Aksamit Res. Mgmt. LLC v. Neb. Pub. Power Dist.

299 Neb. 114

907 N.W.2d 301

AKSAMIT RESOURCE MANAGEMENT LLC et al., appellants,

v.NEBRASKA PUBLIC POWER DISTRICT, appellee.

No. S-17-333

Supreme Court of Nebraska.

Filed February 23, 2018.

Roger P. Cox, P.C., L.L.O., Lincoln, and Peter S. Ratner, of Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., for appellants.

Shawn D. Renner, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., Lincoln, and John C. McClure, of Nebraska Public Power District, Columbus, for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

Cassel, J.

INTRODUCTION

Nebraska Public Power District (NPPD) refused a public records request¹ from potential competitors for documents showing cost and revenue information for each of its generation units, and the district court declined to issue a writ of mandamus to compel disclosure. The competitors’ appeal turns on the statutory exception for "proprietary or commercial information which if released would give advantage to business competitors and serve no public purpose. "²

Does the statute require public records useful to an energy policy debate to be released despite an advantage flowing to a competitor? The words chosen by the Legislature dictate that the answer must be "yes." We cannot say the result is absurd. Accordingly, we reverse the district court’s order and direct issuance of an appropriate writ.

BACKGROUND

PARTIES

Aksamit Resource Management LLC and First Security Power, LLC, are limited liability companies that were formed under the laws of Nebraska and have headquarters in Nebraska. Gary Aksamit is the chief executive officer of both companies (collectively Aksamit). Aksamit intends to produce and sell electricity in Nebraska in the near future.

NPPD is a public corporation and a political subdivision of Nebraska. It has facilities for generation, transmission, and distribution of electric power and energy for sale at retail and wholesale. NPPD has several different types of generation sources: conventional steam electric generation, which generates heat from fossil fuel; steam nuclear generation, which generates heat from nuclear fission; combined cycle and combustion turbine generation, which generates heat from the combustion of natural gas; hydro facilities, which generate power from water; diesel facilities, which use diesel engines to produce electricity; and wind facilities, where the mode of force for the generator is wind.

REQUESTS FOR PUBLIC RECORDS AND RESPONSE

In March 2016, Aksamit sent to NPPD 22 requests for public records. NPPD provided documents to satisfy the vast majority of the requests. This appeal concerns only three requests:

• "documents sufficient to show actual expenditures and revenues by cost and profit centers for each year from 2008 through 2015";

• "each and any document dated January 1, 2013[,] or later that contains, reflects, or constitutes a six-year rate outlook by cost and profit centers"; and

• "documents sufficient to show the annual generation output and revenue for each [NPPD] generation resource, owned or cont[r]acted from 2008 through 2015."

NPPD refused to provide records responsive to those requests and asserted that the requested information was exempt from public disclosure under § 84-712.05(3).

PETITION FOR WRIT OF MANDAMUS

Aksamit filed a petition for writ of mandamus. It alleged that disclosure of the requested information would serve a public purpose, because the citizens of Nebraska "have an indisputable interest in knowing the operational and financial details associated with state-owned electrical utilities so that they may evaluate, among other things, the continued viability of public power in Nebraska."

The district court ordered NPPD to either promptly provide access to the records or, alternatively, to file an answer showing cause why it declined to provide access to the records. In an answer, NPPD maintained that the requested documents fell within the exemption in § 84-712.05(3).

TRIAL

At trial, Aksamit focused on public purposes that would be served by disclosure of the requested information. Aksamit’s vice president of marketing testified that Aksamit had an interest in examining the documents as part of its marketing program to educate Nebraska’s ratepayers and elected rate officials.

Dr. Ernest Goss testified about his research on public power in Nebraska. The research involved "[e]xamining the competitiveness of public power in Nebraska and how it stacks up against its counterparts in the contiguous states such as MidAmerican Energy in Iowa and ... examining potential problems for the taxpayer, the ratepayer in the years ahead." Based on his research, Goss concluded that "there were clear and present dangers" for Nebraska’s taxpayers and electricity ratepayers. Goss explained that the trajectory of electricity prices was larger than the national average and that the trajectory of rate changes "was and is unsustainable."

A difficulty that Goss encountered while conducting research was a lack of access to information about the costs and revenues for NPPD’s individual generation units. Goss preferred to have data relating to individual generation units so that he could "more properly find out what’s the cause and is it something that’s going to be of fundamental issue for the businesses, the citizens, the taxpayers of the State of Nebraska in future years." According to Goss, such data would have been "very instrumental in coming to conclusions about the economic viability of public power in Nebraska."

Goss, as an economist and Nebraska taxpayer, expressed an interest in knowing NPPD’s costs and revenue for individual generating units. He explained that NPPD does not pay property or income taxes and that the payments it makes in lieu of such taxes are much lower than the property tax rate, which meant that "those are taxes that are hoisted off on the Nebraska taxpayer." As an economist, Goss testified that it was very difficult to judge whether NPPD was being run efficiently without looking at the cost and revenue information broken down by generation units.

A former NPPD employee testified that he observed business inefficiencies that increased NPPD’s costs and negatively affected ratepayers. As a board member or a ratepayer, he would want access to NPPD’s cost information by generation unit, because it would allow a better understanding of such costs in order to challenge board members on "why there’s a continuation of a high cost generating unit and what could be done to lower those costs." He did not believe that NPPD’s total cost information was adequate to make assessments as to cost by generating unit, because "[y]ou’re lumping several contributors to a total cost which prevents you from making sound decisions on the individual contributors to that total." Based on NPPD’s total cost information, an individual would be unable to identify "particular high cost plans."

NPPD focused on the confidentiality of the information in the industry and the competitive harm that it may suffer if it had to disclose records responsive to Aksamit’s requests. There is no real dispute that Aksamit seeks to compete with NPPD.

NPPD also competes with participants in the Southwest Power Pool. The power pool is a regional integrated market for the buying and selling of electricity. NPPD both buys and sells electricity in that market. Thomas James Kent, the vice president and chief operating officer of NPPD, testified that the power pool makes bidding offers public 90 days after the operating day, but that it masks the source of the bid and the offer information in order to protect the confidentiality of the specific units. Kent testified that if a participant in the power pool had access to NPPD’s generation unit-specific cost and revenue information, that information could be used to "create bid and offer strategies that would put NPPD at a disadvantage and an unequal playing field in terms of being able to compete equally in the commodity market." He explained that "if someone knew the specific cost information of a given unit, they may use that information to set a bid in pricing strategy that would make their units more competitive." And if the power pool market is not recovering all of NPPD’s costs of production, NPPD’s only other source to make up that loss is with the rates charged to ratepayers.

Kent testified that power purchase agreements are typically not considered public documents, because the pricing information for the cost of the power is generally considered proprietary and confidential by the developer. For example, NPPD currently had a power purchase agreement with a wind facility in Nebraska which contained a confidentiality clause to protect pricing information and other terms. Other of NPPD’s contracts similarly contained confidentiality provisions. Kent explained that "confidentiality is provided to ensure that the pricing arrangements, commercial arrangements, et cetera, are specific to that arrangement and can’t be used competitively with other entities." NPPD considered the cost and revenue information on a generation unit-specific basis to be proprietary and confidential.

DISTRICT COURT’S DECISION

The district court dismissed the petition for writ of mandamus. It stated that the evidence showed the generation unit-specific cost and revenue information was proprietary or commercial to NPPD and that if it were released publicly, it would give advantage to NPPD’s competitors. The court reasoned:

It would be highly unlikely that in enacting § 84-712.05(3), the Legislature intended to allow record custodians to withhold proprietary or commercial information that would give advantage to business competitors, only to render the exemption meaningless by also requiring anything that could conceivably be labeled a "public purpose" for release to nullify the exemption. Here, release of NPPD’s proprietary generation unit-specific cost and revenue information would give advantage to its competitors,

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