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CPS Energy v. Public Utility Commission of Texas

Court of Appeals of Texas, Third District, Austin

August 31, 2017

CPS Energy, Time Warner Cable Texas LLC, and Southwestern Bell Telephone Company d/b/a AT&T Texas, Public Utility Commission of Texas, Appellants// Cross-Appellant,
v.
Public Utility Commission of Texas, CPS Energy, Time Warner Cable Texas LLC, and Southwestern Bell Telephone Company d/b/a AT&T Texas, Appellee// Cross-Appellees

         FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT NO. D-1-GN-13-001238, HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDING

         ON MOTION FOR REHEARING

          Before Justices Puryear, Pemberton, and Bourland

          OPINION

          Cindy Olson Bourland, Justice

         We withdraw the opinion and judgment dated February 24, 2017, and substitute the following opinion and judgment in their place. We deny Time Warner Cable Texas LLC's motion for rehearing and en banc reconsideration.

         This case concerns the rates charged by a municipally owned utility (MOU), CPS Energy, to telecommunications providers and other entities that attach their network facilities to the utility's poles. The appeal raises issues of first impression arising out of the Public Utility Regulatory Act (PURA). See generally Tex. Util. Code §§ 11.001-66.017. Specifically at issue is PURA Section 54.204 and its interaction with federal law and Federal Communications Commission (FCC) rules, as well as the scope of the Commission's jurisdiction over MOUs.

         CPS Energy filed a petition with the Public Utility Commission of Texas (Commission or PUC) seeking an order confirming that CPS Energy's method for calculating its pole-attachment rates was reasonable and consistent with PURA and requiring Southwestern Bell Telephone Company d/b/a AT&T Texas (AT&T) and Time Warner Cable Texas LLC (TWC) to pay all outstanding pole-attachment fees. Although AT&T and TWC both had existing agreements with CPS Energy concerning the use of CPS Energy's poles, this dispute developed after the enactment of legislation that prohibits discrimination by MOUs in favor of or against certificated telecommunications providers (CTPs), see id. § 54.204(b), and that requires MOUs to charge a rate that does not exceed a maximum-allowable rate and to charge a uniform rate for pole attachments, see id. § 54.204(c).

         After a proceeding involving a number of highly contested and complex legal and factual issues that took nearly four years to complete at the Commission level, the Commission determined in its final order that CPS Energy had charged more than the maximum-allowable pole-attachment rate for two years and that it had violated Section 54.204's nondiscrimination and uniform-rate provisions from September 7, 2005 through 2010. The district court affirmed the order in part and reversed it in part. The issues now before us concern the appropriate calculation of the maximum-allowable pole-attachment rate and the application of Section 54.204's nondiscrimination and uniform-rate provisions. As detailed below, we will affirm the judgment of the district court in part, reverse it in part, dismiss for want of jurisdiction in part, and remand the case to the Commission for further proceedings consistent with this opinion.

         BACKGROUND[1]

         CPS Energy is an MOU owned by the City of San Antonio, Texas. CPS Energy delivers electricity to its customers through distribution lines attached to poles that it owns in the San Antonio area. Other entities, such as telephone companies and cable companies, including AT&T and TWC, lease space on CPS Energy's poles so that they may attach the wires and cables necessary to provide telecommunications services to area customers. AT&T is a certified telecommunications utility and certificated telecommunications provider (CTP) in Texas. See id. § 51.002(10)(A)(1). TWC is a franchised cable operator in San Antonio, Texas, and it is not a CTP. See id. § 66.003. CPS Energy had agreements with both AT&T and TWC regarding the use of CPS Energy's poles.

         CPS Energy and AT&T entered into a "Joint Use Pole Contact Agreement" in 1987. The agreement allowed AT&T to attach to CPS Energy's poles and CPS Energy to attach to AT&T's poles. In exchange for attaching to CPS Energy's poles, AT&T agreed to pay an annual attachment fee of $3.75 per pole. The agreement did not allow CPS Energy to adjust the pole-attachment fee, but either party could terminate the agreement upon six months' notice. After termination, the terms and conditions set forth in the agreement remained in full force with respect to all poles that were jointly used by CPS Energy and AT&T as of the termination date. From January 1987 until December 31, 2006, CPS Energy charged AT&T a pole-use fee of $3.75 per pole.

         CPS Energy and TWC entered into a pole-attachment agreement in 1984 to allow TWC to provide cable services. The agreement required TWC to apply to CPS Energy for a permit before attaching to CPS Energy's poles. Under the agreement, CPS Energy charged TWC a fee of $3.75 per pole, per year, but CPS Energy could raise the rate with six months' notice. In 2005, TWC began providing telecommunications services in San Antonio in addition to cable services.

         Also in 2005, the Texas Legislature amended PURA Section 54.204. As part of an act entitled "Furthering Competition in the Communications Industry, " the Legislature amended Section 54.204(b)'s nondiscrimination provision and Section 54.204(c)'s maximum-allowable-rate provision, and it added a uniform-rate provision to Section 54.204(c). The amended statute had an effective date of September 7, 2005, for all provisions except the uniform-rate provision, which had an effective date of September 1, 2006.[2] Under the maximum-allowable-rate provision in Section 54.204(c), MOUs may not charge any entity, regardless of the nature of the services provided by that entity, a pole-attachment rate that exceeds the fee that the MOU would be permitted to charge under rules adopted by the FCC under 47 U.S.C. Section 224(e) if MOUs were regulated under federal law and FCC rules.[3] See id. § 54.204(c). The uniform-rate provision in Subsection (c) requires MOUs to charge a single, uniform pole-attachment rate to all entities that are not affiliated with the MOU regardless of the services carried over the networks attached to the poles. Id. Subsection (b) provides that an MOU may not discriminate in favor of or against a CTP (like AT&T) regarding pole-attachment rates. See id. § 54.204(b). Subsection (d) states: "Notwithstanding any other law, the commission has the jurisdiction necessary to enforce this section." Id. § 54.204(d).

         In PURA Section 54.204(c), the Texas Legislature directs the Commission to determine an MOU's maximum-allowable pole-attachment rate by referring to the FCC rules adopted under 47 U.S.C. Section 224(e). Section 224(e) required the FCC to prescribe regulations to govern the charges for pole attachments used by telecommunications carriers to provide telecommunications services and mandated that "[s]uch regulations shall ensure that a utility charges just, reasonable, and nondiscriminatory rates for pole attachments." 47 U.S.C. § 224(e). The federal statute became effective on February 8, 1996, but it did not apply to MOUs until September 1, 2005, when PURA Section 54.204(c)'s maximum-allowable-rate provision became effective.

         As required by 47 U.S.C. Section 224(e), the FCC adopted a formula for calculating the maximum-allowable pole-attachment rate, referred to as the Telecom Formula. The Telecom Formula calculates a utility's historical cost of owning and maintaining poles and then allocates a portion of that cost to each attaching entity based on the amount of space it occupies on the pole. The Telecom Formula is the product of three calculations: a spacing factor, net pole investment, and the carrying charge. To arrive at the maximum-allowable rate under the Telecom Formula, the net cost of a bare utility pole is multiplied by a space-allocation factor (with inputs including space occupied by the attacher and other inputs designed to determine the percentage of usable space occupied by an attacher, such as pole height, pole burial depth, minimum clearance, and the number of attaching entities) and by a carrying-charge factor designed to determine the utility's annual cost of owning and maintaining that pole regardless of the presence of pole attachments. The FCC Telecom Formula is stated as follows:

         (IMAGE OMITTED)

         47C.F.R. § 1.1409(e).

         On September 1, 2006, as required by PURA Section 54.204(c), CPS Energy charged TWC a pole-attachment fee based on CPS Energy's calculation of the maximum-allowable rate under federal law. Beginning in 2007, CPS Energy charged AT&T and TWC the same pole-attachment rate. In 2009, in an effort to comply with the uniform-rate provision of PURA Section 54.204(c), CPS Energy back billed AT&T for additional amounts due for September 1, 2006 (when the uniform-rate provision became effective) through December 31, 2006.

         For Test Years 2004-2008/Billing Years 2005-2009, [4] CPS Energy charged to AT&T and TWC the annual pole-attachment rates and received from AT&T and TWC the annual payments set forth below:

         CPS Energy's pole-attachment rates

Test Year

Billing Year

CPS Invoiced Rate

AT&T TWC

Amount Paid

AT&T TWC

2004

2005

$3.75

$13.52

$3.75

$13.52

2005

2006

$3.75

$15.63

$3.75

$15.63

2006

2007

$15.63

$15.63

$3.75

$15.63

2007

2008

$19.82

$19.82

$3.75

$15.63

2008

2009

$19.82

$19.82

$3.75

$3.75

         AT&T has not paid CPS Energy's invoiced fees over $3.75. After learning of this, TWC sued CPS Energy in December 2008 in Bexar County District Court, seeking damages and injunctive relief for CPS Energy's alleged discrimination in favor of AT&T and resulting violations of PURA Section 54.204 and alleged breach of contract. About a month after TWC filed suit, in January 2009, CPS Energy filed an enforcement complaint against both AT&T and TWC at the Commission. CPS Energy moved to abate TWC's Bexar County suit on the grounds that the Commission had primary jurisdiction. The Bexar County District Court sustained CPS Energy's plea in abatement and abated the proceeding filed by TWC in March 2009. In November 2010, CPS Energy filed suit against AT&T in Bexar County, and that proceeding was abated in February 2012.

         The Commission proceeding

         In its petition and request for enforcement filed with the Commission, CPS Energy sought an order requiring AT&T and TWC to pay all outstanding pole-attachment fees and determining that CPS Energy's method for calculating pole-attachment fees was reasonable and consistent with PURA Section 54.204. AT&T and TWC subsequently filed motions to dismiss CPS Energy's petition, asserting that CPS Energy lacked standing to file the petition and that the Commission lacked jurisdiction over the contractual issues and had no authority to award damages. The Commission ruled that it had jurisdiction to determine whether CPS Energy's pole-attachment rates comply with PURA and that CPS Energy had standing to seek a declaratory order regarding the issue of whether its pole-attachment rates comply with PURA Section 54.204. However, the Commission dismissed for want of jurisdiction CPS Energy's claims seeking payment of overdue pole-attachment fees. The Commission found that the appropriate venue for these claims was a court with subject-matter jurisdiction over contract damages.

         The Commission subsequently referred the remaining issues to the State Office of Administrative Hearings for hearing before administrative law judges (ALJs). After extensive proceedings, the ALJs issued a proposal for decision (PFD). The PFD contained the ALJs' findings of fact and conclusions of law setting forth their calculation of CPS Energy's maximum-allowable rate for the years at issue and concluding that CPS Energy had not violated Section 54.204's nondiscrimination provisions, except that it discriminated against TWC from September 1, 2006 through December 31, 2006, in violation of Section 54.204(c). After further proceedings, the Commission issued its final Order on Rehearing (Final Order), in which it accepted some but rejected others of the ALJs' findings and conclusions. See Tex. Gov't Code § 2003.049(g) (outlining when Commission may change ALJ's findings and conclusions).

         As noted earlier, this case took nearly four years to complete at the Commission level, involving over 800 filings, close to 60 orders, and several certified questions to the Commission before the PFD was issued. The main issues addressed in the Commission proceedings were whether CPS Energy (1) violated PURA Section 54.204 by having discriminatory rates or terms in its pole-attachment agreements with TWC as compared to AT&T, (2) charged uniform rates to all non-affiliated entities that attached to its poles, and (3) complied with PURA Section 54.204(c)'s requirement that its pole-attachment rates cannot exceed the maximum-allowable rate determined from the FCC's Telecom Formula. To determine whether CPS Energy's rates complied with the rate cap in Section 54.204(c), the Commission concluded that it had jurisdiction to review and modify the appropriate inputs, including defaults and rebuttable presumptions, used to calculate the rate under the Telecom Formula. In addition, because the FCC amended the Telecom Formula in 2011 during the pendency of the proceeding, the Commission also considered the applicability of the FCC amendments and the methodology for calculating pole-attachment rates on a going-forward basis.

         The Commission reiterated in its Final Order that it did not decide whether any existing pole-attachment agreements are contractually valid or enforceable, whether CPS Energy is owed any allegedly overdue pole-attachment fees, or whether any rates charged by CPS Energy are reasonable. The Commission did not determine the rate that CPS Energy should charge for pole attachments. The Commission limited its determination to the maximum rate that CPS Energy may charge for pole attachments.[5]

         The Commission found the following maximum-allowable rates for Billing Years 2005 through 2009 (the highest rate that CPS Energy charged for each year is also shown):

Test Year

Billing Year

Maximum Allowable Rate

CPS Invoiced Rate

2004

2005

$14.92

$13.52

2005

2006

$18.10

$15.63

2006

2007

$17.96

$15.63

2007

2008

$16.50

$19.82

2008

2009

$16.18

$19.82

2009

2010

$14.68

not in Final Order

         Accordingly, the Commission concluded that CPS Energy violated PURA Section 54.204(c) by charging AT&T and TWC a rate above the maximum-allowable rate for Billing Years 2008 and 2009. The Commission further stated in its Final Order that "[i]f CPS Energy charged above $14.68 in test/billing year 2009/2010, CPS Energy charged above the maximum allowable rate for that year as well." In other relevant part, the Commission determined that CPS Energy:

(1) violated Section 54.204(c)'s uniform-rate requirement by charging AT&T different pole-attachment rates for the period between September 1, 2006, and December 31, 2006, and that retroactively billing AT&T did not cure the violation because "competitive damage would have already occurred";
(2) violated Section 54.204(c)'s uniform-rate requirement by failing "to take timely action to ensure that all pole attachers actually paid the uniform rate it invoiced" because AT&T continued to pay the $3.75 rate even after CPS Energy began invoicing a uniform rate in Billing Year 2007; and
(3) violated Section 54.204(b)'s nondiscrimination provision by offering different terms to AT&T and TWC from September 7, 2005, to the end of 2010 and by violating the uniform-rate provision as discussed above.

         The Commission also determined that "competitive harm necessarily occurred as a result of the different rates and terms offered to AT&T and TWC, as well as the different rates collected between AT&T and TWC." Finally, the Commission concluded that it does not have the authority to assess a monetary penalty for violations of Section 54.204 and that Section 54.204 does not expressly give it the power to order remedies for past violations of Section 54.204. Accordingly, it ordered CPS Energy to comply with the relevant statutory provisions going forward by charging a uniform rate and not discriminating in favor of or against a CTP in its pole-attachment agreements.[6]

         The district court's judgment

         After the parties appealed the Commission's Final Order to the district court for judicial review, the district court affirmed the Final Order in part and reversed in part. The district court concluded that the Commission lacked jurisdiction to make determinations about the following issues: (1) the existence of or the statute's effect on disputed private pole-attachment agreements; (2) whether there was a breach of contract; and (3) whether discrimination under PURA necessarily caused harm. The district court reversed the Commission's findings of fact and conclusions of law concerning these issues, stating "[t]hese findings and conclusions are unnecessary to the Commission's order, and their absence does not affect the order." None of the parties challenge this portion of the district court's judgment. Therefore, we will not consider it.

         The district court also reversed the Commission's decision on two of the Telecom Formula inputs. It reversed the Commission's decision to use an average of three attaching entities in its calculation of the pole-attachment rate for Billing Years 2005-2010 instead of the FCC's rebuttable presumption of five attaching entities. The district court also reversed the Commission's decision to adopt a rate of return other than the FCC's default rate of return of 11.25% for Billing Year 2005. The district court otherwise affirmed the Commission's Final Order and remanded the matter to the Commission for proceedings consistent with the district court's judgment. This appeal followed.

         The parties' issues on appeal

         CPS Energy raises five issues on appeal. It challenges the district court's reversal of the Commission's decision to use an average of three attaching entities in its calculation of the pole-attachment rate for Billing Years 2005-2010 instead of the FCC's rebuttable presumption of five attaching entities. In addition, CPS Energy challenges the district court's affirmance of several Commission conclusions. CPS contends that (1) the Commission does not have the authority to review and modify CPS Energy's inputs used to calculate the maximum-allowable pole-attachment rate; (2) the FCC's 2011 amendments to its rules do not automatically apply to PURA Section 54.204(c); (3) the Commission exceeded its authority by imposing a requirement on CPS Energy to not only charge a uniform rate but also collect a uniform rate; and (4) Section 54.204(b)'s nondiscrimination provision does not apply to this proceeding because CPS Energy's pole-attachment agreements did not grant consent for use of a right-of-way as required for application of the provision.

         Like CPS Energy, the Commission challenges the district court's reversal of the Commission's decision to use an average of three attaching entities in its calculation of the pole-attachment rate for Billing Years 2005-2010 instead of the FCC's rebuttable presumption of five attaching entities. The Commission also challenges the district court's reversal of the Commission's decision to adopt a rate of return other than the FCC default rate for Billing Year 2005.

         AT&T and TWC challenge both the district court's reversal of the Commission's decision on the rate of return for Billing Year 2005 and the district court's affirmance of the Commission's determination that PURA does not give it jurisdiction to modify the FCC default rate of return for Billing Years 2006-2010.

         STANDARDS OF REVIEW

         In an administrative appeal governed by the substantial-evidence rule, like this one, a court may affirm the state agency's decision in whole or in part and shall reverse or remand the case for further proceedings if the appellant's substantial rights at the agency level have been prejudiced because the agency has committed one of the errors listed in Section 2001.174(2).[7] See Tex. Gov't Code § 2001.174 (establishing standard for review under substantial-evidence rule); Tex. Util. Code § 15.001 (providing that any party to proceeding before Commission is entitled to judicial review under substantial-evidence rule). The list of potential reversible errors includes administrative findings, inferences, conclusions, or decisions that are:

(A) in violation of a constitutional or statutory provision;
(B) in excess of the agency's statutory authority;
(C) made through unlawful procedure;
(D) affected by other error of law;
(E) not reasonably supported by substantial evidence considering the reliable and probative evidence in the record as a whole; or
(F) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Tex. Gov't Code § 2001.174(2)(A)-(F).

         Every state administrative agency has only those powers expressly conferred upon it by the Texas Legislature. Public Util. Comm'n of Tex. v. City Pub. Serv. Bd. of San Antonio, 53 S.W.3d 310, 316 (Tex. 2001) ("CPS Board I"). "When the Legislature expressly confers a power on an agency, it also impliedly intends that the agency have whatever powers are reasonably necessary to fulfill its express functions or duties." Id. However, an agency may not exercise what is effectively a new power or a power that contradicts the statute, even if the power is expedient for administrative purposes. Id. Furthermore, we consider the agency's interpretation of its own powers only if that interpretation is reasonable and not inconsistent with the statute. Id.

         An agency acts arbitrarily and capriciously when it: (1) denies a litigant due process and prejudices its substantial rights; (2) wholly adopts the record from another case involving different parties, fails to make findings of fact, and bases its decision on its findings made in the other case; or (3) improperly bases its decision on non-statutory criteria. Texas Health Facilities Comm'n v. Charter Med.-Dallas, Inc., 665 S.W.2d 446, 454 (Tex. 1984) (analyzing cases). In addition, an agency abuses its discretion or its decision is arbitrary "if the agency: (1) failed to consider a factor that the legislature directs it to consider; (2) considers an irrelevant factor; or (3) weighs only relevant factors that the legislature directs it to consider but still reaches a completely unreasonable result." City of El Paso v. Public Util. Comm'n of Tex., 883 S.W.2d 179, 184 (Tex. 1994) (citing Gerst v. Nixon, 411 S.W.2d 350, 360 n.8 (Tex. 1966)). An agency's decision is also arbitrary if it is made without regard for the facts, relies on fact findings that are not supported by any evidence, or lacks a rational connection between the facts and the decision. See City of Waco v. Texas Comm'n on Envtl. Quality, 346 S.W.3d 781, 819-20 (Tex. App.-Austin 2011) (analyzing cases), rev'd on other grounds, 413 S.W.3d 409 (Tex. 2013). In other words, we must remand for arbitrariness if we conclude that the agency has not "'genuinely engaged in reasoned decision-making.'" Id. (quoting Starr Cty. v. Starr Indus. Servs., Inc., 584 S.W.2d 352, 356 (Tex. Civ. App.-Austin 1979, writ ref'd n.r.e.)).

         We review the agency's legal conclusions for errors of law and its factual findings for support by substantial evidence. Heat Energy Advanced Tech., Inc. v. West Dallas Coal. for Envtl. Justice, 962 S.W.2d 288, 294-95 (Tex. App.-Austin 1998, pet. denied). Our substantial-evidence review of factual findings "gives significant deference to the agency in its field of expertise." Railroad Comm'n of Tex. v. Torch Operating Co., 912 S.W.2d 790, 792 (Tex. 1995). Substantial-evidence review of these findings requires "only more than a mere scintilla." Id. at 792-93. Substantial evidence "does not mean a large or considerable amount of evidence, but rather such relevant evidence as a reasonable mind might accept as adequate to support a conclusion of fact." Lauderdale v. Texas Dep't of Agric., 923 S.W.2d 834, 836 (Tex. App.-Austin 1996, no writ) (quoting Pierce v. Underwood, 487 U.S. 552, 564-65 (1988)) (internal quotation marks omitted). We consider the reliable and probative evidence in the record as a whole when testing an agency's findings, inferences, conclusions, and decisions to determine whether they are reasonably supported by substantial evidence. See Charter Med., 665 S.W.2d at 452. We presume that the Commission's order is supported by substantial evidence, and the challenging parties bear the burden of proving otherwise. See id. at 453. The burden is a heavy one-even a showing that the evidence preponderates against the agency's decision will not be enough to overcome it, if there is some reasonable basis in the record for the action taken by the agency. See id. at 452. We may not substitute our judgment for the agency's judgment "on the weight of the evidence on questions committed to agency discretion." Tex. Gov't Code § 2001.174. Resolving factual conflicts and ambiguities is the agency's function, and the substantial-evidence rule protects that function. Firemen's & Policemen's Civil Serv. Comm'n v. Brinkmeyer, 662 S.W.2d 953, 956 (Tex. 1984). Our ultimate concern is the reasonableness of the agency's order, not its correctness. Id.

         We review issues of statutory construction de novo. Texas Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex. 2010). Our primary objective when construing statutes is to give effect to the Legislature's intent, which we seek first and foremost in the text of the statute. First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 631-32 (Tex. 2008). The plain meaning of the text is the best expression of legislative intent, unless a different meaning is apparent from the context or application of the plain language would lead to absurd results. Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011). When a statute's words are unambiguous, "it is inappropriate to resort to rules of construction or extrinsic aids to construe the language." City of Rockwall v. Hughes, 246 S.W.3d 621, 626 (Tex. 2008).

         When reviewing an agency's interpretation of a statute that it is charged with enforcing, we first consider whether the statute is ambiguous. See Railroad Comm'n of Tex. v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 625 (Tex. 2011) (citing Fiess v. State Farm Lloyds, 202 S.W.3d 744, 747 (Tex. 2006)). If the Legislature's intent is "clear and unambiguous under the language of the statute, that is the end of the inquiry." Id. If the statute is ambiguous, however, we will generally uphold the agency's construction of a statute it is charged by the Legislature with enforcing, if the agency's construction is reasonable and does not contradict the statute's plain language. Id. "Deference is particularly warranted when the statutory term at issue is 'amorphous, ' when the agency oversees 'a complex regulatory scheme, ' and when the analysis to be performed 'implicates' the agency's technical expertise." State of Tex.' Agencies & Institutions of Higher Learning v. Public Util. Comm'n of Tex., 450 S.W.3d 615, 625 (Tex. App.-Austin 2014, pet. granted) (quoting Texas Citizens, 336 S.W.3d at 629-30), aff'd in part, rev'd in part on other grounds sub nom. Oncor Elec. Delivery Co. v. Public Util. Comm'n of Tex., 507 S.W.3d 706 (Tex. 2017).

         ANALYSIS

         We first consider whether the Commission has the authority to review and modify CPS Energy's inputs used to calculate the maximum-allowable pole-attachment rate under the Telecom Formula. We then analyze the two issues related to the Telecom Formula inputs for the number of attaching entities and for the rate of return. We next consider whether the Commission exceeded its authority by imposing a requirement on CPS Energy to not only charge a uniform rate but also collect a uniform rate. We then determine whether Section 54.204(b)'s nondiscrimination provision applies to this proceeding. Finally, we assess whether our Court has jurisdiction to consider the Commission's conclusion that the FCC's 2011 amendments to its rules automatically apply to PURA Section 54.204(c).

         I. The Commission's authority to enforce Section 54.204(c)'s maximum-allowable-rate provision

         CPS Energy appeals the district court's affirmance of the Commission's conclusion of law 5D that it "has the jurisdiction to review and modify each input, including defaults and rebuttable presumptions, used to calculate the maximum allowable pole-attachment rates under the rules adopted by the FCC under 47 U.S.C. § 224(e)." CPS Energy asserts that the Commission has neither express nor implied authority to review or modify an MOU's inputs to the Telecom Formula. CPS Energy contends that the Commission's authority is limited to enforcing Section 54.204's requirements and that such authority is distinct from the power to set, determine, or establish rates. CPS Energy further asserts that the Commission's modifications to CPS Energy's inputs have the potential to deprive the City of San Antonio of its right to receive reasonable compensation for access to its property in violation of PURA Section 54.205 and amount to retroactive ratemaking. The Commission, AT&T, and TWC all contend otherwise.

         When considering whether the Commission exceeded its authority by modifying CPS Energy's inputs to the Telecom Formula, we first consider whether the Legislature expressly gave the Commission the power to do so. See CPS Board I, 53 S.W.3d at 316. The plain language of Section 54.204 provides that "[n]otwithstanding any other law, the [C]ommission has the jurisdiction necessary to enforce this section." See Tex. Util. Code § 54.204(d). The Legislature thus expressly afforded the Commission broad authority to enforce Subsection (c), which establishes that an MOU "may not charge any entity . . . a pole attachment rate . . . that exceeds the fee [it] would be permitted to charge under rules adopted by the [FCC] under 47 U.S.C. Section 224(e) if [the MOU's] rates were regulated under federal law and the rules of the FCC." Id. § 54.204(c). "[W]hen the Legislature expressly confers a power on an agency, it also impliedly intends that the agency have whatever powers are reasonably necessary to fulfill its express duties." CPS Board I, 53 S.W.3d at 316; see also Texas Bldg. Owners & Managers Ass'n v. Public Util. Comm'n of Tex., 110 S.W.3d 524, 532 (Tex. App.-Austin 2003, pet. denied) (holding that Legislature's giving Commission "jurisdiction to enforce this section" was both grant of express authority and implied grant of powers reasonably necessary to fulfill its duties). CPS Energy argues that the power granted by the Legislature to the Commission to enforce Section 54.204 and to determine if an MOU's rates exceed those allowed under the FCC's Telecom Formula does not give the Commission "additional authority to review or modify CPS Energy's inputs to the Telecom Formula that are based on its books and records, and to thereby modify CPS Energy's maximum allowable pole attachment rate." CPS Energy contends that such modification would result in the Commission setting CPS Energy's maximum-allowable rate and that the Commission's limited rate-setting authority over MOUs does not extend to setting pole-attachment rates.

         CPS Energy's argument depends on the premise that Commission modification of CPS Energy's inputs to the Telecom Formula is the equivalent of rate setting. However, determining the ceiling for the pole-attachment rate in order to enforce the ceiling is not the same as setting the rate. Any rate charged by an MOU that is at or below the maximum-allowable rate complies with Section 54.204(c) as long as it is uniform to all attaching entities and is applied in a nondiscriminatory manner. The Commission is not requiring CPS Energy to charge the maximum-allowable rate. Instead, in this proceeding, as CPS Energy requested, the Commission examined CPS Energy's method for calculating its pole-attachment rate to determine whether the rate charged by CPS Energy exceeded the maximum-allowable rate under the requirements of PURA and the FCC Telecom Formula.

         The effect of the Commission's action here in modifying inputs to determine a rate's ceiling differs from the effect of the contested Commission actions in the cases relied on by CPS Energy to support its argument that the Commission lacks express or implied power to modify the inputs. See CPS Board I, 53 S.W.3d at 312, 325 (determining that Commission exceeded its statutory authority when it promulgated rules establishing wholesale transmission rates for municipally owned utilities and establishing access fee); Public Util. Comm'n of Tex. v. City Pub. Serv. Bd. of San Antonio, 109 S.W.3d 130, 132-33 (Tex. App.-Austin 2003, no pet.) ("CPS Board II") (determining that Commission could not use transmission-cost-of-service (TCOS) number determined under same rules declared to be invalid rate-setting scheme in CPS Board I to carry out other oversight responsibilities under PURA). In CPS Board I, the Texas Supreme Court examined the Commission's rules promulgated under PURA Chapter 35, which required all transmission-owning utilities to provide "open access" to their transmission facilities for wholesale transmission, 53 S.W.3d at 313, and which also required the Commission to "adopt rules relating to wholesale transmission service, rates, and access, " id. at 319. The court determined that the challenged rules, rather than establishing a pricing methodology, impermissibly set rates because no utility had a choice about whether to collect or pay the charge at issue, the elements of the charge were non-negotiable, and each utility was required to submit to a contested-case hearing to have its precise numbers ascertained. Id. at 316-17. The court also concluded that PURA Chapter 36, which gives the Commission broad ratemaking power over investor-owned utilities, allowed the Commission to set rates for wholesale transmission service provided by investor-owned utilities, but not for MOUs, which retain the ability to set their own rates. Id. at 317-18. The court further concluded that Chapter 35 lacked the clear language of Chapter 36 and failed to give the Commission the explicit power to "establish and regulate" transmission rates for MOUs. Id. (quoting PURA Section 36.001(a)). The court in CPS Board I distinguished between the specific power to review rates for reasonableness, which Chapter 35 expressly gave the Commission over MOUs, and the power to initially set rates, which Chapter 35 did not expressly or impliedly give the Commission over MOUs. Id. at 319-20. The court also determined, however, that "[o]nce confronted with a dispute between utilities, the Commission can arrive at a reasonable rate to resolve that dispute." Id. at 320.

         In this case, as explained above, we conclude that determining and enforcing a rate ceiling differs from setting an initial rate. Moreover, the Commission developed CPS Energy's maximum-allowable rate in the context of resolving a dispute under the maximum-rate provision that it is statutorily authorized to enforce. See id. at 320 (explaining that Chapter 35 contemplated oversight role for Commission that included arriving at reasonable rate to resolve disputes between utilities); cf. CPS Board II, 109 S.W.3d at 137 (concluding that Commission could not use TCOS number that was developed as part of invalid rate-setting scheme apart from Commission's role in dispute resolution because using it to check reasonableness of rates or to conduct other oversight functions would bear "too close a nexus to actual rate-setting to withstand scrutiny"). While it is true that MOUs retain the ability to set their own rates, see Tex. Util. Code § 32.002, and that the Commission may establish rates for MOUs only in limited circumstances, see id. §§ 33.002(a)-(b), .051, .052, .054, we conclude that the Commission's modification of CPS Energy's inputs to the Telecom Formula does not exceed the scope of the Commission's jurisdiction over MOUs.

         PURA Subsections 54.204(c) and (d) explicitly require the Commission's enforcement of the maximum-allowable rate to be directed by the FCC rules adopted under 47 U.S.C. Section 224(e) as if the MOU's rates were regulated under federal law and the FCC rules. In other words, the Commission must refer to federal law and FCC rules when determining the maximum-allowable rate. Federal law required the FCC to prescribe regulations in the late 1990s "to govern the charges for pole attachments used by telecommunications carriers to provide telecommunications services, when the parties fail to resolve a dispute over such charges. Such regulations shall ensure that a utility charges just, reasonable, and nondiscriminatory rates for pole attachments." 47 U.S.C. § 224(e). The FCC regulations provide that when the FCC is considering a complaint alleging that a rate, term, or condition for a pole attachment is not just and reasonable, and "costs, values or amounts are disputed, the [FCC] may estimate such costs, values or amounts it considers reasonable." 47 C.F.R. § 1.1409(a) (emphasis added). Furthermore, "[t]he [FCC] shall determine whether the rate, term or condition complained of is just and reasonable." Id. § 1.1409(c). The FCC applies the Telecom Formula to determine "a maximum just and reasonable rate." Id. § 1.1409(e). By giving the Commission "the jurisdiction necessary to enforce this section" and requiring the Commission's enforcement to be directed by federal law and FCC rules, the Legislature expressly contemplated that the Commission would act with the same authority as the FCC when determining the maximum-allowable rate. To do so, the Commission must be able to assess whether CPS Energy is properly allocating costs, and if necessary, must be able to modify CPS Energy's inputs when determining what the maximum-allowable rate is. Consequently, we conclude that the Commission, like the FCC, may "estimate such costs, values or amounts it considers reasonable" when applying the Telecom Formula to determine the "maximum just and reasonable rate" that an MOU may charge, as long as it does so with reference to the FCC's rules and regulations and its orders applying the Telecom Formula.

         CPS Energy also complains of two hypothetical outcomes if the Commission has the authority to modify the inputs to the Telecom Formula: deprivation of the City's historical rights and retroactive ratemaking. CPS Energy contends that "[i]f using the Commission's inputs in lieu of CPS Energy's actual data results in maximum allowable rates below CPS Energy's costs, the City of San Antonio will be deprived of its historical right to receive reasonable compensation for access to its property in violation of PURA § 54.205." See Tex. Util. Code § 54.205 (providing that PURA "does not restrict a municipality's historical right to control and receive reasonable compensation for access to the municipality's public streets, alleys, or rights-of-way or to other public property"). CPS Energy does not assert, however, that the Commission's modification of inputs in this case has resulted in maximum-allowable rates below CPS Energy's costs and that it has thus been denied reasonable compensation; consequently, we need not address this argument. See Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993) (courts prohibited from issuing advisory opinions that decide abstract question of law without binding parties). Similarly, CPS Energy complains that Commission modification of CPS Energy's inputs to the Telecom Formula might lead to retroactive ratemaking. As previously explained, the Commission's determination of the maximum-allowable rate under Section 54.204 is not ratemaking, and therefore, the Commission's determination that CPS Energy's past rates exceeded the maximum-allowable rate does not constitute retroactive ratemaking.[8] Having concluded that the Commission has express authority to review or modify an MOU's inputs to the Telecom Formula to enforce Section 54.204's maximum-allowable-rate provision, we overrule CPS Energy's challenge to the Commission's authority, which is its third issue presented on appeal. We affirm the portion of the district court's judgment affirming the Commission's conclusion that it has jurisdiction to review and modify CPS Energy's inputs to the Telecom Formula.

         II. Telecom Formula input: average number of attaching entities

         The parties raise issues concerning two inputs into the Telecom Formula incorporated into Section 54.204. The first of those input issues relates to the average number of attaching entities. The Telecom Formula calculates a utility's historical cost of owning and maintaining poles and then allocates a portion of that cost to each attaching entity based on the amount of space the entity occupies on the pole. The average number of attaching entities is an input into the Telecom Formula related to the space-allocation factor. In their first issues presented on appeal, CPS Energy and the Commission both assert that ...


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