Opinion
No. COA02-1737-2.
Filed 6 December 2005.
1. Utilities — wholesale interstate power contracts — regulation — not discriminatory
A regulation requiring notice to the Utilities Commission of wholesale interstate energy contracts was merely burdensome on interstate commerce, and not discriminatory, because it applied equally to wholesale contracts in and out of state. The regulation should therefore be evaluated for whether its effect on interstate commerce is clearly excessive in relationship to putative local benefits.
2. Utilities — wholesale interstate power contracts — regulation not overly burdensome
A utilities regulation requiring notice to the Utilities Commission of interstate contracts for wholesaling electric energy is not overly burdensome to interstate commerce because the local benefit (ensuring the supply of electricity to retail customers) outweighs the interstate burden.
3. Utilities — wholesale interstate power contracts — authority of Commission to regulate
The Utilities Commission has the authority under N.C.G.S. § (52-30 and N.C.G.S. § 62-32(b) to require advance submission of wholesale interstate power contracts. The statutes give the Utilities Commission "all powers" necessary to regulate public utilities to ensure that the citizens of North Carolina are provided reasonable service.
4. Utilities — wholesale power contracts — Commission order — sufficient for determination of issues
A Utilities Commission order concerning wholesale interstate power contracts was sufficient to allow the Court of Appeals to determine the controverted issues.
Judge TYSON dissenting.
Appeal by Appellants from orders entered 10 July 2002 and 20 August 2002 by the North Carolina Utilities Commission. Heard in the Court of Appeals 16 September 2003. A divided panel of this Court vacated and dismissed with prejudice the orders of the Commission under the Supremacy Clause of the United States Constitution, U.S. CONST, art. VI, cl. 2, by opinion filed 18 November 2003. See State ex rel. Utils. Comm'n v. Carolina Power Light Co., 161 N.C. App. 199, 588 S.E.2d 77 (2003) (Wynn, J. dissenting). The North Carolina Supreme Court reversed this Court and, by opinion filed 1 July 2005, remanded to this Court for "consideration of the remaining" assignments of error. See State ex rel. Utils. Comm'n v. Carolina Power Light Co., 359 N.C. 516, 614 S.E.2d 281 (2005).
Public Staff Executive Director Robert P. Gruber and Chief Counsel Antoinette R. Wike, by Gisele L. Rankin, Staff Attorney, for appellee North Carolina Utilities Commission. Attorney General Roy Cooper, by Assistant Attorney General Leonard G. Green, for the Attorney General. West Law Offices, PC, by James P. West, for appellee Carolina Utility Customers Association, Inc. Bailey Dixon, L.L.P., by Ralph McDonald, for appellee Carolina Industrial Groups for Fair Utility Rates II. Poyner Spruill LLP, by Michael S. Colo, Thomas R. West, and Pamela A. Scott, for appellees North Carolina Municipal Power Agency Number 1 and North Carolina Eastern Municipal Power Agency, Inc. Hunton Williams, by Edward S. Finley, Jr., for appellants. Len S. Anthony, for appellants Carolina Power Light and Progress Energy. William Larry Porter and Kodwo Ghartey-Tagoe, for appellant Duke Power Company. Robert B. Schwentker and Thomas K. Austin, for appellant North Carolina Electric Membership Corporation.
Non-discriminatory state regulations that "effectuate a legitimate local public interest" and incidentally burden interstate commerce "will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 25 L. Ed. 2d 174, 178 (1970). Appellants argue that the North Carolina Utilities Commission's regulation at issue violates the Commerce Clause and is burdensome on interstate commerce. As we find that the local benefit outweighs the incidental burden to interstate commerce, we affirm the Utility Commission's orders.
This case is on remand to this Court "for consideration of the remaining issues" as mandated by our Supreme Court's holding in State ex rel. Utils. Comm'n v. Carolina Power Light Co., 359 N.C. 516, 529, 614 S.E.2d 281, 290 (2005) wherein the facts pertaining to the issues in this case are fully set forth. See also State ex rel. Utils. Comm'n v. Carolina Power Light Co., 161 N.C. App. 199, 588 S.E.2d 77 (2003).
The issues we address on remand are: (1) whether state regulation of wholesale interstate power contracts impermissibly burdens interstate commerce; (2) whether the Utility Commission is authorized under chapter 62 of the North Carolina General Statutes to require the submission of contracts with wholesale interstate purchasers for review prior to execution; and (3) whether the Utility Commission erred in failing to provide guidance by which it would assess the reasonableness of the agreements over which it claims jurisdiction.
Appellants first argue that the Utility Commission's regulation of wholesale contracts, Regulatory Condition 21, impermissibly burdens interstate commerce. Regulatory Condition 21 requires that a utility shall not enter into contracts for the wholesale of electric energy and/or capacity at native load capacity without first giving the Utility Commission and Public Staff written notice twenty days prior to execution of the contracts.
In reversing the earlier opinion in this case, our Supreme Court stated that the Utility Commission's purpose, "was to provide a mechanism through which [the Utility Commission] 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 [,]'" and it could "`take appropriate action . . . to secure and protect reliable service to retail customers in North Carolina.'" Carolina Power Light Co., 359 N.C. at 519-21, 614 S.E.2d at 284. As our Supreme Court has deemed that the record on appeals shows the purpose of the regulation, that purpose is binding on this Court.
Appellants contend that the Utility Commission's regulation of wholesale contracts impermissibly burdens interstate commerce in violation of the Commerce Clause of the United States Constitution. However, the Utility Commission's regulation ensures that North Carolina retail consumers get a reliable source of electricity, and is merely burdensome on interstate commerce and not discriminatory. Accordingly, the regulation should be analyzed under the test set out by the United States Supreme Court in Pike, 397 U.S. at 142, 25 L. Ed. 2d at 178. The Pike test states that "[w]here the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Id.
Appellants cite to City of Philadelphia v. New Jersey, 437 U.S. 617, 57 L. Ed. 2d 475 (1978), to support its argument that the regulation impermissibly burdens interstate commerce. But City of Philadelphia involved a New Jersey statute that was facially discriminatory. Id. at 628, 57 L. Ed. 2d at 484. In this case, the regulation is not discriminatory, merely burdensome, because the regulation applies equally to wholesale contracts in and out of state. As this regulation is not discriminatory, City of Philadelphia is inapplicable.
Applying the Pike test to the case at hand, the requirement that the companies allow the Commission and Public Staff to review proposed contracts twenty days before they are signed, is not overly burdensome on interstate commerce as the "putative local benefit," to ensure supply of electricity to retail customers, outweighs the burden on interstate commerce. See Ark. Elec. Coop. Corp. v. Ark. Public Serv. Comm'n, 461 U.S. 375, 394, 76 L. Ed. 2d 1, 17 (1983) (state regulation of the wholesale rates charged by utility to its members is well within the scope of "legitimate local public interests" and does not impermissibly burden interstate commerce).
As the Utility Commission's regulation does not violate the Commerce Clause, we affirm the Utility Commission's orders.
Appellant also argues that Chapter 62 of the North Carolina General Statutes does not authorize the Utility Commission to require submission of contracts with wholesale purchasers prior to execution.
Pursuant to section 62-30 of the North Carolina General Statutes:
The Commission shall have and exercise such general power and authority to supervise and control the public utilities of the State as may be necessary to carry out the laws providing for their regulation, and all such other powers and duties as may be necessary or incident to the proper discharge of its duties.
N.C. Gen. Stat. § 62-30 (2003). The Utility 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[.]" N.C. Gen. Stat. § 62-32(b) (2003) (emphasis added).
Our Supreme Court stated that the Utility Commission's purpose of this regulation, "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[,]'" and it could "`take appropriate action . . . to secure and protect reliable service to retail customers in North Carolina.'" Carolina Power Light Co., 359 N.C. at 519-21, 614 S.E.2d at 284. As sections 62-30 and 62-32(b) of the North Carolina General Statutes give the Utility Commission "all powers necessary" to regulate public utilities to ensure the citizens of this State are provided with reasonable service, the instant regulation is authorized by sections 62-30 and 62-32(b) because the regulation's purpose is to ensure the supply of electricity to retail customers. Accordingly, we affirm the Utility Commission's orders as it has the statutory authority to require advance submission of wholesale contracts.
Finally, Appellants argue that the Utility Commission erred by failing to provide guidance by which it would assess the reasonableness of the agreements. In its order denying reconsideration of its 10 July order, the Utility Commission stated that the "Order was only intended to address the matter of jurisdiction since that is a threshold issue. It is not appropriate for this Order to try to specify exactly how the Commission will exercise its jurisdiction or what the Commission might do in a particular case." We hold that the Utility Commission was simply reserving this issue for later determination after the threshold issue of jurisdiction had been decided.
Appellants cite to section 62-79(a)(2) of the North Carolina General Statutes to support their argument that the Commission needed to give further guidance. Section 62-79(a)(2) provides:
(a) All final orders and decisions of the Commission shall be sufficient in detail to enable the court on appeal to determine the controverted questions presented in the proceedings and shall include:
* * *
(2) The appropriate rule, order, sanction, relief or statement of denial thereof.
N.C. Gen. Stat. § 62-79(a) (2003) (emphasis added). The Commission's order is sufficient to allow this Court to determine the issues of jurisdiction, i.e. violation of the commerce clause, supremacy of federal law, and statutory authorization, as previously stated. Accordingly, we affirm the Commission's orders.
Affirmed.
Judge LEVINSON concurs.
Judge TYSON dissents.