SW Transmission Coop. v. Ariz. Corp. Comm’n – 9/12/2006

September 14, 2006

Arizona Court of Appeals Division One Holds Non- Profit Wholesale Rural Electric Transmission Coop. is a Public Service Corporation.

Southwest Transmission Cooperative, Inc. (“SWTC”) sought a declaration from the Arizona Corporation Commission that it was not a public service corporation, and therefore not subject to public regulation under Article 15, Section 3 of the Arizona Constitution. The Commission disagreed. SWTC sought judicial review, and the superior court affirmed the Commission. On appeal by SWTC, the Court of Appeals affirmed the superior court.

The Court of Appeals first found that SWTC met the literal language of Article 15, Section 2, defining a public service corporation as a corporation other than municipal “engaged in furnishing gas, oil or electricity for light, fuel, or power.” Next, it concluded that SWTC’s business and activity were such “as to make its rates, charges, and methods of operations a matter of public concern” under the eight factors articulated in Natural Gas Serv. Co. v. Serv-Yu Coop.70 Ariz. 235, 219 P.2d 324 (1950), even though SWTC does not claim monopoly rights, does not accept all requests for service, and provides service by contracts. The Court found that SWTC “provides and transmits a commodity in which the public has a vital interest,” a fact “no less true because SWTC is one step removed from providing electricity to the consumer directly.”

Judge Orozco authored the opinion; Judges Kessler and Gemmill concurred.