CITY OF DENTON_ TEXAS; CITY OF GARLAND_ TEXAS; AND CITY OF by pengxuebo

VIEWS: 3 PAGES: 36

									                                            NO. 014-0752

                           IN THE SUPREME,COURT OF TEXAS
~~~                ~~~      ~




            TEXAS MUNICIPAL POWER AG:ENCY; CITY OF DENTON, TEXAS;
            CITY OF GARLAND, TEXAS; AND CITY OF GREENVILLE, TEXAS,
                                                                                       Petitioners,
                                                  V.
      PUBLIC UTILITY COMMISSION OF TEXAS1 AND CITY OF BRYAN, TEXAS,
                                                                                     Respondents.

                         On Petition for Review f o the Court of Appeals
                                                   rm
                          For the Third District of Texas, at Austin, Texas
                                    Cause No. 03-02-00M4-CV

                    PETITION FOR RE7rIEW OF
  TEXAS MUNICIPAL POWER AGENCY; CITY OF DENTON, TEXAS; CITY OF
         GARLAND, TEXAS; AND CNTY OF GREENVILLE, TEXAS.

Fulbright & Jaworski L.L.P.         Lloyd Gosselink Bledns          Smith, Majcher & Mudge, L.L.P.
      Wm. B. Wagner                Rochelle & Townsend, P C
                                                         ..                Lawrence S. Smith
      James R. Bailey                 Lambeth Townsend              816 Congress Avenue, Suite 1270
600 Congress Ave., Suite 2400      11 1 Congress Ave., Suite 1800         Austin, Texas 78701
    Austin, Texas 7870 1                Austin, Texas 78701             Telephone: 5 12/322-9066
  Telephone: 5 12/474-5201           Telephone: 5 121322-5 530         Telecopier: 5 12/322-9020
  Telecopier: 5 12/536-4598          Telecopier: 5 12/472-0532
                                                                         Counselfor Petitioners,
      W. Wendell Hall                                                      City of Denton, Texas;
300 Convent Street, Suite 2200                                      City of Garland, Texas; and City of
  San Antonio, Texas 78205                                                   Greenville, Texas
 Telephone: (210) 224-5575
 Telecopier: (2 10) 270-7205
        Counselfor Petitioner, Texas Municipal Power Agmcy




      30786885.1
                        IDENTITY OF PARTIES AND COUNSEL

Parties

1.        Texas Municipal Power Agency (‘‘TMPA”), Petitioner

2.        City of Denton, Texas, Petitioner

3.        City of Garland, Texas, Petitioner

4.        City of Greenville, Texas, Petitioner

5.        Public Utility Commission of Texas, Respondent

6.        City of Bryan, Texas, Respondent

Counsel
      Wm. B. Wagner
      James R. Bailey
      Fulbright & Jaworski L.L.P.
      600 Congress Ave., Suite 2400
      Austin, Texas 78701
      Telephone: 5 12/474-5201
      Telecopier: 5 12/536-4598

Trial and Appellate Counselfor Petitioner Texas klunicipal Power Agency

      W. Wendell Hall
      Fulbright & Jaworski, L.L.P.
      300 Convent Street, Suite 2200
      San Antonio, Texas 78205-3792
      Telephone: (210) 224-5575
      Telecopier: (210) 270-7205

Appellate Counselfor Petitioner Texas Municipal Power Agency

       Lambeth Townsend
       Lloyd Gosselink Blevins Rochelle & Townsend, P.C.
       111 Congress Avenue, Suite 1800
       Austin, Texas 78701
       Telephone: 5 12/322-5830
       Telecopier: 5 12/472-0532

     30786885.1
Trial and Appellate Counselfor Petitioner Texas Municipal Power Agency

   Lawrence S. Smith
   Smith, Majcher & Mudge, L.L.P.
   8 16 Congress Avenue, Suite 1270
   Austin, Texas 78701
   Telephone: 5 12/322-9066
   Telecopier: 5 12/322-9020

Trial and Appellate Counselfor Petitioners City o Denton, City o Garland, and City o
                                                 f              f                   f
Greenville

   Lin Hughes
   Brook Bennett Brown
   Marc 0.Knisley
   McGinnis, Lochridge & Kilgore, L.L.P.
   919 Congress Ave., Suite 1300
   Austin, Texas 78701
   Telephone: 5 12/495-6023
   Telecopier: 5 12/495-6093

Trial and Appellate Counselfor Respondent City oJrBryan

   Elizabeth R. B. Sterling
   Assistant Attorney General
   Natural Resources Division
   P. 0. Box 12548, Capitol Station
   Austin, Texas 787 1 1-2548
   Telephone: 5 121463-2012
   Telecopier: 5 12/320-0052

Trial and Appellate Counselfor Respondent Public Utility Commission o Texas
                                                                     f




 30786885.1                                 ...
                                           -111-
                                                  TABLE OF CONTENTS
                                                                                                                                             ..
IDENTITY OF PARTIES AND COUNSEL ................................................................................                            11

INDEX OF AUTHORITIES..........................................................................................................               v
                                                                                                                                             ..
CITATION CONVENTIONS .....................................................................................................                 vii
                                                                                                                                            ...
STATEMENT OF THE CASE...................................................................................................                   viii
                                                                                                                                            ...
STATEMENT OF JURISDICTION...........................................................................................                       xiii

ISSUES PRESENTED.................................................................................................................          xiv
'IMPORTANCE TO THE JURISPRUDENCE OF THIS STATE ................................................                                              1
STATEMENT OF FACTS ............................................................................................................              3
SUMMARY OF THE ARGUMENT ............................................................................................                         7
ARGUMENT ...............................................................................................................................    10
CONCLUSION AND PRAYER .................................................................................................                     18
CERTIFICATE OF SERVICE ....................................................................................................                 21
INDEX OF APPENDICES ...........................................................................................................             22




   30786885.1
                                                                      -iv-
                                            INDEX OF AUTHORITIES


WL 11 14533 (Patterson, J., joined by Law, C.J., and Puryear, J.) ................................................                       xi
Boykin v. State,
                                           ...........................................................................
       818 S.W.2d 782 (Tex. Crim. App. 1991~)                                                                                            13

                         tl
City of Sherman v. Pub. Ui.Comm'n,
        643 S.W.2d 681 (Tex. 1983)..............................................................................................         10

City of West Tawakoni v. Williams,
        742 S.W.2d 489 (Tex. App.-Dallas                      11987, writ den.) ......................................................   10

City Pub. Sew. Bd. v. Pub. Util. Comm'n,
       9 S.W.3d 868 (Tex. App. Austin 2 0 ) a f d in part, rev'd in part, Pub. Util.
                                         00,
       Comm'n v. Ct Pub. Sew. Bd., 53 S.W.3d 310 ((Tex.2001) ...............................................
                   iy                                                                                                                     4

Dovalina v. Albert,
       409 S.W.2d 616 (Tex. Civ. App.--Arrtarillo                        19166, writ refd n.r.e.).................................       14

Magnolia Petroleum Co. v. Walker,
      83 S.W.2d 929 (Tex. 1935)................................................................................................          14

New York v. Federal Energy Regulation Com.m'n,
      531 U.S. 1189, 122 S.Ct. 1012, 149 L.Ed.2d 102 (2002) ....................................................                          4

Pub. Util. Comm'n v. City Pub. Sew. Bd.,                                                                                                  ..
      53 S.W.3d 310 (Tex. 2001) .................................................................................            4, 5, 11, v11

Southwestern Bell Tel. Co. v. Pub. Ui.Comin'n,
                                    tl
      79 S.W.3d 226 (Tex. App.-Austin 21002, no pet.) ...........................................................                        13

Subartc of Am., Inc. v. David McDavid Nissan, Inc.,
        84 S.W.3d 212 (Tex. 2002) ................................................................................................       16

 Texas Municipal Power Agency v. Pub. Util. Comm 'n,
        100 S.W.3d 5 10 (Tex. App.-Austin 2003, pet. denied)....................................... 17, 18, xi

 Transmission Access Policy Group v. F.E.R. C,
       225 F.3d 667 (D.C. Cir. 2000), a ~ .....................................................................................
                                             d                                                                                            4


STATUTES AND RULES
 75th Leg., R.S., ch. 166, 8 1, 1997 Tex. Gen. Laws 166, amended by Act .....................................                             5
  30786885.1                                                       -V-
76th Leg., R.S., ch. 405, Q 16, 1999 Tex. Gen. Laws 405 ............................................................... 5

76th Leg., R.S., ch. 405, Q 17, 1999 Tex. Gen. Laws 2543 ...........................................................            11
                                                                                                                                ...
Tex. Civ. Prac. & Rem. Code Ann. 05 37.001-37.011(Vernon 1997) .......................................                         viii
                                                                                                                                 ...
Tex. Gov't Code Ann. 6 22.001(a)(3),(6) (Vernon Supp. 2004).................................................                   xiii

Tex. Gov't Code Ann. 3 6 200 1 .OO 1-2001.902.............................................................................
                                                                                                                                 ...
                                                                                                                               viii

Tex. Util. Code Ann. 06 1 1 .OO 1-63.063 ................................................................................   passim

Tex. Util. Code Ann. $0 35.001-35.106 ................................................................................p
                                                                                                         assim

Tex. Util. Code Ann.§§ 35.004, 35.005, 40.001(a), 40.054(e), 40.055(a)(2).......................                             passim
                                                                                                                                  ..
Tex. Util. Code Ann. $8 40.001-40.104(Vernlon Supp. 2004-5) .................................................                   xi1




   30786885.1                                                     -vi-
                            CITATION CONVENTIONS
       The court of appeals heard oral argument regarding the two cases below, Case

Nos. 03-02-00644-CV [the administrative appeal of Public Utility Commission Docket

19585 and the accompanyng declaratory judgment claims] and 03-02-701-CV [the

administrative appeal of Public Utility Commission Docket 2038 1 and the accompanying

declaratory judgment claims], at the same time, and issued one opinion addressing both

cases. However, the cases have not been fimnally consolidated. Petitioners are therefore

submitting two petitions for review, one for each case. The bodies of the petitions are

virtually identical, however. Where citations are made in this petition to the records

before the court of appeals in the two matters, parenthetical explanations follow each

citation ( e g , “Case No. 644” and “Case No. 701”) to indicate to which of the two cases

the citation pertains.




 30786885.1                               -vii-
                                    STATEMENT OF T I E CASE

                                            The Texas Municipal Power Agency (“TMPA”) and
                                            the Cities of Denton, Garland and Greenville,’ Texas
                                            (the Worthern Cities”), brought the action underlying
                                            Case No. 03-02-00644-CV in Travis County District
                                            Court. This suit sought (1) judicial review under the
                                            Administrative Procedure AC? (“AF””)of a final
                                            order of the P’ublic Utility Commission of Texas
                                            (“Comniission”) issued in a complaint proceeding
                                            (PUC Docket 19585) brought at the Commission by
                                            the Ciity of Bryan, Texas ( “ B r ~ a n ” ) ~and (2)
                                            declaratory relief as set forth below.

                                            TMPA and the Northern Cities also brought the action
                                            underlying Case No. 03-02-00701-CV in Travis
                                            County District Court. This suit sought (1) judicial
                                            review under the APA of a final order of the
                                            Commission setting wholesale electric transmission
                                            rates for all utilities in ERCOT4 for 1999 (PUC Dockel
                                            20381)“ and (2) declaratory relief as set forth below.




1
  In Case No. 03-02-00644-CV below, the City of Grleenville is the entity involved. In Case No. 03-02-00701-CV,
the entity involved is GEUS, W a Greenville Electric ‘UtilitySystem.
2
    T EX. GOV’T CODE A NN . $5 2001.001-2001.902 (Vernon 2000 and Supp. 2004-5).
3
  Complaint o the Ct of Bryan, Texas Against Texas Municipal Power Agency and the Cities of Denton, Garland
             f     iy
and Greenville, Texas, Docket No. 19585, Final] Order (July 8, 1999)[hereinafter, the “Complaint Proceeding”]. 3
CR 487-99 (Case No. 644).
4
 The Electric Reliability Council of Texas or ERCOT is a group of interconnected electic utilities in Texas. Pub.
Util. Comm’n v. City Pub. S e n . Bd., 53 S.W.3d 310, 312 (Tex. 2001).
5
  Proceeding to ModifL ERCOT Transmission Rate.5 for 1995’ Pursuant to Substantive Rule 23.67, Docket NO.
20381, Order on Rehearing (Oct. 13, 1999)[hereinafter, the “1999 Ratesetting Proceeding”]. 4 CR 637-701 (Case
No. 701).

    30786885.1                                        -viii-
                                            n both suits, ThllPA sought, pursuant to the Uniform
                                            leclaratory Judgments Act6 (“UDJA”), two types of
                                            leclaratory relief: (1) declarations concerning the
                                            urisdiction and authority of the Commission to
                                            inbundle and change the terms of a certain Power
                                            Zales Clontract (“PSC”) between TMPA and Bryan,
                                            md to clhange TIMPA’S contract sales rates for the sale
                                            I f electric power to Bryan (these claims being referred
                                            .o as the “Jurisdictional Claims”), and (2) declarations
                                            -egardin.g the parties’ obligations under the PSC (the
                                            ‘Contract ~lairns”).~

                                            Bryan also filed. in the both suits essentially identical
                                            sounterclaims under the UDJA regarding (1) the
                                            jurisdiction of the Commission and (2) the parties’
                                            contractual obligations under the PSC (also referred to
                                            as “Contract Claims”).*

Trial Court Information:                    The find judgment in the case which arose fiom the
                                            Complaint Proceeding (Docket 19589, Cause No. 99-
                                            11127, District Court of Travis County, Texas, 2 0 0 ~
                                            District Court, was signed by the Honorable Lora J
                                            Livingston on September 5, 2002. This judgment is
                                            attached as Appendix Tab D.

                                            The final judgment in the case which arose fiom the
                                            1999 Ratesettirig Proceeding (Docket 2038 l), Cause
                                            No. 99-14787 in the same court, was signed by thc
                                            Honorable Lora J. Livingston on October 9, 2002
                                            This judgment is attached as Appendix Tab E.
                                            Earlier orders dismissing the UDJA Jurisdictional
                                            Claims, transferring the Contract Claims, and granting
                                            and denying certain motions for summary judgment in
                                            these ciases are discussed below.




6
    T EX. CIV. PRAC. & &M. CODE ANN. $5 37.001-37.011 (Vernon 1997).
/
    3 CR 477-83 (Case No. 644); 4 CR 631-34 (Case No. 701).
8
    16 CR 2933 (Case No. 644); 18 CR 3445 (Case No. 701).


    30786885.1
                                                      -ix-
Trial Court’s Disposition:                   The district court transferred the venue of both parties’
                                             zontract Claims in both suits to another suit already
                                             >endingbetween the parties in Grimes County, Texas
                                             :the “Grimes County Suit”).’ That suit is still pending
                                             2nd no final judgment has been entered.

                                            Further, the trial court dismissed, for lack of subject
                                            matter -jurisdiction, TMPA’s Jurisdictional Claims
                                            made under the UDJA,’’ (the trial court orders are
                                            attached as Appendix Tabs C and E) and also
                                            dismissed Bryan’s similar UDJA claims for relief.”
                                            As a maitter of relevant background to these two cases,
                                            TMPA also filed an interlocutory appeal of a related
                                            case, Ci3use No. GN 00234, in which the same reliel
                                            had been sought. Again, this included both UDJA
                                            relief and an APA appeal of Docket 22055 - the
                                            Commission’s calendar 2000 rate proceeding. Thal
                                            interlocutory appeal challenged the trial court’s ruling
                                            dismissing the exact same declaratory relief sough1
                                            here. The Third Court of Appeals (albeit a differen1
                                            panel) heard the case and reversed the trial court’s
                                            dismissal of the UDJA claims. See Texas Municipa,
                                            Power .Agency v. Pub. Util. Commh, 100 S.W.3d 510
                                            (Tex. App.-Austin 2003, pet. denied). As such , it is
                                            clear that TMPA and the Northern Cities were entitled
                                            to have their action for declaratory relief as to the
                                            Jurisdictional Claims heard along with the pending
                                            APA appeal.




9
 18 CR 3738-39 (Case No. 644); 20 CR 4018-19 (Case No. 701). The suit in Grimes County is styled as Texas
Municipal Power Agency v. City ofBlyan, Texas,No. 28,169 (278th Dist. Ct., Grimes County, Tex. fded Nov. 12,
1998)[“Grimes County Suit”]. 3 CR 616-24 (Case No. 644); 19 CR 3877-85 (Case No. 701).
      19 CR 3907 (Case No. 644) Appendix Tab C at 3907; 28 CR 5990 (Case No. 701) Appendix Tab E at 5990.
11
      19 CR 3908 (Case No. 644), Appendix Tab C at 3908; 28 CR 5991 (Case No. 701), Appendix Tab E at 5991.


     30786885. I                                       -X-
                                            ;urther proceedings in the trial court regarding the
                                            -emaining claims resulted in entry of the following
                                            eelief: (1) partial summary judgment was granted for
                                            3ryan in both cases “on the ground that, as a matter of
                                             aw, PLJRA Chapter 35 conferred jurisdiction on the
                                            ”ublic Utility Commission to determine whether the
                                            : e m on which TMPA provided transmission services
                                            io Bryan were reasonable”;12 and (2) TMPA’s motion
                                            for pamtial summary judgment with respect to APA
                                            review of the final Commission orders in both cases
                                            was denied.I3. These orders of the trial court are
                                            attached as Appendix Tabs C and E .

                                            In the final judgments, the trial court made the
                                            following dispositions of the matters, having already
                                            dismissed or transferred both parties’ UDJA claims for
                                            relief: (1) the final order in the Complaint Proceeding
                                            (the “Complaint Final Order”) was reversed and
                                            remanded to the Commi~sion’~         (Petitioners agreed
                                            with and supported the reversal, but disagreed that a
                                            remand w s necessary under the Bryan complaint as
                                                       a
                                            worded); and (2) the final order in the 1999
                                            Ratesetting Proceeding was reversed and remanded to
                                            the Co:mmissi~n’~   (Petitioners agreed with this ruling).

                                            Because the final judgments erroneously dismissed the
                                            UDJA Jurisdictional Claims16 and incorporated the
                                            partial summary judgment ruling set forth above
                                            TMPA. and the Northern Cities appealed the trial cour
                                            judgments in both matters. In both cases, TMPA
                                            recognized that the court of appeals was not required
                                            to rule on the Jurisdictional Claims since they had not



IL
     Id..
13
     Id.
l4 19 CR 3909 (Case No. 644), Appendix Tab D    at 3909.
15
     1 Supp. CR 4 (Case No. 701), Appendix Tab F at 4.

l 6 See Texas Municipal Power Agency v. Pub. U i l . Comm’n.100 S.W.3d 510 (Tex. App.-Austin   2003, pet.
denied),


     30786885.1                                          -xi-
                                                  ~~     -     ~                      ~~~




                                          been heard by the trial court, but could do so as a
                                          matter of its discretion.”

Parties in the Court o Appeals:
                      f                   Texas Pvlunicipal Power Agency (“TMPA”), Petitioner

                                          City of IDenton, Texas, Petitioner

                                          City of (Garland,Texas, Petitioner

                                          City of Greenville, Texas, Petitioner in No. 03-02-
                                          00644-(7V, GEUS, W a Greenville Electric Utility
                                          System, Petitioner in No. 03-02-00701-CV

                                          Public lJtility Commission of Texas, Respondent

                                          City of Bryan, Texas, Respondent

Court o Appeals ’ Disposition:
       f                                  Although the two cases were briefed separately, the
                                          Third {Court of Appeals consolidated the two for
                                          purposes of oral argument and disposition. On
                                          January 29, 2004, that court issued a unanimous
                                          opinion affirming the judgments of the tial court in
                                          both matters. Following a motion for rehearing and
                                          responses, that opinion was subsequently withdrawn.
                                          An opinion dated May 20, 2004, w s substituted for
                                                                               a
                                          the prior opinion. This latest opinion also affirmed the
                                          judgments of the trial court in both matters. The first
                                          opinion can be found at 2004 WL 162958; the second
                                          opinion can be found at 2004 WL 1114533 (Patterson,
                                          J., joined by Law, C.J., and Puryear, J.) (attached at
                                          Appendix Tabs A and B, respectively).
                                          TMPA and the Northern Cities, Petitioners here, are
                                          seeking review by this Court of the decision of the
                                          court of appeals in both cases and are filing separate,
                                          but virtually identical, petitions for review




.-
11
     TMPA Brief at 17 (Case No.644);TMFA Brief at 16 (Case No. 701).


 30786885.I                                            -xii-
                                  STATEMENT OF JURISDICTION
            The Supreme Court has jurisdiction over this proceeding because:

            b       the case involves the constniction of one or more statutes necessary
                    to a determination of the case, namely chapters 35 and 40 of the
                    Public Utility Regulatory Act (r‘PURA”),’* including EX.       UTIL.
                    CODE ANN. $5 35.004, 35.005, 40.001(a), 40.054(e), 40.055(a)(2)
                    and 40.101(a) (Vernon 1998 and Supp. 2004), regarding the
                    statutory jurisdiction of the Public Utility Commission over
                    municipally owned utilities; and

            b       the court of appeals has connmitted errors of law of such importance
                    to the jurisprudence of Texas that they should be corrected.

I
    See TEX. GOV’T CODE A”.5 22.001(a)(:3), ( 6 ) (Vernon Supp. 2004).




    18
       PURA is located at T EX . UTIL. CODE ANN. $5 11.001-63.063 (Vernon 1998 and Supp. 2004-5). PURA chapter 35
    is located at TEX. UTIL.CODE A”. $5 35.001-35.106 (Vernon 1998 and Supp. 2004-5), and a copy of those same
    provisions is attached hereto as Appendix Tab G. PIJRA chapter 40 is located at TEX. UTIL. CODE ANN. $9 40.001-
    40.104 (Vernon Supp. 2004-5), and a copy of those same provisions is attached hereto as Appendix Tab H.

     30786885. I
                                                           ...
                                                        -x111-
                                    ISSUES IDRESENTED
1.         Whether the Commission has the jurisdiction under PURA (including chapters 35
           and 40) to modify, regulate and/or abrogate the power sales contract and the
           contract sales rate between TMPA and Bryan.

2.         Whether PURA chapter 40 applies to both proceedings on remand even though
           chapter 40 became effective after thie Complaint Final Order was issued in Docket
           19585, and while the 1999 Ratesetting Proceeding was pending.

‘3.        Whether the court of appeal erred in affirming the dismissal of TMPA’s UDJA
           Jurisdictional Claims regarding the scope of the Commission’s authority.




     30786885.1                               -xiv-
             IMPORTANCE TO THE JURISPRUDENCE OF THIS STATE
        The Texas Legislature for years has adhered to a longstanding policy of extremely

limited regulation of municipally owned utilities (“’MOUs”)with respect to electric utility

matters. The courts of this State, including this Court, have consistently enforced that

policy. The court of appeals’ decision here departs from this long standing line of

authority and effectively rewrites PURALto give the Commission the jurisdiction to

regulate MOUs in ways that the Legislature never intended, including the authority to

modify or abrogate a sales contract of an R40U.

        At issue here is the sanctity of certain contracts for the sale of electric power by

TMPA to its member cities, one of which is Bryan. Each of those contracts is what is

called a “take or pay” contract and together they provide the security for the municipal

bonds that TMPA issues.’’ The contracts provide that each city will be charged the same

uniform sales rate which is set by TMPA according to the contract provisions. Here the

court of appeals has held that the Commussion has the jurisdiction under chapter 35 of

PURA to change the uniform sales rate that TMPA sets for all of its member cities.

         Chapter 35 of PURA was adopted in 1995 for the sole purpose of opening the

market for wholesale electric transmission transactions. Yet the Commission, relying on

chapter 35, has asserted authority over a written power sales contract between TMPA (an

MOU) and Bryan -- not a transmission transaction or dispute. In 1999, the Legislature

adopted chapter 40 of PURA, gving MOUs complete discretion to decide whether to

l 9 TMPA’s outstanding debt is secured by a lien on ’TMPA’s revenues; those revenues are realized pursuant to the
PSC.


30786885.1                                             -1-
participate in the newly deregulated electric power market, and if so, how they would

participate. In particular, chapter 40 provided several explicit protections for MOUs from

the operation of the Commission’s jurisdiction regardless of whether “customer choice”

(unbundling) was adopted by the MOU. Similar protections are provided in chapter 41

for electric cooperatives. In sum, very cllean lines of where and when the Commission

has jurisdiction were drawn by the Legisllature. ‘The opinion below has erased some of

those lines allowing the Commission to asisert jurisdiction where it has none.

        The authority assumed by the Commission here is not expressly granted anywhere,

is not necessary to achieve the goals of chapter 35, and is contrary to the Legislature’s

stated policies of lack of such authority over MOUs. In fact, chapter 40 expressly

prohibits precisely what the Commission has done. Yet, the court of appeals affirmed

this overly expansive view of chapter 35 and has determined that the protections provided

to MOUs in chapter 40 do not mean what they say and are essentially surplusage.

        This Court has yet to examine chapter 40 of PURA, and in particular, how that

chapter should operate in connection with chapter 35 concerning the scope of the

Commission’s jurisdiction over MOUs. ‘fie court of appeals has seriously misconstrued

both chapters 35 and 40 causing MOUs to be subject to sweeping regulatory powers of

the Commission that the Legislature never intended.20 This holding also puts at risk the

contracts for the sale of electric power that are the security for the MOU’s municipal


20
  Even though electric cooperatives do not have the long history of regulatory deference that MOUs do, in enacting
Chapter 4 1 of PURA, the Legislature intended that the cooperatives would have essentially the same protections as
MOUs. Yet those protections could also be denied if the court of appeals’ opinion stands.


30786885.1                                             -2-
bonds, which are explicitly referenced and protected in PURA          0 40.103.    For those

reasons, this Court should grant this petition and reverse the court of appeals.

                                          STATEMENT OF FACTS
           A.       TMPA and the Power Sales Contract
           The essence of this dispute is whether the Commission can modify and change the

contractual obligations of the parties (both MOUs) to a sales agreement - i.e. relieve

Bryan of its obligation to pay the power sales rate set pursuant to a private contract - by

purporting to exercise jurisdiction under P U R A chapter 35. TMPA is an MOU” and

sells electric power to the Cities of Bryan, Denton, Garland and Greenville, Texas

(collectively, the “Member Cities”) pursuant to four identical22power sales contracts

(singularly referred to as the “Power Sales Contract” or ‘‘PSC”).23 The PSC requires

TMPA to generate electric power and to deliver it to each Member City at specified

“Points of Delivery,” which are located either in or near each Member City.24

           Under the PSC, all of TMPA’s costs, including both power generation and

delivery costs, are included in the power sales rate charged to the Member Cities. The

PSC contains detailed provisions regarding what costs may properly be included in that

rate.25 This contractually determined sales rate isl the same for each of the cities. Under

the sales contract, there is no requirement or attempt to isolate any expense or cost
21
     Op. Tex. Att’y Gen. No. MW-212 (1980).
22
     They are identical except for the delivery points.
23   3 CR 469 (Case No. 644); 4 CR 623 (Case No. 701).
24
     Id.
25
     3 CR 554 (Case No. 644); 4 CR 779 (Case No. 701).


30786885.1
                                                          -3 -
attributable to a particular city and charge a different rate to each city. Each city then

pays according to the amount of power that it uses as compared to the amounts used by

each of the other cities. The PSC, as written, is what is referred to in the industry as a

“bundled” contract, meaning both generation and delivery are provided by the seller (here

TMPA) under one contract, and the sales rate charged under the PSC is a “bundled”

rate.26

          B.        The Statutory and Regulatory Changes Leading up to the Dispute
          Prior to 1995, if a utility in ERCOT wished to sell electric power to another utility,

and those two were not physically connected, a voluntary contract or “transmission

agreement” was required allowing the use of the transmission lines of another utility

standing between the buyer and the seller.. See generally Pub. Util. Comm ’n v. City Pub.

Sew. Bd., 53 S.W.3d 310, 312 (Tex. 2001)[“‘SanAntonio”]. However, this ad hoc

structure provided opportunities for transmission providers to improperly influence

competition in the wholesale power market;27so in 1995, the Legislature amended PURA

to allow wholesale buyers and sellers to compel the use of other utilities’ electric




26
     The term “bundled” was described simply by the D.C. Circuit Court of Appeals as:
           Vertically integrated utilities use their own facilities to generate, transmit, and distribute electricity to their
           customers. Traditionally, the customer paid one combined rate for both the power and its delivery, this the
           industry refers to such sales as “bundled.”
Transmission Access Policy Group v. F.E.R.C, 225 F.3d 667, 690 (D.C. C r 2000), a f f d by New York v. Federal
                                                                       i.
Energy Regulation Comm’n, 531 U S . 1189, 122 S.Ct. 1012, 145)L.Ed.2d 102 (2002).
21
  See City Pub. Serv. Bd. v. Pub. Util. Comm’n, 9 S.W.3d 868, 871 (Tex. App. Austin 2000), a f f d in part, r m ’ d in
            tl
part, Pub. U i .Comm ‘nv. City Pub. Serv. Bd., 53 S.\N.3d 310 (Tex. 2001).


30786885.1
                                                              -4-
transmission systems (such amendments now contained in chapter 35 of PURA28). All of

these changes were designed to open up the markets so that utilities could purchase

power from remote locations and not be hampered by not being able to obtain

transmission service to get the power to their systems. There was nothing in this

enactment that mentioned or sought to readjust the long standing regulatory framework

with respect to existing wholesale sales contracts of an MOU. In fact, there was no need

to do so to accomplish any of the goals of chapter 35.

        In 1997, purportedly pursuant to chapter 35, the Commission adopted a new

wholesale transmission pricing methodollogy that set, to the penny, the transmission

charges for all utilities in ERCOT. See generally San Antonio, 53 S.W.3d at 316-317.

However, in San Antonio, this Court found that pricing methodology was invalid in its

entirety because the Commission does not have the authority to set rates for MOUs and

was only to have an oversight role of transmission regulation of MOUs. Id. at 3 18-320.

        In this now well known case, there was no issue of the Commission asserting it

could go even hrther and change an MOU’s sales rate as well. The present case,

originating with the Commission’s ruling in 1999 in the Complaint Case, is that next step

and presents that issue: Can the Commission regulate and change an MOU’s written

sales contract and sales rate in the guise of the same type of expansive (chapter 35)

jurisdiction that has been held to be invalid?

28Chapter 35 of PURA was further amended in 1999. The 1995 amendments, as they as they were codified in 1997
but before the 1999 amendments, can be found at Pulblic Utility Regulatory Act, 75& Leg., R.S., ch. 166, 5 I , 1997
Tex. Gen. Laws 166, amended by Act of May 27,1999,76& Leg., R.S., ch. 405, 9 16, 1999 Tex. Gen. Laws 405. A
copy of the pre-1999 version of Chapter 35 is attached as A p p e n b Tab J.


30786885.1                                             -5-
         C.      The Dispute Between TMPA and Bryan
         Under the Commission’s then current (but now invalid) pricing methodology,

Bryan recognized that it would pay less in total for the power it purchased from TMPA if

it would pay separately only the Commission-set transmission rates and a portion of the

sales rate as compared to the uniform bundled sales rate under the PSC. This result

occurred primarily due to two factors: ( 1 ) the Commission-set rates (now invalid) were

distance sensitive (i.e. the charges varied in proportion to the distance the power traveled)

and (2) Bryan was the closest of the four cities to TMPA’s generating plant. The right to

separate the charges, however, is not how the PSC: is written and not what it provides. In

other words, the PSC provides for each Member City to pay the same rate for the amount

of power used. Whether a particular item or component is properly included in that sales

rate, which is the point of Bryan’s allegations, is determined by reference to the sales

contract. That, of course, would be a contact determination.

         Bryan refused to pay the full amount of the sales rate charged by TMPA under the

PSC. TMPA sued Bryan in the Grimes County Suit, alleging breach of the PSC and

seeking a declaratory judgment as to Bryan’s obligations under the PSC.29 Bryan

counterclaimed, also alleging breach of the PSC and seeking a declaratory judgment as to

its obligations under the PSC3’ That suit is still pending and no final judgment has been

entered.

         Bryan initiated the Complaint Proceeding before the Commission. In the

29   17 CR 3283-91 (Case No. 644); 19 CR 3877-85 (Case No. 701).

30 16 CR 2922-6   (Case No. 644); 18 CR 3444-50 (Case No. 701).


30786885.1                                            -6-
Complaint Final Order, which was issued on July 8, 1999 and before this Court’s

decision in San Antonio, the Commission ordered that Bryan could limit the sales rate

payments to TMPA and was only obligated to pay the transmission charges set by the

Commission, rather than the full contract sales rate.31 The effect of this order was to shift

from TMPA to Bryan the legal and financial responsibility for the delivery of the power

from the TMPA generating plant to Bryan, which, in industry terminology, “unbundled”

the PSC. This same result occurred in the 1999 Ratesetting P r ~ c e e d i n g .In ~
                                                                                 ~ other words,

these final orders changed the contract .provisions and obligations found in the PSC,

which is the security for TMPA’s bonds.                     Although these final orders have been

overturned, the court of appeals’ decision would allow this same result to occw again.

         The Petitioners believe that the cmrt of ;appeals has significantly misstated the

nature of the case by couching this case as a dispute concerning transmission service or

transactions -- but it is not. TMPA can only be found to be providing transmission

service if the PSC has been modified by a court of competent jurisdiction (i.e. the Grimes

County court) so as to transform it into an unbundled contract. No such holding exists.

                                   SUMMARY OIF THE ARGUMENT
         The court of appeals has significantly misconstrued chapter 35 of PURA as

granting by implication the Commission the power to modify, amend, and/or abrogate the
31
   It is interesting to note that the ALJ i the Comjplaint Proceeding granted TMPA’s motion to dismiss on the
                                           n
grounds that it was a contract dispute. When this ruling was before the Commission for approval, the Commission -
without any notice and without any opportunity for a contested case hearing - not only denied the ALJ’s
recommendation but ruled in favor of Bryan, thereby denying TMPA any semblance of due process. Simply stated,
the Commission improperly resolved the merits of the matter, without notice, hearing, or evidence, when the only
matter before it was TMPA’s motion to dismiss for lack ofjurisdiction. TMPA Brief at 6 (Case No. 644).
32
     1 CR 101-15 (Case No. 701).


30786885.1
                                                      -7-
PSC, andor to regulate Th4PA’s power sales (not transmission) rate, when the purpose of

chapter 35 is simply to provide open access and to give the Commission limited

jurisdiction over wholesale transmission transactions. The court of appeals has also

totally eviscerated the express protections from Commission regulation for MOUs

contained in chapter 40 of PURA. As such, the opinion radically changes the regulatory

landscape and the historical freedom fiom Commission regulation enjoyed by MOUs,

contrary to the express intentions of the Legislaturt:.

          The court of appeals attempts to define the issue before it several times and each

time it does not accurately state the question(s) that TMPA posed from the outset and

asked in its declaratory relief. The court, acknowledging that it was not being asked to

decide if the Commission orders were correct or being asked to decide contract issues,

stated:

          Instead, the task before us is to decide the narrow question of whether
          chapter 35 of PURA conferred jurisdiction on the Commission to determine
          whether the terms on which TMPA provided transmission services to Bryan
          were reasonable.

Op at 1 1 .33 The questions TMPA posed in its declaratory relief, however, were different -

- whether the Commission has the authority to change a MOU’s sales contract and

change a sales rate.            In fact, Petitioners do not dispute that the Commission has



33 The court of appeals described Bryan’s complaint as follows: “Thus, Bryan asked the Commission to examine
wholesale transmission charges that the TMPA board of directors had already set.” Op. at 17. TMPA’s board does
not set any transmission rates. While Bryan’s complaint may (allegethat the board does, that is simply incorrect.
TMPA takes the Commission-set transmission charges and uses those charges along with numerous other costs to
determine the sales rate to be charged to each of the cities under the PSC. Perhaps, this is part of the reason for
some of the statements and approach taken in the opinion - namely that the court of appeals felt it had to use or take
Bryan’s allegations as true.


30786885.1                                               -8-
jurisdiction over transmission transactions or disputes under chapter 35. See Op at 14.

        In essence, the court’s formulation of the issue is a rhetorical question that

assumes the final answer since it starts witlh the underlying premise that the sales contract

has already been unbundled and there art: two separate transactions in place - one for

sales and one for transmission service. Whether the sales contract is unbundled is,

however, a matter that (1) has not yet been resolved and (2) can only be resolved in the

Grimes County Suit where the decision will be made as to whether certain actions of

TMPA changed or unbundled the contract or not. If a court had determined the PSC to

be unbundled, then TMPA would agree thai the Commission has transmission

jurisdiction over any transmission service or disputes with regard to Bryan and that Bryan

would be +a transmission customer. That no such determination has been made is,

however, irrefutable.

         What the actual, undisputed facts show is that both Bryan and the Commission

admit and acknowledge the PSC was a bundled contract prior to the implementation of

the Commission’s invalid transmission                               As a part of that invalid scheme,

 TMPA made filings that Bryan asserts would unbundle the PSC. The court of appeals

 apparently agrees for purpose of determining jurisdiction, the meaning of which is

 unclear because the court readily acknowledges it cannot decide contract issues and

 should not be deciding matters for the Commission. Op. at 11. The fact remains,

 however, that the PSC as written is a bundled sales contract that has not been changed by

 34 Bryan Brief at 8-9 (Case No. 644); Bryan Brief al. 7-8 (Case No. 701). Final Order in Docket 19585, Finding of
 Fact No. 1 1 . 1 CR 178 (Case No. 644).


 30786885.1
                                                        -9-
any court. As such, the question also remains: Does the Commission have the authority to

modifl, abrogate or change a MOU’s sales contract and contract sales rate? The answer

is “no” according to the Legislature’s pronouncements found in chapter 40 of PURA and

no such power can be implied from chapter 35.

                                             ARGUMENT
I.      The Commission’s Authority Under PURA Chapter 35
        The court of appeals observed, and the parties appear to agree, that the only source

of the Commission’s power, if any, to regulate sales contracts and rates of a MOU would

have to be found in chapter 35 of PURA. Op. at 1 1 . The authority granted there as to

MOUs, however, pertains only to wholesale transmission transactions. For example,

chapter 35 provides in part:

                § 35.005. Authority to Order Transmission Service

              (a)    The commission maiy require an electric utility to provide
        transmission service at wholesale to another electric utility . . . and may
        determine whether terms for the transmission service are reasonable.

PURA     9   35.005 (emphasis added). Other provisions of chapter 35 which illustrate this

point are      $5    35.004, .005, .006 and .008, included in Appendix Tab G.                           The

Commission’s jurisdiction over ratesetting by MOUs such as TMPA has historically been

very limited.35 As this Court recently stated:

         Thus, the Commission’s jurisdiction over municipally owned utilities is
         restricted. Unlike investor-owned utilities, municipally owned utilities
         retain the ability to set their own rates without the Commission’s approval.


                 v. Pub. Util. Comm ‘n, 643 S.W.;!d 681, 683-5 (Tex. 1983); City of West Tawakoni v. Williams,
35 City of Sherman
742 S.W.2d 489,493 (Tex. App.-Dallas 1987, writ den.).


30786885.1
                                                    -10-
Sun Antonio, 53 S.W.3d at 318 (footnotes omitted).                            The only jurisdiction the

Commission has under chapter 35 is to aiddress and resolve disputes over transmission

service, which this Court has characterized as “largely an oversight role for the

Commission with respect to wholesale transmission transactions.” Id. at 320 (emphasis

added).

          Again, it is worth noting that it is a sales transaction at issue here -- not a

transmission transaction. Importantly, there is clearly no express authority in chapter 35

over an MOU’s existing sales contracts arid such power is not necessary to carry out any

other provision found in chapter 35. As such, there is no basis to imply such authority.

See Sun Antonio, 53 S.W.3d at 3 15.

          The court of appeals’ statutory mis-construction means that the Commission will

now have the authority to tear apart any bundled. power sales rate of an MOU. This is

contrary to the intention of the Legislabure as expressed in chapters 35 and 40. It is

clearly not expressly found in or necessary to accomplish the goals of chapter 35, which

only required that MOUs - like other transmission utilities - provides open access for

transmission across their systems by third parties.

1.
 1        The Commission’s Authoritv Under PURA Chapter 40
          The court of appeals significantly misconstrued parts of chapter 40 of PURA that

prohibit the actions taken and the jurisdiction asserted by the Commission here. In 1999,

the Legislature added chapters 39, 40 and 41 to PURA.36 Chapter 39 required private or


36   See Act of May 27, 1999, 76th Leg., R.S., ch. 405,9 17, 1999 Tex. Gen. Laws 2543


30786885.1                                              -11-
investor-owned utilities (“IOUs”) to separate their vertically integrated operations into

the three major component parts (generation, transmission, and distributionhetail sales)

and established the overall framework for the transition by IOUs to an unregulated

market for electric power. This is the process called “unbundling” and it only occurred

under the aeBs of the Legislature when it enacted the new legislation in 1999. Chapters

40 and 41 were part of this legislation and defined the options and roles that MOUs and

electric cooperatives, respectively, had in the new competitive marketplace.

         A.    Section 40.054(e) Prohibits the Commission From Unbundling an
               MOU’s Sales Contract With Its Customers
         In chapter 40, the Legislature made it clear that whether an MOU participated in

retail competition, and if so, how it did so, was left largely to the discretion of the MOU.

Section 40.054(e), for example, expressly prohibits what the Commission has sought to

do here, i.e., unbundle the PSC:

         The Commission does not have jurisdiction to require unbundling of
         services or functions of. . . a municipally owned utility. . . .

P U R A 5 40.054(e). Despite this express provision to the contrary, the court of appeals
has improperly found that the Commission has (under its so-called chapter 35

jurisdiction) the power to unbundle the sales contract of a MOU      -   like TMPA’s sales

contract with Bryan.

         B.    Section 40.055 Grants Exclusive IJnbundling Jurisdiction to the MOU
         Chapter 40 also affirms that the sole authority to determine whether TMPA or any

MOU will unbundle rests with the MOU itself:



30786885.1                                  -12-
                    Sec. 40.055. JURISDICTION OF MUNICIPAL GOVERNING BODY

                       (a)    The municipal governing body or a body vested with the
               power to manage and operate a municipally owned utility has exclusive
               jurisdiction to:
                                                               ***
                        (2)    determine whether to unbundle any energy-related activities
                        and, if the municipally owned utility chooses to unbundle, whether
                        to do so structurally or functionally;
                                                               ***
P U R A 0 40.055(a)(2). The court of appeals completely misconstrued this provision,
deciding that it applies only to those MOUs choosing to participate in retail competition.

Op. at 18. This construction, however, is contrary to the clear language of the statute -

violating a cardinal rule of statutory c~nstruction.~” the Legislature chosen to limit
                                                     Had

the application of this section to only those MOIJs adopting customer choice, it could

easily have done so. Throughout chapter 40, the Legislature used the phrase “customer

choice” in connection with MOUs (e.g.,                   $8    40.052, .053,.054, .057, .058, .059) to

distinguish between MOUs adopting customer choice and those not doing so. The

exclusion of the phrase “customer choice” here mleans that the Legislature did not intend

for the statute to have the limited scope that the court of appeals has found --violating yet

another rule of statutory constructi~n.~~

~~            ~~~




37
   See Boykin v State, 818 S.W.2d 782, 785 (Tex. Crim. App. 1991)[LL‘Wherethe statute is clear and unambiguous,
the Legislature must be understood to mean what it has expressed, and it is not for the courts to add or subtract from
such a statute.”’].
38 See Southwestern Bell Tel. Co. v. Pub. Util. Comm’n, 791 S.W.3d 226, 229 (Tex. App.-Austin              2002, no
pet.)[“‘[E]very word excluded from a statute must ... be presumed to have been excluded for a purpose.”’].




     30786885, I                                        -13-
         Additionally, the court of appeals’ construction leads to the result that an MOU

choosing retail competition cannot be forcibly unbundled by the Commission (not

needed because the MOU is doing so), but an MOU not choosing competition

presumably can be forcibly unbundled by the Commission. This is an absurd result.39 It

would also give the Commission unprecedented authority over those MOUs choosing to

retain their historical structure, which runs completely contrary to the Legislature’s

overriding precept that whether and how an MOU participates in competition is

discretionary with the MOU.

          C.         Section 40.101 Protects an MOU’s Sales Contracts
          Finally, and even more clearly, chapter 40 assures that existing power sales

contracts of MOUs, such as the PSC, would be free from interference:

          Sec. 40.101. INTERFERENCE WITH CONTRACT

                 (a)    This subtitle may not interfere with or abrogate the rights or
          obligations of parties, including a retail or wholesale customer, to a contract
          with a municipally owned utility or river authority.

PURA          5   40.1Ol(emphasis added). “This subtitle” as used above means Subtitle B of

PURA, i.e., chapters 31 through 41, which chapters contain all the various provisions

relating to electric utilities-including Chapter 35 of PURA.

          In giving effect to the language of this section as required by the rules of statutory

            the
const~uction,~~ intention of the Legislature is clear and unambiguous-nothing in


39
  See Dovalina 1’. Albert, 409 S.W.2d 616, 621 (Tex. Civ. App.-Amarillo    1966, writ ref d n.r.e.)[court should not
adopt construction that will lead to absurd results or consequence:^].
40
     See Magnolia Peholeum Co. v. Walker, 83 S.W.2d 929,934 (Tex. 1935).


30786885. I
                                                     -14-
Subtitle B (again including chapter 35) shall interfere with or abrogate the PSC. Yet the

court of appeals, relying on the second sentence of 9 40.00 1(a),41holds that €40.10 1 does
                                                                               j

not override the Commission’s jurisdiction, thereby effectively creating a “Chapter 3 5

Exception” to the express prohibitions contained in Chapter 40. See Op. at 18. As

formulated by the court of appeals, this exception swallows the rule.

         The clear purpose of the second sentence of €j 40.001(a) is to resolve potential

conflicts between chapter 40 and other sections of PURA that do not expressly use the

phrase “municipally owned utility.” The court of appeals misconstrues the effect of this

sentence to essentially eliminate the operation ofthe rest of chapter 40. This sentence

only operates to say that chapter 40 does not automatically govern and that the provisions

of chapters 35 and 40 must be harmonized. Because chapter 35 does not anywhere

authorize the Commission to modifjr, interfere with, or abrogate an MOU’s contracts,

there is no conflict between it and chapter 40 and no need to create a “Chapter 35

Exception .”

         Several other sections of Chapter 40 contain other protections for MOUs couched

in similar “nothing in this subtitle” language.42By crafting a “Chapter 35 Exception” that

allows the Commission to ignore these important limitations, the court of appeals has


4’ The   second sentence of this section states: “With respect to the regulation of municipally owned utilities, t h s
chapter controls over any other provision of this title, except for sections in which the term ‘municipally owned
utility’ is specifically used.” PURA $ 40.001(a).
42 For example, $40.102, prohibits anything in “this subtitle” from limiting an MOU’s access to the wholesale
market; $40.103, prohibits anything in “this subtitle” from impairing the bond covenants of MOU’s and river
authorities; and 540.104, prohibits anything in “this subtitle” from impairing the tax exempt status of MOU’s,
cooperatives, and river authorities, or from impairing the tax exempt status of the debt obligations issued by such
entities.


30786885.I                                              -15-
reached an absurd result that could not have been intended by the Legislature and would

potentially give the Commission broad powers that, again, are specifically denied it.

         D.       The Court of Appeals’ lllis-interpretation of Chapter 40 Will Have
                  Broad Effects
         The court of appeals’ evisceration of chapter 40 goes far beyond TMPA, and

affects every municipality in Texas that owns an electric utility system. Further, chapter

41 of PURA, which applies to elec.tric cooperatives, contains virtually identical

provision^.^^ The protections intended for cooperatives could also be denied and are
certainly implicated here.

11
 1.      Chapter 40 Applies to the Entire Period at Issue

         The court of appeals states that the parties agree that chapter 40 does not apply to

the Complaint Proceeding or the first eight months of the 1999 Ratesetting Proceeding

(because chapter 40 did not become effective until September 1, 1999). See Op. at 17.

Petitioners do not agree to that and explained at length in their appellate brief how

chapter 40 applies to the entire period at issue and explained that again in their motion for

rehearinga        Regardless of what has been briefed, the law is clear that chapter 40 (i.e.

subsequent legislation) applies to the entire period in deciding jurisdictional matters of

this nature. See Subaru o Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212,220
                         f

(Tex. 2002).


43
     See PURA   $9 41.054(e), .055(2), and .101(a). A complete copy of PURA chapter 41 is attached at Appendx Tab
I.
44
  See TMPA Brief at 3 1-33 (Case No. 644); TMPA Brief at 30-32 (Case No. 701); TMPA Motion for Rehearing at
15-19 (Case No. 644); TMPA Motion for Rehearing at 15-19 (Case No. 701).


 30786885.1                                            -16-
        This is an extremely significant error and one that cannot go uncorrected. The

parties and the Commission should not be forced to go through another proceeding not

looking at the controlling statutory provisions.

IV. The Court of ApDeals Erred in M i r m i w the Dismissal of TMPA’s
        Declaratory Judgment Claims Regarding the Jurisdiction of the Commission
        The trial court dismissed TMPA’s UDJA Jurisdictional Claims regarding the

jurisdiction of the Commission, finding that it lacked subject matter jurisdiction to

consider those                   The court of appeals here affirmed that dismissal, finding that

those claims were “unnecessary and redundant” in view of its holding that chapter 35

provided jurisdiction over “transmission services.” Op. at 20. As pointed out above, that

was not the declaratory relief or question that TMPA posed.

        In Texas Municipal Power Agency v. Pub. Util. Comm’n, 100 S.W.3d 510 (Tex.

App.-Austin             2003, pet. denied)(“TMPA v. PUC’), the court of appeals there was

confronted with the issue of whether the trial court had subject matter jurisdiction of the

exact same declaratory relief claims regarding the scope of the Commission’s authority.46

Holding that TMPA’s UDJA Jurisdictional Claims were different fiom and broader than

TMPA’s claims regarding the particular Commission order at issue, the court of appeals



45 19 CR 3908 (Case No. 644), Appendix Tab C at 3908; 28 CR 5991 (Case No. 701), Appendix Tab E at 5991.
46
    TMPA v. PUC was brought by TMPA and the Northern Cities seeking review under the APA of the
Commission’s final order in its Docket 22055, which set ERCOT-wide transmission rates for 2000, similar to what
the Commission did in the 1999 Ratesetting Proceeding, which is being presented to this Court. At the same time
the trial court dismissed, on jurisdictional grounds, TMPA’s UDJA claims in the two matters being presented to this
Court, it also dismissed the same UDJA claims in the matter arising from Docket 22055. In that latter matter,
however, TMPA pursued an interlocutory appeal of that trial court ruling, whch was reversed by the l k r d Court of
Appeals in TMPA PUC. The case arising from the Docket 22055 proceeding is still pending in the Travis County
                  \J.




District Court.


30786885.1                                             -17-
there found that the trial court indeed had subject matter jurisdiction to consider the

UDJA Jurisdictional Claims. Id. at 519-520. The same result should apply here.

        Although Petitioners believe that the court of appeals’ opinion holds that the

Commission has the authority to modify and change TMPA’s sales contract and sales rate

with Bryan, there could be interpretations to the contrary given the way the court phrased

the issue. Should Petitioners’ view not be a correct reading of the opinion, then the

merits of TMPA’s UDJA Jurisdictional Claims (clearly separate claims regarding the

scope of the Commission’s authority which TMPA was entitled to have heard in these

cases) have yet to be addressed by any court. In that situation, the court of appeals’

affirmance of the dismissal of those claims is contrary to TAMPA u. PUC and is error.

                              CONCLUSION AND PRAYER

        Petitioners respecthlly request that the Court (i) grant their petition for review; (ii)

reverse the judgments of the court of appeals; (iii) render judgment in favor of

Petitioners; and (iv) grant such other and further relief to which Petitioners are entitled.




30786885.1                                    -18-
               State Bar No. 2066120
              James R. Bailey
               State Bar No. 0152500
               FULBRIGHT & JAWORSKI, L.L.P.
              600 Congress Avenue, Suite 2400
              Austin, TX 78701
              Telephone: (5 12) 474-520 1
              Facsimile: (512) 536-4598

              W. Wendell Hall
               State Bar No. 08787400
              Fulbright & Jaworski, L.L.P.
              300 Convent Street, Suite 2200
              San Antonio, Texas 78205-3792
              Telephone: (210) 224-5575
              Telecopier: (2 10) 270-7205

              Lambeth Townsend
               State Bar No. 20167500
              LLOYD GOSSELINK BLEVINS
              ROCHELLE & TOWNSEND, P.C.
              111 Congress Avenue, Suite 1800
              Austin, TX 78701
              Telephone: (512) 322-5830
              Facsimile: (512) 472-0532

              COUNSEL FOR PETITIONER
              TEXAS MUNICIPAL POWER AGENCY




30786885.1
             -19-
             Smith, Majcher & Mudge, L.L.P.
             Lawrence Smith
             8 16 Congress Avenue, Suite 1270
             Austin, Texas 78701
             Telephone: 5 12/322-9066
             Telecopier: 5 12/454-2452

             COUNSEL FOR PETITIONERS
             CITY OF DENTON, TEXAS;
             CITY OF GARLAND, TEXAS; AND
             CITY OF GREENVILLE, TEXAS




30786885.1   -20-
                            CERTIFICATE OF SERVICE

        I certify that a true and correct copy of the above and foregoing instrument was

served via hand               accordance with Rule 9.5 of the Texas Rules of Appellate

Procedure, on                 September, 2004 on the following counsel of record:

    Lin Hughes
    Brook Bennett Brown
    McGinnis, Lochridge & Kilgore, L.L.P.
    9 19 Congress Avenue, Suite 1300
    Austin, Texas 78701

    Elizabeth R. B. Sterling
    Assistant Attorney General
    Natural Resources Division
    P. 0. Box 12548, Capitol Station
    Austin, Texas 787 11-2548

    Counsel for Respondents




 30786885.1                                 -21-
                                                 APPENDIX INDEX

                                                                                                                               TAB NO.
January 29, 2004 Third Court of Appeals Opinion .......................................................                                    A

May 20, 2004 Third Court of Appeals Substituted Opinion            ......................................... B
Corrected Order [19 CR 3906-8 (Case No. 644)] ...........................................................    C
'.FinalJudgment [19 CR 3909-10 (Case No. 644))                        ........................................................... D
Corrected Order (28 CR 5989-91 (Case No. 701)] .........................................................                          E

Final Judgment 1 Supp. CR 1-5 (Case No. 701)) ..........................................................
                1                                                                                                                 F
PURA Chapter 35 .............................................................................................................     G

PURA Chapter 40 ............................................................................................................      H
PURA Chapter 41 .............................................................................................................. I

Pre-1999 Version of PURA Chapter 35                           ..........................................................................   J




 30786885. I                                                   -22-

								
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