Entergy Louisiana, LLC v. Louisiana Public Service Commission, Concordia Electric Cooperative Inc.

FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #017

FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 15th day of March, 2017, are as follows:

BY GENOVESE,J.:

2016-CA-0424 ENTERGY LOUISIANA, LLC v. LOUISIANA PUBLIC SERVICE
COMMISSION, CONCORDIA ELECTRIC COOPERATIVE INC. (Parish of E.
Baton Rouge)
For the reasons stated herein, the judgment of the district court
is reversed, and Louisiana Public Service Commission Order No. U-32980
is hereby reinstated. All costs are assessed against Entergy
Louisiana, LLC.
REVERSED.

03/15/17

SUPREME COURT OF LOUISIANA

No. 2016-CA-0424

ENTERGY LOUISIANA, LLC

VERSUS

LOUISIANA PUBLIC SERVICE COMMISSION,
CONCORDIA ELECTRIC COOPERATIVE INC.

ON APPEAL
FROM THE NINETEENTH JUDICIAL DISTRICT COURT,
FOR THE PARISH OF EAST BATON ROUGE

GENOVESE, J.

This electrical service provider case comes before us on direct appeal

pursuant to La.Const. art. 4, § 21(E) 1 for our review of a district court judgment

reversing Louisiana Public Service Commission (LPSC) Order No. U-32980.

Because we find that the LPSC did not act arbitrarily and capriciously in reaching

its decision, we reverse.

FACTS AND PROCEDURAL HISTORY

This action arises out of the construction of a facility by United Plant

Services (UPS), in Trout, Louisiana, to which Entergy Louisiana, LLC (Entergy)

provides electric services. Entergy’s competitor, Concordia Electric Cooperative,

Inc. (Concordia), filed a complaint with the LPSC asserting that Entergy’s service

to the UPS facility violates La.R.S. 45:123 and LPSC General Order No. R-28269,

1
This court’s appellate jurisdiction over Louisiana Public Service Commission proceedings is
conferred by La.Const. art. 4, § 21(E) which provides:

Appeals. Appeal may be taken in the manner provided by law by any
aggrieved party or intervenor to the district court of the domicile of the
commission. A right of direct appeal from any judgment of the district court shall
be allowed to the supreme court. These rights of appeal shall extend to any action
by the commission, including but not limited to action taken by the commission or
by a public utility under the provisions of Subparagraph (3) of Paragraph (D) of
this Section.

collectively referred to as the 300 Foot Rule, by providing service to UPS at a

point of connection Concordia presumed to be within 300 feet of its existing

electrical lines.

UPS is a family-owned company that provides machine repair services.

UPS planned construction of a building on a ten-acre parcel of land it owned in

Trout located at the intersection of Highway 8, its northern boundary, and Hanger

Road, its eastern boundary. Prior to the construction of the building, Concordia

and Entergy were in competition to provide electric services to the proposed UPS

facility. At that time, Concordia had existing electric lines running along both

Highway 8 and Hanger Road, within 300 feet of the property.

In December 2012, Concordia drafted a letter to UPS offering to provide

electric services. UPS did not respond to Concordia’s letter. In January 2013,

Entergy provided UPS with a letter of intent requesting that it be selected to

provide electrical services to UPS. UPS signed Entergy’s letter of intent prior to

the commencement of construction of the building. In February 2013, Entergy

became aware that its competitor, Concordia, had existing lines in the area. In the

summer of 2013, Entergy constructed its own electric lines to serve the UPS

facility. The construction of the new electric lines, estimated to be 2,500 to 3,000

feet from the nearest Entergy facility, was undertaken by Entergy before an actual

contract was signed with UPS.

Proceeding towards the construction of the building, UPS’s architect

prepared drawings showing three alternative placements of the building on the ten-

acre tract: one at 100 feet from Hanger Road; the second at 150 feet from Hanger

Road; and the third at 200 feet from Hanger Road. Once construction was

completed, the eastern corner of the building was 125 feet from the Hanger Road

property boundary. The result of this placement was that the entirety of the UPS

2

facility was located within 300 feet of Concordia electric lines, except for a

triangular portion measuring twelve feet by twelve feet by six feet. The electric

meter for the building is located within this triangular space placing it between 302

and 315 feet from various points along Concordia’s lines.

Concordia filed a complaint against Entergy with the LPSC, alleging that

Entergy violated La.R.S. 45:123(A) 2 and LPSC General Order No. R-28269(D),3

the 300 Foot Rule, in providing electric service to UPS. Concordia later contended

that UPS and Entergy intentionally circumvented the 300 Foot Rule by placing its

2
Louisiana Revised Statutes 45:123(A) provides:

A. (1) No electric public utility shall construct or extend its facilities or
furnish or offer to furnish electric service to any point of connection which at the
time of the proposed construction, extension, or service is being served by, or
which is not being served but is located within three hundred feet of an electric
line of another electric public utility, except with the consent in writing of such
other electric public utility. However, nothing contained herein shall preclude:

(a) Any electric public utility from extending service to an applicant for
service at an unserved point of connection located within three hundred feet of an
existing electric line of such electric public utility, unless:

(i) Such line was not in operation on April 1, 1970, and

(ii) The point of connection is located within three hundred feet of an
existing electric line of another electric public utility, which line was in operation
on said date, or

(b) Any electric public utility from extending service to its own property
or to another electric public utility for resale.
3
The LPSC General Order No. R-28269(D) provides in pertinent part:

Intent of Commission:

It is the determination of this Commission that, in order to effect
economies in the services of electricity, and thereby maintain reasonable rates,
uneconomic and wasteful practices should be prohibited. As a result, the needless
paralleling and duplication of existing transmission or distribution lines or the
extensions thereof, by electric public utilities in order to serve customers readily
accessible to like facilities of an electric public utility already providing service
in the immediate area, should be discouraged.

Consistent with its purpose, the LPSC General Order No. R-28269, Ordering Section (3)(I)
further provides: “Where necessary, the Commission shall determine whether the choice of the
meter location was intended to circumvent this General Order prohibiting the needless
duplication or extension of facilities.”

3

meter at a distance beyond 300 feet from Concordia’s lines.4 Entergy countered

that the location of the meter was predicated on UPS business needs and safety

concerns and that the meter placement was not by design in circumvention of the

300 Foot Rule.

The matter was presented to an Administrative Law Judge (ALJ). Following

the hearing, the LPSC staff filed a post-hearing brief stating that “[t]he placement

of the meter becomes so convenient as to strain credulity when viewed in context

of the other circumstances[.]” Further, “[a]ccording to the totality of the

circumstances, Staff is of the opinion that Concordia has presented a

preponderance of evidence to suggest that either UPS and/or [Entergy] intended to

circumvent the 300 Foot Rule.” Finally, it was the LPSC’s staff conclusion and

recommendation that the ALJ order Entergy “to disconnect its facilities from the

UPS Facility property, and to authorize Concordia to begin providing electrical

service to the building.”

The ALJ, however, issued a Proposed Recommendation that the LPSC

dismiss Concordia’s claims based upon its finding that Concordia failed to show

that UPS or Entergy had intentionally placed the building and the meter in

circumvention of the 300 Foot Rule, thereby enabling UPS to select Entergy as

opposed to Concordia as its electric service provider. Concordia filed exceptions

to the ALJ’s Proposed Recommendation. Upon the retirement of the ALJ, the

action was reassigned to another ALJ, who denied Concordia’s exceptions and

issued a Final Recommendation adopting and reinstating the Proposed

Recommendation.

4
Entergy and Concordia reached a stipulation during the course of the LPSC proceedings, once
surveys had been conducted, that the location of the UPS meter was not within 300 feet of
Concordia’s electric lines.
4

During its monthly Business and Executive Session, the LPSC considered

the ALJ’s Final Recommendation. The recommendation of the ALJ was

unanimously rejected by the LPSC, which found a violation of the 300 Foot Rule,

and issued Order No. U-32980 concluding as follows:

The ALJ’s recommendation was considered by the Commission
at its June 24, 2015 Business and Executive Session. Following a
lengthy discussion and oral arguments by each side, the Commission
on motion of Commissioner Campbell, seconded by Chairman
Holloway, and unanimously adopted, voted to reject the ALJ’s
recommendation and based on the evidence in the record and heard
before the Commission at oral argument, the Commission found that
Entergy violated the 300 Foot Rule in serving UPS. If there should be
an appeal, and Entergy loses the appeal, Entergy shall immediately
disconnect its facilities from UPS and reimburse Concordia for its
losses associated with Entergy’s service of UPS from the date of this
order.

Entergy filed a petition for appeal and judicial review of LPSC Order No.

U-32980 in the Nineteenth Judicial District Court, and Concordia filed a Petition

for Intervention in that proceeding. Following oral argument, the district court

reversed the LPSC’s decision, finding it to be arbitrary and capricious. The

district court gave the following brief oral reasons for judgment:

The court is of the opinion that the Commission’s reversal of the ALJ
recommendation is certainly arbitrary and capricious based upon the
evidence in the record. The court is firmly of the opinion that the
customer chose the carrier for the complete fair nexus within the 300-
foot rule. Therefore, to the extent that action is inconsistent with this
court’s ruling, it’s hereby reversed.

The district court’s ruling was reduced to a written judgment stating in pertinent

part:

IT IS FURTHER ORDERED that Order No. U-32980 is
arbitrary and capricious and hereby reversed, and that the
Administrative Law Judge’s Final Recommendation in favor of
[Entergy] be and hereby is reinstated.

The LPSC and Concordia thereafter sought a direct appeal to this court to review

the judgment of the district court. For the following reasons, we reverse.

5

DISCUSSION

The LPSC has jurisdiction over the regulation of public utilities, including

electrical service providers. The LPSC’s jurisdiction is conferred by La.Const. art.

4, § 21(B) which states:

Powers and Duties. The commission shall regulate all common
carriers and public utilities and have such other regulatory authority as
provided by law. It shall adopt and enforce reasonable rules,
regulations, and procedures necessary for the discharge of its duties,
and shall have other powers and perform other duties as provided by
law.

This constitutional provision grants the LPSC “broad and independent

regulatory powers over public utilities. The LPSC’s jurisdiction over public

utilities has been labeled by this court as ‘plenary.’” Entergy Louisiana, LLC v.

Louisiana Public Service Comm’n, 08-284, p. 11 (La. 7/1/08), 990 So.2d 716, 723

(quoting Gulf States Utilities Co. v. Louisiana Public Service Comm’n, 578 So.2d

71, 100 (La.1991), cert. denied, 502 U.S. 1004, 112 S.Ct. 637, 116 L.Ed.2d 655

(1991)).

In furtherance of the regulation of electrical service lines, the 300 Foot Rule

provides that no public utility may extend electric service to any “point of

connection”5 already receiving service from another utility or to any new point of

connection located within 300 feet of the existing lines of a competing electric

utility. If two or more electric public utilities have existing lines within 300 feet of

a point of connection, the customer may choose among those electric service

providers.6 Additionally, and pertinent to the instant matter, the LPSC may

determine if the location of a point of connection was chosen for the purpose of

5
“Point of Connection” is defined as the “meter location or point where electric public utility
facilities meet the facilities owned by the customer.” LPSC General Order No. R-28269,
Ordering Section (2)(h).
6
This is true unless one of the lines was in operation as of April 1, 1970, in which instance, that
provider has the exclusive right to serve the customer. La.R.S. 45:123(A)(1)(a)(i).
6

circumventing the provisions of the 300 Foot Rule. The LPSC has the authority to

order that a service be changed, and it may penalize an errant utility service

provider if the provider is found to have either directly violated the 300 Foot Rule

or circumvented the rule in the placement of the point of connection.

On appeal, Concordia and the LPSC contend that the district court erred in

reversing LPSC Order No. U-32980 and reinstating the recommendation of the

ALJ. Thus, we must consider whether LPSC Order No. U-32980 is arbitrary and

capricious.

The applicable standard of review when considering whether a decision of

the LPSC is arbitrary and capricious has been stated several times by this court. In

Entergy Louisiana, LLC v. Louisiana Public Service Commission, 990 So.2d at

723, we opined:

This court has held that an order of the LPSC should not be
overturned unless it is arbitrary and capricious, a clear abuse of
authority, or not reasonably based upon the factual evidence
presented. Entergy Gulf States, Inc. v. Louisiana Public Service
Comm’n, 2000-0336, p. 4 (La. 8/31/00), 766 So.2d 521, 525; Entergy
Gulf States, Inc. v. Louisiana Public Service Comm’n, 1998-1235, p. 6
(La. 4/16/99), 730 So.2d 890, 897; Entergy Louisiana, Inc. v.
Louisiana Public Service Comm’n, 1998-0475, p. 4 (La. 9/9/98), 717
So.2d 217, 218. The function of the reviewing court is not to
reevaluate and re-weigh the evidence, or to substitute its judgment for
that of the Commission. Washington St. Tammany Electrical Coop.,
Inc. v. Louisiana Public Service Comm’n, 1995-1932, p. 5 (La.
4/8/96), 671 So.2d 908, 912. The Commission is entitled to deference
in its interpretation of its own rules and regulations, though not in its
interpretations of statutes and judicial decisions. Alma Plantation v.
Louisiana Public Service Comm’n, 1996-1423, p. 4 (La. 1/14/97); 685
So.2d 107, 110. The Commission’s interpretation and application of
its own orders deserve great weight because the Commission is in the
best position to apply them. Dixie Electric Membership Corp. v.
Louisiana Public Service Comm’n, 441 So.2d 1208, 1211 (La. 1983).

Additionally, “[a] person attacking a [LPSC] order bears a high burden of

demonstrating that it is defective. Louisiana Power & Light Co. v. Louisiana

Public Service Com’n, 609 So.2d 797, 799-800 (La.1992).” Washington St.

7

Tammany Elec. Coop., Inc. v. Louisiana Public Service Comm’n, 07-399, p. 7 (La.

6/29/07), 959 So.2d 450, 455.

In this case, the parties have stipulated that the meter in UPS’s facility is

located at a distance outside of 300 feet from Concordia’s lines. Thus, the relevant

inquiry is whether or not the placement of the meter was an intentional

circumvention of the 300 Foot Rule. The LPSC determined that it was. We must

determine whether this decision of the LPSC is arbitrary and capricious.

This court has reviewed the evidence. Based upon the record, and mindful

that we are not to reevaluate the evidence and substitute our judgment for the

findings of LPSC, we do not find the decision of the LPSC to be arbitrary and

capricious. Undisputedly, the record contains documentary evidence and

contradicting testimony requiring credibility determinations and inferences.

However, we conclude that the LPSC’s decision that Entergy acted in violation of

the 300 Foot Rule is “reasonably based upon the factual evidence presented.”

Entergy Louisiana, LLC v. Louisiana Public Service Comm’n, 990 So.2d at 723.

Whether the placement of UPS’s building was intentional is disputed by the

parties. Entergy maintains UPS’s Project Manager, David Grant, working with a

third party architect, provided UPS with three alternative placements of the

building on the ten-acre tract. The UPS home office had the ultimate decision on

where the building was to be placed, and the 300 Foot Rule was not a factor.

Likewise, it was irrelevant whether Concordia or Entergy were going to provide

service to the facility. Entergy denied being involved in any way in UPS’s

decision on the placement of the building.

Entergy also denies that the building was moved in order to manipulate the

ultimate meter location. Mr. Grant explained that UPS wanted the building to be

located 100 feet from the Hanger Road boundary to provide ample room for

8

expansion in the future, but its placement at a precise distance from Hanger Road

was not critical. Additionally, Entergy discounts the discrepancy between the

intended 100 feet and actual 125 feet distance as being a “mistake.” Mr. Grant’s

measurements were done before the property was cleared, and he did not know

exact boundary lines. He made the measurement to the best of his ability, given

his knowledge, the terrain, and his physical restrictions.

In addition to the placement of the building, the parties also dispute the

purpose for the placement of the meter. Entergy maintains it established through

Mr. Grant’s testimony that the placement of the meter was based upon UPS’s

legitimate business and safety considerations. Mr. Grant testified that he worked

with a third party electrician, and his decision on the meter location was dictated

by the placement of a 44-inch transformer, which necessarily had to account for

equipment traffic, machinery, offices, and areas of moisture. According to Mr.

Grant, this was the “one and only place” that the meter could be located so as not

to interfere with UPS business and safety needs. Mr. Grant denied that the 300

Foot Rule was a consideration.

Concordia counters that Entergy acted in disregard for the 300 Foot Rule

and did nothing to ensure its compliance even before getting UPS to execute the

letter of intent. Despite this lack of knowledge, Entergy’s customer service

specialist, Ms. Theresa Johns, testified that she was “certain” that Entergy could

serve UPS, or, she was at least “hopeful” to do so without any apparent basis for

such optimism. Given the presence of Concordia’s existing lines on two sides of

the ten-acre tract, Concordia questioned Entergy’s decision to rebuild one of its

single-phase lines, which was over a mile away from the UPS property, convert it

to a three-phase line, and then extend the three-phase line 2,500 to 3,000 feet with

the mere hope of serving the UPS facility.

9

Turning to the placement of the building, Concordia directs this court’s

attention to the plats of survey admitted into evidence which clearly show that

nearly the entire UPS facility is located within 300 feet of Concordia’s lines.

Although Mr. Grant was adamant that this measurement was of no concern to UPS,

Concordia and the LPSC point out Mr. Grant’s inability to explain the discrepancy

between UPS’s initial decision to locate the building within 100 feet of Hanger

Road and its ultimate placement 125 feet from Hanger Road other than that it was

a “mistake.” Had the building been positioned 100 feet from Hanger Road, but for

a “mistake,” the entire building, and thus, necessarily the meter, would have been

within 300 feet of Concordia’s lines.

The testimony of Ms. Johns is also cited to refute Mr. Grant’s testimony that

the 300 Foot Rule was not a factor in the building’s placement. According to Ms.

Johns, once she was aware of the presence of Concordia’s electric lines, she

informed UPS that Entergy could not serve them if the meter was located within

300 feet of that line. Additionally, Ms. Johns testified that Mr. Grant told her that

he was aware of the 300 Foot Rule, having spoken to employees of Concordia.

Therefore, the record reflects that the personnel involved in making the decision

were aware of the 300 Foot Rule, were aware of the existing lines, and were aware

of the consequences thereof.

Apart from whether the ultimate building placement was a “mistake,”

Concordia and the LPSC dispute that the location of the meter itself—in a twelve

foot by twelve foot by six foot triangle, located directly in the middle of the

building, and in the only portion of the building located further than 300 feet from

Concordia’s lines—was by mere coincidence. They contend that this is further

evidence of an intentional placement so as to locate the meter beyond 300 feet of

Concordia’s lines.

10

In addition to disputing Mr. Grant’s stated reasons for UPS’s placement of

the building, Concordia and the LPSC also dispute the purported reasons of

business and safety concerns expressed by Mr. Grant relative to the meter

placement. Although Mr. Grant first insisted that the meter location was “the one

and only place” that it could go, they argue that he later admitted that the meter

could have been placed at other locations in the building and still have been away

from the traffic of which he expressed concern. It is asserted that “Mr. Grant’s

refusal to admit knowledge of the 300 Foot Rule, his explaining the location of the

building as a mistake[,] and his refusal to concede the obvious on re-cross[,] all

suggest a lack of credibility[.]” Further, Ms. John’s “certainty,” coupled with Mr.

Grant’s testimony, demonstrate “that a decision was made to locate this building

and this meter so as to circumvent the 300 Foot Rule.” To conclude otherwise,

they argue, “requires a belief that a comedy of mistakes and errors resulted in

Entergy’s ability to serve the load in question and that Entergy [constructed]

thousands of feet of line to serve this load with the mere hope that the comedy

would develop.”

The LPSC’s authority to protect against the duplication of electric lines and

its authority to determine whether a meter placement was done to circumvent the

300 Foot Rule were considered by this court in Washington St. Tammany Electric

Cooperative, Inc. v. Louisiana Public Service Commission, 959 So.2d 450. In that

case, similar to the case at bar, Washington St. Tammany Electric Cooperative,

Inc. (WST) argued that valid reasons existed for the choice of a meter location a

distance away from a sewer lift station which resulted in the meter being located in

excess of 300 feet from an existing electric line of its competitor. Notably, there

was no admission, testimony, or other direct evidence that the meter was

11

purposefully located in order to circumvent the 300 Foot Rule. The LPSC rejected

WST’s purported reasons, and this court upheld the decision of the LPSC finding:

While the Commission does not have the authority to tell private
individuals where they can install their meters, the Commission has
the explicit authority to prohibit the needless duplication or extension
of facilities, and it currently does that by enforcement of the 300 Foot
Rule. Pursuant to General Order dated May 26, 2004, the
Commission may determine whether a meter location has been
selected to circumvent the 300 Foot Rule, regardless of whether that
selection was made by the utility or the customer. Further, the
Commission can, without question, prevent an electric utility from
providing service to a point of connection that circumvents the 300
Foot Rule. . . . The Commission found that the meter location was
chosen in an attempt to circumvent the 300 Foot Rule, and there is a
reasonable evidentiary basis in the record to support this finding.

Id. at 459.

In the instant case, the LPSC reached differing conclusions from those of the

ALJ and the district court. The LPSC considered that had the UPS building been

positioned within 100 feet of Hanger Road, as was the design, the entire building

would have been within 300 feet of Concordia’s lines, which would have given

Concordia exclusive rights to provide electrical services to the facility. Moreover,

whether or not it was due to a “mistake,” the actual placement of the meter in a

twelve foot by twelve foot by six foot triangle, in the center of the UPS building,

was the only location it could have been placed and still be outside of 300 feet of

Concordia’s lines. Any other location of the meter would have been within 300

feet of Concordia lines and would have given Concordia an exclusive right to serve

the UPS facility. The LPSC, using its own judgment and evaluation of the

evidence, unanimously rejected the reasons presented by Entergy and found that

the evidence did support a conclusion that the 300 Foot Rule was intentionally

circumvented. We find that there was a reasonable evidentiary basis for the

decision of the LPSC. Thus, Entergy has not met its high burden of proving that

the decision of the LPSC was arbitrary and capricious.

12

CONCLUSION

For the reasons set forth above, we find that Louisiana Public Service

Commission Order No. U-32980 is not arbitrary and capricious and that there is a

reasonable basis therefor in the record.

DECREE

For the reasons stated herein, the judgment of the district court is reversed,

and Louisiana Public Service Commission Order No. U-32980 is hereby reinstated.

All costs are assessed against Entergy Louisiana, LLC.

REVERSED.

13