Supreme Court overturns ruling, states Oncor must pay equipment relocation costs

By Michael McGrady | Feb 28, 2018

AUSTIN – Oncor Electric Delivery Co. LLC was dealt a significant loss earlier this month as the Texas Supreme Court overturned a ruling from a lower appellate court exempting the utility company from paying the relocation costs of equipment in the city of Richardson.

AUSTIN – Oncor Electric Delivery Co. LLC was dealt a significant loss earlier this month as the Texas Supreme Court overturned a ruling from a lower appellate court exempting the utility company from paying the relocation costs of equipment in the city of Richardson.

The case between Oncor and the more than 100,000-person city of Richardson began its drawn-out history in 2010. That year, Richardson city council approved a measure to widen 32 public alleyways, which required the movement of existing power lines.

In response, Oncor argued it didn't have to cover the cost of relocation of equipment because the law only applies to roadways, not alleyways.

Supreme Court Justice Paul Green, the author of the opinion, wrote that Oncor’s position on the matter contradicts existing common and state law.

“Richardson has exclusive control over its public rights-of-way and has authority to manage the terms of use of those rights-of-way,” Green wrote in the court's opinion.

Green added: “Richardson did so in the franchise contract, which is consistent both with well-established common law and with the utilities code in requiring a utility forced to relocate facilities from a public right-of-way to do so at its own expense.”

The court determined that the definition of “public right-of-way” was too ambiguous to be used exclusively for roads and streets. Citing the definition, found under the Public Utility Regulation Act, the court stated it “cannot conclude that the Legislature intended to strip municipalities of their common law right to require utilities to bear relocation costs in all manner of public rights-of-way, including roads, streets, alleys and highways.”

Additionally, the court overturned a settlement heard before the state Public Utilities Commission (PUC) where Richardson was the sole responsible party in the case of relocation costs. The court determined that the settlement was null, leaving Oncor liable.

The decision occurred before the state PUC authorized a new tariff highlighting the deal. Nevertheless, the court found that the deal still mandated that Oncor be liable for costs given the existence of pro forma language that already included the financial agreements between the city and the company in any governing agreements. This means that the PUC settlement between Richardson and Oncor as void because the pro forma language still mandates a coverage of relocation costs by the utility provider.

"The franchise contract controls when, as in this case, Richardson requests a relocation to accommodate changes to public rights-of-way for transportation purposes," the decision reads. "This is consistent both with common law and Texas statutory law. The tariff, on the other hand, controls when Richardson, acting as an end use customer, requests a relocation for the purposes of the city’s own facilities."

The State Supreme Court heard arguments for city of Richardson, Texas v. Oncor Electric Delivery Co. LLC, case no. 15-1008, on Sept. 12, 2017. The case was originally submitted to the court in 2015.

Oncor was represented by corporate counsel Howard V. Fisher and by Robert K. Wise of Lillard Wise Szygenda. The city of Richardson retained Peter G. Smith and Victoria W. Thomas of Nicholas Jackson Dillard Hager & Smith, Wallace B. Jefferson and Roger D. Townsend of Alexander Dubose Jefferson & Townsend, and Clarence A. West, according to Law360.

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