Justia Utilities Law Opinion Summaries

A public utility owned by a municipality owned poles used for distributing electric power. Other companies, such as telephone and cable providers, attached their equipment to these poles under agreements with the utility. In 1984, one such agreement allowed a cable company’s predecessor to attach equipment in exchange for an annual fee, with an escalator clause for potential increases. The contract required both parties to comply with all applicable laws that affected their rights and obligations. Over time, the cable company (later known as Spectrum) paid increasing rates, while another company (AT&T) continued to pay the original rate. After changes to state law in 2005 prohibited discrimination in pole-attachment rates and capped those rates at a federal maximum, the utility began invoicing both companies at the higher rate. Spectrum paid the higher invoices, but AT&T continued to pay the older, lower rate.Legal disputes ensued. Spectrum sued the utility, arguing the utility had breached the contract and violated statutory requirements by charging discriminatory rates. After initial proceedings before the Public Utility Commission and the trial court, the Third Court of Appeals held that the utility had not violated the statute because it had invoiced both companies at the same rate, and the Thirteenth Court of Appeals later ruled that the contract did not incorporate new statutory requirements arising after the agreement’s formation.The Supreme Court of Texas reviewed the case. It determined that the parties’ contract, by its express language, incorporated future changes in law affecting the parties’ rights and obligations. The court held that the relevant statutory provisions applied to the agreement and that Spectrum could pursue its breach-of-contract claim based on the utility’s alleged failure to comply with these laws. The Supreme Court of Texas reversed the judgment of the court of appeals and remanded the case to the trial court for further proceedings. View "SPECTRUM GULF COAST, LLC v. CITY OF SAN ANTONIO" on Justia Law

A group of utility companies operating nuclear power plants in Maine, Connecticut, and Massachusetts entered into contracts with the Department of Energy (DOE) requiring DOE to dispose of their spent nuclear fuel (SNF) in exchange for fees paid into a federal fund. DOE failed to meet its obligations, resulting in the utilities retaining and storing SNF on-site beyond their planned plant decommissioning. To ensure funds for safe decommissioning and continued SNF storage, the utilities established nuclear decommissioning trusts (NDTs), funded by electricity ratepayers and managed according to federal regulations. These trusts generated significant investment gains, which were used to pay for ongoing SNF storage expenses.Previously, the United States Court of Federal Claims and the United States Court of Appeals for the Federal Circuit found DOE in partial, ongoing breach of the contracts, awarding damages to the utilities for costs incurred due to the breach. In the current claim period (2017–2021), the utilities sought reimbursement for $145 million in SNF storage costs. DOE conceded liability but argued that the investment gains from the NDTs should be credited against damages, effectively reducing its liability to zero. The Court of Federal Claims rejected this argument, granting summary judgment to the utilities and entering judgment for the full $145 million, subject to appeal.The United States Court of Appeals for the Federal Circuit reviewed the Court of Federal Claims’ grant of summary judgment de novo. It held that the investment gains from the NDTs are not “mitigation” of damages and cannot be set off against the utilities’ breach-induced expenses, because the gains did not reduce or avoid losses caused by DOE’s breach and were not directly related to the breach. The court affirmed the judgment, requiring DOE to reimburse the utilities for their SNF storage costs without offset for NDT investment earnings. View "CONNECTICUT YANKEE ATOMIC POWER CO. v. US" on Justia Law

During Winter Storm Uri in February 2021, El Paso Electric Company (EPE) relied on the Palo Verde Nuclear Generating Station Unit 3 (PV3) to supply uninterrupted electricity to its New Mexico customers amid extreme weather and soaring natural gas prices. EPE used a Commission-approved proxy price formula, based on natural gas market index prices, to calculate the incremental costs associated with PV3-generated energy during the storm. The City of Las Cruces challenged EPE’s entitlement to recover these increased costs at the proxy price rate, focusing on whether the proxy price mechanism was appropriately applied.EPE sought a variance from the New Mexico Public Regulation Commission (NMPRC) to amortize the extraordinary cost increases over twelve months, which was not contested. Instead, intervenors raised legal objections to the use of the PV3 proxy price. The NMPRC conducted administrative proceedings, during which it found that the proxy price formula established in prior cases—including the 2009 Credit Suisse Agreement—remained valid and had been reaffirmed in subsequent orders. The Commission determined that PV3 was the most cost-effective resource during the storm and that EPE’s use of the proxy pricing formula was appropriate. The Commission’s final orders authorized EPE to recover the costs for PV3 energy based on the proxy price.The Supreme Court of the State of New Mexico reviewed the Commission’s orders. It adopted a highly deferential standard to the NMPRC’s interpretation of its own prior orders and found the Commission’s actions reasonable, supported by substantial evidence, and not arbitrary or capricious. The Court held that the City had not demonstrated that EPE’s use of PV3 at the proxy price or the Commission’s orders were unlawful or unreasonable, and it affirmed the Commission’s orders in full. View "City of Las Cruces v. Public Regulation Commission" on Justia Law

In May 2023, law enforcement officers in North Dakota responded to a report of gunshots fired into electrical equipment at a substation owned by two power cooperatives. Near the scene, officers searched a car and found a gun case and medication labeled with Cameron Smith’s name. A tow truck employee identified Smith as the driver and indicated he had dropped Smith off at a nearby hotel. Officers located Smith at the hotel, detained him, and obtained surveillance footage showing him with duffel bags later found in a dumpster. The bags contained firearms and ammunition matching shell casings at the substation. Officers obtained warrants to test the bags for DNA and to search Smith’s residence and devices. Smith was charged with destruction of an energy facility in North Dakota and later in South Dakota for a similar incident.The United States District Court for the District of North Dakota denied Smith’s motion to suppress evidence, ruling that the evidence would have been inevitably discovered even absent the challenged searches. Smith then entered a conditional guilty plea, reserving his right to appeal the suppression ruling. At sentencing, the district court applied a 12-level upward departure under the sentencing guidelines and imposed consecutive sentences totaling 300 months, plus over $2 million in restitution.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the denial of Smith’s motion to suppress, finding that the modified warrant affidavit supported probable cause and that the evidence was admissible under the inevitable discovery doctrine. The court also concluded that Smith’s appeal waiver barred his challenge to the restitution order. However, the appellate court found procedural error in the calculation of the sentencing guideline range, holding that the evidence did not support a finding that Smith’s motive was to intimidate or coerce a civilian population as required for the sentencing departure. The court vacated the sentence and remanded for resentencing. View "United States v. Smith" on Justia Law

A California corporation that manufactures medical devices sought to connect two properties it owns, separated by a public street, into a single microgrid using its own private equipment. The microgrid would supplement its energy needs by drawing power from the local regulated utility when necessary. The company claimed it had obtained local approvals and that its microgrid complied with Public Utilities Code section 218, which defines when an entity is not considered a regulated "electrical corporation." However, Southern California Edison (SCE) declined to support the company’s plan, citing concerns about safety and operational control, and asserting that it had discretion to deny facility modifications or connections that could affect its distribution system.The California Public Utilities Commission (PUC) initiated a rulemaking process to develop a policy framework for microgrids, as mandated by Senate Bill No. 1339. In the fifth phase of this process, the PUC adopted tariffs for multi-property microgrids proposed by investor-owned utilities but declined to adopt the company’s proposed changes to SCE’s tariff rules. The PUC found that the company’s proposals could allow an unregulated entity to compel changes to, or control, regulated utility infrastructure, potentially compromising safety and reliability. The company’s application for rehearing was denied, with the PUC reiterating that the proposed rule changes conflicted with statutory requirements, including sections 218, 399.2, and 451.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the PUC’s decisions. The court held that the PUC had not abused its discretion, misinterpreted the statutes, or failed to proceed as required by law. It found that the PUC’s decisions were consistent with applicable law and legislative intent, particularly the priority given to safety and the requirement that regulated utilities maintain control over their distribution systems. The court affirmed the PUC’s decisions. View "Applied Medical Resources Corp. v. Public Utilities Commission" on Justia Law

A town served by a privately owned water utility experienced significant rate increases after the utility was sold to an investment fund. Responding to community concerns, the town decided to pursue public ownership of the water system. In 2015, it adopted two resolutions of necessity to begin eminent domain proceedings, aiming to take over the utility’s assets both within and just outside its boundaries. The utility, now owned by a new company, did not challenge the procedural validity of the resolutions but argued that the requirements of public necessity and more necessary public use, as mandated by California’s Eminent Domain Law, were not satisfied.The San Bernardino County Superior Court, presiding over a bench trial, determined that special statutory rules for takings of privately owned public utilities applied. The court found that, in this context, the utility could rebut the presumption of necessity by a preponderance of the evidence, rather than being limited to showing gross abuse of discretion by the public entity. After trial, the court found in favor of the utility, concluding that the town had not established the requisite elements to justify the taking. The Fourth Appellate District, Division Two, reversed, holding that the trial court should have reviewed the town’s findings only for gross abuse of discretion and had failed to give proper deference to the town’s determinations.The Supreme Court of California reviewed the matter and held that, under the 1992 amendments to the Eminent Domain Law, a public entity’s resolution of necessity for taking privately owned utility property creates only a rebuttable presumption, not a conclusive one. Therefore, the trial court is to exercise independent judgment as the trier of fact, determining whether the utility owner has rebutted the presumption by a preponderance of the evidence. The Supreme Court reversed the Court of Appeal’s judgment and remanded for further proceedings. View "Town of Apple Valley v. Apple Valley Ranchos Water" on Justia Law

Three individuals filed a class action lawsuit against San Francisco, challenging new water rates adopted by the city’s Public Utility Commission in May 2023. The plaintiffs alleged that the new rates violated Proposition 218 of the California Constitution by including costs unrelated to the actual provision of water service, resulting in charges that exceeded the cost of service. Before adopting the new rates, the city provided required notice to ratepayers, including information about a 120-day period for legal challenges under the applicable validation statutes. The plaintiffs sought a refund, declaratory and equitable relief, and a writ of mandate.After the class action was filed, the City litigated the case for over a year. It participated in discovery, case management, and even moved for summary judgment, without initially arguing that the suit was procedurally improper. Eventually, the City moved for judgment on the pleadings, arguing that plaintiffs’ action was subject to the validation statutes, specifically Government Code section 53759 and Code of Civil Procedure sections 860 et seq., which require reverse validation actions attacking agency matters like water rates to be brought within 120 days and with specific notice by publication to all interested parties. The trial court (San Francisco County Superior Court) agreed with the City, finding the statutes mandatory and jurisdictional, and dismissed the case for failure to comply with the procedural requirements, including timely filing and appropriate notice.On appeal, the California Court of Appeal, First Appellate District, Division Two, reviewed the judgment de novo. The court held that compliance with the validation statutes was mandatory and jurisdictional. Plaintiffs’ failure to file a proper reverse validation action and to provide notice by publication deprived the court of jurisdiction. The court rejected arguments that the City had waived these requirements or that good cause existed for noncompliance. The judgment in favor of the City was affirmed. View "Toy v. City & County of S.F." on Justia Law

Six wind farms located in Minnesota, North Dakota, South Dakota, and Iowa, all subsidiaries of Avangrid Renewables, sought certification from the Public Utilities Commission of Ohio (PUCO) to be recognized as eligible Ohio renewable-energy-resource-generating facilities. Such certification would allow these out-of-state wind farms to sell renewable energy in Ohio. Carbon Solutions Group, L.L.C. (CSG), representing Ohio-based renewable energy interests, opposed the applications, arguing that the applicants failed to demonstrate their energy was physically deliverable into Ohio as required by state law.PUCO conducted a three-day evidentiary hearing in December 2022, during which staff, the applicants, CSG, and other interested parties presented testimony and evidence. The central issue was whether the energy generated by these noncontiguous out-of-state facilities could be shown to be deliverable into Ohio. The commission relied on its established Koda test, which uses distribution-factor (DFAX) power-flow studies conducted by regional transmission organizations (RTOs) to determine whether a facility’s energy is physically deliverable into Ohio. After review, PUCO found that the applicants’ DFAX studies, performed by PJM Interconnection, met the required deliverability thresholds and approved all six applications.CSG appealed to the Supreme Court of Ohio, arguing that the evidence was insufficient and that procedural errors occurred, including denial of a subpoena and improper reliance on hearsay. The Supreme Court of Ohio found that PUCO’s order was supported by sufficient evidence and complied with statutory requirements for findings and reasoning. The court held that the commission’s use of the Koda test and reliance on the PJM DFAX studies was reasonable and not against the manifest weight of the evidence or contrary to law. The court also found that CSG’s procedural objections were either waived or jurisdictionally barred. The Supreme Court of Ohio affirmed PUCO’s order. View "In re Application of Moraine Wind, L.L.C." on Justia Law

A multi-state utility company operating a gas-fired power plant in Washington alleged that the state's Climate Commitment Act (CCA) impermissibly discriminated against interstate commerce by allocating no-cost greenhouse gas emissions allowances only for electricity sold to Washington customers. Under Washington’s Clean Energy Transformation Act (CETA) and the CCA, utilities serving in-state customers receive no-cost allowances to offset compliance costs, while electricity exported to customers in other states does not receive this benefit. The company argued that this scheme increased costs for its non-Washington customers and potentially its shareholders, as out-of-state sales from the Washington facility required purchasing emissions allowances at auction.The United States District Court for the Western District of Washington reviewed the complaint and found that the electricity generated for export was not subject to CETA’s decarbonization mandates, distinguishing it from in-state electricity. The district court concluded that the two categories were not similarly situated for purposes of Dormant Commerce Clause analysis. The court reasoned that utilities serving Washington customers were already subject to more aggressive decarbonization requirements under CETA, justifying the allocation of no-cost allowances under the CCA. The district court dismissed the complaint with prejudice, finding no plausible claim of unconstitutional discrimination, and denied the motion for preliminary injunction as moot.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal and denial of the injunction. The Ninth Circuit held that because the regulatory schemes governing in-state and exported electricity are distinct, the emissions associated with each are not similarly situated. Therefore, Washington’s allocation of no-cost allowances did not violate the Dormant Commerce Clause. The court further held that dismissal without leave to amend was appropriate, as any amendment would be futile. The decision was affirmed. View "PACIFICORP V. SIXKILLER" on Justia Law

A transmission development company sought to build a high-voltage transmission line across three Maryland counties to address a regional electricity shortage. After receiving federal approval, the company was required to obtain a Certificate of Public Convenience and Necessity (CPCN) from Maryland's Public Service Commission (PSC) before construction. As part of the CPCN application, environmental and socioeconomic field studies needed to be conducted on properties along the proposed route. The property owners refused access for these surveys, prompting the developer to submit desktop studies instead, which the PSC's Power Plant Research Program (PPRP) found inadequate, deeming the application incomplete. The developer then sought an injunction to enter the properties for the necessary field studies.The United States District Court for the District of Maryland granted the developer's motion for a preliminary injunction, finding that the developer was likely to succeed on the merits under Maryland law, particularly Section 12-111(a) of the Real Property Article, which allows entities with eminent domain powers to access private land for surveys. The court determined that the developer had a viable claim to such power for the purposes of conducting the surveys, even though it could not condemn property until it obtained a CPCN. The court also found irreparable harm due to lost revenues from project delays, that the balance of equities favored the developer, and the public interest supported the injunction.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s decision under an abuse of discretion standard. The Fourth Circuit affirmed, holding that the district court did not abuse its discretion in granting the preliminary injunction. The court concluded that the developer likely possessed the statutory right of access to conduct surveys prior to obtaining a CPCN, and that all four Winter factors for injunctive relief were satisfied. View "PSEG Renewable Transmission LLC v. Arentz Family, LP" on Justia Law