Yellowstone Valley Electric Cooperative, Inc. v. Montana Power Co.

No. 91-374
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
YELLOWSTONE VALLEY ELECTRIC
.
COOPERATIVE, INC ,
Plaintiff and Respondent,
MONTANA POWER COMPANY,
Defendant and Appellant.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Maurice Colberg, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Donald L. Harris; Crowley, Haughey, Hanson, Toole &
Dietrich, Billings, Montana
For Respondent:
Paul G. Olsen; Olsen & Christensen, Billings,
Montana
For Amicus Curiae Montana Electric Cooperatives'
Association:
Maxon R. Davis; Cure, Borer & Davis, P.C., Great
Falls, Montana
Submitted on Briefs: October 31, 1991
Decided: December 4, 1991
Filed:
Justice John Conway Harrison delivered the Opinion of the Court.
This is an appeal from the Thirteenth Judicial District
Court ' s order permanently enjoining the Montana Power Company (MPC)
from providing electricity to ZooMontana of Billings, Montana.
Involved is the District Court's interpretation of Montana's
Territorial Integrity Act. The Territorial Integrity Act was
adopted in 1971 to aid in the resolution of disputes between
electric utilities and electric cooperatives in the event a
question arose over which company would provide electrical service
to new customers. We affirm.
The appellant, MPC, raises the following issue:
Did the District Court err in enjoining MPC from providing
electricity to ZooMontana under Montana's Territorial Integrity
Act?
This Court is revisited with a question thought long ago well
buried by the passage of the 1971 Montana Territorial Integrity
Act. For some twenty years, commencing with Sheridan County Elec.
Coop. v. Montana-Dakota Util. Co. (1954), 128 Mont. 84, 270 P.2d
742, to Montana Power Co. v. Sun River Elec. Coop., Inc. (1971),
157 Mont. 468, 487 P.2d 307, this Court struggled with numerous
cases between the privately-owned electric companies and the
electric cooperatives in Montana. The Territorial Integrity Act,
now codified as §§ 69-5-101 et seq., MCA, was enacted to settle and
bring to an end these types of cases in the courts of Montana.
Like many pieces of legislation, the Territorial Integrity Act was
a product of compromise, and seemed to serve that purpose for some
twenty years between the time when the last case was before this
Court and the present time with the instant case.
The underlying facts of this case are the following:
ZooMontana is a non-profit corporation formed to build and
operate a zoo on property located just west of the city limits of
Billings, Montana. Following years of fund raising, ZooMontana
began the actual construction of the zoo by erecting the education
building on its land. Eventually, ZooMontana intends to build a
number of buildings and animal exhibits on the property. The
construction was to proceed in stages as the funding permitted.
On May 3, 1991, MPC officials met with Yellowstone Valley
Electric Cooperative, Inc. officials (the Cooperative) to discuss
a number of issues. During that meeting, MPC informed the
Cooperative that ZooMontana had requested MPC to provide three-
phase power for the education building. MPC stated it intended to
supply the power because it had the right to do so under the
Territorial Integrity Act of 1971. The Cooperative officials
disagreed with MPC's interpretation of the Act.
On May 8, 1991, the Cooperative's general manager sent a
letter to MPC which stated in part: "Our measurements show that our
Cooperative's electric facilities are closer to the proposed
education building than MPCols." There being no response to the
letter, on May 24, 1991, MPC began extending its three-phase line
to ZooMontana property. This construction was observed by a
Cooperative official for nearly a week and when the line extension
was completed to ZooMontana, the Cooperative, on May 30, 1991,
obtained from the District Court an ex parte temporary restraining
3
order and order to show cause which enjoined MPC from further
construction of its facilities to ZooMontana.
The parties agree to the following: (1) that neither MPC nor
the Cooperative would master meter the entire ZooMontana property
at the entry point of each party adjacent to its respective three-
phase service; (2) that ZooMontana property would utilize in excess
of 400 kilowatts within two years and that the project eventually
would use over 800 kilowatts; (3) that ZooMontana is a llcommercial
and industrial premises;" and (4) that the basic issue is the cost
to each party of the three-phase line extension.
The District Court heard this matter in two hearings. After
the first hearing it was agreed by both parties that the
engineering firm of Schmidt, Smith and Rush (SSR Engineers, Inc.)
would be appointed to determine the cost of the extension. SSR
Engineers, Inc. submitted its report to the court dated June 14,
1991, wherein it set forth the estimated costs.
The District Court found in its Findings of Fact No. 7 as
follows:
7. Pursuant to Section 69-5-106(2) M.C.A. the
parties agreed to an independent consultant engineer, SSR
Inc. Engineers, to determine whether [the Cooperative] or
MPC can extend its lines to the customer, ZooMontana, at
the least cost. SSR's report (Plaintiff's Exhibit 3) was
made with several presumptions and concluded that:
(a) the cost to MPC to extend its three phase line
prior [sic] from an extension of that line commenced by
construction on May 24, 1991, and restrained by [the
District Court] by order dated May 31, 1991, to the
education building is $24,136.43;
(b) the cost to MPC to extend its three phase line
from the ending point after the extension referred to in
paragraph 7(a) to the education building is $14,622.46;
(c) the cost to MPC to extend its three phase line
to the ZooMontana property line is $ 1 6 , 3 1 9 . 4 9 ;
(d) the cost to [the cooperative] to extend its
three phase line to the education building is $28,348.86;
(e) the cost to [the Cooperative] to extend its
three phase line to the ZooMontana property line is
$6,092.45.
The District Court in its Conclusions of Law Nos. 3 and 4
stated:
3. Since the parties agree that the ZooMontana
property is a commercial premises with a need of 4 0 0
kilowatts or larger within two years and since either
party can extend its lines to the user without any cost
for the extension, the issue is whether MPC as an
electric utility is entitled to priority because it can
under the statute "..
.extend its lines to such industrial
or commercial premises at less cost to the electric
utility...".
4. Section 69-5-102 (7) M.C.A. defines llpremisesll
as:
"Premiseso means a building, residence,
structure, or facility to which electricity is
being or is to be furnished; provided, that
two or more buildings, structures, or
facilities which are located on one tract or
contiguous tracts of land and are utilized by
one electric consumer for farming, business,
commercial, industrial, institutional,
governmental, or trailer court purposes shall
together constitute one premises, except that
any such building, structure, or facility,
other than a trailer court, shall not,
together with any other building, structure,
or facility, constitute one premises if the
electric service to it is separately metered
and the charges for such service are
calculated independently of charges for
service to any other building, structure, or
facility.
The premises of the ZooMontana property within the
meaning of this statute is the property line of the
property. For this reason the appropriate comparisons of
cost for [the Cooperative] and MPC to extend their lines
to the property line of ZooMontana are the costs referred
to in paragraphs 7(c) and 7(e) of the Findings of Fact
herein such costs being $ 1 6 , 3 1 9 . 4 9 to MPC and $ 6 , 0 9 2 . 4 5
to [the Cooperative]. Since the cost of extension of the
lines to the premises is greater to MPC than [the
Cooperative], [the Cooperative] is entitled to provide
the electric power to ZooMontana.
On appeal, MPC contends that the correct comparison to be made
was MPC's cost of extending the three-phase power extension to the
education building in the amount of $24,136.43, as compared to the
Cooperative's cost to extend its power to the same building in the
amount of $28,348.86. The Cooperative contends that the premises
involved here is the entire ZooMontana property so that the cost
comparison to be made is the cost of extending three-phase power to
the ZooMontana property line. That comparison shows that MPC's
cost would be $16,319.49 as compared to the Cooperative's cost of
Section 69-5-102(7), MCA, defines premises as applicable in
this case:
"Premisesu means a building . . . to which
electricity is being or is to be furnished; provided,
that two or more buildings, structures, or facilities
which are located on one tract ...and are utilized by
one electric consumer for . .. institutional . . .
purposes shall together constitute one premises . . .
[with an exception for separate metering which is not
here applicable].
On this issue, the District Court's Findings of Fact No. 8 is
pertinent:
8. The intent of ZooMontana is to utilize its
entire parcel of property for development of its zoo for
various buildings, parking areas, exhibits, displays and
other uses. Although the education building would be the
first place or building located within the total property
for which three phase electric power may be needed such
power will ultimately be required for the entire zoo. .
There is no dispute between the parties as to the foregoing planned
utilization of the entire parcel. Both parties utilize such future
developments to arrive at the 400 kilowatts of power needed within
two years, and referred to in the statute.
We conclude that such facts establish that the District Court
is correct in its conclusion that the premises for this purpose is
the property line of the property and not the education building.
We therefore affirm the holding of the District Court that the
appropriate cost comparison of the costs of $16,319.49 to MPC and
$6,092.45 to the Cooperative; and since the cost of extension is
greater to MPC than the Cooperative, the Cooperative is entitled to
provide the electric power. We affirm the court's order
permanently enjoining MPC from providing electric power to
ZooMontana.
Affirmed .
We concur:
R-
Chief ~ u s t i c d
December 4, 1991
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
Donald L. Harris
CROWLEY LAW FIRM
P.O. Box 2529
Billings, MT 59103-2529
Paul G. Olsen
Olsen & Christensen
P.O. Box 1596
Billings, MT 59103-1596
Maxon R. Davis
Cure, Borer & Davis
P.O. Box 2103
Great Falls, MT 59403-2103
ED SMITH
CLERK OF THE SUPREME COURT
STA~MONTANA
BY: [<
$f ,
Deputy