Court Opinion

ID: 9770217
Source: CourtListenerOpinion
Date Created: 2023-08-29 15:54:37.587262+00
Date Added: 2024-06-11T07:31:15.826592
License: Public Domain

MAUZY, Justice,
concurring and dissenting.
This utility case presents two issues involving the respective burdens of shareholders and ratepayers. In disposing of both issues, the majority heeds the complaints of the utility company, but fails to recognize the burdens borne by the ratepayers. I dissent from part II of the majority opinion, and concur only in the result of part III.
As to the first issue, I agree with Justice Gonzalez that Rule 23.66(e) prohibits a utility from recovering purchased power payments in excess of the utility’s avoided cost. Nothing in either the language or the history of that rule suggests that its terms are inapplicable to negotiated contracts. Certainly, a utility may contract for a rate which is lower than its incremental cost; but the governing federal statute explicitly prohibits the adoption of a rate which exceeds the utility’s incremental cost. 16 U.S.C. § 824a-3(b)(1988). Thus, Rule 23.66(e)(2) should be read to mean exactly what it says: that a utility’s purchase rate “shall not exceed avoided cost.” See American Paper Inst., Inc. v. American Elec. Power Serv. Corp., 461 U.S. 402, 416, 103 S.Ct. 1921, 1930, 76 L.Ed.2d 22, 35 (1983) (“[A] qualifying facility and a utility may negotiate a contract setting a price that is lower than a full avoided cost rate.”) (emphasis added).
As to the allocation of proceeds from asset sales, I agree that the Commission should have considered factors other than the relative contributions to depreciation. I would emphasize, however, that the Commission’s discretion in this context is sharply limited. By shouldering the main financial burdens associated with utilities, and by assuming the risk of loss, ratepayers establish valid interests in utility assets. Those interests must be taken into account whenever such assets are sold; any failure to do so will necessarily rise to an abuse of discretion.