Opinion ID: 2632475
Heading Depth: 3
Heading Rank: 1

Heading: Proprietary or general?

Text: ¶ 18 The ratepayers argued that City Light's GHG offset contracts serve a general government function, not a proprietary function, and therefore are not impliedly authorized by the utility's enabling statute, RCW 35.92.050. This court has said that [t]he principal test in distinguishing governmental functions from proprietary functions is whether the act performed is for the common good of all, or whether it is for the special benefit or profit of the corporate entity. Okeson I, 150 Wash.2d at 550, 78 P.3d 1279. Here, the ratepayers argue that City Light's offset contracts provide no special benefit to the utility. Cleaning up the utility's own emissions is an inherent part of the utility's operations, and therefore serves a utility purpose, but cleaning up other parties' emissions in order to combat global warming for the betterment of everyone everywhere serves a general governmental purpose and is not for the special benefit of the utility or its ratepayers. Reply Br. of Appellants at 2. ¶ 19 Seattle responded that buying greenhouse gas offsets from a third party is the equivalent of reducing emissions from a utility's own operations. Br. of Resp't at 36. Seattle also noted that the offset contracts secure the GHG offset credit only for Seattle City Light, suggesting that such credit is a special benefit for the utility. Id. at 39. The city also cited Taxpayers of Tacoma for the proposition that all utility operations are proprietary in nature. In that case we said that [a]ctions taken pursuant to RCW 35.92.050 serve a business, proprietary function, rather than a governmental function. Taxpayers of Tacoma, 108 Wash.2d at 694, 743 P.2d 793. Similarly in Hite, 112 Wash.2d at 459, 772 P.2d 481, we said, It is clear that in the production and sale of electricity, a municipal corporation acts in its proprietary capacity. See also Okeson I, 150 Wash.2d at 550, 78 P.3d 1279 (The electric utility operates for the benefit of its customers, not the general public.). ¶ 20 Distinguishing proprietary from government functions was a key issue in Okeson I, the first phase of this case. There, we held that providing street lights is a general government function rather than a proprietary utility function because, unlike furnishing electricity, it is not for the `comfort and use' of individual utility customers who can control their own usage but instead serves the general public. Okeson I, 150 Wash.2d at 550, 78 P.3d 1279 (quoting in part Twitchell v. City of Spokane, 55 Wash. 86, 89, 104 P. 150 (1909)). We reached that conclusion although in 2002, before we issued the Okeson I decision, the legislature had amended RCW 35.92.050 to specifically authorize cities to operate streetlights as part of their rate-based electric utilities. Id. at 547, 78 P.3d 1279 (quoting Laws of 2002, ch. 102, § 1). [4] Thus, in light of Okeson I, we cannot say todayas we did in Taxpayers of Tacoma in 1987that all actions taken pursuant to RCW 35.92.050 are proprietary. Rather, an electric utility's action is proprietary only if: (a) it is part of the production and sale of electricity and (b) it is for the `comfort and use' of individual customers paying only for their own usage, not for general public use. Okeson I, 150 Wash.2d at 550, 78 P.3d 1279. ¶ 21 Applying the Okeson I standard to the current phase of the case, we conclude that City Light's GHG offset contracts are not proprietary because they are not part of the services for which individual customers are billed. Like the streetlights at issue in Okeson I, the offset contracts are charged to City Light customers regardless of how much electricity they use. In other words, there is no relationship between an individual's power use and what that individual pays through City Light rates for the GHG emission reduction program. While it is true that the program may be viewed as a legitimate part of the utility's production of electricity because its purpose is to prevent City Light's production from causing a net increase in global greenhouse gas emissions, that is not enough to make the program a proprietary function. ¶ 22 Under Okeson I, there must also be a connection between the amount paid and the benefit received by the ratepayer. The dissent contends that the requisite connection is met because City Light's ratepayers benefit specially from knowing the electricity they consume is not contributing to anthropogenic climate change. Dissent at 566. We know of no authority for the proposition that a function performed by a public utility is to be viewed as a proprietary function simply because some of the utility's ratepayers feel good about a particular function a utility is performing. We also disagree with the dissent's assertion that City Light's ratepayers benefit because the offset program allows City Light to operate more efficiently and saves the ratepayers money. Dissent at 566, 566. While, as we have indicated, there may be legitimate reasons for a government agency to encourage a worldwide reduction in greenhouse gas emissions, it is a stretch to say that City Light's distribution of money to other entities that have reduced their emissions allows City Light to produce electricity more efficiently and provide that electricity to its customers at lower rates. The record simply does not support this assertion. In sum, the contracts are of a general government nature.