USA Law and Practice Contributed by: David P. Flynn, Lindsey E. Haubenreich, Thomas F. Puchner and Dennis W. Elsenbeck, Phillips Lytle LLP
Public Participation Public participation and input may be permitted in accordance with applicable state and local laws. Similar to the federal processes, state law may require a public hearing, and the oversee- ing state agency or state utility commission may solicit public comments. Most state utility com- missions have an online public docketing portal where applications, notices, comments, peti- tions, rulings and orders are posted. Depending on the state and the type of distribu- tion facility being proposed, a utility or developer may need to file advance notice of a proposed facility, which may be subject to public com- ment. Timing of distribution system approvals may depend on state-specific public notice and comment requirements, utility rate case sched- ules, local government involvement, and state policy and regulation. 5.3 Terms and Conditions Imposed in Approvals to Construct and Operate Electric Distribution Facilities The terms and conditions of distribution facil- ity approval vary based on state regulations and market structures. In vertically integrated states, a state utility commission typically requires the distribution facility applicant to demonstrate that a facility is necessary, prudent, in the public inter- est, and just and reasonable in light of current market conditions and state policy objectives. Approval may be conditional on compliance with certain safety, environmental, engineering and public interest standards. 5.4 Eminent Domain, Condemnation or Expropriation Rights to Construct and Operate Electricity Distribution Facilities The power of eminent domain, condemnation and expropriation is commonly granted to elec- trical energy distribution facility applicants upon
review and approval of their construction and operation application. However, depending on the applicable state laws governing eminent domain, the rights of the distribution facility applicant will vary. A distribution facility or utility exercising its right of eminent domain must provide just compensa- tion for the property being condemned. 5.5 Monopoly Rights for Electricity Distribution Entities In most states, utilities have geographically defined service territories, provided for by state legislation or regulation, within which the utility has monopoly rights to provide a distribution service. Exceptions may exist in some states for competitive market participants, depend- ing on state law and regulation. The degree to which monopoly service rights exist, the extent of deregulation, the method by which such rights are modified and the opportunity for competitive market participants to compete within those ser- vice territories varies significantly by state. 5.6 Electricity Distribution System Charges and Terms of Service The primary authority over electrical energy dis- tribution is each state’s utility commission, which typically has broad authority to ensure just and reasonable rates, terms and conditions of distri- bution service in accordance with state legisla- tion, regulation and promulgated rules. FERC imposes a functional test for the case-by- case determination of whether a facility is provid- ing interstate transmission service or local dis- tribution service, but generally defers to states’ interpretation and application of those factors in making its determination. State utility commis- sions have jurisdiction over rates and terms of service for retail distribution-level utility service.
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