Opinion ID: 2600461
Heading Depth: 3
Heading Rank: 2

Heading: Service to customers in disputed area

Text: {21} Doña Ana argues that the record does not contain substantial evidence showing that its service to new customers in the disputed area would interfere with Moongate's service or system. After reviewing the testimony of both parties, the Hearing Examiner concluded that Moongate and its current customers would be harmed if Doña Ana were to serve new customers in the area. Moongate would lose the ability to spread fixed costs over a larger customer base and the benefits of modernization, lose developer contributions to the construction of reserve capacity, lose the flexibility provided by multiple tanks and wells, and experience new problems with maintenance and repairs that are inherent to overlapping lines with other utilities. In support of these conclusions, Moongate offered testimony from its Vice President, Jeff Gariano, regarding the utility's planning and operations process, and the potential impact of Doña Ana's service in the area to Moongate and its customers. Gariano explained that Moongate's development plans were based on the assumption that they would be the only water service provider in the area and that Moongate's current facilities included excess capacity designed to accommodate expansion over time. If Doña Ana were permitted to serve the same area, this excess capacity would be stranded. Gariano testified that Moongate had previously experienced maintenance problems where portions of their system overlapped with another water provider's systems. He anticipated similar problems arising from Doña Ana's construction because there would be over three miles of duplication in the water lines of the two systems. Moongate also offered the testimony of Dr. Thomas McGuckin, an economist at New Mexico State University in Las Cruces. Dr. McGuckin testified that certain economies of scale could only be achieved if all of the customers in the area were served by a single provider. {22} Doña Ana argues that Moongate's testimony is self-serving and general, and should therefore not be considered substantial evidence. Because Moongate has a stated policy of constructing new facilities only to meet the needs of new customers, Doña Ana argues that there is no excess capacity in the system and no other benefits for existing customers. Doña Ana's service to new customers therefore cannot interfere with Moongate's system because it is only limiting Moongate's expansion, not interfering with its current system. Doña Ana also calls our attention to Dr. McGuckin's admission that he had not specifically determined whether additional customers would benefit Moongate's system. {23} [A]lthough the evidence may support inconsistent findings, we will not disturb the agency's finding if supported by substantial evidence on the record as a whole. See Herman, 111 N.M. at 552, 807 P.2d at 736. The testimony submitted by Moongate was detailed enough to permit a reasonable person to conclude that Doña Ana's planned service to future customers in the disputed area would interfere with Moongate's system. Moongate's evidence supports the conclusion that Doña Ana's service would interfere with Moongate's physical system, its planning to provide future service, and its ability to realize economies of scale for its customers. We have found no indication in the record that Moongate's evidence was so devoid of factual basis or support, that it should not be viewed as substantial evidence. The PRC could consider the basic principle of economies of scale when making its decision. Those principles are specially relevant because the PRC is instructed to avoid economic waste. The admission that some of Dr. McGuckin's testimony was based on general principles, rather than a specific examination of Moongate's current system, does not undermine this testimony, which suggests that service can be most efficiently provided if a single provider is operating in the area, driving down per person costs over time. Further, Moongate did submit evidence that it built excess capacity into its existing lines in anticipation of future expansion. Having already determined that the PRC's definition of service or system including future expansion within one-half mile is reasonable, we conclude that evidence that encroachment on Moongate's service area will interfere with Moongate's planned expansion of service is substantial evidence of interference. Thus, the PRC's decision was supported by substantial evidence. {24} Doña Ana also argues that the PRC is estopped from limiting its rights to serve the disputed area because Doña Ana has obtained water rights to be used for that purpose. We are not persuaded. The Office of the State Engineer did not have the jurisdiction to determine the service area dispute involved in this appeal. Compare NMSA 1978, §§ 72-1-1 through 72-1-12 (2005) (water rights in general), and NMSA 1978, §§ 72-2-1 through 72-2-18 (2003) (setting out the rules governing the duties of the state engineer), with § 62-9-1 (authorizing the PRC to resolve disputes between competing water utilities or MDWCAs). In light of the language of Section 62-9-1, we conclude that the State Engineer's ruling regarding water rights did not preclude the PRC's order under Section 62-9-1.