Okla. Gas & Elec. Co. v. State ex rel. Okla. Corp. Comm'n

535 P.3d 1218

OKLAHOMA GAS AND ELECTRIC COMPANY and ONEOK Arbuckle II Pipeline, LLC, Appellants,

v.STATE of Oklahoma EX REL. OKLAHOMA CORPORATION COMMISSION, Appellee.

No. 117,896 (cons. w/ 117,902)

Supreme Court of Oklahoma.

Filed April 3, 2023

Rehearing Denied: September 11, 2023

Clyde A. Muchmore and Melanie Wilson Rughani, Crowe & Dunlevy, PC, Oklahoma City, Oklahoma, for Appellant Oklahoma Gas and Electric Company.

William L. Humes, Oklahoma Gas and Electric Company, Oklahoma City, Oklahoma, for Appellant Oklahoma Gas and Electric Company.

David E. Keglovits, ONEOK Arbuckle II Pipeline, LLC, Tulsa, Oklahoma, for Appellant ONEOK Arbuckle II Pipeline, LLC.

W.A. Drew Edmondson, Riggs, Abney, Neal, Turpen, Orbison, Lewis, Oklahoma City, Oklahoma, for Appellant ONEOK Arbuckle II Pipeline, LLC.

Patricia L. Franz and Daniel P. Boyle, Oklahoma Corporation Commission, Oklahoma City, Oklahoma, for Appellee Oklahoma Corporation Commission.

Brian W. Hobbs, Pain Garland and Hobbs, LLP, Anadarko, Oklahoma, for CKenergy Electric Cooperative, Inc.

Deborah R. Thompson, OK Energy Firm, PLLC, Oklahoma City, Oklahoma, for Appellee CKenergy Electric Cooperative, Inc.

Jana L. Knott, Bass Law, Oklahoma City, Oklahoma, for Appellee CKenergy Electric Cooperative, Inc.

Adam J. Singer and J. Eric Turner, Derryberry & Naifeh, LLP, Oklahoma City, Oklahoma, for Oklahoma Association of Electric Cooperatives.¹

Jon E. Brightmire and Tom Q. Ferguson, Doerner, Saunders, Daniel & Anderson, L.L.P., Tulsa, Oklahoma, for Amicus Curiae Public Service Company of Oklahoma.

Jack P. Fite, White, Coffey & Fite, P.C., Oklahoma City, Oklahoma, for Amicus Curiae Public Service Company of Oklahoma.

Joann S. Worthington, American Electric Power, Oklahoma City, Oklahoma, for Amicus Curiae Public Service Company of Oklahoma.

Ash Mayfield, Grand River Dam Authority, Tulsa, Oklahoma, for Amicus Curiae Grand River Dam Authority.

Brendon S. Atkinson, Atkinson Law Firm, PLLC, Enid, Oklahoma, for Amicus Curiae Oklahoma Agricultural Cooperative Council.

H. Duane Riffe, Riffe & Associates, Tulsa, Oklahoma, for Amicus Curiae Oklahoma Rural Water Association.

Clinton D. Whitworth, Whitworth, Wilson & Evans, PLLC, Edmond, Oklahoma, for Amicus Curiae Oklahoma State Union of the Farmers Educational and Co-operative Union of America, Inc.

Ericka McPherson, Oklahoma Farm Bureau, Oklahoma City, Oklahoma, for Amicus Curiae Oklahoma Farm Bureau Legal Foundation.

Gurich, J. ¶1 This retained appeal addresses the interpretation of the "large-load" or "one megawatt" exception to the Retail Electric Supplier Certified Territory Act (RESCTA). The RESCTA, codified at 17 O.S. 2011, § 158.21 et seq. , divides Oklahoma's unincorporated areas into territories which are served by retail electric suppliers which maintain the "exclusive right to furnish retail electric service to all electric-consuming facilities located within its certified territory." 17 O.S. 2011, § 158.25(A). The RESCTA provides exceptions, however, that allow other retail electric suppliers to enter these certified territories in certain circumstances:

The provisions of this act shall not preclude any retail electric supplier from extending its service after the effective date of this act (1) to its own property and facilities, in an unincorporated area, and (2) subject to Section 5 D, to an electric-consuming facility requiring electric service, in an unincorporated area, if the connected load for initial full operation of such electric-consuming facility is to be 1,000 kw or larger.

17 O.S. 2011, § 158.25(E). The latter exception is known as the "large-load" or "one megawatt" exception. The present matter concerns the meaning of "extending its service" as used in the large-load exception. Although undefined in the statute, "extending its service" does not specifically restrict a retail electric supplier from using open-access transmission lines to extend its service as Oklahoma Gas & Electric ("OG&E") proposes to do here.

Facts & Procedural History

¶2 The underlying facts in this case are not in dispute. In 2018, ONEOK Arbuckle II Pipeline, LLC ("ONEOK") began building a 530-mile long pipeline to transport liquefied natural gas ("NGL") production from the South Central Oklahoma Oil Province and Sooner Trend Anadarko Canadian Kingfisher regions to Mont Belvieu, Texas. The purpose of the pipeline is to pump NGL through a series of electrically-powered pump stations, including the Binger II Pump Station ("Binger II") in Caddo County, Oklahoma. For purposes of the RESCTA, the Binger II is located in the certified territory of CKenergy Electric Cooperative, Inc. ("CKE").² Generally, CKE has the exclusive right to furnish all retail electric service within its certified territory, unless an exception is applicable and allows other retail electric suppliers to service the load. 17 O.S.2011, § 158.25.

¶3 CKE is a rural electric cooperative and a retail electric supplier.³ CKE is not subject to the Commission's rate regulation, but is subject to the Commission for purposes of the RESCTA.⁴ OG&E is an investor owned electric public utility and a retail electric supplier.⁵ OG&E is wholly subject to the regulatory authority of the Commission.⁶ For the purpose of this case, ONEOK is a rural electric customer. The Binger II is an electric-consuming facility with a connected load greater than 1,000 kilowatts of electricity and meets the requirements for a large load as contemplated by 17 O.S.2011, § 158.25(E).⁷ Since the large load exception is applicable, the facility may be served by any retail supplier by extending its service. 17 O.S.2011, § 158.25(E).

¶4 Because the large load exception was applicable to the Binger II, ONEOK solicited bids from CKE and OG&E to furnish power to the Binger II. OG&E submitted a bid that was at least $5 million dollars below CKE's,⁸ so ONEOK awarded OG&E the contract for service on June 13, 2018. In order to fulfill the contract, OG&E proposed to use a third-party's transmission lines to provide service to the Binger II. OG&E planned to run a high-voltage line from Western Farmers Electric Cooperative's ("WFEC") transmission lines to a new substation—which OG&E would construct—and then run low-voltage distribution lines to the Binger II.⁹ OG&E intended to use this method because its own distribution lines were at least nine miles from the Binger II,¹⁰ whereas WFEC's transmission lines ran near the Binger II. On July 3, 2018, CKE petitioned the Oklahoma Corporation Commission ("Commission") for temporary and permanent injunctive relief to enjoin OG&E from utilizing WFEC's transmission lines to provide service to the Binger II. CKE also asked for a declaratory ruling determining that 17 O.S.2011, § 158.25(E) does not allow a retail electric supplier to extend its service into another supplier's certified territory directly from its own, or third-party, transmission facilities.

¶5 As CKE's request for relief adversely affected its operations, ONEOK intervened in the case on July 17, 2018. On August 22, 2018, OG&E moved the Commission to dismiss the case. While OG&E's motion to dismiss was pending, the Commission denied CKE's motion for temporary injunctive relief on September 18, 2018. Despite an administrative law judge's recommendation to grant the dismissal, the Commission ultimately denied OG&E's motion to dismiss on November 7, 2018. The Commission held a hearing on the merits of the case on November 14, 2018. On March 12, 2019, the two-member panel of the Commission issued its order, stating the following in part:

IT IS FURTHER ORDERED that OG&E is enjoined from serving or furnishing retail electric service to the Pump Station directly from third-party transmission facilities in violation of the RESCTA.

IT IS FURTHER ORDERED that the Commission declines the request to issue a declaratory ruling as requested by CKenergy.¹¹

The Commission also made specific findings that though section 158.25(E) allows an electric retail supplier to "extend" its retail distribution systems, there is a limitation on the manner in which such extension of its services may occur.¹² The Commission interpreted the phrase "extending its service" to mean the lengthening of a retail electric supplier's own retail distribution system.¹³

¶6 In accordance with Article IX, Section 21 of the Oklahoma Constitution, the Commission granted a stay of the March 12, 2019, order until final disposition on appeal and set an appeal bond. ONEOK and OG&E both appealed the Commission's injunction to this Court, and we consolidated the appeals.¹⁴

Standard of Review

¶7 This Court is asked to review the Commission's order enjoining OG&E from the use of third-party transmission lines. The consolidated appeals of the Commission's decision involves the statutory interpretation of 17 O.S.2011, § 158.25(E) concerning the manner or mechanism in which OG&E proposes to service the Binger II. In order to review a decision of the Commission, we must be mindful of Article IX, § 20 of the Oklahoma Constitution :

The Supreme Court's review of appealable orders of the Corporation Commission shall be judicial only, and in all appeals involving an asserted violation of any right of the parties under the Constitution of the United States or the Constitution of the State of Oklahoma, the Court shall exercise its own independent judgment as to both the law and the facts. In all other appeals from orders of the Corporation Commission the review by the Supreme Court shall not extend further than to determine whether the Commission has regularly pursued its authority, and whether the findings and conclusions of the Commission are sustained by the law and substantial evidence. Upon review, the Supreme Court shall enter judgment, either affirming or reversing the order of the Commission appealed from.

Okla. Const. art. IX, § 20. "The trial court's conclusions on issues of law pertaining to the injunctive relief receive a non-deferential de novo appellate review." Western Heights...