ANALYSIS OF JULY 9, 2020 SUPREME COURT OPINION
(Posted July 9, 2020) It’s a double opinion day here at VANA, as the Robes in Richmond hand down a decision on the same day when their brethren across the Potomac wrap up October Term 2019. For coverage of the US Supreme Court’s decisions, you should go to SCOTUSblog. For coverage of the SCV, well, (heh, heh) I’m the only game in town; you may as well read on.
Regulated utilities
Lest you perceive that that last line was unbounded egotism, please be assured that I meant it only as a lead-in for today’s ruling in Wal-Mart Stores East, LP v. SCC. The question here is whether Wal-Mart can shed the shackles of buying electricity from the dominant utility around, a regulated monopoly that you know as VEPCO or APCO, depending on where in Virginia you are.
Some time ago, the 140 Troublemakers created a framework for some semblance of competition in electric utilities. Nonresidential customers whose demand exceeds 5 megawatts have the right to buy electricity from a competitor to VEPCO and APCO. Any customer, including a plain-old homeowner, has the same right if they want 100% renewable energy and their “host” utility doesn’t offer that.
There’s a third category for nonresidential customers. If separately they demand less than 5 MW, but they can aggregate different locations to exceed that threshold, they may ask the State Corporation Commission to permit them to bolt and get their electricity elsewhere. The commission has the discretion to approve that request if there are no adverse effects to other customers and the request is consistent with the public interest.
Wal-Mart, as you know well, operates a lot of stores in Virginia. The individual locations don’t use 5 MW, but when you add up all of them, they greatly exceed that figure. Wal-Mart accordingly filed an application seeking to enter the wholesale energy market, to save a few dollars.
An SCC hearing examiner convened a hearing to consider the matter. That hearing established that the electric companies would sustain losses if all the Wal-Marts across our fair land left the grid, and those costs would be passed along to “captive” consumers, those unable to leave the monopoly, in the form of higher rates. “Yes, but,” Wal-Mart replied, “the average customer’s bill would go up only fractionally, not enough to harm anyone.” The evidence showed a monthly increase of 13 cents for VEPCO customers using 1,000 KW, and five cents for those in APCO’s territory. A footnote in today’s opinion recites Wal-Mart’s contention that such a customer could offset that tiny increase by replacing a single incandescent lightbulb with an LED. (As evidence of my environmental bona fides, I hereby certify that all of my old lightbulbs are long gone, replaced by LEDs some time ago.)
I’ll reframe this setup slightly, in a way that will telegraph the outcome of today’s decision: Would you be willing to pay a few extra cents each month so one of the world’s largest retailers can save a lot, maybe millions, on its electric bills? The SCC looked at that proposed transfer of wealth, a few pennies at a time, and balked. It found that other customers would indeed be affected, and that the retailer’s request was thus contrary to the public interest.
Wal-Mart then moved for reconsideration, asking the SCC to allow it a more limited extent of relief – not all its stores, but something less than that, in a manner that would make it palatable. The commission denied that motion and Wal-Mart headed to the courthouse.
In this case, that means the Supreme Court itself. Under Virginia law, the SCC is a tribunal of equal dignity with circuit courts, and proceedings there offer the priceless opportunity for a by-right appeal. No petition stage; you just go straight to the merits.
Today a unanimous Supreme Court affirms the SCC’s decision. It affords the commission substantial deference where, as here, the statutory framework provides that the commission “may” grant requested relief. Despite the de minimis nature of the individual effects on each residential customer, the overall effect is to transfer millions of dollars from individual customers to a corporate giant, without those customers’ consent. The SCC thus had the discretion to rule as it did.
The court also affirms the denial of Wal-Mart’s reconsideration motion. The justices agree with the SCC that this wasn’t a request to reconsider anything; it was a request to grant relief other than what the application sought. That would require amending the pleading, something that Wal-Mart never sought. Instead, the initial “request” was a passing reference during testimony by a Wal-Mart representative.
