Local Union NOS. 15 v. Illinois Commerce Comm'n.

Case Date: 06/20/2002
Court: 5th District Appellate
Docket No: 5-01-0416 Rel

Notice

Decision filed 06/20/02. The text of this decision may be changed or corrected prior to the filing of a Petition for Rehearing or the disposition of the same.

NO. 5-01-0416

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

 

 

LOCAL UNION NOS. 15, 51, and 702, ) Appeal from an Order of the
INTERNATIONAL BROTHERHOOD OF  ) Illinois Commerce Commission.
ELECTRICAL WORKERS, )
)
          Petitioners,  )
)
v. ) No. 00-199
)
THE ILLINOIS COMMERCE COMMISSION )
and WPS ENERGY SERVICES, INC., and )
BLACKHAWK ENERGY SERVICES, L.L.C.,  )
)
          Respondents.  )

 


 

JUSTICE WELCH delivered the opinion of the court:

Local Union Nos. 15, 51, and 702 of the International Brotherhood of ElectricalWorkers (petitioners) appeal from a decision by the Illinois Commerce Commission(Commission) reaffirming a certificate of authority that the Commission had granted to therespondent, WPS Energy Services, Inc. (WPS), to operate as an alternative retail electricsupplier (ARES) under article XVI of the Public Utilities Act (220 ILCS 5/16-101 (West2000)). Petitioners specifically challenge the Commission's construction of section 16-115(d)(5) of the Electric Service Customer Choice and Rate Relief Law of 1997 (220 ILCS5/16-101 (West 2000)) (reciprocity provision). Petitioners contend that the Commissionerred in its construction of the reciprocity provision. We agree, and for the reasons thatfollow, we reverse the decision of the Commission and remand for further proceedings.

In 1997, the Illinois legislature passed article XVI of the Public Utilities Act, entitledthe Electric Service Customer Choice and Rate Relief Law of 1997 (Customer Choice Law) (220 ILCS 5/16-101 (West 2000)). The Customer Choice Law introduced competition forthe first time into the Illinois electricity market and moved the Illinois electric industry froma heavily regulated world toward a competitive marketplace. Commonwealth Edison Co.v. Illinois Commerce Comm'n, 322 Ill. App. 3d 846, 848 (2001); Illinois Power Co. v.Illinois Commerce Comm'n, 316 Ill. App. 3d 254, 257 (2000). The Customer Choice Lawopened the electricity market to participants other than the existing, vertically integratedutilities, and it allowed for the creation of entities called alternative retail electric suppliers. Illinois Power Co., 316 Ill. App. 3d at 257. An ARES may or may not be affiliated with anexisting utility company, and it is authorized to sell and market electricity to customers. Illinois Power Co., 316 Ill. App. 3d at 257.

For an entity to operate as an ARES and serve any retail customer or other user in theState of Illinois, the entity must first obtain a certificate of service authority from theCommission. 220 ILCS 5/16-115(a) (West 2000). A verified application containinginformation showing that the applicant meets the requirements of section 16-115 must befiled with the Commission. 220 ILCS 5/16-115(b) (West 2000). The Commission shallthen grant the application for a certificate of service authority if it makes certain findings asset forth in subsection (d) of section 16-115. 220 ILCS 5/16-115(d) (West 2000).

Section 16-115(d) provides as follows:

"(d) The Commission shall grant the application for a certificate of serviceauthority if it makes the findings set forth in this subsection based on the verifiedapplication and such other information as the applicant may submit:

(1) That the applicant possesses sufficient technical, financial[,] andmanagerial resources and abilities to provide the service for which it seeks acertificate of service authority. ***;

(2) That the applicant will comply with all applicable federal, State,regional[,] and industry rules, policies, practices[,] and procedures for the use,operation, and maintenance of the safety, integrity[,] and reliability[] of theinterconnected electric transmission system;

(3) That the applicant will only provide service to retail customers in anelectric utility's service area that are eligible to take delivery services under this Act;

(4) That the applicant will comply with such informational or reportingrequirements as the Commission may by rule establish and provide the informationrequired by Section 16-112. ***;

(5) That if the applicant, its corporate affiliates[,] or the applicant's principalsource of electricity (to the extent such source is known at the time of the application)owns or controls facilities, for public use, for the transmission or distribution ofelectricity to end-users within a defined geographic area to which electric power andenergy can be physically and economically delivered by the electric utility or utilitiesin whose service area or areas the proposed service will be offered, the applicant,its corporate affiliates[,] or principal source of electricity, as the case may be,provides delivery services to the electric utility or utilities in whose service area orareas the proposed service will be offered that are reasonably comparable to thoseoffered by the electric utility, and provided further, that the applicant agrees tocertify annually to the Commission that it is continuing to provide such deliveryservices and that it has not knowingly assisted any person or entity to avoid therequirements of this Section. ***;

(6) With respect to an applicant that seeks to serve residential or smallcommercial retail customers, that the area to be served by the applicant and anylimitations it proposes on the number of customers or maximum amount of load tobe served meet the provisions of Section 16-115A, provided[] that the Commissioncan extend the time for considering such a certificate request by up to 90 days[] andcan schedule hearings on such a request;

(7) That the applicant meets the requirements of subsection (a) of Section 16-128; and

(8) That the applicant will comply with all other applicable laws andregulations." (Emphasis added.) 220 ILCS 5/16-115(d) (West 2000).

In the instant case, it is the Commission's construction and application of section 16-115(d)(5) that petitioners challenge on appeal. We now turn to the facts in the instant case.

On March 2, 2000, WPS filed an application with the Commission. The applicationsought a certificate of service authority to operate as an ARES. WPS sought to serve certainIllinois nonresidential retail customers throughout portions of Illinois. The applicationstated that Wisconsin Public Service Corp. and Upper Peninsula Power Company areaffiliates of WPS and that these companies own and control electric transmission anddistribution facilities for public use and for the delivery of electricity to end-use customersin a defined geographic region in Wisconsin and Michigan. None of the territories ofWisconsin Public Service Corp. or Upper Peninsula Power Company were open to retailelectric competition and customer choice at the time the application was filed.

WPS filed a "Certification of Compliance." The certification was attached to WPS'sapplication and explained why WPS believed that it complied with the reciprocity provision(section 16-115(d)(5)): "This compliance is based on the fact that electric power and energycan not be 'physically and economically delivered' [by the affected Illinois utilities] to theservice areas of [WPS] *** affiliates." WPS claimed that it understood that the purpose ofsection 16-115(d)(5) was to ensure that those Illinois utilities that have opened their serviceareas to competition have comparable rights to compete in the service areas controlled byutility affiliates of an ARES applicant. Although WPS acknowledged that the service areasof its affiliates were not open to competition at the time of the application, it argued thatbecause power and energy could not be economically or physically delivered by the affectedIllinois utilities to retail customers in the service areas of the WPS affiliates, WPS'sapplication should not be barred on the basis of noncompliance with the reciprocityprovision.

On April 18, 2000, the Commission granted a certificate of service authority to WPS,specifically finding, among other things, that it would not be economical for the Illinoisutilities in question to deliver electrical power and energy to the service areas of WPS'saffiliates. The Commission found that because it would not be economical for the Illinoisutilities in question to deliver electrical power and energy to the service areas of WPS'saffiliates, the reciprocity provisions of section 16-115(d)(5) do not preclude WPS fromreceiving an ARES certificate.

On March 16, 2001, the Commission sua sponte reopened the proceedings, noting,"[T]he Commission is concerned that it may have erred in construing Section 16-115 of theAct[] and that its construction of the law in two important respects may have erroneouslylimited the facts it considered[.]"

On March 28, 2001, petitioners filed a petition to intervene. Several other parties alsofiled petitions to intervene. Petitioners argued in their petition that the Commission shouldadopt an entirely different construction of the reciprocity provision than it had previously. Petitioners argued that under the reciprocity provision, the applicant is required to show thatthe transmission and distribution of electricity can be physically and economically deliveredby Illinois utilities in whose areas the applicant wishes to provide electricity to end-users andthe applicant was also required to show that the necessary political and administrativeactions have been taken in the applicant's or its affiliates' jurisdiction to physically permitthe delivery of such electricity by Illinois utilities to end-users in the applicant's or itsaffiliates' service areas. Petitioners claimed that there is nothing in the reciprocity provisionthat suggests that merely because the Illinois utilities cannot "physically and economically"deliver power to the service areas of the applicant or its affiliates, the applicant is exemptfrom any other requirements set forth in the provision. Petitioners argued that the"physically and economically delivered" clause must be read as imposing additionalrequirements on the applicant that must be fulfilled before it may enter the Illinois retailelectric supply market.

In response, WPS argued that petitioners misunderstood or misapprehended thereciprocity provision. WPS contended that the reciprocity provision merely requires anapplicant to certify that power and energy cannot be physically or economically deliveredby an Illinois utility, in whose service area or areas the applicant proposes to provide service,to retail customers in the service territory of the applicant or its affiliates. WPS argued thatthe section clearly states that if the Commission finds that power and energy cannot bephysically and economically delivered by Illinois utilities to the transmission or distributionsystem of the applicant or its affiliates, then an applicant may be certified regardless ofwhether the applicant or its affiliates provide delivery services comparable to those offeredby Illinois utilities.

Following a hearing, the Commission agreed with WPS and rejected the argumentset forth by petitioners. The Commission agreed with WPS that petitioners' proposedconstruction "is contrary to the plain language of Section 16-115(d)(5) and would afford nomeaning to the qualifying term 'physically and economically delivered.' " The Commissionthen reaffirmed its previous ruling, stating that the proper standard when applying section16-115(d)(5) is whether the Illinois utilities can physically and economically deliver powerand energy to the service areas of WPS's affiliates. The Commission reaffirmed thecertificate of service authority, finding, among other things, that because it would not beeconomical for the Illinois utilities to deliver electric power and energy to the service areasof WPS's affiliates, the reciprocity provision of section 16-115(d)(5) does not preclude WPSfrom receiving ARES certification. We now turn to petitioners' arguments on appeal.

On appeal, petitioners challenge the Commission's interpretation, contending that thereciprocity provision is ambiguous. Petitioners then turn to the legislative purpose inenacting the Customer Choice Law and argue that the section must be construed to requirethat an applicant meet the physically deliverable test and the economically deliverable testand demonstrate that the applicant or applicant's affiliates' service area is open tocompetition. Petitioners contend that the construction of the Commission is erroneousbecause nowhere does the provision provide that if an Illinois utility company cannotphysically or economically deliver power in the ARES applicant's service area, then theapplicant is relieved of the burden of demonstrating reciprocity.

In response, WPS contends that the reciprocity provision is not ambiguous and thatthe Commission's construction is consistent with the plain language of the statute. WPSfurther contends that petitioners' interpretation is unreasonable and absurd, that petitionersare merely attempting to create an ambiguity where none exists, that petitioners' contentionthat the language in the provision should be read in the conjunctive is wrong, and that noconflict exists between the provision and the preamble to the Customer Choice Law. WPScontends that the Commission's construction was reasonable in that the reciprocity clauseapplies only if an ARES applicant or its affiliate owns a public utility to which electricpower and energy can be physically and economically delivered by the Illinois utilities. WPS continues that the statute plainly reads that if electric power and energy can bephysically and economically delivered, only then must that public utility provide the Illinoisutilities with the opportunity to compete in its service areas. WPS argues that the plainlanguage of the statute provides that if the utility cannot physically and economically deliverpower to the ARES applicant's service area or service area of its affiliates, then the inquiryends and the remaining conditions in the section do not apply.

We point out that the Commission has also filed a brief on appeal. In that brief, theCommission argues that petitioners' construction of section 16-115(d)(5) is in error:"Nowhere in [the provision] is there an explicit requirement that an ARES *** prove ordemonstrate that its utility relatives' territories are open to competition." (Emphasis inoriginal.) The Commission further argues that the provision merely requires that reasonablycomparable delivery services be provided if it is proved that electricity can be physically andeconomically delivered. The Commission contends that the purpose of the GeneralAssembly in enacting the Customer Choice Law was to create and increase competitive retailmarkets for electricity in Illinois and that the Commission's construction of the provisionadvances that purpose whereas petitioners' construction leaves the words "physically andeconomically delivered" without meaning. Finally, the Commission contends that if theGeneral Assembly wanted to bar affiliates of out-of-state utilities from adding theircompetitive weight in Illinois, it could have specifically done so.

Where we are called upon to address the Commission's interpretation of its own rules,we must keep in mind that the Commission's interpretation is considered to be prima faciereasonable and that we may not interfere with its interpretation unless the administrativeconstruction is clearly erroneous, arbitrary, or unreasonable. Commonwealth Edison Co. v.Illinois Commerce Comm'n, 322 Ill. App. 3d 846, 849-50 (2001). As our supreme court hasnoted, although we are not bound by the Commission's interpretation of a statutory standard,due to an agency's experience and expertise, we should generally give substantial weight anddeference to the interpretation of a statute by the agency charged with the administration andenforcement of the statute. See Illinois Power Co. v. Illinois Commerce Comm'n, 111 Ill.2d 505, 511 (1986); Commonwealth Edison Co., 322 Ill. App. 3d at 854.

In the instant case, the issue before us is the Commission's construction of section 15-116(d)(5). When a court interprets a statute, the primary objective is to ascertain and giveeffect to the intent of the legislature. Illinois Bell Telephone Co. v. Illinois CommerceComm'n, 262 Ill. App. 3d 266, 274 (1994). The best indication of what the legislatureintended is the statutory language itself. Metro Utility Co. v. Illinois Commerce Comm'n,262 Ill. App. 3d 266, 274 (1997). Clear and unambiguous terms are to be given their plainand ordinary meaning (West Suburban Bank v. Attorneys' Title Insurance Fund, Inc., 326Ill. App. 3d 502, 507 (2001)), and where statutory provisions are clear and unambiguous,the plain language as written must be given effect, without reading into it exceptions,limitations, or conditions that the legislature did not express. Davis v. Toshiba Machine Co.,186 Ill. 2d 181, 184-85 (1999).

However, where the language of a statute is ambiguous, i.e., where it is capable ofbeing understood in two or more different senses by reasonably well-informed people, thecourt may then look to extrinsic sources in order to ascertain the legislature's intent. Wal-Mart Stores, Inc. v. Industrial Comm'n, 324 Ill. App. 3d 961, 966 (2001). One of the firstsources that should be utilized is the legislative purpose of the statute. Wal-Mart Stores,Inc., 324 Ill. App. 3d at 966.

In the instant case, we agree with petitioners that section 15-116(d)(5) is "hardly amodel of simplicity." The first sentence in this provision, the sentence at the center of thedispute in this appeal, contains no less than 150 words and three different conditions. Howto read these conditions in the statute is where the parties differ. Had section 15-116(d)(5)begun the way most of the other subsections in section 15-116(d) begin, simply, "That theapplicant," we doubt whether there would be any serious debate over how the statute is tobe construed. However, because the legislature inserted the word "if" as the second wordin the sentence, the parties now disagree as to how the provision is to be construed. Weagree with petitioners that the insertion of the word "if" has rendered the statute ambiguous. The ambiguity caused by this word is best shown by examining the arguments andconstructions of the parties.

According to the arguments of WPS and the Commission, "if" is to be given its plainand ordinary meaning-"in the event that"-and applied as follows: "In the event that" theCommission finds that the applicant satisfies the first condition in section 16-115(d)(5), onlythen must the Commission find that the applicant satisfies the next condition. In order toachieve this result, however, WPS and the Commission are required to insert a "then" at theend of the first condition, following the word "offered" and before the words "theapplicant."(1) After the substitution and insertion of the terms suggested by WPS and theCommission, the provision would read in part as follows:

"(d) The Commission shall grant the application for a certificate of serviceauthority if it [finds] ***:

* * *

(5) That in the event that the applicant, its corporate affiliates[,] or the applicant'sprincipal source of electricity (to the extent such source is known at the time of theapplication) owns or controls facilities, for public use, for the transmission ordistribution of electricity to end-users within a defined geographic area to whichelectric power and energy can be physically and economically delivered by theelectric utility or utilities in whose service area or areas the proposed service will beoffered, then the applicant, its corporate affiliates[,] or principal source of electricity,as the case may be, provides delivery services to the electric utility or utilities inwhose service area or areas the proposed service will be offered that are reasonablycomparable to those offered by the electric utility, and provided further, that theapplicant agrees to certify annually to the Commission that it is continuing to providesuch delivery services and that it has not knowingly assisted any person or entity toavoid the requirements of this Section."

Although WPS and the Commission contend that the plain and ordinary use of the word "if"renders the provision unambiguous, we disagree, for we believe that the statute is subjectto a different, equally reasonable interpretation, when the word "if" is given its othercommonly understood meaning.

Petitioners suggest that the word "if" be given its other commonly understoodmeaning-"on condition that" (Webster's Third New International Dictionary 1124 (1976)). Under petitioners' suggestion, when "if" is read as "on condition that," the provision readsas follows:

"(d) The Commission shall grant the application for a certificate of serviceauthority if it [finds] ***:

* * *

(5) That on condition that (1) the applicant, its corporate affiliates[,] or the applicant'sprincipal source of electricity (to the extent such source is known at the time of theapplication) owns or controls facilities, for public use, for the transmission ordistribution of electricity to end-users within a defined geographic area to whichelectric power and energy can be physically and economically delivered by theelectric utility or utilities in whose service area or areas the proposed service will beoffered, (2) the applicant, its corporate affiliates[,] or principal source of electricity,as the case may be, provides delivery services to the electric utility or utilities inwhose service area or areas the proposed service will be offered that are reasonablycomparable to those offered by the electric utility, and provided further, that (3) theapplicant agrees to certify annually to the Commission that it is continuing to providesuch delivery services and that it has not knowingly assisted any person or entity toavoid the requirements of this Section. ***."

We believe that petitioners' construction is also reasonable, and because the constructionoffered by WPS and the Commission and the construction offered by petitioners are bothcapable of being understood by reasonably well-informed people, we find this section to beambiguous. Accordingly, in order to ascertain which construction best effectuates thelegislative purpose behind this section, we shall turn to the legislative purpose in enactingthe statute.

As noted earlier, the purpose of the Customer Choice Law was to introducecompetition into Illinois's electricity market. However, section 16-101A of the CustomerChoice Law (220 ILCS 5/16-101A(c) (West 2000)), entitled "Legislative findings," makesclear that the legislature was concerned that the Illinois electrical utilities that hadundertaken certain investments be able to maintain, upon the introduction of competitioninto the market, a reasonable opportunity to obtain a return on their investments. Thelegislature noted that it was concerned that new entrants into the industry might be able totake an unreasonable advantage of the investments that had been made by the formerlyregulated industry. 220 ILCS 5/16-101A(c) (West 2000). Specifically, section 16-101A(c)provides:

"With the advent of increasing competition in this industry, the State has acontinued interest in assuring that the safety, reliability, and affordability of electricalpower is not sacrificed to competitive pressures[] and[,] to that end, intends toimplement safeguards to assure that the industry continues to operate the electricalsystem in a manner that will serve the public's interest. Under the existing regulatoryframework, the industry has been encouraged to undertake certain investments in itsphysical plant and personnel to enhance its efficient operation, the cost of which ithas been permitted to pass on to consumers. The State has an interest in providingthe existing utilities a reasonable opportunity to obtain a return on certaininvestments on which they depended in undertaking those commitments in the firstinstance while, at the same time, not permitting new entrants into the industry to takeunreasonable advantage of the investments made by the formerly regulated industry." (Emphasis added.) 220 ILCS 5/16-101A(c) (West 2000).

Clearly, the legislature was concerned with allowing into the market new entrants that mightbe able to take an unreasonable advantage over the existing utilities. In light of this clearlystated concern, we believe that petitioners' construction of section 16-115(d)(5) is consistentwith this concern, while the construction offered by WPS and employed by the Commissionis not. We agree with petitioners' arguments that the construction offered by WPS and theCommission would give a new entrant an opportunity to take an unreasonable advantageover the existing utilities, for it would allow a new entrant into the Illinois utility marketwithout providing the Illinois utilities affected by the new entrant an opportunity to alsocompete in the market of the new entrant, hence allowing the new entrant to take anunreasonable advantage of the investments made by the formerly regulated industry.

Accordingly, we believe that petitioners' construction of section 16-115(d)(5) isconsistent with the legislative intent and that the construction offered by WPS and employedby the Commission is not. The legislature made it clear that it did not want Illinois affiliatesto be unreasonably taken advantage of, and the construction offered by petitioners bestprotects this interest. Because the Commission's construction is not consistent with thisabove-noted legislative concern whereas the construction offered by petitioners is, webelieve that the Commission's construction of section 16-115(d)(5) is unreasonable anderroneous.

In conclusion, we reverse the Commission's construction of section 16-115(d)(5) andfind that the statute must be construed such that before the Commission grants a certificateof service authority, it must find that the applicant complies with each condition set forth insection 16-115(d)(5). Because the Commission did not engage in this full analysis, wereverse the decision of the Commission and remand this cause to the Commission toreconsider the application in light of our ruling and to address any other issues that mayarise.



Reversed; cause remanded.



GOLDENHERSH and KUEHN, JJ., concur.

1. Such an insertion necessarily follows from the arguments proposed in each of theparties' briefs. The Commission argues in its brief that the provision "requires thatreasonably comparable delivery services be provided if it is proved that electricity can bephysically and economically delivered." (Emphasis added.) Furthermore, WPS argues inits brief that the provision "requires the Commission to make a finding of reciprocity ***if [emphasis added] the applicant" satisfies the first condition of the section.