Appeal of Liberty Utilities (EnergyNorth Natural Gas) Corp., D/B/A Liberty ( 2023 )

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Public Utilities Commission
No. 2022-0146
APPEAL OF LIBERTY UTILITIES (ENERGYNORTH NATURAL GAS) CORP.,
D/B/A LIBERTY
(New Hampshire Public Utilities Commission)
Argued: February 9, 2023
Opinion Issued: November 15, 2023
Pastori | Krans, PLLC, of Concord (Terri L. Pastori and Ashley D. Taylor
on the brief, and Terri L. Pastori orally), for the petitioner.
John M. Formella, attorney general, and Anthony J. Galdieri, solicitor
general (Christopher G. Aslin, senior assistant attorney general, on the brief
and orally), for the New Hampshire Department of Energy.
Donald M. Kreis, consumer advocate, on the brief, for the Office of the
Consumer Advocate.
HANTZ MARCONI, J. The petitioner, Liberty Utilities (EnergyNorth
Natural Gas) Corp., d/b/a Liberty (Liberty), appeals an order of the New
Hampshire Public Utilities Commission denying Liberty’s request to recover
development costs related to a proposed natural gas pipeline and tank system,
the Granite Bridge project. The respondents, the New Hampshire Department
of Energy and the Office of the Consumer Advocate, appear in opposition to
this appeal. We affirm.
I
The following facts either were stated in the Public Utilities Commission’s
orders or are drawn from the contents of the documents in the certified record
before us. This case arises from an unrealized construction project. Liberty is
a utility company that provides natural gas to thousands of customers in parts
of New Hampshire. According to Liberty, it relies solely on Tennessee Gas
Pipeline Co., LLC (Tennessee Gas Pipeline) for its gas supply in southern and
central New Hampshire. Liberty executives testified that Liberty sought more
supply from Tennessee Gas Pipeline because Liberty was facing increased
demand. Liberty and Tennessee Gas Pipeline agreed to an arrangement
whereby Liberty would receive additional gas from a second pipeline, but
Tennessee Gas Pipeline cancelled that arrangement. In response, Liberty
began to explore other options, and eventually decided to construct its own
pipeline and tank system, called the Granite Bridge project. During that time,
however, Liberty continued to assess the viability of increasing its supply with
Tennessee Gas Pipeline. As part of its efforts to construct Granite Bridge,
Liberty spent approximately $9.1 million in “development costs.” Liberty
estimated that $7.5 million of that amount consisted of engineering,
environmental, consulting, internal labor, commission related costs, and land
costs. Liberty executives specified that the costs included preliminary designs,
environmental assessments, outside consulting services, and options to
purchase land, among others. Despite those costs, according to Liberty, it
would have been years before Liberty broke ground on Granite Bridge. Later,
Tennessee Gas Pipeline offered Liberty more space on its pipeline at a cheaper
rate than the projected cost of Granite Bridge. Liberty accepted that offer, and
then cancelled the Granite Bridge project.
After Liberty cancelled Granite Bridge, it sought to recover approximately
$7.5 million in costs through a temporary rate increase to its customers. The
Public Utilities Commission determined that Liberty could not recover those
costs through its rates because they were “associated with construction work”
that was unfinished, and thus barred by RSA 378:30-a. Liberty filed a motion
for rehearing, which the Public Utilities Commission denied.
This appeal followed.
II
RSA chapter 541 governs our review of Public Utilities Commission
decisions. See RSA 378:31 (2009). Under RSA 541:13, we will not set aside
the Public Utilities Commission’s order except for errors of law, unless we are
satisfied, by a clear preponderance of the evidence, that it is unjust or
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unreasonable. RSA 541:13 (2021). The Public Utilities Commission’s findings
of fact are deemed prima facie lawful and reasonable. Id. In reviewing the
Public Utilities Commission’s findings, our task is not to determine whether we
would have found differently or to reweigh the evidence, but rather, to
determine whether the findings are supported by competent evidence in the
record. See Appeal of Malo, 169 N.H. 661, 668 (2017). We review the Public
Utilities Commission’s rulings on issues of law de novo. See Appeal of
Pennichuck Water Works, 160 N.H. 18, 26 (2010).
Liberty asserts that its costs are recoverable under RSA 378:30-a
because construction never began on Granite Bridge. See RSA 378:30-a
(2009). Determining whether Liberty’s costs are recoverable requires
interpreting RSA 378:30-a. We first look to the language of the statute itself,
and, if possible, construe that language according to its plain and ordinary
meaning. Doe v. Attorney General, 175 N.H. 349, 352 (2022). We interpret the
statute as written and will not consider what the legislature might have said or
add language that the legislature did not see fit to include. Id. The legislature
is not presumed to waste words or enact redundant provisions and, whenever
possible, every word of a statute should be given effect. Id. We construe all
parts of a statute together to effectuate its overall purpose and avoid an absurd
or unjust result. Id. Moreover, we do not consider words and phrases in
isolation, but rather within the context of the statute as a whole. Id.We begin with the text of the statute to determine whether Liberty’s costs
are recoverable:
Public utility rates or charges shall not in any manner
be based on the cost of construction work in progress.
At no time shall any rates or charges be based upon any
costs associated with construction work if said
construction work is not completed. All costs of
construction work in progress, including, but not
limited to, any costs associated with constructing,
owning, maintaining or financing construction work in
progress, shall not be included in a utility’s rate base
nor be allowed as an expense for rate making purposes
until, and not before, said construction project is
actually providing service to consumers.
RSA 378:30-a.
The plain language of RSA 378:30-a prohibits Liberty from recovering its
costs for Granite Bridge through its rates. We focus on the second sentence
because its breadth is broadest. See Appeal of Public Serv. Co. of N.H., 125
N.H. 46, 52 (1984). The second sentence prohibits recovering “any costs
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associated with construction work if said construction work is not completed.”
RSA 378:30-a. That sentence broadly restricts recovering costs because a cost
need only be “associated with” uncompleted construction work for it to be
unrecoverable. Id.; see Appeal of Public Serv. Co. of N.H., 125 N.H. at 54-55.
Here, Liberty sought to recover approximately $7.5 million in costs specifically
related to its plan to construct Granite Bridge. Executives for Liberty testified
that these costs included engineering, environmental, and consulting costs,
among others, and Liberty itself deemed them development costs. They
testified that the money was spent on, among other things, preliminary
designs, environmental assessments and compliance, cost analysis, regulatory
approvals, and options to purchase land and acquire easements. Those costs
were associated with Granite Bridge because they were steps in the process to
construct its pipeline and tank system, a physical structure. See Appeal of
Public Serv. Co. of N.H., 125 N.H. at 54.
Liberty asserts that the Public Utilities Commission ignored the word
“work” in the second sentence of RSA 378:30-a, improperly expanding the
statute’s reach. By doing so, Liberty contends, the Public Utilities Commission
barred costs without giving effect to the entirety of the statute. The statute
bars “costs associated with construction work,” and Liberty contends no
“construction work” occurred here. Because interpreting RSA 378:30-a is a
legal question, we review the Public Utilities Commission’s order de novo. See
Appeal of Pennichuck Water Works, 160 N.H. at 26. Interpreting the entirety of
the second sentence still leads to the same conclusion, regardless of whether
the Public Utilities Commission ignored a word in its analysis. We have
already interpreted “construction work” to refer to a physical structure. Appeal
of Public Serv. Co. of N.H., 125 N.H. at 53-54. Granite Bridge was to consist of
a pipeline and tank system, a physical structure. See id. While no physical
structure was built, Liberty’s costs remained “associated with” one because
Liberty incurred costs specifically related to its plan to build a physical
structure.
Nevertheless, Liberty contends that its costs should be recoverable
because it incurred them as part of its statutory obligation to evaluate its
potential least cost option. As the Department of Energy pointed out, however,
these “costs would be capitalized if the project had been placed in service” and,
as the Public Utilities Commission found, are not “least-cost planning costs.”
The Public Utilities Commission found: “As pointed out by the [Office of the
Consumer Advocate] and [the Department of] Energy, these costs were not
routine planning to determine the least-cost course of action, but were costs
incurred in furtherance of a specific project, Granite Bridge.” As the Public
Utilities Commission concluded, “[t]he operative question is whether the costs
were ‘associated with construction,’ . . . .” “Here, these costs were plainly
associated with the construction of the Granite Bridge project.” The Granite
Bridge project was “not completed” because it was never constructed. RSA
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378:30-a. Accordingly, Liberty cannot recover its costs when it cancelled the
project and consumers derived no benefit. See id.; Appeal of Public Serv. Co. of
N.H., 125 N.H. at 54-55.
Next, Liberty argues that our decision in Appeal of Public Service Co. of
New Hampshire supports its contention that for the second sentence to bar
recovery of costs actual construction must have begun. We disagree. In
Appeal of Public Service Co. of New Hampshire, we determined that RSA
378:30-a barred the utility company from recovering, through rates, its
investment in a plant which was abandoned during construction. See Appeal
of Public Service Co. of N.H., 125 N.H. at 54-55. The utility acquired an
interest in a project to build a nuclear electric power generating plant and had
invested $15,926,729 in the construction when the owners cancelled the
project. Id. at 48-49. When the utility sought to recover these costs through
ratemaking, we held that RSA 378:30-a barred it from doing so. Id. at 54-55.
We reasoned that the company’s costs were “associated” with construction
work because the company invested in constructing the facility. Id. at 54. This
decision, Liberty contends, limits the meaning of “associated with construction
work” to projects where actual construction has begun.
The issue in Appeal of Public Service Co. of New Hampshire, however,
was whether costs associated with abandoned construction could be recovered
for that part of the project that had been completed before abandonment. Id.
at 51. The nature and timing of the costs incurred were not issues in that
case. See id. In particular, we were not provided with a breakdown of the
costs sought to be recovered, but assumed that the investment included the
cost of the “actual construction and the cost of money used to pay for it.” Id.Without a breakdown of the costs, we cannot determine whether Appeal of
Public Service Co. of New Hampshire held that pre-construction costs were
“associated with construction work.” See id. Thus, we had no occasion to
decide in that case whether pre-construction costs alone were costs “associated
with construction work.” Without such an occasion, Appeal of Public Service
Co. of New Hampshire did not limit “costs associated with construction work”
to costs incurred where actual construction began. See id. at 54, 55.
Turning to Liberty’s argument that the first sentence of RSA 378:30-a
does not apply, we agree because the “construction work” was not “in
progress.” Regarding the third sentence, Liberty contends that it is
inapplicable because it addresses “construction work in progress” and no
“construction work in progress” occurred here. Because “construction work in
progress” must be different from “construction work,” the examples in the third
sentence are irrelevant to interpreting the second sentence. We also agree with
Liberty that the third sentence does not apply, but disagree that its examples
are irrelevant to our analysis of the second sentence. The third sentence
states:
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All costs of construction work in progress, including,
but not limited to, any costs associated with
constructing, owning, maintaining or financing
construction work in progress, shall not be included in
a utility’s rate base nor be allowed as an expense for
rate making purposes until, and not before, said
construction project is actually providing service to
consumers.
RSA 378:30-a. The third sentence describes “construction work in progress” to
include “any costs associated with constructing, owning, maintaining or
financing construction work in progress.” Id. In comparison, the second
sentence also uses the term “any costs associated” but does not delimit the
timing of the costs incurred to while construction is “in progress.” Id. Because
the second sentence captures costs beyond those “in progress” in the third
sentence, the costs in the second sentence necessarily encompass costs similar
to those costs in the third sentence. Thus, construed together, the third
sentence informs the nature of the costs “associated with” construction work to
also encompass pre-construction activities, such as “owning” and “financing.”
Because the statute is unambiguous, we decline to look to the legislative
history of RSA 378:30-a. See Sutton v. Town of Gilford, 160 N.H. 43, 55
(2010).
Next, we turn to Liberty’s contention that we should look to RSA 162-
H:2, III to determine what constitutes “construction work” in the second
sentence of RSA 378:30-a. Liberty contends that RSA 162-H:2, III should be
read together with RSA 378:30-a to help determine whether Liberty’s costs are
“associated with construction work.” The Department of Energy counters that
Liberty waived that argument by failing to include it in Liberty’s motion for
rehearing. RSA 541:3 governs the procedure for rehearing before the Public
Utilities Commission. RSA 541:3 (2021). It states, “[w]ithin 30 days after any
order or decision has been made by the commission, any party to the action . .
. , may apply for a rehearing . . . , specifying in the motion all grounds for
rehearing.” Id. In its motion for rehearing, Liberty did not mention RSA 162-
H:2, III, specifically, but did argue that it had not made application for a siting
permit, nor undertaken any pre-construction or construction activities, and
cited RSA 162-H:5, I. It then drew the Public Utilities Commission’s attention
to RSA 162-H:2, III by letter dated January 18, 2022, more than thirty days
after the Public Utilities Commission October 29, 2021 order. The Public
Utilities Commission deemed this a “new argument[]” and declined to address
it.
We have held however, that a party may cite new authorities so long as
its general argument was raised in the first instance. See Chagnon Lumber Co.
v. Stone Mill Const. Corp., 124 N.H. 820, 822 (1984); State v. Schachter, 133
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N.H. 439, 440 (1990) (holding that where a party raised its “general theory of
recovery” before the trial court, it “will not lose its right to appeal on that theory
simply because it cited for the first time on appeal a statute that it believed to
be favorable to its position.”) Liberty argued before the Public Utilities
Commission that the dictionary definitions of “construction” and “construct”
provided legal support for its costs being recoverable and it pointed to its lack
of siting permit activities pursuant to RSA chapter 162-H as further proof that
these costs were not related to construction work. In its letter, Liberty added a
specific reference to RSA 162-H:2, III to define what activities are considered
“construction work.” Thus, we disagree with the Commission that the letter
raised a new issue; rather, it raised additional legal authority to support issues
already presented by Liberty.
On the merits of Liberty’s additional statutory construction argument, we
are not persuaded. Liberty contends that RSA 162-H:2, III should be read in
conjunction with RSA 378:30-a. RSA 162-H:2, III defines “[c]ommencement of
construction.”
“Commencement of construction” means any clearing of
the land, excavation or other substantial action that
would adversely affect the natural environment of the
site of the proposed facility, but does not include land
surveying, optioning or acquiring land or rights in land,
changes desirable for temporary use of the land for
public recreational uses, or necessary borings to
determine foundation conditions, or other
preconstruction monitoring to establish background
information related to the suitability of the site or to the
protection of environmental use and values.
RSA 162-H:2, III (2023). Liberty contends that its costs cannot be “associated
with construction work” because they do not fall under RSA 162-H:2, III. The
Department of Energy and the Office of the Consumer Advocate counter that
RSA 162-H:2, III and RSA 378:30-a differ, and should not be read together. We
agree with them.
RSA 162-H:2, III and RSA 378:30-a are part of separate and distinct
regulatory regimes dealing with different subject matter. See RSA 162-H:2;
RSA 378:30-a. RSA chapter 162-H pertains to the energy facility evaluation,
siting, construction and operation for projects. RSA ch. 162-H (2023).
Conversely, RSA chapter 378 governs public utility rate setting. See RSA
378:27 (Supp. 2022); RSA 378:28 (2009). RSA 162-H:2, III defines what
constitutes “commencement of construction” before which a certificate must be
obtained from the Site Evaluation Committee. RSA 162-H:2, III; RSA 162-H:5,
I. RSA 378:30-a, however, restricts certain costs from being recovered through
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a utility’s rates. RSA 378:30-a. Furthermore, the statutes were enacted at
different times, rendering RSA 162-H:2, III, enacted in 1991, of little help in
interpreting RSA 378:30-a, enacted more than a decade earlier in 1979. Laws
1979, 101:1; Laws 1991, 295:1. Therefore, we decline to import the definition
of “[c]ommencement of construction” in RSA 162-H:2, III into RSA 378:30-a.
For the foregoing reasons, we affirm the order of the Public Utilities
Commission.
Affirmed.
MACDONALD, C.J., and DONOVAN, J., concurred.
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