As previously reported, on April 3, 2015, a hearing officer of the Georgia Public Service Commission issued an initial decision in favor of Jackson EMC in its dispute with Georgia Power Company over the right to serve a wood manufacturing plant. See our prior Legal Alert, Georgia Public Service Commission Renders Initial Decision in Favor of Jackson EMC in Territorial Dispute with Georgia Power, on this decision.

The dispute arose when Georgia Power claimed that it had the right to provide electric service to a plant owned by Atlantic Wood Pellets (AWP). The plant had been previously owned by Louisiana Pacific and had been served by Jackson EMC for more than 20 years prior to its sale to AWP. Accordingly, Jackson EMC claimed that it – and not Georgia Power – had the right to serve the plant under the Territorial Act’s “grandfather rights” clause. That clause grants an electric supplier the right to continue serving any premises lawfully served by it, regardless of whether it is sold to a different owner.

After the hearing officer issued his initial decision, AWP filed an appeal to the full Commission. Georgia Power did not appeal. Thereafter, Jackson EMC and AWP negotiated a settlement, which was reported to the Commission by AWP’s attorney. As part of that settlement, AWP agreed to withdraw its application for full Commission review. AWP, however, subsequently proposed substantive changes to the settlement. Having already reached a settlement with AWP, Jackson EMC did not agree to the proposed changes. AWP then proceeded with its application for review by the full Commission.

Based on the parties’ settlement agreement, Jackson EMC filed a motion to dismiss AWP’s application for review. Jackson EMC also argued that the hearing officer’s initial decision should be affirmed on the merits. The full Commission ruled in favor of Jackson EMC on both points.

As to Jackson EMC’s motion to dismiss, the Commission found that “JEMC and AWP agreed to the terms of a settlement agreement, that such settlement was communicated to the Commission by counsel for AWP and that AWP later decided that it no longer wanted to settle the case. In such circumstances, Georgia courts have found that the settlement agreement is binding upon the parties.” The Commission rejected AWP’s argument that because the parties’ agreement required that AWP purchase all of its power from Jackson EMC, this constituted an unlawful “general restraint of trade” and violated the Georgia Cogeneration and Distribution Act of 2001. Thus, the Commission granted Jackson EMC’s motion to dismiss AWP’s application for review.

The Commission also adopted the hearing officer’s initial decision, finding that Jackson EMC had the exclusive right to serve the AWP plant. First, the Commission found that the plant did not qualify for customer choice as a “new premises” under the large load exception of the Territorial Act. The Commission stated that the plant was “not new . . . [it] did not recently come into existence.” Rather, the Commission found that the plant had been in existence for more than 20 years prior to being sold to AWP. And while AWP had removed some of the equipment from within the premises, the premises itself was “largely as it [had] been for over two decades.”

Second, the Commission found that Georgia Power failed to demonstrate that Jackson EMC’s grandfather rights had been extinguished. Georgia Power argued that Jackson EMC had lost its grandfather rights because the plant had been “destroyed or dismantled” by AWP and subsequently reconstructed in substantially different kind from the original Louisiana Pacific plant. The Commission, however, found that the plant had not been “destroyed or dismantled,” even though some of the manufacturing equipment had been removed.

The Commission further found that even if the premises had been destroyed or dismantled, AWP’s planned changes to the building would not result in it being a “substantially different” facility. On the contrary: (1) the “vast majority” of the main process building would remain; (2) the plant would continue to be used for wood manufacturing; and (3) there would be “substantial overlap in the physical layout, infrastructure, equipment, process centers, and operations.” Accordingly, the Commission found that “the evidence more than satisfie[d] the ‘in substantial kind’ standard, leaving Jackson EMC as the only lawful supplier” of the plant. Based on these findings, the full Commission adopted the decision of the hearing officer.

On December 10, 2015, AWP filed an appeal of the Commission’s decision with the Fulton County Superior Court.

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Jackson EMC is represented by James A. Orr, Benjamin C. Morgan, and Matthew J. Bowness of Sutherland Asbill & Brennan LLP.