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Virginia Electric and Power Co. v. State Corporation Commission

Supreme Court of Virginia

March 29, 2018

VIRGINIA ELECTRIC AND POWER COMPANY
v.
STATE CORPORATION COMMISSION, ET AL.

         FROM THE STATE CORPORATION COMMISSION

          PRESENT: Lemons, C.J., Mims, McClanahan, Powell, Kelsey, and McCullough, JJ., and Millette, S.J.

          OPINION

          DONALD W. LEMONS CHIEF JUSTICE.

         In this appeal, we consider whether certain large customers can purchase electricity from any licensed supplier of energy in the Commonwealth under Code § 56-577(A)(5), without being subject to the notice requirement set forth in Code § 56-577(A)(3).

         I. Facts and Proceedings

         Virginia Electric and Power Company ("VEPCO") is a public service corporation authorized to sell electricity in the Commonwealth. VEPCO is the exclusive provider of electricity in a geographic area known as its service territory, subject to limited exceptions that permit customers to purchase electricity from any licensed supplier of energy in the Commonwealth. See Code §§ 56-265.4, 56-577(A). Direct Energy Services, LLC ("DES") is licensed as a competitive service provider ("CSP"), which allows it to sell electricity to customers located in another utility's service territory under certain circumstances.

         On August 26, 2016, DES filed a petition for a declaratory judgment ("petition") with the State Corporation Commission ("Commission"), seeking an order that it can sell electricity provided from 100% renewable energy to customers located in VEPCO's service territory pursuant to Code § 56-577(A)(5) ("Section (A)(5)"). As relevant here, DES sought clarification that customers who can purchase electricity from a CSP under Code § 56-577(A)(3) ("Section (A)(3)"), due to their high demand for electricity ("large customers"), can also purchase electricity produced with 100% renewable energy under Section (A)(5). Section (A)(3) provides that if a customer purchases electricity from a CSP, it cannot return to the incumbent utility in its service territory without providing five years' advance written notice. Section (A)(5) does not contain a notice requirement.

         The Commission entered an order directing VEPCO to respond to the petition and providing DES with an opportunity to reply to VEPCO's response. VEPCO responded and asserted that Section (A)(3) governs all purchases of electricity by large customers from CSPs, regardless whether the electricity is produced with renewable energy. Accordingly, VEPCO asserted that large customers cannot invoke Section (A)(5) to circumvent the notice requirement in Section (A)(3).

         On October 11, 2016, Appalachian Voices, a nonprofit organization that advocates for renewable energy, filed a motion to participate as a respondent. The Commission granted the motion and Appalachian Voices filed comments in support of the petition. Appalachian Voices observed that Section (A)(5), unlike Section (A)(3), does not distinguish between customers based on the size of their demand for electricity, and therefore argued that large customers can purchase electricity under Section (A)(5). VEPCO filed an additional response with leave of the Commission, and reiterated its argument that large customers who purchase electricity from CSPs do so under Section (A)(3), regardless of the source of the electricity. DES filed a reply arguing that because Section (A)(3) provides that it is "subject to the provisions of subdivisions 4 and 5, " the conditions and limitations in Section (A)(3) do not apply to purchases under Section (A)(5).

         In a final order dated March 15, 2017, the Commission held that large customers can purchase electricity provided from 100% renewable energy under Section (A)(5). The Commission explained that Code § 56-577 provides for three types of retail access to electricity, each subject to its own qualifications and limitations. Section (A)(3) "permits retail access for certain large customers regardless of the type of electricity being sold." Code § 56-577(A)(4) ("Section (A)(4)") "permits aggregation of non-residential customer load for the purpose of meeting the Section (A)(3) size limits, subject to Commission approval and, like Section (A)(3), permits retail access regardless of the type of electricity being sold." In contrast, Section (A)(5) contains "no size or minimum stay requirements." It permits customers "to purchase 100% renewable energy from a CSP if the incumbent utility does not offer . . . 100% renewable energy." The Commission concluded that large customers can purchase electricity under Section (A)(5), and that they are "not subject to a minimum stay provision if they are purchasing a 100% renewable energy product from a CSP under" this section.

         VEPCO moved for reconsideration of the final order. VEPCO acknowledged that Section (A)(5) contains no size or minimum stay requirements. However, VEPCO argued that because "the more specific statute will control" where "two statutes govern the same thing, " interpreting "the lack of specific requirements for large customers in Section (A)(5) as negating the specific requirements for large customers in Section (A)(3) would allow the general rule to supplant the specific one." VEPCO further observed that the language "subject to the provisions of subdivisions 4 and 5" modifies the phrase "only individual retail customers . . . whose demand . . . exceeded five megawatts . . . shall be permitted to purchase electric energy from any supplier." VEPCO contended this language "makes clear that customers other than large customers are eligible to procure service from Competitive Providers under Sections (A)(4) and (A)(5)." Finally, VEPCO noted that the Commission appeared to have interchanged the notice requirement in Section (A)(3) and the "minimum stay period" under 20 VAC § 5-312-80(Q) ("Rule 80(Q)"), and asked the Commission to clarify that its ruling did not impact Rule 80(Q).

         The Commission suspended its final order to consider the motion for reconsideration and then reaffirmed its holding by order dated April 26, 2017. The Commission noted that under Covel v. Town of Vienna, 280 Va. 151, 162, 694 S.E.2d 609, 616 (2010), "when one statute speaks to a subject generally and another deals with an element of that subject specifically, the statutes will be harmonized, if possible, and if they conflict, the more specific statute prevails." The Commission explained that Sections (A)(3) and (A)(5) are not in conflict:

Section (A)(3) only applies to large users of electricity, and it allows these users to purchase electric energy from a CSP regardless of how that electric energy is generated. Section (A)(5) applies to all retail customers "regardless of customer class, " and it allows these customers to purchase from a CSP if the electric energy is provided 100% from renewable energy. Unlike Section (A)(3), Section (A)(5) does not require five years' advance notice in order for a retail customer to purchase from its incumbent electric utility after such customer has chosen to purchase 100% renewable energy from a CSP. This does not represent a conflict; this simply reflects different requirements imposed by the General Assembly for different competitive purchase options explicitly permitted by statute.

         Accordingly, the Commission concluded that it is unnecessary to employ rules of statutory construction because the statute is unambiguous. The Commission reinstated its final order and clarified that its holding ...


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