3109 Hwy. 25 S., L.L.C v. Duke Energy Carolinas ( 2019 )

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.
THE STATE OF SOUTH CAROLINA
In The Supreme Court
3109 Hwy. 25 S., L.L.C. d/b/a 25 Drive-In and Tommy
McCutcheon, Respondents,
v.
Duke Energy Carolinas, LLC, Appellant.
Appellate Case No. 2018-000475
Appeal from the Public Service Commission
Memorandum Opinion No. 2019-MO-034
Heard May 30, 2019 – Filed August 21, 2019
AFFIRMED
Frank Rogers Ellerbe III and Samuel J. Wellborn, both of
Robinson Gray Stepp & Laffitte, LLC, of Columbia,
Heather Shirley Smith, of Duke Energy Corporation, of
Greenville, and Rebecca Jean Dulin, of Duke Energy
Corporation, of Columbia, all for Appellant.
John J. Fantry Jr., of Fantry Law, of Winnsboro, and
Alexander George Shissias, of The Shissias Law Firm,
LLC, of Columbia, both for Respondents.
JUSTICE JAMES: In this direct appeal, we must determine whether the Public
Service Commission of South Carolina erred in ordering Duke Energy Carolinas,
LLC,1 to return a Greenwood, South Carolina customer to a less expensive electricity
rate that is available to certain Duke customers in that area of the state. We affirm
the Commission.
I.
Tommy McCutcheon and his wife own and operate 25 Drive-In, a drive-in
movie theater located in Greenwood. Duke provides electricity to the theater. On
May 30 and June 13, 2015, there were power outages at the property; both occurred
when Duke's service line melted. Duke claimed the theater's energy consumption
was too much for the existing service line to handle. McCutcheon claimed the
theater's energy consumption was conservative and did not cause the outages. Duke
upgraded the drive-in's facilities to handle the supposed increased load and per
Duke's internal policy, removed the drive-in from the "Greenwood rate" and placed
it on the significantly more expensive "Duke rate."
The Greenwood rate is a product of Act No. 1293 of 1966. In 1965, Duke
offered to purchase properties of the Greenwood County Electric Power
Commission (GEPC). In response to Duke's offer, the General Assembly enacted
the Act, authorizing the sale of GEPC property under certain terms. In pertinent
part, the Act provides:
The rates to be charged for electric power for all connections which
exist at the consummation of the sale shall be the lower of the rates
charged by [GEPC] and Duke Power Company and the same shall not
be grounds for any claim alleging discrimination. The rates to be
charged for electric power for connections after the date of the sale shall
be the applicable rates of Duke Power Company. As used herein the
word "connections" shall be deemed to mean the physical connection
of a residence or business establishment and shall have no reference to
the person or business firm occupying the premises so connected, and
the benefit of the lower rate shall continue although the person or firm
occupying such premises may change from time to time.
1
Duke Power Company was a predecessor to the current Duke Energy Corporation.
Duke Energy Carolinas, LLC, is a subsidiary of Duke Energy Corporation. We will
refer to all these entities as "Duke."
Act No. 1293, 1966 S.C. Acts 3294, 3297. At the time the sale was executed, energy
costs were trending downward, and it was expected customers impacted by the sale
would eventually migrate from the Greenwood rate to a lower Duke rate. Obviously,
this estimate proved to be incorrect as energy costs instead trended upward. As a
result, there are still approximately 2,540 Duke accounts on the 1966 Greenwood
rate. The Greenwood rate is significantly less expensive than the Duke rate, and
customers on the Greenwood rate work arduously to keep it.
This Court has previously interpreted the terms of the Act to allow customers
to be transferred from the Greenwood rate to the Duke rate when a "new connection"
has been established. See Payne v. Duke Power Co., 304 S.C. 447, 452, 405 S.E.2d
399, 401-02 (1991) (holding a "new connection" effectuates a transfer from the
Greenwood rate to the Duke rate). We have further explained, "[A] change in either
the character of the connection (e.g. from single to three phase) or use of the premises
(e.g. from residential to commercial) constitutes a new connection effectuating a
transfer to Duke rates." Id.McCutcheon filed a complaint against Duke with the Commission, alleging
the drive-in's transfer to the Duke rate was improper. Duke argues the transfer was
proper because a new connection was established at the drive-in when it upgraded
the drive-in's facilities to handle an increased load. The Commission ordered Duke
to place the drive-in back on the Greenwood rate, subject to certain limitations.
Duke appeals, claiming (1) substantial evidence in the record does not support the
Commission's conclusions, and (2) the Commission's decision was controlled by an
error of law.
II.
In its order placing the drive-in back on the Greenwood rate, the Commission
noted the critical need for Duke to provide safe, reliable power to its customers and
the unfairness that would result in punishing Duke for actions taken to remedy an
"unsafe situation." However, the Commission also noted, "[I]t would not be
appropriate to have the [drive-in] -- operating for a number of years in apparent
compliance with the Greenwood Rate, and taking measures to ensure compliance
with the Rate -- to be removed from the rate without specific proof that they had
become non-compliant with the rate." As a result, the Commission ordered Duke to
place the drive-in back on the Greenwood rate, subject to certain limitations (these
limitations are not an issue in this appeal).
Duke requested rehearing;2 in its order denying rehearing, the Commission
clarified that its ruling was not based on a finding as to whether Duke's upgrade
constituted a change in the character of the connection sufficient to establish a new
connection. The Commission explained it found "inadequate information was
available to determine that a change in character was necessitated in this case due
solely to the actions of [McCutcheon]."3
We may reverse or modify the Commission's decision if the substantial rights
of an appellant have been prejudiced by a decision clearly erroneous in view of the
substantial evidence in the record. See S.C. Code Ann. § 1-23-380(5)(e) (Supp.
2018). We have held:
"Substantial evidence" is not a mere scintilla of evidence nor evidence
viewed blindly from one side of the case, but is evidence which,
considering the record as a whole, would allow reasonable minds to
reach the conclusion that the administrative agency reached or must
have reached in order to justify its action.
Lark v. Bi-Lo, Inc., 276 S.C. 130, 135, 276 S.E.2d 304, 306 (1981) (quoting Laws v.
Richland Cty. Sch. Dist. No. 1, 270 S.C. 492, 495-96, 243 S.E.2d 192, 193 (1978)).
We are prohibited from substituting our own judgment for that of the Commission
upon a question as to which there is room for a difference of intelligent opinion.
Hamm v. Pub. Serv. Comm'n of S.C., 310 S.C. 13, 16-17, 425 S.E.2d 28, 30 (1992).
Duke argues there is no substantial evidence in the record to support the
Commission's ruling that the drive-in was eligible for the Greenwood rate.
Specifically, Duke contends there was no basis for the Commission to conclude that
"the thermal outages were caused by anything other than [the drive-in's] electricity
demand exceeding the capacity" of the existing facilities, and Duke further argues
McCutcheon "provided no credible alternative theory as to the failure of the electric
service line." We disagree.
2
Duke's motion requesting rehearing is not in the record on appeal.
3
During its reply argument before this Court, Duke argued for the first time that the
Commission improperly shifted the burden of proof from McCutcheon to Duke. We
find this argument unpreserved, as it was never raised to or ruled upon by the
Commission. See Brown v. S.C. Dep't of Health & Envtl. Control, 348 S.C. 507,
519-20, 560 S.E.2d 410, 417 (2002) (finding an issue unpreserved because it was
not raised to or ruled upon by the trial court).
The parties agree the power outages occurred because the service wire had
melted. However, they do not agree as to why the wire melted. McCutcheon's
expert, James R. Calhoun, testified before the Commission the wire melted because
it was deteriorated and that neither the drive-in's equipment nor thermal overload
caused the wire to melt. Duke's expert, Joel Lunsford, testified the service wire
failed because of thermal overload caused by the drive-in's consumption of power
above the wire's maximum amperage rating. There is also evidence in the record—
as cited by the Commission—establishing McCutcheon installed modern, more
energy-efficient equipment at the drive-in before the two outages occurred.
Evidence was presented that after the second outage, and after Duke
completed the upgrade, Duke placed a demand meter on the service wire. There was
testimony that the drive-in reached a demand level of 225 amperes after Duke
installed the demand meter. Duke argues this evidence establishes the outages were
caused by thermal overload. However, the Commission was free to give little or no
weight to this evidence, as the demand meter was installed after the second outage,
and there was no demand meter in place at the time of either of the two outages.
The Commission obviously evaluated the evidence presented at the hearing.
Although reasonable minds could differ, substantial evidence supports the
Commission's finding that the evidence in the record did not establish a change in
the character of the connection "was necessitated in this case due solely to the actions
of [McCutcheon]." In every fact-dependent case, fact-finders must evaluate the
evidence and reach a decision; here, the Commission, as fact-finder, simply did not
evaluate the evidence in the way Duke desired.
III.
We may reverse or modify the Commission's decision if the substantial rights
of an appellant have been prejudiced by a decision affected by an error of law. See
S.C. Code Ann. § 1-23-380(5)(d) (Supp. 2018).
Duke argues the Commission found a "new connection" was established when
Duke upgraded the drive-in's facilities, and pursuant to Act 1293, the Commission's
decision to return the drive-in to the Greenwood rate constituted an error of law.
Duke asserts our prior decisions in Duke Power Co. v. South Carolina Public Service
Commission, 284 S.C. 81, 326 S.E.2d 395 (1985), and Payne v. Duke Power Co.,
304 S.C. 447, 405 S.E.2d 399 (1991), support such a finding. We disagree.
In neither Duke Power Co. nor Payne did we specifically hold that an upgrade
of a customer's facilities conclusively constitutes a change in the character of the
connection sufficient to establish a new connection. As discussed above in Section
II, the Commission considered the evidence presented and concluded the evidence
did not establish a change in the character of the connection "was necessitated in this
case due solely to the actions of [McCutcheon]." The Commission declined to find
an upgrade of a customer's facilities constitutes, as a matter of law, a change in the
character of the connection sufficient to establish a new connection. We agree with
the Commission's analysis.
Duke also argues Act 1293 does not allow the drive-in, once it was placed on
the Duke rate, to "re-qualify" for the Greenwood rate. Under the unique facts of this
case, we disagree. Here, McCutcheon vehemently protested his removal from the
Greenwood rate. Duke still removed him from the Greenwood rate, and
McCutcheon challenged his removal to the Commission. Duke appears to assert that
once McCutcheon was placed on the Duke rate, he can never be placed back on the
Greenwood rate. Under this reasoning, if Duke arbitrarily removes a customer from
the Greenwood rate (as it arguably did here) and places the customer on the Duke
rate, this decision would never be reviewable. Such an interpretation of the Act
would be absurd and would deprive the Commission of its authority to review Duke's
rate-setting activity in the area encompassed by Act 1293. See S.C. Code Ann. § 58-
27-1940 (2015) ("Any person, corporation, or municipality having an interest in the
subject matter, including any electrical utility concerned, may petition in writing
setting forth any act or thing done or omitted to be done by any electrical utility in
violation, or claimed violation, of any law which the [C]ommission has jurisdiction
to administer or of any order or rule of the [C]ommission."); Payne, 304 S.C. at 451
n.6, 405 S.E.2d at 401 n.6 ("Although . . . [we] held that Act 1293 divested [the
Commission] of jurisdiction to raise the old Greenwood rates, [the Commission] is
not prohibited from exercising its regulatory authority in a manner consistent with
the Act."). The Commission's ruling does not exceed its authority to ensure Duke is
charging its customers the legally prescribed rates.
Therefore, we hold the Commission did not err in returning the drive-in's
account to the Greenwood rate.
IV.
For the foregoing reasons, we affirm the Commission.
AFFIRMED.
KITTREDGE, Acting Chief Justice, HEARN, FEW, JJ., and Acting Justice
Paula Thomas, concur.