Court Opinion

ID: 6471986
Source: CourtListenerOpinion
Date Created: 2022-06-26 14:21:09.0766+00
Date Added: 2024-06-11T15:53:50.518128
License: Public Domain

MINZNER, Justice, dissenting. I. 14. I respectfully dissent. I agree with Justice McKinnon that the decisive issue in this case is not Southern Union’s current status as a public utility. The Public Service Company of New Mexico (PNM) applied for a rate increase based on expenses that could involve a matter of public concern and the reasonableness of current utility rates. The primary issue should be whether it is “necessary and convenient,” NMSA 1978, § 62-6-4(A) (1993), for the Public Utility Commission (PUC) to evaluate those expenses in order to achieve a balance between ensuring “that reasonable and proper services shall be available at fair, just and reasonable rates, and ... that capital and investment may be encouraged and attracted____” NMSA 1978, § 62-3-l(B) (1967). I believe there are unresolved matters of fact which preclude a determination either that the PUC lacks subject matter jurisdiction or that the PUC can exercise its jurisdiction under the Act to consider the merits of this claim. II. 15. The Legislature has granted broad powers to the PUC in establishing and maintaining fair, just and reasonable rates. Section 62-6-4(A) (exclusive jurisdiction); Behles v. New Mexico Pub. Serv. Comm’n (In re Timberon Water Co.), 114 N.M. 154, 157, 836 P.2d 73, 76 (1992) (“[W]e must always keep in mind that ‘the Commission is vested with considerable discretion in determining the justness and reasonableness of utility rates.’”) (quoting Attorney Gen. v. New Mexico Pub. Serv. Comm’n, 101 N.M. 549, 553, 685 P.2d 957, 961 (1984)); Public Serv. Co. of N.M. v. New Mexico Envtl. Improvement Bd., 89 N.M. 223, 227, 549 P.2d 638, 642 (Ct.App.1976). The PUC must act to protect the interests of both ratepayers and investors. Behles, 114 N.M. at 158, 836 P.2d at 77 (“ ‘Our limited but vital role is to ensure that the end result of a rate order reasonably balances investor and ratepayer interests.’”) (quoting Jersey Central Power & Light Co. v. Federal Energy Reg. Comm’n, 810 F.2d 1168, 1192 (D.C.Cir.1987)). Finally, the PUC may do whatever is necessary and convenient to balance those interests and to achieve the purposes of the Public Utility Act. Section 62-6-4(A). 16. It is true that the PUC’s jurisdiction is limited to matters involving a public utility. Section 62-6-4(A). It is also true that Southern Union ceased to be a public utility under the Act upon its transfer of gas utility assets to PNM. See NMSA 1978, § 62-3-3(G) (1993) (defining “public utility”); see also In re Southern Union Co., New Mexico Pub. Serv. Comm’n No. 1891/1892, at 51 (Final Order December 12, 1984) (“Upon the granting of the abandonment of service by Southern Union, Southern Union is no longer a public utility and therefore our statutory authority over it ends.”). As a result, Southern Union is not subject to the reasonable burdens of the Act nor entitled to its reasonable benefits. 17. Nonetheless, the rate increase in this case was requested by a New Mexico public utility, PNM, as defined in the Act by the Legislature. Section 62-3-3(G). Further, the requested increase concerns a possible utility-related expense for which the ratepayers may have received a benefit pursuant to an acquisition over which the PUC has jurisdiction. See In re Southern Union Co., New Mexico Pub. Serv. Comm’n No. 1891/1892, at 62 (Final Order December 12, 1984) (“This Commission retains jurisdiction over this matter to the extent permitted by law to assure compliance with all of the terms and conditions of this Order.”) (emphasis added). 18. The Legislature has specifically required PUC approval of any acquisition of a public utility. NMSA 1978, § 62-6-12 (1989). Pursuant to this power and its power over fixing and adjusting the rates of a utility, the PUC ascertains a utility’s value by giving due consideration to the history and development of the property and business of the particular public utility, to the original cost thereof, to the cost of reproduction as a going concern, to the revenues, investment and expenses of the utility in this state and otherwise subject to the commission’s jurisdiction and to other elements of value and rate-making formulae and methods recognized by the laws of the land for rate-making purposes. NMSA 1978, § 62-6-14(A) (1983). 19. In the acquisition of a public utility, a purchase agreement could contain both matters which are private or individual in nature and terms which affect the ratepaying public. The purchase price is a term that could represent mixed interests. In determining the value of a utility for purposes of fixing a fair and reasonable rate base, the PUC “shall give due consideration ... to the original cost” of a utility. Section 62-6-14; Behles, 114 N.M. at 157 n. 1, 836 P.2d at 76 n. 1. As a result, the purchase price is a potential matter of public concern. Nonetheless, the PUC “is not limited to any particular method of valuation in determining the rate base.” Behles, 114 N.M. at 157 n. 1, 836 P.2d at 76 n. 1. If the PUC determines that the “original cost” does not accurately represent the value of the utility for ratemaking purposes or would not assist in fixing a reasonable rate, the PUC is free to rely on other factors. See Hobbs Gas Co. v. New Mexico Pub. Serv. Comm’n, 94 N.M. 731, 733-34, 616 P.2d 1116, 1118-19 (1980) (discussing the factors available to the PUC in determining the value of a utility for purposes of ratemaking). 20. In PNM’s acquisition of the utility from Southern Union, the excluded obligations term and the term obligating PNM to file regulatory applications for excluded obligations may have affected the purchase price. Considering the difficult and protracted nature of the acquisition agreement, Southern Union may not have agreed to the ultimate purchase price and the excluded obligations without the provision obligating PNM to file regulatory applications specifically for recovering costs incurred from the excluded obligations. It is possible that the PUC contemplated this in approving the acquisition. Further, with respect to the setting of rate's charged by PNM, it is possible that the PUC, in balancing the interests of the consumers and the ratepayers, might rely on the purchase price in determining the value of the utility. Finally, it is possible that this particular expense, liability for take- or-pay claims, is utility-related and generally within the jurisdiction of the PUC. In fact, PNM’s obligation to file for a rate increase was specifically limited to those expenses Southern Union “would have sought to recover” if it were still a public utility. 21. PNM’s allegations, if true, would provide support for an exercise of jurisdiction by the PUC. Assuming PNM’s lack of obligation for Southern Union’s undetermined future liabilities resulted in PNM paying less to acquire the utility, and assuming the lower acquisition cost resulted in a lower rate base, the application would be based on utility-related expenses from which the ratepayers derived a benefit. The application then would lie squarely within the PUC’s jurisdiction over utility rates. NMSA 1978, § 62-8-7 (1991) (discussing the procedure for rate changes); Section 62-6-4(A). However, because the PUC may determine the reasonableness of utility rates through a variety of means, it is also possible that this specific contractual term is purely a matter of private agreement and that it did not affect the purchase price of the utility or otherwise concern the ratepaying public. See Southwestern Pub. Serv. Co. v. Artesia Alfalfa Growers’ Ass’n, 67 N.M. 108, 117, 353 P.2d 62, 68 (1960) (“The power of the commission does not extend to acts of a utility not affecting its public duties; its jurisdiction is limited to matters and controversies wherein the rights of a utility and the public are involved.”) (internal quotation and citation omitted). As a result, it is possible that the term of the acquisition contract providing the-basis for this application has no relevance to PNM’s rates as set by the PUC. See Artesia Alfalfa Growers’ Ass’n, 67 N.M. at 118, 353 P.2d at 69 (“In this connection the question is posed as to whether the matter of dispute between appellant and appellee is of a private nature or a matter of public concern”). 22. The above discussion of purchase price does not represent the exclusive avenue of finding a valid exercise of jurisdiction by the PUC. Rather, it is meant to serve as an illustration of the type of factual inquiry which is required for a determination by the PUC of subject matter jurisdiction, considering the breadth of power granted by the Legislature to the PUC in its ratemaking function. III. 23. This claim raises factual issues which must be resolved before determining whether the PUC has subject matter jurisdiction over this action. In a motion to dismiss for lack of subject matter jurisdiction, the Attorney General stated, “There is absolutely no presentation of a utility expense, obligation or liability of GCNM-PNM that would justify a rate order by the Commission____” The Attorney General’s motion to dismiss could be construed as a challenge to the validity of the jurisdictional facts alleged by PNM. “[I]f the Rule 12(b)(1) motion is a factual attack on the jurisdictional allegations of the complaint — i.e., the truth of the jurisdictional facts alleged by the plaintiff is challenged— the court may receive any competent evidence, such as affidavits, deposition testimony and the like, in order to determine the factual dispute.” 2A James Wm. Moore et al., Moore’s Federal Practice ¶ 12.07[2.-1], at 12-52 (2d ed.1996). 24. Therefore, I would remand to the PUC for consideration of evidence in order to determine whether the PUC, under these facts, has jurisdiction under the Public Utility Act. Specifically, I believe the PUC should resolve the relevant factual issues relating to jurisdiction and determine whether the consideration of this rate increase application is necessary and convenient in the exercise of its jurisdiction over rates, acquisitions, and other matters included in the Public Utility Act. If, under this standard, the PUC determines that it has subject matter jurisdiction under the Act, it can then address the merits of the case and determine whether the requested rate increase would be fair, just, and reasonable. If the PUC determines that it does not have subject matter jurisdiction, it should make sufficient findings of fact and conclusions of law to permit effective appellate review.