Opinion ID: 2600461
Heading Depth: 3
Heading Rank: 1

Heading: Definition of Interfere with a Service or System

Text: {13} In their submissions before the PRC, both parties offered considerable testimony regarding Moongate's current capacity and ability to expand service to new customers. Although there is some disagreement regarding the precise capacity, the parties appear to agree that Moongate has some excess capacity, but will have to build additional facilities to accommodate the needs of the new customers currently seeking service in the disputed area. Doña Ana argues, in light of these facts, that there is no substantial evidence in the record that Moongate will have the capacity to serve future customers, and that the PRC therefore erred in finding that Doña Ana's service to those customers would result in unreasonable interference with Moongate's service or system. Resolution of this dispute depends on how the phrase unreasonably interfere with a service or system is interpreted. {14} The PRC appears to have adopted an interpretation presuming that all contiguous territory lies within a utility's service or system, and to have adopted a definition of contiguous that includes territory within one-half mile of a public utility's pipes or facilities. In support of this interpretation, the PRC notes that public utilities have a duty to offer service in their service area, and that utilities are permitted by statute to construct line extensions into contiguous territory without seeking approval from the PRC. Doña Ana offers three alternate interpretations of this language, and suggests that the interpretation adopted by the PRC is overly expansive. Doña Ana argues that service or system should be defined as encompassing either: (1) only a utility's existing customers and facilities; (2) a utility's existing customers and facilities and all customers who could be served without additional improvements; or (3) all customers who could be served at a reasonable cost in a reasonable time by the utility with additional improvements. {15} We first observe that the phrase unreasonably interfere with the service or system of a utility, while not wholly mysterious, does not lend itself well to judicial construction. Neither interfere nor service or system are defined by statute, and both are general enough terms to have a variety of meanings. [2] Doña Ana's own brief demonstrates this ambiguity by recognizing at least three possible meanings, all inconsistent to some degree with the interpretation adopted by the PRC. {16} Next, we note that the PRC has been granted policy-making authority in several areas. See NMSA 1978, §§ 62-6-4 through 62-6-26.1 (2005) (establishing the PRC and setting out rate-making powers, associated duties, and procedures). Section 62-9-1 grants the PRC the additional authority to resolve service area disputes between utilities and MDWCA's. If any public utility or mutual domestic water consumer association in constructing or extending its line, plant or system unreasonably interferes or is about to unreasonably interfere with the service or system of any other public utility or mutual domestic water consumer association rendering the same type of service, the commission. . . may . . . make an order and prescribe just and reasonable terms and conditions in harmony with the Public Utility Act [62-13-1 NMSA 1978] to provide for the construction, development and extension, without unnecessary duplication and economic waste. Section 62-9-1(A). The statute explicitly instructs the PRC to minimize duplication and economic waste through its regulations, and permits the PRC to prescribe just and reasonable terms to achieve that end. We have previously recognized that public utilities are regulated monopolies, pledging to serve the public without discrimination and exchanging the right to determine . . . whom it will serve, what it will charge, or how it will finance or invest for relative freedom from competition. Morningstar, 120 N.M. at 590, 904 P.2d at 39 (quoting Dickinson v. Maine Pub. Serv. Co., 223 A.2d 435, 438 (Me.1966)); see also NMSA 1978, § 62-3-1(B) (1967). The PRC is the entity given the responsibility for setting rates, regulating these utilities, and limiting competition in order to prevent duplication and waste. See §§ 62-6-4 through 62-6-26.1; § 62-9-1. In addition to the specific procedures set out by the Legislature, the PRC has been provided with a general policy goal to guide its decision-making. It is the declared policy of the state that the public interest, the interest of consumers and the interest of investors require the regulation and supervision of such public utilities to the end that reasonable and proper services shall be available at fair, just and reasonable rates, and to the end that capital and investment may be encouraged and attracted so as to provide for the construction, development and extension, without unnecessary duplication and economic waste, of proper plants and facilities for the rendition of service to the general public and to industry. Section 62-3-1(B). Thus, Section 62-9-1 is part of a comprehensive regulatory scheme granting the PRC the policy-making authority to plan and coordinate the activities of New Mexico public utilities, in a manner consistent with the Legislature's stated goals. {17} We conclude, based on these statutes, that the Legislature intended to delegate relatively broad policy-making authority to the PRC. Section 62-9-1 instructs the PRC to avoid duplication and economic waste and appears to assign the PRC the role of coordinating and planning expansion of water service in the state. We further observe that the PRC requires flexibility in carrying out this mandate. A detailed understanding of the operation of public utilities is required to determine intelligently whether a particular activity will interfere with the service or system of a public utility. As the agency responsible for the regulation of public utilities, or as its successor, the PRC has developed this expertise. Our deference to an agency is at its height when, as here, we are presented with an ambiguous statute, administered by an agency which has been granted relevant policy-making authority, and implicating the expertise of the agency. Our deference is not absolute, however, and we will nonetheless reject an agency's interpretation of an ambiguous statute if it appears unreasonable or inconsistent with legislative intent. {18} The PRC argues that its view of what may unreasonably interfere with the service or system of another service provider, including most activity within half a mile of a utility's existing facilities, is consistent with its statutory mandate to prevent duplication and economic waste. It appears reasonable, given its planning and coordination function, that the PRC include not only a public utility's physical plant and current customers in a service or system, but also any contiguous territory that is not receiving similar service from another utility. Section 62-9-1(A) states that a utility need not secure a certificate for an extension into territory contiguous to that already occupied by it and that is not receiving similar service from another utility, and both Moongate and the PRC note that a utility has a duty to offer service to customers in its service area. See NMSA 1978, § 62-8-2 (1941); Morningstar, 120 N.M. at 590, 904 P.2d at 39 (public utilities accept the duty to offer service and submit to other regulations in exchange for protection from competition). For planning purposes, the PRC may, therefore, include this contiguous territory in the service or system of the utility. The agency's definition of contiguous, which includes territory within one-half mile of a utility's pipes or facilities, appears neither arbitrary nor capricious because utilities have both a right and a duty to extend service to these areas. {19} Section 62-9-1 is somewhat ambiguous, and its interpretation requires both the PRC's technical expertise and its policy-making authority. We believe the Legislature intended the PRC to have broad discretion to regulate competing utilities and water providers in order to coordinate their activities and limit duplication and waste. The PRC's interpretation of interference with a service or system, which includes most encroachment by a utility or MDWCA within one-half mile of another utility's facilities, is consistent with the goals and purpose of Section 62-9-1. We conclude that it was properly adopted in this case. {20} We therefore conclude the PRC employed a reasonable standard when determining whether Doña Ana's planned construction would interfere unreasonably with Moongate's service or system. We next consider whether there is substantial evidence to support the PRC's conclusion that Doña Ana's service to new customers within the disputed area would result in unreasonable interference with Moongate's service or system.