### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-10-00430- CV

Nucor Ste el - Texas, a Division of Nucor Cor poration, App ellant

v. P ubl ic Utility Com m ission of T exas, Oncor Elect ric De livery Com pany an d Texas Energy F uture Holdin gs Limite d Par tnership, App ellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 98TH JUDICI AL DISTRICT NO. D-1 -GN-0 8-0 0246 7, H ONO RAB LE RHO NDA HURLEY , JUDGE P RESIDING

O P I N I O N

Texas Energ y Future Ho l dings Partnership (“Te x as Energ y ”) soug ht to acquir e Oncor Electric Deliver

y Company (“O ncor” ), which is a tran s m ission-and-distribution elec tric utilit y . Under the rele vant statutory scheme , the Public Uti l i t y C ommissi on (“Commission”) is require d to analy

ze whether

the ac quisiti on of a reg ulated utilit y is in the public interest. See Tex. Util. Code Ann. § 14.101 (West Supp. 2011). Consequently , Texas Energ y and Oncor filed various business commitments with the Commi ssion reg ar d ing the acquisition and asser ted that the proposed acquisition was in the p u b l i c interest. I n response , Nucor Steel - Texas, a division of
Nucor Corporation (“N ucor” ), intervene d and opposed the proposed ac q u i s i tion. Ultimately , the Commi ssion deter

mined that the transac tion was in the public interest, and the district court upheld that deter mination. On appea l, Nucor challeng es the Commi ssion’s co n s t ru cti on of the statutes setting out the public-intere st analy s i s re l evant to the proposed transac tion. Essentially , Nucorarg ues that the Commi ssion’s err oneous construction fore closed the admission of cer tain evidenc e and testimony that Nucor co n t en d s should have been considere d as part of the public-intere st

a n a ly s is

. I n a d d it io n , N u c o r a ls o c o n te n d s th a t th e Co mm is s io n ’ s p u

b li c - in te r e s t d e te r

mi n a ti o n is n o t

a d e q u a te ly s u p p o r te d b y th e e v id e n c e in th e r e c o r d

. We w il l a f f ir m th e ju d g me n t o f th e d is tr ic t c o u r t.

STATUT ORY F RAMEWORK
As m en t i o n ed above, this case involves the acquisiti on of a utilit y . For some time

now, the leg islature has imposed various restric tions on cer tain business transac tions involving public utilit ies. See Tex. Util. Code Ann. § 14.101. A restric tion rele vant to this case states that if

a public utilit y is g oing to enter into a transac tion that “involves the sale of at least 50 perc ent of the stock of the utilit y ,” the utilit y must repor t the transac tion to the Commi ssion “within a rea sonable time.” Id. § 14.101(b). After being informed of the transac tion, the Commi ssion i s re q u i re d to investiga te the proposed transac tion in order “to deter mine whether the action is consistent with the public interest.” Id. Fur

ther, the leg islature provide d the Commiss ion with the following various fac tors to consider in making its publi c-inter est deter mination:
(1) the rea sonable value of the proper ty , fac iliti es, or s ec u rities to be acquir ed, disposed of, merg ed, tra

nsfer red, or consolidated; (2) whe ther the tra

nsaction will: (A) a dverse ly

aff ect the he alth or saf

ety of customer s or employ ees; (B ) result in the tran s fer of jobs of citizens of this state to worke rs domiciled outside this st ate; or (C) re sult in t he dec line of ser vice;

2(3) whether the public utilit y will rec eive considera tion equal to the rea sonable value of the a ssets when it sells, leases, or transfe rs assets; and (4) whe ther the tra

nsaction is consistent with the public interest.

Id. I f the Commi ssion ultimately conclude s that the transac tion is not in t h e public interest, the Commi ssion will “take the eff ect of the transac tion into consideration in rate making p ro ce ed i n gs and disallow the eff

ect of the transac tion if the transac tion will unrea sonably aff ect rate s or service .” Id. § 14.101(c)

.

Rece ntly , the leg islature enac ted ano th e r p r o v is io n th a t is r e la te d to the public-intere st analy sis. See id. § 39.262(o) (West Supp. 2011). I n particula r, t he new provision provides that if

a utilit y or a person seeking to “ac quire or merg e with” the utilit y “files wi t h t h e [C ]om mission

a stipulation, repr esenta tion, or commitment” as part of its filing under section 14. 1 0 1 , t h e Commi ssion “may

enfor ce the stipulation, represe ntation, or commitment to the ex tent that” it “is consistent with the standards provided by this section and Secti o n 1 4

. 1 0 1 .” Id. I n addition, the provision states that the Commi ssion “may rea sonab l y interpre t and enfor ce conditions adopted under” the new pr ovision. Id.

When Texas Energ y and Oncor informed the Commi ssion about the proposed

t ra nsaction, they filed various commitments rela ting to the transac tion. Be fore perf orming t h e public-intere st analy sis in this case , the Commi ssion asked the parties to provide briefing reg arding the scope of the ty

pes of information that the Commi ssion may consider in light of the dere g ulation of t he electric market. I n particula r, although the Com mission was not fac ed with the prospect of being asked to actua lly enfor ce one of the proposed commitments, the Commi ssion asked the parties

3to explain whether the Commi ssion has the authority to enfor ce eve ry co m m i t ment that is made

or whether its authority is limit ed to commitments that aff ect the reg ulated transmi s s i on-anddistribution-electric utilit y . After the parties filed their briefs, the Commi ssion deter mined that its enfor ceme nt authority is limit ed to stipulations aff ecting the reg ulated u t i lity

. I n light of that deter mination, the Commi ssion made evidentiar y ruling s limit ing the ty

pes of evidenc e that may be admitted in the public-intere st hearing to evidence demonstrating how the re g ulated utility will be aff ecte d by the transa ction and by

the var ious stipul ations made by Texas Energ y and Oncor

. The deter mination reg arding th e s c o p e o f th e Co mm is s io n ’ s e n f o r c e me nt authority and the acc ompany ing evidentiar y ruling s form the ba sis for this appea l. 1

BACK GR OUND Wit h the prec eding in mind, we now summarize the even t s that led to the dispute

at i s s ue. As descr ibed previously , Oncor is a transmission-and-distribution elec tric utilit y . See
Tex. Util. Code Ann. § 31.002(19) (West 2007) (def ining “tra nsmissi on and distribution utility ”).

I n addition to the provision authorizing the enfor ceme nt of stipulations, the leg islature also 1 rec ently promulg ated other statutory provisions perta ining to transac tions involving an elec tric utilit y . See Tex. Util. Code Ann. § 39.262( l )-( n) (W est Supp. 2011). As with section 14.101, the new statutory provisions require utilit ies to inf o rm t h e C ommissi on about cer tain proposed transac tions and st ate that the C ommissi on must approve a transaction provided that it “finds that the transac tion is in the public interest.” Id. § 39.262( l ), (m). These additional statutory provisions also include new fac tors for the Commi ssion to consider when it perf orms a public-intere st analy sis. Id. § 39.262(m) (listing following fac tors for consideration: whether transac tion will ad verse ly aff

ect reliability of service , availability of service , or cost of service ). Howeve r, the leg islature expressly limit ed the applicability of th o s e n ew fa ctors to proposed business transac tions that wer e filed with the Commi ssion after the filing a t issue in this case
. Id. § 39.262(n) ( stating tha t subsections ( l ) and (m) d o n o t ap ply to transac tions in which ag ree ment was executed befor e April 1, 2007, provided that filing for revie w befor e Commi ssion was filed befor e May 1, 2007). Acc ording ly , the Commi ssion did not consider the new pr ovisions when perf orming its publi c-inter est ana ly sis. 4During the time rele vant to this appea l, Oncor was a wholly owned subsidiary of TXU Corp. At that

time, TXU Corp. also owned two other companies that wer e aff iliated with Oncor

. Those companies

wer e TXU Energ y

(a r etail-e lectric provider) and L uminant (a powe r-g ener ation company ).
Texas E n ergy soug ht to acquir e TXU Corp. in its entirety , and Texas Energ y and Oncor i nformed the Commi ssion about t h e p ro p osed acquisition. See id. § 14.101 (re quiring
p u blic utilit ies to repor

t proposed sales or acquisitions to Commi ssion so that Commi ss i o n m ay investiga te p ro posed transac tions). Nucor and various other parties intervene d and opposed the proposed a cquisition.

When Texas Energ y initiated the acquisition, it made sever al business commitments, and Texas Energ y and Oncor filed a stipulation with the Commi ssion that set out a ll of the various commitments. The filed stipulati o n ex p l ai ned that some of the commitments wer e desig ned “to support the separ atene ss of Oncor from the rest of TXU Corp. and its subsidiaries.” Howeve r, the stipulation also detailed other commitments that wer e “unre lated to Oncor ’s business [or] th e [C ommissi on] proce eding ” and that wer e only inclu d ed fo r “the sake of completene ss.” Many of those commitments addre ssed Oncor ’s aff iliates and are the subject of part of the dispute at issue in this case
. Specifica lly , the controve rsial commitments wer e promises to reduc e the rate s char g ed by the reta il-elec tric provider, to maintain majority owner ship of TXU Corp. for more than five y ear s,
to r e d u c e th e n u mb e r o f p la

n n e d c o a l u

n it s , a n d to in v e s t r e s o u r c e s in to e me r g in g e n e r g y te c h n o lo g ie s
. Early on in the application proce ss, the Commi ssion asked the various parties to brief

cer tain proce dural issues reg arding the scope of the newly adopted subsection 39.262(o) of the

u ti li ti e s c o d e
. S

e e id

. § 3 9

. 2 6 2 ( o )

. A s d is c u s s e d p r e v io u s ly , th a t p r o v is io n e mp o w e r s th e Co mm is s io n

5to enfor ce stipulations filed as part of the approva l proce ss. I n essenc e, the Commi ss ion wanted

input from the parties rega rd i n g whether the Commi ssion’s new statutory authority to enfor ce commitments allowed it to enfor ce all commitments that are made or whether the authority is limit ed only to commitments related to the public utility

. Although the Commi ssion was not being asked

to enfor ce any specific stipulation at that time, the Commi ssion was seeking clar ification reg arding the ty pes of information that it could consider during the public-intere st det er m i n ation reg arding the propos ed t ra n s action by Texas Energ y and Oncor

. I n other words, the Commi ssion elicited
response s reg arding whether the Commi ssion is limit ed to considering how commitments will aff ect the utilit y or whe ther the Commission may more g lobally

consider the eff

ect of the commitments. After rec eiving various response s, the Commi ssion issued an order stating that its revie w of a proposed business transac tion under the utilit ies code is limit ed in scope. Specifica lly , the Commi ssion deter

mined that it could only enfor ce commitments that direc tly rela ted to a public utilit y . Essentially , the Commi ssion rea soned that in light of the rec ent dere g ulation of the elec tric industry , the leg islature only intended to empower t h e C o mmissi on to enfor ce commitments that rela ted to a public utilit y and did not inten d t o allow the Commi ssion to “eva luate or enfor ce any commitment made that rela tes to [an] aff iliate of [a] public utilit y .” I n light of that deter mination, the Commi ssion rea soned that it could “only addre ss commitments that direc tly aff ect Oncor ” in the public-intere st analy sis under sec tion 14.101 of the utilit ies code

. See id. § 14.101.

Soon afte r the Commi ssion issued its limit ing order , Nucor filed discovery reque sts
reg arding the four commitments previously discussed that wer e “unre lated to Oncor ’s business,” but
Texas Energ y and Oncor objected to the discovery reque sts as exce e d in g th e s c o p e of the proce eding

.

6The Commi ssion sustained those objections. L ater , Nucor attempted to file testimony perta ining to,

among other thing s, the four c ommitm ents. When seeking the admission of t he testi mony , Nucor insisted that the Commi ssion should consider the offe red testimony beca use it demonstrated that the sale of Oncor will have a neg ative impact on the State as a whole. As with the discovery reque sts, Oncor moved to strike the testimony as bei n g b ey ond the scope of the proce eding , and the Commi ssion ag ree d in part and struck portions of the offe red testimony that it deter mined wer e bey ond the scope of the proc eeding

.

During the course of the proce eding , Texas Energ y and Oncor ag ree d to amend their initial stipulation in order to addre ss the conce rns of some of the intervening parties. Severa l of the intervening parti e s e n d o r s e d th e a mendments, and Texas Energ y , Oncor , and many of the intervening
p ar ties adopted the new stipulation. The new stipulation did not contain the four controve rsial commitments that did not perta in to Oncor

. Nucor did not endorse the new stipulation and continued to object to the ac quisiti on by arg uing tha

t the stipulation was not in the public interest. When contesting the stipulation, Nucor relied on testimony that had been previously submitt ed by parties that orig inally objected to the merg er but had now chang ed their minds. Shortly afte r Nucor filed its objections, the parties whose evidenc e Nucor relied on moved to withdraw their previously filed testimony

. Be cause the now-settling parties w it h d r e w th e ir te s timony , Texas Energ y and Oncor moved to st ri ke the portion of Nucor ’s filings that relied on the withdrawn testimony

. The Commi ssion g rante d the motions to strike and there b y re m o v ed portions of Nucor ’s filed testimony and exhibits

. Ultimately , the Commi ssion issued an order con c luding that the proposed acquisition and stipulation were in the public inter est, and Nuc or appe aled the Commi ssion’s or der. See Tex.
7Gov’t Code Ann. § 2001.144(a) (West 2008) (explaining when ag ency decision is final in contested

case ), § 2001.145 (West 2008) (stating that final ag ency decision is appea lable). The district court aff irmed the Commission’s final order, a nd Nucor appea ls the district court’s judg ment.

DISCUSSIO N On appea l, Nucor prese nts three issues challeng ing the district court’s aff irmance of the Commi ssion’s final order

. First, Nucor contends that the Commi ssion err ed when it deter mined that the provisions of the utilit ies code descr ibed above only autho ri z ed the Commi ssion to “eva luate and enfor ce” the commitments made by Texas E n er gy that direc tly aff ecte d Oncor (the public utilit y

). Relatedly , Nucor asser ts tha t the Commi ssion e rre d by concluding that it c ould not consider “any b r o a d e r p u

blic interest evalua tion of the entire transac tion.” Second, Nucor challeng es the Commi ssion’s decision based on the previous deter minations to limit Nucor ’s permissible discovery reque sts and to remove portions of Nucor’s filed testimony

. Finally , Nucor ar gu es that the Commi ssion’s approva l of the s t i pulation by Texas Energ y and Oncor was not adequately supported by

evidenc e in the re cord.

The Com m ission ’s Interpre tation of the Scope of its Authority
As mentioned above, Nucor challeng es th e Co mm is sion’s construction of the various

statutes that g overn the public-intere st analy sis that the Commi ssion was require d to perf orm in this

case
. After this appea l was filed, the supreme court was confr onted with a simil ar situation in which
an ag ency deter mined that the statutes at issue limited the ty pe of information that it may consider when perf

orming a public-intere st a naly sis. Railroad Comm’ n v. Texas Citi zens for a Safe Future

8& Clean W ater , 336 S.W .3d 619 (Tex. 2011). As in the prese nt case , a party challeng ed the ag ency ’s construction as being too narr ow and inconsistent with the rele vant g overning scheme , id. at 622-23, and the supreme court explained that the “cr ux of the dispute, then, i s whether the term ‘public interest’ is a broad, open-e nded term, encompa ssing any conce ivable subject potentially aff ecting the public, or a more narr ow term,” id. at 624. When de termining whether to uphold the Commi ssion’s interpre tation, the supreme court noted that rathe r than being clea r and unambig uous, the meaning of the ter

m “public intere st” is instead an a morphous conce pt. Id. at 628. After setting out the dispute in the case , the supreme cou rt o u tlined the proper standard by which courts revie w an ag ency ’s construction of an ambig uous statute that the ag ency is

c h a r g e d w it h e n f o r c in g
. A lt

h o u g h g e n e r a ll y s ta

ti n g th a t s ta tu to r y c o n s tr u c ti o n is a q

u e s ti o n o f la

w th a t

a p p e ll a te c o u r ts r e v ie w d e n o v o , id

. a t 6 2 4 ( c it in g F

ir s t A m
. Ti tl

e I n s
. Co

. v
. Co m b s , 2 5 8 S. W. 3 d 6 2 7 , 631 (Tex. 2008)); see also Fireman’s Fund C o u n t y Mu t. Ins. C o. v. Hidi , 13 S.W .3d 767, 768-69 (T ex. 2000) (stating that when perf orming statutory construction, courts should look to plai n meaning of words used in statute), the court also explained that revie wing courts also g ive “ser ious consideration” or “some defe renc e” to an ag ency ’s interpre tation of a statute that it is char g ed with enfor cing , Texas Citi

zens , 336 S.W .3d at 6 24-25, provided that the statutory lang uag e at issue is “ambig uous,” id. at 625 (quoting Fiess v. State Farm Lloyds , 202 S.W .3d 744, 747-48 (Tex. 2006)), and provided that the ag ency ’s interpre tat ion “‘is rea sonable and does not contra dict the plain lang uag e of the statute,’” id. (quoting Tarrant Appraisal Dist. v. Moore , 845 S.W .2d 820, 823 (Tex. 1993)); see a l

s o i d. (stating that “‘a lternative unreasonable constructions do not make’ ” statute ambig uous (quoting Fiess , 202 S.W .3d at 748)). I n addition, the court explained that it “is prec isely

9when a statutory term i s subject to multipl e understanding s that we should defe r to an ag ency ’s

rea sonable interpre tation.” Id. at 628. The court then emphasized that defe renc e is particula rly

war rante d when the statutory term at issue is “as amorphous as ‘public interest,’” when the ag ency

overse es “a complex reg ulatory scheme ,” and when the analy sis to be performe d “implic at es” the
ag ency ’s technical expertise. Id. at 629-30. Finally , the court rea soned that beca use an ag ency ’s interpre tation “of a statute it is char g ed with administering ” only has “to be rea sonable and in acc ord with the s tatute’s plain lang uag e,” an ag ency ’s construc tion does not have to be “the only —or t he best—interpre tation in order to wa rra nt . . . defe renc e.” Id. at 628.
As with the ag ency inv o l v ed in Texas Citi zens , the Commi ssion is char g ed with

overse eing a complex reg ulatory scheme

. See Tex. Util. Code Ann. §§ 11.0 0 2 (c) (stating that
purpose of public util ity reg ulatory act is to g rant Commi ssion authority to protec t customers of elec tric service s), 14.001 (West 2007) (bestowing upon Commi ssion power to reg ulat e p ublic utilit ies wit h i n i t s jurisdiction). Also, the i ssue i n this case involves the boundaries of a simil arly amorphous pub li c -intere st deter mination that falls within the Commi ssion’s technica l expertise. See id. § 14.101. Acc ording ly , we apply the same standard of revie w that was applied in Texas Citi zens . 2

I n its reply brief, Nucor asser ts tha t the Commi ssion’s inter preta tion is not e ntitled to any 2 defe renc e bec ause “ the Commiss ion provided no discernible rea son for making its decision.” We disag ree
. Although Nucor corr ectly points out that the Commi ssion did not r efe r to the arg uments made by Texas Energ y or Oncor reg arding the Commi ssion’s authority under subsection 39.262(o), the Commi ssion did provide a basis in its order for its limit ed construction of section 39.262(o). I n particula r, the Commission s tated as f ollows: The Commi ssion finds that the leg islative intent of the lang uag e in § 39.262(o) indicates that this secti o n o n l y appli es to the public utilit y and to commitments that direc tly aff

ect the public utilit y . Whil e the Commi ssion h as examined a wide varie ty of issues related to public utilit y transac tions using the public interest 10I n challeng ing the Commi ssion’s construction of the s tatutes as prohibit ing review

and enfor ceme nt of stipulations that do not rela te to Oncor , Nucor asser ts that “nowhe re in Section 39.262(o) a

re the re the limit ations the Commi ssion c laims.” More spe cifica lly , Nucor arg ues that

no lang uag e require s that a stipulation have a “dire ct eff ect” on the trans m i s s i on-and- distribution utilit y and asser

ts that t h e C ommissi on’s deter mination provides no g uidance reg arding when something direc tly aff

ects a utilit y . I nstead, Nucor contends that althoug h the Commi ssion ty pically only has authority

over r egulated uti lities, the pl ain l ang uag e of subsection 39.262(o) expansively
empower ed the Commi ssion to revie w and enfor ce any stipulation g iven as part of a filing u nder section 14.101, “no matter who made the stipulation.” As support for this proposition, Nucor notes that subsection 39.262(o) applies to stip u l at i o n s made by “an elec tric utilit y or transmission and

standard in § 14. 101(b)( 4), most of these proce eding s took place prior to S.B. 7 and a restruc tured elec tric industry in ERCOT, and are not direc tly compar able t o this proce eding

. The restruc turing of the elec tric industry in T ex as , as well as the leg islative history conce rning § 39.262(o), limit the Commi s s ion’s revie w of the pending transac tion. There fore , the Commi ssion’s deter mination

. . . is that the Commi ssion cannot evalua te or enfor ce any commitment made that rela tes to the aff iliate of the public utilit y , and can only addre ss commitments that direc tly aff ect Onc or. I n its brief, Nucor also contends that the more thorough ex p l an ation for the limit ed construction that is found in the Commi ssion’s appellate brief should be d i sreg arde d beca use it amounts to nothing more than impermissible “ post hoc rationalization.” See Trans-American Van Serv., I nc. v. U nited States , 421 F. Supp. 308, 319 (N.D . Tex. 1976) ( stating that revie wing courts may not se arc h rec ord for “ post hoc rationalizations that the [age ncy ] itself has not a rticulated as a basis for its result”)

. Although the Commi ssion elabor ated on its construction in its appellate brief, the main thrust of the Commi ssion’s briefing on this issue is the same as that expressed in its order : that the Commi ssion d oes not have authority over the companies aff iliated with Oncor beca

use it curr ently only has authority over public or reg ulated utilit ies. Acc ording ly , we cannot conclude that the Commi ssion’s briefing on the issue repr esents the sort of post hoc rationalization that we should disreg ard. 11distribution utilit y or a person seeking to acquir e or merg e with an elec tric utilit y or transmission

and distribution utilit y .” Tex. Util. Code Ann. § 3 9

. 2 6 2(o) (empha sis added)

. I n light of this provision as well as t he broad definition for “person” found i n the utiliti es code, Nucor urg es t hat subsection 39.262(o) plainly empower s the Commi ssion to enfor ce any stipulation filed reg ardle ss of whether the stipulation had an eff ect on the reg ulated transmission-and-distribution utilit y and to deter mine whether all filed stipulations are in the public interest. See id. § 11.003(14) (West 2007) (def ining “[p] erson” as including individuals, partne rships, mutual or cooper ative associations, and
corpor ations”); see also id. § 39.262(o) (stating that Co m m i s s ion “may rea sonably interpre t and enfor ce c onditions adopted under this section”)

.

Simi larly , Nucor contends that there is no statutory support in section 14.101 for the limit ations imposed by the Commi ssion. I n making this asser tion, Nucor notes that su b section 14.101(b) require s the Commi ssion to deter mine if a “tra

nsaction” is in the “public interest” and

asser ts that nothing in the rema inder of section 14.101 “sug g ests that the ‘transa ction’ under revie w is limit ed to the publ ic u t i l i t y (i n this case Oncor ) or that the ‘publi c int ere st’ is somehow l imited exclusively to the reg ulated elec tric utilit y transmission and distribution service .” Id. § 14.101. To the contra ry , Nucor insists that the plain meaning of the wording in the statute supports the opposite conclusions. I n addition, Nucor arg ues that the fac tors listed in the public-intere st analy sis under section 14.101—value of proper ty to be acquir ed, adver se health or safe ty eff ects, transfe r of jobs, decline of service , consideration g iven for acquisition, and public interest—ar e broad considerations that may be applied to any one seeking to acquir e a transmission-and-distribution utilit y under subsection 39.262(o). See id. §§ 14.101, 39.262(o).

12I n addition, Nucor insists that construing the statutes in the manner sug g ested by the

Commi ssion would rende r subsection 39.262(o) a “func tional nullity ” beca us e even though the lang uag e of the statute seems to expand the Commi ssion’s power , the Commi ssion’s interpre tation provides the Commi ssion “ with no more and no less authority than it ha d under Section 14.101(b)

to revie w merg ers and acquisitions of reg ulated u tilit ies.” See Tex. Gov’t Code Ann. § 311.021 (West 2005) (explaining that when construing statutes, co u rt s should presume that leg islature intended entire statute to be eff ective)

. Moreove r, Nucor contends that if the leg islature had intended

t h e l i mitation sug g ested by the Commi ssion, the leg islature could have easily said that when i t promulg ated subsection 39.262(o). See USA W aste Servs. of

Houston, Inc. v. Strayhorn , 150 S.W .3d 491, 494 (Tex. App.—Austin 2004, pet. denied) (explaining that courts presume that ever y word

was delibera tely chosen and that excluded words wer e left out on purpose)

. Finally , Nucor arg ues that the Commiss ion’s construction improper ly favor s Texas Energ y ’s private interest in a voiding oversig ht of the dere g ulated portions of the acquisition over the public’s interest in having
“re view and enfor ceme nt of [all] commitments benef icial to the public that wer e place d befor e the Commi ssion, even if not direc tly applica b l e t o On cor.” See Tex. Gov’t Code Ann. § 311.021(5) (stating that when perf

orming statutory construction, courts presume that “public interest is favor ed

over a ny private inter est”).
Nuc o r p r e s e n ts a r e asonable construction of the various statutes involved to the extent that the lang uag e of the statutes could be rea d as empower ing the Commi ssion to revie w and enfor ce all stipula t i o n s t h at are filed as part of a section 14.101 application. Howeve r, the question to be decide d in this case is w hether the Commi ssion’s inter preta tion is also rea sonable, consistent with the g overning statutes, and ther efor e, entitled to def ere nce. 13When construing the statutes involved, the Commi ssion took n o te o f th e foundational

shift in the Texas elec tricity marke t that occur red in the time betwee n whe n s ec t i o n 14.101

was orig inally enac ted and when section 39.262 was amende d to add subsection 39.262(o). At the time section 14.101 was en ac t ed , utilit ies wer e opera ting as monopolies that wer e reg ulated by the Commi ssion. See CenterPoint Energy Houston Elec., LLC v. Gulf Coast Coal. of Citi es , 252 S.W .3d 1, 7 (Tex. App.—Austin 2008) (on reh’ g ), aff’d in part, rev’ d in part sub nom. , State v. Public Util. Comm’n , 344 S.W .3d 349 (Tex. 2011). Under this scheme , a re gion in Texas “wa s

serve d by a single vertica lly integ rate d utilit y ,” Citi es of Corpus C h r i s t i v. Public Util. Comm’n , 188 S.W .3d 681, 684 (Tex. App.—Austin 2 0 0 5 , p e t. d e n ied), meaning that a single utilit y “produc ed, transporte d, and reta iled elec tricity ” for t h e reg ion, Reliant Energy, Inc. v. Public Util. Comm’n , 101 S.W .3d 129, 133 (Tex. App.—Austin 2003), rev’ d in part sub nom ., CenterPoint Energy, Inc. v. Public Util. Comm’n , 143 S.W .3d 81 (Tex. 2004).

Howeve r, i n 1999, the l eg islature enacted various s tatutes that beg an the transition

to a competitive reta il-service industry

. S ee Ac t o f May 27, 1999, 76th L eg ., R.S., ch. 405, 1999
Tex. Gen. L aws 2543 (cur rent version at Tex. Util. Code Ann. §§ 39.001-.910 (West 2007 & Supp. 2010)). Under the new competitive mar k et, “the former ly integ rate d utilit ies wer e require d to ‘unbundle’ and divide into three separ ate entities: (1) reta il elec tric providers, (2) power -g ener ation companies, and (3) transmission-and-dist ri b u t ion utilit ies.” Gulf Coast , 252 S.W .3d at 7; see Tex. Util. Code Ann. § 39.051(a) -(b) (West 2007). “Af ter the dere g ulation proce ss was completed, th e p o w e r - g e n e r a

ti o n a n d r e ta il e le c tr ic ma

r k e ts w o u ld b e s u

b je c t to th e ‘ n o r

ma l f o r c e s o f c o mp e ti ti o n ’ and ‘customer choice s,’ but the transmission- a n d

- d is tr ibution utilit ies would rema in reg ulated by the
Co mm is s io n
. ” G u lf Co a s t , 2 5 2 S. W. 3 d a t 8 ( q u o ti n g T e x. U ti l. Co d e A nn
. § 3 9

. 0 0 1 ( a ) ( We s t 2 0 0 7 ) )

. 14Consist ent wit h the s tatutory mandate, a formerly i n t egrated ut ility was unbundled

and divided int o Oncor, an aff iliated reta il-elec tric provider, and an aff iliated power -g ener ation
company
. As a result, only Oncor was still subject to reg ulation by the Commi ssion, but its aff iliated companies were not. I n light of this drama tic reg ulatory shift, the C ommissi on conclude d that i t s enfor ceme nt power s under subsection 39.262(o) extended only to s t i p u l at i o ns that aff ecte d the
company over which it had reg ulatory authority (Onc or) and not to stipulations that rela t ed t o companies aff

iliated with Oncor but did not direc tly aff ect Oncor

. For that rea son, the Commi ssion

3
also deter mined that it may only consider evidenc e rela ted to the reg ulated utilit y when considering whether a proposed transac tion is i n t h e p u blic interest under section 14.101 of the utilit ies code.
See Tex. Util . Code Ann. § 14.101.

The Commi ssion’s limit ing interpre tation is s u pported by the lang uag e in section
14.101. Section 14.101 applies to transac tions involving a “public utilit y ” and imposes obliga tions and restrictions on public utilit ies. See id. After dere g ulation, Oncor rema ined a public utilit y by statutory direc tive, but the aff iliated companies did not. See id. §§ 11.004 (def ining “public utilit y ”

As support for its asser

t i o n t h at the Commi ssion’s limit ed interpre tation of subsection 3 39.262(o) is incorre ct, Nucor ref ers to two case s addre s sing controve rsies arising prior to dere g ulation in wh i ch courts broadly descr ibed the Commi ssion’s authority over ag ree ments betwee n parties. See In re Entergy Corp. , 142 S.W .3d 316, 324 (Tex. 2004) (stating that merg er ag ree ment betwee n utilit y and various parties was basis for Commi ssion’s approva l of merg er and that administrative char acte r that g ave eff ect to merg er ag ree ment also g ave Commi ssion authority to adjudicate disputes arising from ag ree ment); Public Util. Comm’n v. Southwestern Bell Tel. Co. , 960 S.W .2d 116, 119-20 (Tex. App.—Austin 1997, no pet.) (explaining that p o we r to conduct adjudicative proce eding s nece ssarily includes “powe r to acc ept and act upon an ag ree ment betwee n the parties that remove s from dispute and litigation a subsidiary issue of fac t or law” and “powe r to formulate and awa

rd a rea sonable reme dy to eff ectua te the ag ree ment”). Howeve r, nothing in either of those case s compels a conclusio n t hat the Commi ssion’s limit ed interpre tation, particula rly in light of the dere g ulation of the elec tric marke t, is inconsistent with the g overning statutory lang uag e. 15as including elec tric utilit ies), 31.002(6) (West 2007) (spec ify ing that term “ele ctric utilit y ” includes

transmission-and-distribution utilit y but expressly excluding power -g ener ation companies and

reta il-elec tric providers) ; see also id. § 36.001(a) (West 2007) (authorizing Commi ssion to “re g ulate

rate s of an ele ct ri c u t ility ”). Acc ording ly , the C ommissi on’s construction of section 39.262(o) as
p er t ai n i n g only to stipulations involving Oncor is consistent with the focus in section 14.101 on public utilit ies.
I n light of the drama tic chang e in the elec tric marke t and in light of the Commi ssion’s

n e w ly d im in is h e d r e g

u la to r y r o le , th e Co mm is s io n ’ s c o n s tr u c ti o n o f th e s ta

tu te s a t is s u e is r e a s o n a

b le and con s i s t en t with the lang uag e of the statutes at issue as well as the entire statutory structure chang ing the Texas elec tric marke t to a competitive and dere g ulated marke t. See Jones v. Fowler , 969 S.W .2d 429, 432 (Tex. 1998) (ex plaining that when determ i n i ng leg islative intent, entire act, not isolated portions, must be considered)

. 4

We also observe that the Commi ssion’s inte r p r e ta ti o n is c o n s is te n t w it

h th e le g is la

ti v e history perta ining to the enac tment of subsection 39.262(o). See Tex. Gov’t Code Ann. § 311.023(3)

We note that subsectio n 39.262(o) does not require the Commi ssion to enfor ce 4 stipulations filed. See Tex. Util. Code Ann

. § 3 9.262(o). I nstead, the leg islature stated that the Commi ssion “may enfor ce” filed stipulations. Id. Acc ording ly , the leg islature has left the decision reg arding whether to enfor ce a stipulation to the C ommissi on’s discretion. See Tex. Gov’t Code Ann. § 311.016(1) (West 2005) (explaining that leg islature’s use of word “[m] ay cr ea t es d is c r e ti o n a

r y a u th o r it y ” )

. E v e n a s s u

mi n g th a t th e Co mm is s io n c o u ld e xe r t a u th o r it y o v e r s ti p u la

ti o n s unrela ted to a public utilit y , in light of the leg islature’s decision to dere g ulate the elec tric marke t, we would be unable to conclude that the Commi ssion abused its discretion b y re fusi ng to consider stipulations t hat do not rela te to Oncor

. See Tex. Gov’ t Code Ann. § 2001.174(2)( F) (West 2008) (allowing court to reve rse ag ency ’s order if ag ency ’s deter minations a

re “ar bitrary or capr icious or char acte rized by abus e o f d i s cretion or clea rly unwar rante d exercise of discretion”) ; Downer v. Aquamarine Operators, Inc. , 701 S.W .2d 238, 241-42 (Tex. 1985) (explaining that action is abuse of discretion if it occur s without ref ere nce to any g uiding rules o r p ri n ci p l es or is arbitra ry or unrea sonable). 16(West 2005) (explain i n g t h at when construing statutes, court may consider leg islative history ).

Subsection 39.262(o) was enac ted by house bill 624 in 2007. Act of May 23, 2007, 80th L eg ., R.S., ch. 1186, § 1, 2005 Tex. Gen. L aws 4049, 4049. That same y ear , a competing bill, senate bill 482, was also proposed and c overe d many of the same topics addre ssed by house bi ll 624. Ultimately , senate bill 4 8 2 d i d n o t pass, but it contained a provision that was identical to that of subsection 39.262(o) with the exception of the section numbers. Compare Tex. Util. Code Ann. § 39.262(o), with Conf. Comm. Rep’t, S.B. 482, 80th L eg. , R

. S ., at p. 24 (May 20, 2007); see Conf. Comm. Rep’t, S.B. 482, 80th L eg ., R.S., Section-by -Section Analy sis, at p. 16. When discussing the brea dth of the enfor ceme nt power bestowed by senate b i ll 482, repr esenta tive Miller explained that the proposed amendments only dealt with “re g ulated industries, which are the transmission lines” and do “not touch g ener ation [or] reta il.” H.J

. o f Tex., 80th L eg ., R.S. 1866 (2007). Fur ther, Miller confirme d that the amendme nt did not “impact competitive companie s.” Id. 5

Although we g ener ally rec og nize that courts should be war y of using the leg islative history 5 for statutes that wer e not enac ted in order to divine the meaning of a statutory provision that actua lly beca me law, see E n t er

g y Gu l f States, Inc. v. Summers , 282 S.W .3d 433, 442-43 (Tex. 2009), we believe that the leg islative history for senate bill 482 is noteworthy in this case g iven that the rele vant statutory lang uag e proposed in senate bill 482 is identical to the lang uag e enac ted and codified into subsection 39.262(o), compare Conf. Com m
. R ep ’t , S

. B. 482, 80th L eg ., R.S., at p. 24 (May 20, 2007), with Tex. Util . Code Ann. § 39.262(o)

. I n its reply brief, Nucor ref ers to the summary provided by the Texas L eg islative Council as support for its broade r i n t er p re tation of subsection 39.262(o). See Texas L eg islative Council, Summary of E

nactments , 80th L eg ., R.S., at 432 (2007); see also Tex. Gov’t Code Ann. § 323.001 (We s t 2 0 0 5 ) (s p ecif

y ing who members of council are ). I n that summary , the Council wrote that h ouse bill 624 authorizes the Commi ssion “to enfor ce” a “stipulation, repr esenta t i o n , o r commitment” filed by an elec tric utilit y , transmission-and-distrib ution utilit y , or “ac quisiti on or merg er party .” Summary of Enactme nts , 80th L eg ., R.S., at 432. After ref err ing to this lang uag e, Nucor urg es that the lang uag e in the summary demonstrates that the leg islature intended to make all s ti p u la tions filed be subject to enfor ceme nt by the Commi ssion reg ardle ss of whether the stipulati o n s 17M o r e v e r , w e c a n n o t a g r e e w it h N u c o r ’ s a s s e r

ti o n th a t th e Co mm is s io n ’ s in

te r p r e ta ti o n rende rs s ubsection 39.262(o) a functional nullity

. Although it is true that the Commi ssion’s interpre tation of the statutes at issue more sharply limit s the Commi ssion’s authority to revie w and enfor ce stipulations than the interpre tation offe red by Nucor , that fac t does not rende r subsection 39.262(o) a nullity

. Fur

ther, prior to the enactment of subs ection 39.262(o), the C ommissi on had

no express statutory autho ri t y to enfor ce stipulations filed as part of a notification of a proposed

tr a n s a c ti o n u n d e r s e c ti o n 1 4

. 1 0 1

. I

n f a c t, in r e v ie w in g a f

il in g u n d e r s e c ti o n 1 4

. 1 0 1 , th e Co mm is s io n is only expli citly permitted to “disallow the eff ect of t h e t ra n s ac t ion if the transac tion will

unrea sonably aff

ect rate s or service ” and to “take the eff ect of t h e t ra n s ac tion into consideration
in rate making proce eding s.” Tex. Ut il. Code Ann. § 14.101(c)

. Howeve r, subsection 39.262(o)
g rante d the Commi ssion the additional authority to enfor ce stipulations made as part of a filing under section 14.101. Id. § 39.262(o).

Fur therm o re, althoug h Nucor corr ectly points out that the Commi ssion’s interpre tation shields portions of t he transaction pertaining to a ffiliated c ompanies fr om oversig ht by the Commi ssion, in light of the fac t that the af fi l i at ed co m panies are no longe r subject to
reg ulation by the Commi ssion, we cannot ag ree with Nucor ’s asser tion that the Commi ssion’s interpre tation somehow improperly eleva ted Texas Energ y ’s private inter e s ts o v e r th a t o f the public. 6

direc tly aff

ect a reg ulated uti lity

. Although the repor t does not specify

whether a stipulation must direc tly aff

ect a reg ulated utilit y to be enfor cea ble, the repor

t does not expli citly contra dict the Commi ssion’s interpreta tion either. As discussed previously , in addition to enac ting subsection 39.262(o), the leg islature also 6 added other subsections to section 39.262 b u t limit ed the applicability of those subsections to transac tions occur

ring afte r the one at issue in this case
. See Tex. Util. Code Ann. § 39.262( l ), (m). One of those new subsect i o ns—subsection 39.262(m)—provide s fac tors for the Commi ssion to 18Be cause we conclude that the Commi ssion’s construction of subsection 39.262(o) is

rea sonable and consistent with the plain lang uag e of that statute as well as the statutes dere g ulating the elec tric industry , we hold that the trial court prop er l y u p h el d the Commi ssion’s construction.
Acc ording ly , we ove rrule N ucor’ s first issue on appea l.

The Com m ission ’s Lim itations on Discovery and the Adm ission of T estim ony

I n its second issue, Nucor arg ues that various evidentiar y ruling s by the Commi ssion denied it the rig ht to a full hear ing and violated its due proce ss rig hts and its rig ht to equal protec tion under the law. See U.S. Const. amend. XI V, § 1; Tex. Cons t. art. I , §§ 3, 19. When review ing a n
ag ency ’s ruling s on the admissi o n o r exclusion of evidenc e, appellate courts apply an abuse- ofdiscretion standard. Texas Dep’ t of Pub. Safety v. Nordin , 971 S.W .2d 90, 93 (Tex. App.—Houston [14t h Dist.] 1998, no pet.); see Tex. Gov’t C ode Ann. § 2001.174(2)( F) (West 2008) (s t at i ng that

courts may reve rse ag ency order under substantial-evidenc e standard when order is “ar bitrary or
capr icious or charac terized by abuse of d i s cr eti on or clearly unwar rante d exercise of discretion”)

. Under this standard, an ag ency abuses its discretion if it acts without ref ere nce to any g uiding rules

consider when deciding whet h er a p roposed transac tion is in the public interest. Although that subsection does not apply to the t ransa ction here , the fa ctors provide some insight reg arding what the leg islature int ended the Commi ssion to consider after dere g ulation. I t is worth noting that the leg islature directed the Comm ission to consider whether “the transaction will adver sely aff ect the reliability of service , availability of service , or cost of service of the

. . . transmission and distribut ion utilit

y .” Id. § 39.262(m) (empha sis added)

. Fur ther, althoug h the provision also allows the Commi ssion to consider those eff ects on an “ele ctric utilit y ,” the definition of elec tric utilit y does not include power -g ener ation companies or reta il-elec tric p ro viders that wer e unbundled from a former ly integ rate d utilit y . See id. § 31.002 (6 ), (10), (17) (West 2007) (def ining elec tric utilit y , power -g ener ation company , and retail-elec tric p ro v i der)

. Acc ording ly , the l eg islature has limit ed the fac tors to be considere d, and this limit ation is consistent with the Commi ssion’s construction of subsection 39.262(o) a s applied to transa ctions filed under section 14.101. 19and princ iples or if its a ctions are arbitra ry or unrea sonable. See City of San Benito v. Rio Grande Valley Gas Co. , 109 S.W .3d 750, 757 (Tex. 2003).

First, Nucor challenges t h e C ommissi on’s order deny ing sever al of its discovery
reque sts. See 16 Tex. Admin. Code § 22.141 (2011) (setting scope and forms of discovery ). Those
reque sts rela ted to the four commitments that wer e orig inally filed by Texas Energ y and that did not rela te to Oncor (the public utilit y ). For that rea son, the Commi ssion deter mined that the discovery
reque sts wer e bey ond the scope of the proce eding

. See id. (stating that parties may obtain discovery

on matters “re levant to the subject matter in the proce eding ” unless matters are privileged o r exempted under rule s of evidenc e or c ivil procedure ).

Second, Nucor disputes the Commi ssion’s order striking parts of Dennis W. Goins’s testi m o n y . Nu co r had previously filed t estimony from Goins that addre ssed, among other things,
O n c o r ’ s a f

f il ia te s , th e f o u r c o mm it me n ts d is c u s s e d p r e v io u s ly , a n d th e s c o p e o f s u

b s e c ti o n 3 9

. 2 6 2 ( o )

. For that rea son, Oncor filed a motion to strike parts of Goins’s testimony from Nucor ’s filings, and the Commiss ion gr anted the motion in part a nd struck var ious portions of the testimony

. As discussed above, the Commi ssion deter mined that the g overning stat u t es only authorized the Commi ssion to revie w and enfor ce stipulations that bear upon a reg ulated utilit y , and

we conclude d that the Commi ssion’s construction is rea sonable, consis tent with the g overning statutory scheme , and there fore , entitled to defe renc e. I n light o f t h at deter mination, we cannot conclude that the Commi ssion abused its discretion by deny ing Nucor ’s discovery re q u es t s fo r information that did not perta in to Oncor or by striking testimony that also did not addre ss Oncor . See Te x . Gov’t Code Ann. § 2001.051 ( West 2008) ( stating that party in c ontested case is

20entitled to oppor tunity to pr esent evidenc e on issues “involved in the case ”); Tex. Util. Code Ann. § 14.054(b)( 1) (West 2007) (addres sing settlements of contested case s and say ing that parties are entitled to hear i n g “o n i ssues that rema in in dispute”). I n fac t, Nucor essentially conce ded in its reply brief that this portion of its second issue is depende nt on a deter mination that the Commi ssion improperly

narr owed the sc ope of its re view.
I n i t s second issue, Nucor also criticizes another decision by the Commi ssion that limit ed other testimony that Nucor soug ht to introduce. As mentioned befor e, sever al parties in addition to Nucor orig inally objected to the proposed acquisition of Oncor

. The Commi ssion Staff also ini t i al l y objected to the proposed transac tion. When the parties and the Commi ssion Staff

o b j ected, they filed testimony from various witnesses contending that the proposed transac t i o n

was not in the public interest. Unde r Commissi on rules, testimony from expert witnesses must be
pre- filed, but the testimony is not admitt ed into the re cord until it is offere d by a witness and until the witness testifies that the “testimony is a true and acc urate repr esenta tion of what the testimony

wo u l d b e i f t he testimony wer e to be g iven orally at the time the written testimony is offe red into evidenc e.” 16 Tex. Admin. Code § 22.225 (a) -(b) (2011). Although the testimony at issue was
p r e - f il e d w it h th e Co mm is s io n , it w a s n o t a d mi tt e d in to th e a d mi n is tr a ti v e r e c o r d

. A f

te r T e xa s E n e r g y
ag ree d to modify the stipulations that it orig inally proposed in order to addre ss some of the conce rns of the objecting parties, the Commi ssion Staff and many of the parties that orig inally objected to the acquisition chang ed their minds and e ndorsed the pr oposed transa ction.

Be cau s e Nucor was conce rned that some of the previously objecting parties might wi t h d ra w t h e testimony that they had previously filed, Nucor asked the Commi ssion to inquire

21whether the parties intended to have their previously filed testimony offe red into evide n ce
. The

Commi ssion issued an order asking all intervening parties as well as the Commi ssion Staff to confirm “whether their previously fi l ed direc t testimony will be offere d into evidenc e.” After the order was iss ued, Nucor subm itted its proposed testim ony , inclu d i n g Go i n s’s testimony

. Goins’s
p r o p o s e d te s ti mo n y p a

r ti a ll y r e li e d o n th e te s ti mo ny o f a Co mm is s io n St a f f w it n e s s , D r
. Cr a ig Ro a c h , and a witness for Texas I ndustrial Energ y Consumers (“Te x as I ndustrial”), J eff ry Pollock, that had been filed p ri o r to Texas Energ y ’s modifications. Nucor also attache d as an exhibi t to Goins’s testimony a copy of Roach’s testimony

. Howeve r, afte r Nucor filed its testimony , the Commi ssion Staff and T ex as I ndustrial elec ted to withdraw the testimony by Roach and Pollock that they had previously

submitt ed.
On appea l, Nucor contends that the Commi ssion err ed by allowing the Commi ssion
S t af f and Texas I ndustrial to withdraw the previously filed testimony of Roach and Pollock and al s o asserts that it was err or to allow the Commi ssion Staff and Texas I ndustrial to withdraw their testimony afte r having the opportunity to revi ew t h e t estimony that Nucor filed. Under the Commi ssion’s rules, the only express prohibition on the ability to withdraw evidenc e during
proce eding s befor e the Commi ssion limit s the ability of an individual to withdraw evidenc e after
i t has been admitted into the rec ord. 16 Tex. Admin. Code 22.225(e) (2011) (stating that p ar t y
may withdraw evidenc e afte r it has been admitted into rec ord only by ag ree ment of al l parties to
p r o c e e d in g )

. A s me n

ti o n e d a b o v e , a lt h o u g h th e te s ti mo ny a

t is s u e w a s p r e - f

il e d w it h th e Co mm is s io n , both the Commi ssion Staff and Texas I nd u s t ri al withdrew their pre- filed testimonies befor e they

wer e admitted into the rec ord. See id. § 22.225(a) -(b)

. Nucor has not ref err ed us to any rule, statute,

22or case law that expli citly prohibits the Commi ssion from a ll o w in g in d iv iduals to withdraw proposed

testimony befor e it is admitted into the rec ord. I t is also worth noting that Nucor has not ref err ed us
to any reque st that it made to the Commi ssion afte r the parties withdrew their testimony that asked for a n extension of tim e to file or to modify its testim ony

in response to the w ithdrawa l.
Fur thermore , as descr ibed previously , the pre- filed testimony was i n i t i all y offe red

to show that the proposed transac tion was not in the public interest, and t h e C o m m ission authorize d the withdrawa l afte r Texas Energ y and Oncor made signific ant modifications to the proposed transac tion. Moreove r, as a result of those modifications, neither Texas I ndustrial nor the Commi ssion Staff continued to believe that the transac tion was ag ainst the public interest. I n fac t, they endorse d the modified transa ction.

I n li g h t o f th e a

b o v e , in c lu d in g th e c h a

n g e s ma d e to th e s ti p u la

ti o n , w e c a

nn o t c o n c lu d e that the Commiss ion abused its discretion by allowing the Commiss ion Staff and Texas I ndustrial to withdraw their pr eviously filed testimony

. After Texas I ndustrial and the Commission S taff w ithdrew the te stimony of Roach and Po l l o ck , Texas Energ y and Oncor filed a motion to strike the portions of Goins’s proposed testimony that discussed and extensively quoted from the withdrawn test i m o ny as well as the exhibi t containing Roach’s testimony

. Specifica lly , Texas Energ y and Onc or ar g ued that bec ause the testimony of Roach and Pollock had been withdrawn, the portions of Goins’s testimony quoting and ref err ing to their

testimony

as we ll as the exhibi t c onstitut ed impermissible he arsa y . See Tex.
Gov’t C ode Ann. § 2001.081 (West 2008) (s t ating that rules of evidenc e apply to hear ings before Commi ssion); Tex. Admin. Code § 22.221 (2011) (same)

. I n other words, Texas Energ y and Oncor

23stated that beca use those pag es “simply restate [d] testimony b y ” w it n e s s e s w h o se testimony had been withdrawn, “Goins’ restate ment of their testimony is hear say —an out of court statement offe red to
prove the truth of the matter asser ted.” See Tex. R. Evid. 801(d) (def ining hear say as “a statement, other than one made by

the dec lara

nt while testify ing a

t the trial or hea

ring , offe red in e vidence to prove the truth of t he matter asser ted”)

. After revie wing th e mot ion, the C ommissi on g rante d the motion in part and struck all of the testimony by Goins that discussed or quoted the testimony of Roach a nd Pollock as well as the e x hibit containing Roac h’s testimony

. 7
On appea l, in addition to challeng ing the Commi ssion’s dec i s i on to allow the Commi ssion Staff and Texas I ndustrial to withdraw the testimony of Roach and Pollock, Nucor also challeng es t he Commissi on’s dec ision to st rike the portion of Goins’s testimony that discussed or quoted the withdra

wn testimony

as we ll as the exhibi t containing Roach’s te stimony

. I n contesting the Commi ssi o n ’s rul ing, Nucor alleg es that the portions of Goi ns’s testimony quoting and summarizing the testimony of Roach and Pollock as well as the

acc ompany ing exhibi t are either not hear say or fall within an exception to hear say
. First, Nucor contends that they are admissions by party -opponents and, there fore , are not hear say by definition.

On appea l, Nucor contends that the Commi ssion err ed by striking portions o f Go i n s ’s 7 testimony without se tting out the rea sons why the testimony

should be remove d. Although Nucor corr ectly points out that the order ing para g raph does not expli citly say why portions of Goins’s testimony wer e stricken, Texas Energ y and Oncor ’s motion provided only one basis for the remova l of the testimony at issue. I n particula r, they urg ed that near ly all of the testimony appea ring on pag es eig ht throug h eleve n as well as the entirety of the acc ompany ing exhibi t was hear say
. Moreove r, the Co m m i s s i o n s u mmarized in its order the hear say arg uments made by Texas Energ y and Oncor and the responsive arg uments made by Nucor and then stated t hat i t was stri k ing the testimony of Goins “[a]fter revie wing the pleading s” by the parties. Acc ording ly , we cannot ag ree with Nucor ’s asser tion that the Commi ssion’s order was improper beca use it provided no basis for the exclusion. 24See id. R. 801(e) (2) (setting out circ umstances in which statement may be admitted as admission by

party -opponent).

Howeve r, we believe that Nucor ’s relianc e on t he rule addre ssing statements by party -opponents is misplaced. That rule, b y i t s terms, applies only to admissions by a party to the proceeding

. Id. The Com mission was t h e ad j u d i ca tive body with which Nucor sought to file testimony , not a party to the proce eding

. Acc ordi n gl y , t h e Commi ssion could rea sonably have conclude d that its Staff did not qualify as a “par ty ” to that proce eding as that term is used in the rule
g ov er n i n g admissions by party -opponents. Acc ording ly , the Commi ssion could have deter mined that the t es t i m o ny orig inally proposed by the C ommissi on Staff and later withdrawn could not be admitted as an a dmission by a par ty -opponent.
For differ ent rea sons, we also believe that Nucor ’s relianc e on the rule as support for the admis sion of t estimony previously filed by Texas I ndustrial is equally misplaced. At the t ime that Texas I ndustrial initially offe red the testimony , the interests of Texas I ndustrial and Nucor wer e alig ned beca

use they eac h opposed the proposed tr an s action. Moreove r, afte r Texas I ndustrial initially filed the proposed testimony of Pollock, Texas I ndustrial enter ed into the ag ree d stipulation that settled all of its issues perta i n ing to the proposed transac tion. That settlement eff ectively ended Texas I

ndustrial’s participa tion in the case
. Although Texas I ndustrial still filed a brie f and participated in the hear ings afte r enter ing into the stipulation, its primary involvement in the case

was limit ed to demonstrating that it was now in favor of the transac tion and stating its rea sons for no long er c ontesting the transac tion. For these rea sons, w e believe that the Commi ssion c ould

25rea sonably have deter mined that the testimony orig inally proposed by Texas I ndustrial and then withdrawn w as not admissible as an a dmission by a par ty -opponent in the c ase. As mentioned above, Nucor also contends that portions of Goins’s testimony as well

as the acc ompany ing exhibi t wer e admissible unde r an exception to the hear say rule. Specifica lly , Nucor contends that the parts of Goins’s testimony discussing and quoting the Commi ssion Staff’s witness (Roach) as wel l as the exhibi t containing Roach’s testimony wer e admissible as public

rec ords. Id. R. 803(8)( C). The public-re cord exception provides, in rele vant part, that the following ty pes of doc uments are not excluded by the g ener al prohibition ag ainst the admission of hear say :
Records, repor

ts, state ments, or data compilations, in any form, of public office s or ag encie s setting f

orth: (C) in c ivil ca ses as to a

ny party

. . . , fac tual finding s resulting from an investig ation made pur suant to authority g rante d by

law; unless t h e source s of information or other circ umstances indicate lack of trustworthiness.

Id.
Nucor contends that the require ments of the rule wer e met beca use Roach was paid by the Commi ssion Staff to prepa re testimony and beca

use his testimo n y “i s es s enti ally a repor t ref lecting his expert opinion and conclusions reg arding the underly ing transac tion.” Fur

ther, Nucor
arg ues that Roach’s testimony reg arding the protec tive measure s that should be imposed as part of the transac tion “ar e fac tual finding s resulting from his investiga tion, which was conducte d pursuant
to instructions g iven by Staff, u n d er au t h o ri ty g rante d by law.” Finally , Nucor alleg es that the

26Commi ssion Staff must have considere d Roach’s testimony to be tru stworthy or else they would

not have r etained his ser

vices or initially

filed the testimony

. Howeve r, Nucor has ref

err ed to no statute, rule, or cas e co n cl uding that proposed testimony from an expert witness who was hired by the Commi ssion Staff qualifies as a public

rec ord. Fur

ther, althoug h Roach was hired by the Commi ssion Staff, no showing was made that he

was under the supervision of the Commi ssion Staff when he rese arc hed and prepa red his testimony

. Cf. Fibreboar d C o r

p
. v. Pool , 813 S.W .2d 658, 676 (Tex. App.—Texarkana 1991, writ denied) (stating that rule 803(8) “is applicable only when the exhibi t is prepa red by public offici al s or employ ees under their supervision i n t h e p erformanc e of their officia l duties,” that “[d] ocuments
prepa red by private individuals and filed with a g overnme ntal ag ency are not officia l documents as contemplated by Rule 803(8),” and that even if individual prepa ring document is under contra ct with
ag ency , document is not public rec ord if individual prepa ring document was not under supervision of public o ff

i ci al ). I n addition, Nucor has provided no support for the proposition that a hired expert’s proposed testimony could qualify as “fa ctual finding s resulting from an investiga tion made pursuant to authority g rante d by law.” Although the Commi ssion Staff hired Roach to prepa re testimony , that does not automatically rende r his revie w of the proposed transac tion an investiga tion perf ormed unde r “a

uthority g rante d by

law.” Finally , we have been unable to f ind a ny support for the idea that the mere filing of proposed testimony rende rs the testimony a public rec ord under rule 803(8). The absenc e of support is even more compelling in a case like this wher e the testimony was pre- filed but was not admitted into the rec ord bef

ore it wa s withdrawn. See 16 Tex. Admin. C ode 22.225(a )-( b).

27I n l i g ht of the prec eding , we cannot conclude that the Commi ssion abused its

discretion by failing to conclude that the portion of Goins’s test i m o n y at issue as well as the

acc ompany ing aff

idavit wer e admissions by party -opponents or that they qualified under the public-re cord exception to the hear say rule. Moreove r, beca use the testimony and exh ibit wer e offe red to prove that Pollock and Roach objec ted to the proposed transac tion, we cannot conclude that the Commi ssion abused its discretion by striking the tes t i m o n y and the exhibi t as hear say
. See Tex. R. Evi d. 801, 802. 8

I n a final challe n ge t o the Commi ssion’s decision to strike portions of Goins’s testimony , Nucor contends that the Commi ssion’s order g ranting Texas Energ y and Oncor ’s motion

to strike is arbitra

ry and unrea sonable on its fac e beca use the Commi ssion “re fused to g rant Nucor ’s
arg ument that testimony filed by Oncor [and Texas Energ y ] should be stricken on the same g rounds” that Oncor and Texas Energ y alleg ed in their motion to strike. Stated differ ently , Nucor alleg es that beca use the Commi ssion struck the portion of Goins’s testimony that discussed testimony by other witnesses that had been withdrawn, the Commi ssion should have also struck the rebuttal testimony filed by Texas Energ y

and Onc or that re sponded to testimony that had bee n withdrawn.
As support for this arg ument, Nucor ref ers to its administrative filing entitled “Nuc or Steel - Texas’ Response to TEF’ s and Oncor ’s Motion to Strike Supplemental Direc t Testimony of
Dr. Dennis W. Goins.” I n that filing, Nucor arg ued that the portions of Goins’s testimony that Texas

I n its reply brief, Nucor also contends that the stricken parts of Goins’s testimony as well as 8 the exhibi t w ere admissible “ as the delibera te cre ation of hear say exceptions by the [C ommissi on] in permitting parties to withdraw testimony after having had a chanc e to revie w Nucor ’s testimony addre ssing the settlement.” Having revie wed the rec ord, we cannot ag ree with Nucor ’s asser tion that the Commiss ion’s actions could ha ve somehow c rea ted a he arsa y exception. 28Energ y and Oncor objected to should not be stricken beca use they wer e rele vant to the subject matter
at issue, wer e admissible under the public-re cord exception to hear say , and wer e admissions by a party -opponent. Nea

r the end of the response , Nucor asser ted that Texas Energ y and Oncor had
“m ad e no attempt to withdraw their own rebuttal testimony , almost all of which was pre p ar ed t o ref ute direc t testimony that their co-Sig natories have now elec ted to withdraw.” Furt h er, Nucor
arg ued that in light of Texas Energ y and Oncor ’s contentions t hat portions of Goins’s testimony should be stricken, the Commi ssion “should strike all of Movants’ rebuttal testimony responding to witnesses whose testimony will not be offe red into evidenc e at hear ing” and then listed the rebuttal testimony of six witnesses that had be en filed by Texas Energ y

or Onc or. Howeve r, nothing in the title of the filing indicates that Nucor was actua lly seeking

to st ri k e t h e t est imony of any witness; on the contra ry , the title stated that the filing was a
response to Texas Energ y and Oncor ’s motion to strike testimony

. Fur thermore , with the exception of the arg ument reg arding Texas Energ y ’s and On co r’ s witnesses that was discussed above, the whole thrust o f t h e fi l i n g was that Goins’s testimony should be admitt ed in its entirety

. See In re Brookshire Groce ry Co. , 250 S.W .3d 66, 72-73 (Tex. 2008) (explaining that nature of motion and relief soug ht a

re not a scer

tained by simply looking at motion’s caption and that courts also look to substance of motion); Finley v. J.C. Pace , Ltd. , 4 S.W .3d 319, 320 (Tex. App.—Houston [1st Dist.] 1999, no pet.) (stating that substance of motion is g leane d from body of m otion an d fr o m “pra y er for relief ”). Fur thermore , the pray er for relief failed to alterna tively plead that in the event that the Commi ssion g ra n t s Texas Energ y and Oncor ’s motion to strike, the Commi ssion should also

s t ri k e the testimony that Nucor highlig hted. I n fac t, the pray er makes no mention of str i k i n g an y

29testimony at all. On the contra ry , the pray er reque sted “that [Tex as Energ y ] and [Oncor’s] Motion

to Strike be denied and that Nucor be g rante d such further relief to which it may be entitled.” I n addition, a fter the Commi ssion g rante d Texas E nerg y and Oncor ’s motion to strike, Nucor did not file its own motion to strike the testimony of the six witnesses listed in its response , nor did it object when those witnesses’ testim onies wer e later admitted into the administrative record. Cf. Tex. R. App. P. 33.1 (explaining that in or der to pr eser ve complaint for appellate revie w, party must make complaint to trial court in “a timely reque st, objection, or motion”); see also Kaufman v. Commission for Lawyer Discipline , 197 S.W .3d 867, 875 (Tex. App.—Corpus Christi 2006, pet. denied) (stating that party waives r ight to ra ise appe llate claim if not pre sented be low).
I n light of the prec eding , we cannot conclude that the Commi ssion’s order g ranting
Texas Energ y and Oncor’s mot ion to strike was arbitra ry or unre asonable or t hat t he C ommissi on abused its discre tion when it issued the order

.

Having found no abuse of discretion i n any of the ruling s that Nucor arg ued wer e

err oneous, we cannot conclude that the Commi ssion’s eviden ti a r y r u li n g s d e p r iv e d Nucor of the rig ht to a fa ir hea

ring or violated Nuc or’s c onstitut ional rig hts to due proce ss and equa l protection.

The Com m ission ’s Order Is Supp orte d by S ubs tantial Evid ence

I n it s th ir d is s u e , N u c o r c o n te n d s th a t th e r e is n o e v id e n c e s u

p p o r t i n g th e Co mm is s io n ’ s finding t h at t he non-unanimous stipulation was in the public interest. Nucor g roups its various

asser tions int o three sets of ar g uments.

I n its first set of arg uments, Nucor arg ues that t h e Commi ssion’s order does not satisfy the statutory r equire ments for a final administrative decision beca use the Commi ssion’s order

30amounted to no more than bald and conclusory asser tions that the transac tion a nd stipulation we re in the public interest. See Tex. Gov’t Code Ann. § 2001.141(b)- (d) (West 2008) (stating that final decision m ust contain findings of fac t and conc lusions of law, that finding s may only be based on

ev i d en ce and matters that wer e “off icially noticed,” and that finding s, “if set forth in statut o ry lang uag e, must be acc ompanied by a concise and expli cit statement of the un derly ing fac ts supporting the finding s”). Fur ther, Nucor contends th a

t the Commi ssion’s order is improper beca use it contains no ref

ere nce to e vidence in the rec ord. 9
As discussed previously , most of the parties to this adm i n i s t ra tive proce eding

enter ed into an ag ree d stipulation, and the Commi ssion a pproved that stipulation and incorporated the stipulation into its orde r. Var ious c ases have descr ibed the manner in w hich ag encie s may use

n o n -unanimous stipulations. See City of Corpus Christ i v. Public Util. Comm’n , 51 S. W

. 3 d 2 3 1 (Tex. 200 1 ); C i t

y of El Paso v. Publi c Util

. Comm’n , 883 S.W .2d 179 (Tex. 1994). I n particula r,

an admini s t ra t i v e ag ency is require d to consider the stipulation “on its merits,” Corpus Christ i , 51 S.W .3d at 263 (Ow en, J ., concur ring ), and may not simpl y adopt a non- unanimous stipulation, City o f E l P a s o , 883 S.W .2d at 183. Stated differ ently , the incorporation of a non-unanimous stipulation is proper when an ag ency makes its own independe nt finding that the stipulation satisfies

Nucor also contends that the order is imprope r and may not be upheld beca use it contains 9 no discussion of the arg uments or evidenc e offe red by the non-settling parties. Howeve r, Nucor has ref err ed to no statutory

authority or case law for that proposition, a nd we have be en unable to find any
. To the contra

ry , althoug h we wer e construing a prior version of the Administrative Procedur e Act, this Court has conclude d that the Commi ssion is only require d to state finding s that support “its ultimate finding s; it is not require d to state fac ts that it reje cted and upon which it did not rely in rea ching its conclusions.” See Pede rnales Elec. Coop. v. Public Util. Comm’n , 809 S.W .2d 332, 337 (Tex. App.—Austin 1991, no writ). 31the rele vant g overning criter ia based on substantial evidenc e in the rec ord as a wh o l e, s ee id.

(discussing adoption of non-unanimous stipulation in rate context and stating that adoption is proper if ag ency makes finding that proposal wi l l es t ab lish rea sonable rate s for are a (quoting Mobil Oil Corp. v. F

ederal Power Comm’n , 417 U.S. 283, 314 (1974)) ), and when the ag ency “provide s all parties, including non-sig natories, the opportunity to be hear d on the merits of the stipulation,” id.

at 183-84; see 1 6 T ex
. Ad m in. Code § 22.206 (2011) (providing that when some parties have

rea ched a g ree ment on some or all issues, ea ch par ty to proce eding still has rig ht to full hear ing on issues still in dispute). 1 0

As a preliminary m at t er , we note that Nucor was g iven the opportunity to be hear d reg arding the stipulation and the proposed transac tion. Although the Commi ssion limit ed the scope of the proc eeding in light of its interpre tation of section 39.262(o) , Nucor fully and ac tively participa ted in the hear ings reg arding the approva l of the transac tion, including cross-e x amining the chief executive office r of Oncor , and filed expert testimony as well as sever al exhibi ts contesting that the proposed tr ansac tion was in the public interest.

Nucor also asser

ts that the Commi ssion’s order cannot be upheld beca use the Commi ssion 1 0 d id n o t ma

k e a s p e c if

ic f in d in g th a t th e s ti p u la

ti o n “ r e s u lt e d in ju s t a

n d r e a s o n a

b le r a te s
. ” A s s u

p p o r t for the proposition that the Commi ssion is require d to make that ty pe of finding , Nucor ref

ers to City o f E l P a s o v
. P u b li c U

ti li ty Co m m is s io n , 8 8 3 S. W. 2 d 1 7 9 ( T e x. 1 9 9 4 )

. T h a t c a s e in v o lv e d a s it

u a ti o n in which a reg ulated utilit y soug ht to incre ase its rate s. Id. at 181. Be cause El Paso was a rate case , the supreme court explained that the Com m i s s i o n wa s require d to independe ntly find that the stipulation resulted in just and reasona ble ra tes.
Howeve r, the prese nt c ase is not a rate case . Rather, this case involves the acquisition of a public utilit y under section 14.101 of the utilities code. See Tex. Util. Code Ann. § 14.101 (West 2007). Acc ording ly , we cannot conclude that the Commi ssion’s failure to make the specific finding sug g ested by

Nucor would constitute g rounds for ove rturning the Commiss ion’s order

. 32Having considere d whether Nucor was g iven an opportunity to be hear d on the

merits of the stipulation, we now consider whether the Commi ssion made its own finding that the

s t i p u lation satisfied the require ments of section 14.101 and whether that deter mination i s supported by substantial evidenc e. At the conclusion of the proce eding , the Commi ssion issued its order approving the transac tion. The order is thirty pag es in leng th and contains 102 finding s of fac t a nd 10 conclusions of law. I n the introductory para g raphs of the order , the Commi ssion conclude d that “the merg er fulfills the require ments set forth in” s ec t i o n 1 4 .101 and “that the stipulation rea ched by cer tain parties

. . . fu l fi l l s t h e standards for approva l of non-unanimous

s ti p u la ti o n [s ] s e t f

o r th

. . . in Ci ty o

f E l P a s o v
. P u b li c U

ti li ty Co m m is s io n . ” N e xt, th e Co mm is s io n
set out the backg round of the case , including identify ing the various parties involved in the case , listi ng the various hear ings that wer e conducte d, and summarizing the proposed transac tion and the stipulation entere d into by various parties. Following the discussion of the mer g er, the Commi ssion direc tly incorpora ted all of the commitments ma d e in th e non-unanimous stipulation in findings of

fac t 43 throug h 95. After listi ng the commit m ents in the stipulation, the Commi ssion found that “[b] ased on the rec ord evidenc e, the terms of t h e s t i p u l at i on rea ched by cer tain parties in this d o ck et are rea sonable” and that “the stipulation rea ched by cer tain parties in this docket i s i n the public interest.” Then, the Commi ssion made findings specific to the require ments from

s u b s e c ti o n 1 4

. 1 0 1 ( b )

. S

e e T e x. U ti l. Co d e A nn
. § 1 4

. 1 0 1 ( b )

. A lt h o u g h th e Co mm is s io n c o n c lu d e d that sever al of the fac tors listed in subsection 14.101 did not apply beca use “the merg er does not

33involve the sale of a utilit y ’s assets or a merg er of opera ting utilit ies,” see id. § 14.101(b)( 1), (3), 1 1
the Commiss ion made findings reg arding the re maining f actor s. Specifica lly , the Commiss ion found as f ollows:

98. Ba sed upon the rec ord evidenc e and the commitments offe red b y Oncor , the merg er will not adver sely aff ect the health or safe ty of Oncor ’s custom ers or employ ees. 99. No par

ty prese nted evidenc e to re but [Texas Energ y ]’s position tha t the merg er will not result in the transfe r of jobs of citizens of this state to worke rs domiciled out of this state.
100. Ba sed upon the rec ord evidenc e and the commitment offe red by Oncor rela tive to specific perf

ormanc e and customer service standards, the merg er will not result in a dec line in service

.

. . . 102. The mer ger, coupled with the terms of the stipulation, as amende d, is in the public interest.

See id. § 14.101(b)( 2), (4). The Commi ssion also found that “[b] ased u pon the commitment by [Tex as Energ y ] and Oncor that Oncor will not seek to inc lude merg er costs in f uture rate reque sts, the merg er will not result in Texas rate pay ers bear ing merg er- rela ted costs unrela t ed to the

corr esponding benef

its to Tex as ra tepay ers.”
At the end of t he order, the Commi ssion conclude d that the “mer g er, coupled wit h the term s o f t h e stipulation, as amende d, meet the require ments set forth in” section 14.101 “to

We note that Nucor makes no specific challeng e to t h e C ommissi on’s deter mination 1 1 that the provisions in subsection 14.101(b) perta ining to the value of the utilit y ’s as s et s and the consi d er at ion offe red under the transac tion had no applicability to the public-intere st analy sis at issue. 34support a pub l i c interest finding ”; that the “stipulation, as amende d, is in the public interest”;

and that the “stipulation, as amende d, satisfies all o f t h e Commi ssion’s standards for revie w of a non-unanimous stipulation.”

The finding s underly i ng the Commi ssion’s public-intere st deter mination are supported by

substantial evidence in the record. A par ty challeng ing a

n order by the Commiss ion “bea rs the burden of overc oming a presumption t h at the Commi ssion’s finding s are supported by substantial evidence.” Nucor Steel v. Public Util. Comm’n , 168 S.W .3d 260, 267 (Tex. App.—Austin 2005, no pet.). When deter mining whether an ag ency ’s ac t i o n s are supported by substantial evidence , courts ar e prohibited fr om substitut ing their judgme nt for the Commission’s
“as to the weig ht of the evidenc e on questions committed to ag ency discretion.” Citi es of A bilene,
San Angelo, & Vernon v. Public Util. Comm’n , 146 S.W .3d 742, 748 (Tex. App.—Austin 2004, no pet.) (citing Tex. Gov’t Code Ann. § 2001.174 (West 2008)); see also Tex. Util. Code Ann. § 15.001 (st at i n g that judicial revie w of ag ency action is under substantial-evidenc e standard) ; Tex. Gov’t Code Ann. § 2001.174(2) (allowing court to r ever se ag ency deter mination if it i s not suppor ted by substantial evidenc e). I n making this deter mination, courts are not asked to verify whether “the
ag ency rea ched the corr ect conclusion, but whether some rea sonable basis ex i s t s i n the record for the ag ency ’s action.” Citi es of Abilene, San Angelo, & Vernon , 146 S.W .3 d at 7 48. I n fac t, the evidenc e may actua lly preponde rate ag ainst the Commi ssion’s fi n d ing and be upheld as long as there is enoug h evidenc e to sug g est that the C ommissi on’s “determination was withi n the bounds of re asonable ness.” Id.

Severa l witnesses t estified that the proposed transac tion was in the p u b l i c i n t ere st.
For example, Dr. Wil liam Aver a, Texas Energ y ’s witness, testified that the terms of the stipulation

35“ensur e Oncor ’s fi n an ci al independe nce with sever al ring -fe ncing provisions and commit [Tex as

Energ y ] to maintaining Oncor ’s capital structure and limit ing its embedde d debt cost.” Fur thermore , Aver a clar ified that t h e ring -fe ncing portions of the stipulation isolated Oncor from the financ ial
risks or expenses of its aff iliates and “ensur es t h at t h e risk” from aff iliates “does not neg atively impact the financ ial v i ab ility of the utilit y .” I n addition, Aver a explained that the terms of the stipulation also “ensur e Oncor ’s opera tion al i ndepende nce” and “pre serve Oncor ’s financ ial independe nce.” Then, Aver a rela ted that “[b] eca use Oncor ’s opera tions will not be direc tly aff ecte d,
the merg er does not threa ten the health or safe ty of customers or employ ees, jobs in Texas, or quality
of service .” Additi o n al l y , Av era explained that as a result of the stipulation, Texas Energ y “will expend substantial funds on demand- side man age m ent and ener g y eff iciency prog rams.” Aver a clar ified that the demand -s i d e- m anag ement expenditures will be $200 milli on “over the amount included in On co r’ s rate s.” Fur ther, Aver a testified that the stipulation require s Oncor to “make capital expenditures on its traditional sy stem

. . . during the next five y ear s.” Moreove r, Aver a stated
that the stipulation “esta

blishes detailed reliability and perf ormanc e standards” that will be eff ective
for five y ear s afte r the transac tion and that “Onc or also ag ree d to custom er s er vice metrics for maintaining stre et lights a nd handling customer se rvice reque sts.” Finally , A v e r a e xp la in e d th a t the stipulation provided additional benef its to the public
that wer e “bey ond the Commi ssion’s authority to order .” I n particula r, Av era ref

ere nced Oncor

ag ree ing to issue a $72 milli on cre dit to its customers as well as agr eeing to not seek recove ry for

36various expenses in future rate case s, including a $35 milli on write-of f to Oncor ’s storm rese rve and a $20.9 million write-off r esulting f rom the re structuringof Onc or’s re g ulated asse ts. 1 2

Throug hout its first and third issue s , Nu co r complains that althoug h the Commi ssion’s 1 2 interpre tation of the g overning statutes limit ed its ability to consider or enfor ce commitments to those that direc tly rela ted to Oncor , th e C o m m i s s i o n in its public-intere st analy sis approve d stipulations made b y “ O n c o r ’ s u n r e g u la te d a f f il ia te s a n d u nr e g u lated third party marke t participa nts.” Given that the C ommissi on’s construction prohibited Nucor from int roducin g evidenc e reg arding eff ects of the transac tion bey ond those rela ting to Onc or, Nuc or insists that the Commi ssion erre d by including commitments rela ting to unreg ulated companies. Moreove r, Nucor arg ues that “under the C ommissi on’s reading of t he law, the re is no way to enfor ce these commi tments” and that the alleg edly problematic c ommitm ents may be disreg arde d “without penalty .” The commitments Nuc or is r efe rring to a re the promise to spend $200 million on demandside manag ement and the $72 milli on cre dit Oncor ag ree d to g ive to its customers. S p ec i fi cally rega rding the cre dit, Oncor promised to g ive the cre dit to its reta il-elec tric-pr ovider customers. Under the stipulation, the reta il providers are require d to pass the cre dit on to their reta il customers. I n challeng ing the propriety of this stipulation, Nucor asser ts that the Commi ssion will be unable to enfor ce the commitment beca use it depends on the actions of unreg ulated companies. Admittedly , althoug h we need not make a final deter mination r eg arding the issue, we do note that based on the Commi ssion’s c onstruction, it is not entirely clea r that the Commi ssion would be able to f orce the unreg ulated compa

nies to pass the cr edit on to the ir customers. Howeve r, the Commiss ion would unquestionably be able to enfor ce the commitment as it rela tes to the obliga tions imposed on Oncor

. See Tex. Util. Code Ann. § 39.262(o); see also id. § 14.101(c) (authorizing Commi ssion to take “the eff ect of the transac tion into consideration in rate making proce eding s”). For that rea son, we cannot ag ree with Nucor’ s asser

tion that the Commi ssion’s inc lusion of this c ommitm ent in its order wa s somehow improper

. U n d e r th e d emand- side-mana g ement commitment, T e xa s E n e r g y a g r e e d to f u n d $ 2 0 0 mi ll io n for demand- side-ma n age m ent prog rams. Fur ther, the commitment require d Oncor , throug h the funding g iven by Tex as Energ y , to spend $100 milli on on demand- side-mana g ement issues. The commitment also extensively listed the manner in whic h Oncor was re quired to spend t he money , including using $16 milli on for low-income- customer prog rams. F in a ll y , th e c ommitm ent explained that Texas Energ y would be g iving the other $1 0 0 m i llion to Texas Energ y “af filiates other than Onco r. ” Ot her than mentioning Texas Energ y ’s decision to provide funding for companies other than Oncor , the stipulation and the Commi ssion’s order make no further ref ere nce to tha t f

unding. Acc ording ly , we cannot conclude that the mere mention of this promise, without more, was reve rsible er

ror or could have somehow i nvalidated the Commi ssion’s limit ed construction of t he g overning statutes.

37Another witness for Tex as Energ y , Fr eder ick Goltz, simil arly testified that the

stipulation and transac tion wer e “undoubtedly consistent with the public interest.” As with Aver a, Goltz explained that the stipulation is desig ned “to provide rea sonable assura nce that Oncor will function as a separ ate company from [i ts] aff iliates and that Oncor will be protec ted fr o m any possible neg ative impacts from financ ial difficulties at those aff iliates.” Goltz also testified that as a result of t he stipulation, Oncor a g ree d to provide the rate cre dit discussed above and to not seek

to rec oup the expenses associa ted with the transa ction throug h its rates. Fur ther, Goltz stated that
Oncor ’s customers will rec eive the benef it of improvements to Oncor ’s eff iciency and of additional demand- side-mana g ement spending and that under the stipul at i on, Oncor is require d to either maintain or improve its transmission-and-dist ribution sy stem. I n addition, Goltz rela ted that the transaction will not adver sely aff ect any of Oncor ’s customers or employ ees beca use “Onc or will be manag ed no differ entl y af t er the closing of the [t ]ransaction” and that “Onc or has historically provided safe , reliable service .” Additionally , Goltz clar ified that the transac tion will not r esult in the transf er of jobs to workers out of Te x as and “ will not result in a decline of Oncor ’s servic es.”
I n a d d it io n to th e te s ti mo ny o f T e xa s E n e r g y ’ s w it n e s s e s , O n c o r a ls o o f

f e r e d te s ti mo ny from its chief executive office r, Robert Shapard. Shapard ag ree d that the transac tio n wa s “i n the public interest in acc ordanc e with [s u bsection] 14.101(b) and considering the fac tors identified there in.” I n his testimony , Shapard ag ree d with the portions of Goltz’s testimony reg arding how the require ments of the stipulation separ ate Oncor from its aff iliates and protec t Oncor from any
neg ative im p ac t s stemming from one of its aff iliate’s financial problems. Shapard also discussed the benef its to Oncor ’s customers, including the cre dit, the additional money spent on demand- side

38manag ement and ener gy -e ff i cienc y prog rams, and the fee s that Oncor ag ree d not to rec over in its

n e xt r a te c a s e
. F u

r th e r mo r e , Sh a p a r d e xp la in e d th a

t th e s tip u la

ti o n r e q u ir e s O n c o r to ma

k e s ig n if ic a n t i n vestments in its transmission-and-distribution sy stem, which S hapar d char acte rized as a “maj o r

conce ssion by [Tex as Energ y ] and Oncor.” Shapard a lso related tha t under the stipulation, Oncor is require d to meet cer

tain “ag g ressive” reliability standards that will lead to reba te pay ments “if the standards are not achie ved.” Finally , Shapard testified that the transac tion will not result in a decline
in service to Oncor ’s customers due to the capital- investment commitments under the stipulation as well as the additional reliability standards that will be applied and that beca use Oncor “w i l l be
manag ed no differ ently afte r the closing of the [t ]ransaction,” th e ac q u i s i tion will not aff ect the health or sa fety

of its employ ees. A witness for the Commi ssion Staff, Dar ry l Tietjen, also testified that the transac tion was in the publ ic intere st. He explained that the s tipulation repr esente d “an acc eptable resolution of contested issues in this proce eding as well as i n Oncor ’s current rate pro ce ed i n g .” I n addition, Tietjen listed various benef its arising from the stipulation, including the investments in demand- side
manag ement, the decision by Oncor to not seek rec overy of cer tain expenses, and the cre dit that will be g iven to Oncor ’s customers. Fur thermore , Tietjen explained that the stipulation serve s the public interest by

providing “ce rtainty

on the resolution of a varie ty of issues, it ensures an outc ome that,
in the ag g reg ate, is at least equal to—or, in some instances, possibly better than—what would result from continued litigation.” Moreove r, Tietjen summ ar ized the various commitments that wer e desig ned to keep Oncor independe nt and to i n s u late Oncor from any potential neg ative eff ects

s te mm in g f

r o m o n e o f it s a f

f il ia te s
. T ie tj e n a ls o me n ti o n e d th e p r o mi s e b y O n c o r to a d h e r e to c e r

ta in

39reliability standards as well as Oncor ’s promise to pay $3.6 billion over the next five y ear s “to

support the traditional Oncor sy stem” and to “ ensure Oncor ’s adher ence to a t le ast the same levels of ca pital investment that would have oc curr ed abse nt the merg er tra nsaction.”
I n light o f the prec eding , we must conclude that the Commi ssion considere d the stipulatio n o n i t s m er its, made its own finding that the stipulation satisfied the rele vant
statut o ry require ments, and provided all parties with an opportunity to addre ss the merits of the stipulation. We must also conclude that the stipulation i s supported by substantial e vidence in the

rec ord as a

whole.
I n i t s s econd set of arg uments, Nucor contends that two of the commitments contained in the s tipulation and that wer e relied on by the C ommissi on in its d et er m i nation could

not support the C ommissi on’s conclusion that the proposed transac tion was in the publ ic i ntere st. The first is the one-time $72 milli on cre dit offe red by Oncor to reta il-elec tric providers that the provi ders would then pass on to their retail customers. The Com mission found t hat t he credit
repr esente d “a gr eat benefit for Texas reta il consum er s
. ” T he second involved the $56 milli on in write-of fs to Oncor ’s storm rese rve and from restruc turing fee s that Oncor promised not to include in its future rate case
.

When attacking the propriety of the cre dit, Nucor asser ts that none of the s et t l ing parties provided any testimon y d em onstrating that the amount of the cre dit, $72 milli on, was adequate. I n making this contention, Nucor ref ers to the fac t tha

t the cre dit wa s g iven in exchang e f o r th e Co mm is s io n ’ s d e c is io n to d is mi s s O n c o r ’ s th e n - p e n d in g r a te c a s e
. E s s e n

ti a ll y , N u c o r th e o r iz e s that had the rate case continued, the Commi ss i o n m i gh t have discovere d that Oncor ’s excess

40reve nue well exceede d the amount offe red as a cre dit and that without e vidence of Oncor ’s cost of

service , the C ommissi on was unable to evalua te t he reasonable ness of the cr edit. Reg arding the 1 3
write-of fs, Nucor contends that the benef it of the write-of

fs is illusory beca

use there is no g uara

ntee

or evidenc e “that Oncor would have reque sted rec overy of any of t h es e ex p enses in its 2008 rate

case , or that the Commission would have g rante d that reque st.”

Rather than challeng e the evidentiary support for the stipulation as a whole, Nucor posits the conce pt that revie wing courts m ay o n ly aff irm a Commi ssion’s order approving a nonunanimous stipulation if eac h term of a stipulation is individually supported by substantial evidenc e. Even assuming that Nucor ’s asser tion is corr ect, its challeng e to these particula r finding s still fails.
As summarized above, various witnesses testified that the cre dit and the write-of fs repr esente d a benef it to Oncor’s c ustomers and we re in the public inter est. Moreove r, althoug h Nucor corr ectly points out that Oncor ’s rate case was dismiss ed prior to a final deter mination reg arding whether and

to what amount Oncor had acc umulated excess re v en ue, that uncer tainty does not nece ssitate a conclusion that the finding reg arding the $72 milli on cre dit wa s err oneous. Simi larly , the fac t that the dismiss al of the rate case fore closed the possibili ty of finding out whether the Commi ssion would have a uthorized recove ries during the rate case for the write-of fs that Oncor ag ree d to make under the stipulation does not rende r the finding s perta ining to those write-of fs improper. Undeniably , the

I n this set of arg uments, Nucor ag ain challeng es the Commi ssion’s decision to not addre ss 1 3 or include in its order the evidenc e that Nucor offe red reg arding the stipulation. I n particula r, Nucor contends that the Commi ssion should have addre ssed the testimony by Goins stating that the cre dit was tied to the Commi ssion’s decision to dismiss Oncor ’s then-pe nding rate case that was initiated when the Commi ssion Staff estim ated that Oncor ’s rates led t o $80 milli on i n excess reve nue. I n footnote nine, we addre ssed simil ar arg uments made by Nucor, and for those same rea sons, we reje ct this challeng e as w ell. 41stipulation, by its nature as a settlement ag ree ment, fore closed knowledg e of the ultimate outc ome

had the parties fully litigated the various cla ims, but Nucor’s cha lleng es ig nore the actua l benef its

o b t ai n ed from the settlement, including a speedie r resolution of the issues and rec overy with o u t the need for and adde d expense of continued a nd protrac ted litigation. Moreove r, althoug h Nucor

corr ectly points out that the C ommissi on may have ultim ately forbidden rec overy of t he ex penses that wer e written off under the s t i p u l at i o n o r conclude d that Oncor had obtained excess reve nues

w e ll b e y o n d $ 7 2 mi ll io n , th e Co mm is s io n cou ld h a v e a s e a s il y ma d e th e o p p o s it e d e te r mi n a ti o n s
. I n other words, the stipulation might have g iven a benef it that otherwise would not have been g iven had the r ate c ase c ontinued.

I n it s final set of arg uments, Nucor arg ues that the write-of fs had no bear ing on whether the proposed tra

nsaction wa s in the public interest. I n other wor ds, Nucor arg ues that the write-of fs rela ted to Oncor ’s rate case but wer e not rele vant to the proposed acquisition of Oncor

. 1 4 Although those write-of

fs perta ined to O ncor’ s then-pe nding rate case , we can find

Although it did not contest the following finding s in its opening b ri ef, in its reply brief, 1 4 Nu co r seems to challeng e sever al finding s reg arding steps that wer e taken to “minim i z e an y deleter ious impac t the merg er might otherwise have on Oncor .” Specifica lly , Nucor contends that t hose commitments in the stipulation “do absolutely nothing to deter mine whether wi t h t h o s e measure s and other e lements the merg er/a cquisition is i n the public intere st.”
As discussed ear lier, the leg islature provided fac tors for the Commi ssion to consider when perf orming a public-intere st analy sis, including whether a proposed transac tion wil l re s u l t in a decline in service and, more g ener al l y , wh et her the acquisition “is consistent with the public interest.” See Tex. Util . Code Ann. § 14.101(b)( 1)-( 4). Given thi s lang uag e, we cannot conclude that the Commi ssion’s decision to consider commitments desig ned to protec t the public utilit y from potential financ ial ruin was unreasona ble or inconsistent with the plain lang uag e of the g overning statutes. See Railroad Comm’n v. Texas Citi zens for a Safe Future & Clean W ater , 336 S.W .3d 619, 625 (Tex. 2011). 42no support for the proposition that a conce ssion rela ting t o a ra t e ca s e could not be included in a

stipulation filed under section 14.101 or in an orde r by the Commiss ion endorsing the stipulation. This seems particula

rly true g iven that the Commi ssion is authorized under subsection 14.101(c) to consider the eff

ects of a proposed transac tion in a utilit y ’s “ra temaking p roceeding s.” Tex. Util. Code Ann. § 14.101(c ).

For all the re asons pre viously g iven, we ove rrule N ucor’ s third issue on appea l.

CONCLUSION Having overr

uled all three of Nucor ’s issues on appea l, we aff irm the judgme nt of the district court.

__________________________________________ David Pury ear , J ustice
Be fore J ustices Pury ear , Pemberton and Rose
Affir med Filed: Mar ch 15, 2012

43