Court Opinion

ID: 7395078
Source: CourtListenerOpinion
Date Created: 2022-07-29 01:11:41.491765+00
Date Added: 2024-06-11T16:21:47.131990
License: Public Domain

TYSON, Judge, dissenting.
The majority's opinion addresses the issues of whether the regulation violates the Commerce Clause of the United States Constitution and Chapter 62 of the North Carolina General Statutes and affirms the Commission's order without determining the effect of the regulation on interstate commerce. The record before us is insufficient to make that determination. This case should be remanded to the Commission. I respectfully dissent.
I. The Commerce Clause
Appellants contend the scope of the Commission's jurisdiction over wholesale power contracts is an impermissible burden on interstate commerce in violation of the Commerce *173Clause of the United States Constitution.
Article I, Section 8, Clause 3 of the United States Constitution confers on Congress the power to "regulate Commerce . . . among the several States[.]" The Commerce Clause "has long been seen as a limitation on state regulatory powers, as well as an affirmative grant of congressional authority." Fulton Corp. v. Faulkner, 516 U.S. 325, 331, 116 S.Ct. 848, 133 L.Ed.2d 796, 804 (1996) (citation omitted). The United States Supreme Court has "identified two modes of analysis to evaluate state statutes under the Commerce Clause. The Court will consider the statute invalid without further inquiry when it `directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests.'" Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 762-63, 115 S.Ct. 1745, 131 L.Ed.2d 820, 832-33 (1995) (quoting Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552, 559 (1986)). Where a state statute regulates evenhandedly and only indirectly effects interstate commerce, "it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Pike v. Bruce Church, 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174, 178 (1970) (citation omitted). In either case, "the critical consideration is the overall effect of the statute on both local and interstate activity." Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552, 560 (1986) (emphasis supplied).
It is established beyond peradventure that "legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality. . . ." A court may invalidate legislation enacted under the Commerce Clause only if it is clear that there is no rational basis for a congressional finding that the regulated activity affects interstate commerce, or that there is no reasonable connection between the regulatory means selected and the asserted ends.
Hodel v. Indiana, 452 U.S. 314, 323-24, 101 S.Ct. 2376, 69 L.Ed.2d 40, 50 (1981) (internal citations and quotations omitted).
The production and sale of electric energy is an article of trade within the bounds of Commerce Clause protection. See New England Power Co. v. New Hampshire, 455 U.S. 331, 102 S.Ct. 1096, 71 L.Ed.2d 188 (1982) (applying a Commerce Clause analysis to a regulation restricting the transportation of privately produced electricity in interstate commerce). "A State is without power to prevent privately owned articles of trade from being shipped and sold in interstate commerce on the ground that they are required to satisfy local demands or because they are needed by the people of the State." Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1, 10-11, 49 S.Ct. 1, 73 L.Ed. 147, 153 (1928) (citations omitted).
Regulatory Condition 21 requires that an utility shall not enter into a contract for the wholesale purchase of electric energy at native load capacity without first giving the Commission and the Public Staff written notice twenty days prior to execution of the contract. The Commission's justification for the prior submission requirement was to "provide a mechanism through which NCUC meaningfully could enforce the requirement `that CP & L's retail native load customers receive priority with respect to, and the benefits from, CP & L's existing generation and that CP & L's wholesale activities not disadvantage its retail ratepayers from either a quality of service or rate perspective.'" State ex. rel. Utils. Comm'n v. Carolina Power & Light Co., 359 N.C. 516, 519, 614 S.E.2d 281, 284 (2005). The Commission concluded it has the authority "to take appropriate action if necessary to secure and protect reliable service to retail customers in North Carolina." The Commission failed to provide any guidelines by which it would assess the reasonableness of the agreements over which it has claimed jurisdiction. The Commission has not yet defined what constitutes "appropriate action," or to set forth the factors it will use to determine whether the proposed "action" is "appropriate," or what remedial measures the Commission may assert.
*174Without the Commission setting forth any guidelines it will follow in reviewing a wholesale contract, this Court is unable to determine the local and overall effects or benefits arising from the regulation to conduct a meaningful analysis under the Commerce Clause. Brown-Forman Distillers Corp., 476 U.S. at 579, 106 S.Ct. at 2084, 90 L.Ed.2d at 560 (the court must consider the overall effect of the statute on local and interstate activity). This Court cannot determine whether the burden on interstate commerce arising from the regulation "is clearly excessive" in relation to the local benefits it affords. Pike, 397 U.S. at 142, 90 S.Ct. at 847, 25 L.Ed.2d at 178.
The Commission has not issued any guidance to provide notice to or assist the parties in negotiating terms or provisions of contracts in advance of its required twenty-day prior submission of proposals. In State ex. rel. Util. Comm'n v. Carolina Water Service, Inc., our Supreme Court stated:
This Court has stressed in the past how important it is that the Commission "enter final orders that are sufficient in detail to enable this Court on appeal to determine the controverted issues . . . Failure to include all necessary findings of fact and details is an error of law and a basis for remand under N.C.G.S. § 62-94(b)(4) because it frustrates appellate review."
335 N.C. 493, 501-02, 439 S.E.2d 127, 132 (1994) (emphasis supplied) (quoting State ex rel. Utilities Comm. v. AT & T Communications, 321 N.C. 586, 588, 364 S.E.2d 386, 387 (1988)). I vote to remand this issue to the Commission for findings of fact and to develop a record setting forth the factors and guidelines the Commission will employ once it receives a proposed wholesale power contract and any constitutionally permissible "appropriate action" it may take.
II. Chapter 62
Appellants next contend that Chapter 62 of the North Carolina General Statutes does not authorize the Commission to require the submission of contracts with wholesale purchasers for regulation prior to execution. Our Supreme Court held that the Commission's jurisdiction is not preempted by the Supremacy Clause of the United States Constitution. U.S. Const. art. VI, cl. 2.; State ex. rel. Utils. Comm'n v. Carolina Power & Light Co., 359 N.C. at 529, 614 S.E.2d at 290.
The General Assembly has delegated to the Commission the "authority to supervise and control the public utilities of the State as may be necessary to carry out the laws providing for their regulation. . . ." N.C. Gen.Stat. § 62-30 (2003). The Commission is also "vested with all power necessary to require and compel any public utility to provide and furnish to the citizens of this State reasonable service of the kind it undertakes to furnish and fix and regulate the reasonable rates and charges to be made for such service." N.C. Gen.Stat. § 62-32(b) (2003).
The reason for strict regulation of public utilities is that they are either monopolies by nature or given the security of monopolistic authority for better service to the public. The public is best served in many circumstances where destructive competition has been removed and the utility is a regulated monopoly.
Utilities Comm. v. Coach and Utilities Comm. v. Greyhound Corp., 260 N.C. 43, 51, 132 S.E.2d 249, 254 (1963). Retail customers totally depend upon their franchised electric utility for reliable electric service. As such, the Commission has the duty to set reasonable rates and the authority to compel utility companies to render adequate and reliable service. Utilities Comm. v. Edmisten, 294 N.C. 598, 605, 242 S.E.2d 862, 867 (1978) (citation omitted). The Commission has asserted:
it has jurisdiction and authority under State law to review, before they are signed, proposed wholesale contracts by a regulated North Carolina public utility granting native load priority to be supplied from the same plant as retail ratepayers and to take appropriate action if necessary to secure and protect reliable service to retail customers in North Carolina.
The Commission presented no indication of or guidance to the parties through rule making or regulation how it intends to apply its asserted statutory authority to review a proposed interstate wholesale contract prior to its execution by the parties. The Commission *175has not set forth the options or powers it asserts to have upon reviewing these contracts or remedies it may assert, other than the power to "take appropriate action."
Because the Commission failed to provide the parties any procedure or guidelines to show what the Commission will or will not do in light of a proposed contract, this Court is unable on this record to determine whether the regulation at issue is within the Commission's statutory authority under Chapter 62.
In its order initiating the investigation and requesting comments, the Commission noted the "sharp disagreement among the parties" regarding the extent of the Commission's jurisdiction. The Commission requested the parties file briefs arguing their positions on the extent of the Commission's jurisdiction over regulated utilities signing wholesale interstate contracts at native load priority. The Commission also requested the parties submit a list of issues appropriate for further comment for review by the Commission.
As stated in the brief submitted by the North Carolina Attorney General, "the Commission has not failed to give the utilities specifics about how it intends to review and assess a grant of native load priority and its possible effects on retail customers. It simply has not gotten to that stage in this preeding." Because the Commission has not "gotten to that stage in this proceeding," this Court is unable to review any guidelines or procedures the Commission may employ in reviewing a wholesale contract to determine the effect the Commission's actions may have on interstate commerce, or whether the regulation as applied on any "appropriate action" taken is an impermissible burden on interstate commerce.
Without guidance the utilities may rely upon in negotiating with potential interstate purchasers, public electric utilities doing business in North Carolina are left at a competitive disadvantage to electric utilities of other states. Without knowing the guidelines and procedures the Commission will employ in reviewing potential wholesale energy contracts, we are unable on this record to decide either the effects or burdens on interstate commerce or whether the Commission's prior review requirement or asserted "appropriate action" rests within its statutory powers.
I vote to remand this issue to the Commission for findings of fact and to develop a record setting forth the guidelines and procedures the Commission intends to employ upon the receipt and review of potential wholesale energy contracts and the nature and extent of the constitutionally permissible "appropriate action" it may take.
III. Conclusion
Without any guidelines or procedures the Commission intends to employ in reviewing a contract or the "appropriate action" it may take, this Court is unable to address the effect of the Commission's action on interstate commerce or to determine whether the Commission has acted within its statutory powers.
While the "purpose" of the prior review regulation may be laudable, our analysis must be on the "effect" on interstate commerce of the Commission's actions and whether the Commission's actions are permitted under its statutory powers. I agree with the State Attorney General's argument that the jurisdictional and preemption issues have been settled. This case should be remanded to the Commission for findings of fact and for developing a record consistent with the constitutional limits of the Commerce Clause, United States Constitution, Article I, Section 8, Clause 3, and its statutory powers under North Carolina General Statutes, Chapter 62. The attempt by the majority's opinion to adjudicate and affirm these issues in the absence of an adequate record and absence of the required Commerce Clause effects analysis is error. I respectfully dissent.