

ppropriate .” Te x . R. Civ. P . 215.3;

se e als o P

R I nv s. v . S tate , 251 S.W .3d 472, 480 (Tex. 2 0 08) (e x plaining that discovery sanction

“ sh ou ld b e no mor e se ve re tha n n e c e ssa ry to s a tis fy

its le g iti mate purp os e s” ). Mo re ov e r, c a se la w s p e c i f

i e s t h a t s an c t i o n s s h o u l d b e i mp o s e d o n a p art y o n l y w h e n t h e p art y h a d a “ du ty to preserv e ev i d ence ” and “ neg lige ntly or intentionally ” destroy ed the e vidence and whe n the destruction of t h e ev i dence “pre judiced” the other pa

rty ’s “a bility to present its ca se or de fense .” Mc Mi lli n , 1 80 S.W. 3d

a t 19 8; se e Adob e Lan d Co rp . v . G rif fin , L. L.C. , 236 S.W .3d 351, 357 (Tex. App.—For

t Worth 2007, no pet.). As dis c us se d p re vio us ly , th e inf or matio n th a t w a s n ot pr ov ide d w a s h ist or ic a l data reg ardingthe amount of e lectric ity that wa s d el i v ere d. When testify ing a bout the information, Southwestern’s witness, Mitch Elmore , admitted that not all of the information wa s available and stated that Southwestern “had g one throug h two major customer acc ounting c hang es since 1976, a nd

on ly the min imum r e qu ir e d d a ta wa s ma int a ine d aft er th e c on ve rs ion in 1 99 9. ” As a

re su lt,56

Southwestern could not provide customer history data “ back to the or igina l date of se rvi ce in the

acc ounting sy stem.”

Ho we ve r, a lth ou g h So ut hwe st e rn c ou ld n ot p ro du c e the inf or matio n th a t w a s lo st, Sou thw e ste rn

did pr ov ide an e sti mate of

the los t inf

or matio n. I n pa

rt ic ula r, it pr ov ide d an e sti mate of the pa st and present l oad in the C ooperative’s servic e ar ea by compar ing the number of w ells that

wer e pre sent in the Cooperative’s ar ea pr ior to c ertifica tion a nd the number of wells that wer e in the

ar eaat t h e t i m e o f t h e co n t es t ed -c as e p ro ce ed i n g. I nl i gh to f t h i s , t h e a dm i n i s t ra t i v e l aw j u d ge

conc luded that Southwestern “ rea sonably rec onstructed the pe rtinent information lost in the

acc ounting c hang e over .” Doc ket 24229 (Mar . 6, 2003) (Proposal f or De cision). M o re o v er , wh end es cr i b i n g t h e i n fo rm at i o n

t h at w a s l o s t , t h e a dm i n i s t r a t i v e l aw j u d ge

rea soned that the infor

mation that Southwestern lost would not have shown what amount of elec tricity had bee n provided to customer s inside the Cooperative’ s service are a. Id. S p e c i f i c a l l y, the ad mi n is tr a ti v e la

w ju d g e s tate d

th a t t h e in f o r mati o nw a s u n a v a il a

b le b e c a u s e So u thw e s te rn p ro v ided “se rvice at a pr imary meter point” a

nd provided “ a bill for the e ntire field—not broke n down by in d iv id

u a l w e ll s o r

b y w h ic h w e ll s w e r e lo c a te d in [th e Co o p e r a ti v e ’ s ] s e r

v ic e ar e a and which we re not.”

This d e te r

mi n a ti o nis s u

p p o rte d b y E lm o r e ’ s te s ti mo n y

in d o c k e t 2 4 2 2 9

. Elmore stated that bec ause ma

ny of the disputed ar eas only rec eived service throug h a sing le deliver y point and bec ause ma

ny of the disputed ar eas stra ddled the boundarie s betwee n Southwestern’s a nd the Coo pe rativ e ’s se rv ic e are a , “ it is no t po ssi ble to ide nti fy” the po rt ion of the e le c tr ic ity

that ul tim a te ly power ed consumingfac iliti es located inside t h e Co o p e r a

ti v e ’ s s e r v ice a rea . Fur ther, Elmore testified57

that Southwestern often only sent one bill to a customer for all of the e lectric ity that was sent to that customer a

nd th at , ac cording ly , the bills itsent made no distinction betwee n consuming fac iliti es located inside Southwester n’s servic e ar ea a

nd those locate d inside the Cooperative’ s service are a. Mo re ov e r, a s d e sc ri be d e arl ie r, Hunte r t e sti fi e d th a t it wa s c omm on ind us tr y pr a c tic e fo r a

uti lity to provide ser

vice to an oil oper ator by deliveringthe elec tricity

t o a deliver

y point and allowing the

c us tom e r t o d istri bu te the po we r t o it s f a c ili tie s thro ug h it s o wn

lin e s. Given that the information reque sted by the Commiss ion was not nec essar y to the Commi ssion’s ultim ate r esolution of this c ase, that the administrative law judge conclude d that the los t in for matio n w ou ld n ot h a ve pr ov ide d th e ty pe of inf or matio n th a t th e Com mis sio n o ri g ina lly reque sted, that the evidence demonstrating that Southwestern did not routinely trac k the information orig i n al l y re qu es t ed , an d

t h at S o u t h we s t ernat t em p t edt o p ro v i d e as u b s t i tu t e f o r t h e l o s ti n fo rm ation,

we c annot conc lude that t he C ommissi on abused its discre tion by failing to conclude that neither a neg ative infe renc e nor a

nother sanc tion was appropr iat e o r j u s t ified in this case. See Trev ino , 969 S.W .2d at 953 (noting that “ther e is no one re medy that is appropriate for e very incidence of” discovery abuse a nd that “cour

t must respond appropr iately based upon the particula

r fa cts of ea ch individual case” ).

F or the se re a so ns , we ov e rr ule the Coo pe rativ e ’s sixthand se ve nth iss ue s o n a

pp e a l.

CO NC LU SION Havingoverr

uled all of the Cooperative’ s issues on appea l, we af firm the judg ment of the dis tr ic t c ourt
.58 _____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _______________________ David Pury ear , J ustice Be fore Chief J ustice L aw, Justi ces Patter son and Pury ear ; ConcurringOpinion by J ustice Patterson Affir med Filed: Nove mber 7, 2008