(AUSTIN) – In a case closely watched by cities across Texas, the Texas Supreme Court Friday reiterated the long-recognized right of a city to require utilities to bear line and pole relocation costs when roadways are widened or straightened.
Oncor Electric Delivery Co. had challenged a requirement by the city of Richardson to pay the costs of relocating utility poles in 32 alleys. The company argued that the specific wording of the state’s Utilities Code did not require them to do so.
Oncor reasoned that the Legislature’s use of “street” and not “alley” showed its intent to exempt alleys from the statutory requirement. Richardson said that “street” is a general term that includes alleys and other transportation thoroughfares.
The Supreme Court, however, decided that the requirement also applies to alleyways and other thoroughfares, reversing a 2015 decision from the Dallas Court of Appeals that favored Oncor.
“Absent greater clarity from the Legislature to abrogate this right, the Legislature’s express recognition of a municipality’s right to have the utility pay for the relocation on a street does not forbid a municipality from also requiring the utility to pay for a relocation along an alley, highway, or other transportation thoroughfare,” said Justice Paul Green.
The dispute dates to 2010, when Richardson approved the alley-widening project, requiring the relocation of 150 electric poles and lines. Oncor, which had routinely paid for changes to the city’s rights-of-way, refused to pay for the alley work.
Around this time, Oncor filed an unrelated rate case with the Public Utility Commission. Oncor resolved the rate case with a steering committee of Richardson and other cities served by the utility. The settlement adopted a “tariff” that included standard language stating that retail customers or entities requesting relocation must pay the costs.
After Richardson sued Oncor for breach of contract, the trial court granted Richardson’s motion for summary judgment. The 5th Court of Appeals reversed and rendered judgment in favor of Oncor.
Cities were concerned with the lower court ruling because it appeared to replace the common law rule with a new interpretation of language commonly used in utility rate filings. The PUC, in an amicus brief, sided with Oncor that the relocation cost requirement applies only in connecting with the widening of streets.
The Supreme Court held that the tariff did not alter the earlier contract between Richardson and Oncor. Green said state statutes and common-law principles support a city’s right to require utilities to bear relocation costs along public rights-of-way.
“Under the court of appeals’ contrary holding, the PUC’s rules, in establishing tariff provisions that are required for utility tariffs, effectively abolish home-rule cities’ authority over public rights-of-way and give utilities unchallengeable power to demand relocation costs merely by obtaining approval of their rates,” said Green.
Roger Townsend of Alexander Dubose Jefferson & Townsend represented the city. Robert Wise of Lillard Wise Szygenda represented Oncor.