The Georgia Supreme Court heard arguments Tuesday in a dispute over a major manufacturer’s decision to choose Walton Electric Membership Corp. instead of Georgia Power as its electricity supplier.
The state’s highest court is expected to rule in the coming months on the case, which concerns Georgia Power’s claim that the company has “grandfathered rights” under the Georgia Territorial Electric Service Act to continue supplying electricity to the refurbished cat food maker Nestlé Purina PetCare Co.
The state Supreme Court agreed to take up the case to reconsider decisions by the Fulton County Superior Court and the Georgia Court of Appeals that had opposed the Georgia Public Service Commission’s decision to deny Georgia Power’s request to prohibit Walton EMC from supplying electricity to the Nestlé-Purina plant in Hartwell.
The Georgia Territorial Electric Service Act of 1973 introduced some retail competition in a market dominated by Georgia Power, allowing manufacturing and commercial customers of a certain size to choose their electricity supplier once.
The Georgia PSC regulates investor-owned Georgia Power, which serves 2.7 million customers. The five-member state commission has limited regulatory authority over more than 90 EMCs and municipal power systems.
Nestlé notified Walton in 2019 that the company would use its electricity services, and in April 2019, Georgia Power filed a complaint with the PSC alleging that Walton violated the Territorial Act by supplying electricity to the same premises that had been served by Georgia Power since 1991.
According to Walton EMC’s attorney, David Cook, the company’s conversion of a former towel factory into a cat food plant was more than enough to ensure the state’s utility choice. Cook said the rule has been applied appropriately by the PSC for decades.
“The customer choice provision of the Territorial Acts applies to pre-existing buildings that are being remodeled, not to substantial portions,” Cook said. “We also ask this court to hold that a large load customer need not completely demolish the premises to satisfy this customer choice provision because satisfying the customer choice provision is a matter of extent.”
Judges Carla Wong McMillian and Charles J. Bethel questioned Georgia Power’s attorney, Thomas Reilly, about why he disagreed with the PSC’s findings that Nestlé’s investment of hundreds of millions in renovating the factory did not qualify as a “new building.”
Reilly said the lower courts rightly granted Georgia Power the opportunity to exercise its right to continue supplying electricity to the same location where it had already done so for years.
“The lower court’s judgment should be affirmed because the Public Service Commission unlawfully deprived Georgia Power of the exclusive right to continue to supply Hartwell’s premises in violation of the provisions of the Territorial Act,” Reilly said.
Bethel bombarded Reilly with a series of questions about the major renovations made to the building under Nestlé Purina.
“So Georgia Power’s position is that the cat food plant was essentially rebuilt along with the previous towel plant,” Bethel said. “Are the machines that the towel manufacturer presumably used to weave towels still in operation?”
“No, sir,” said Reilly.
“Are the boilers that supplied the alleged bleaching and dyeing processes still in operation?” asked Bethel.
“They are not,” Reilly said.
“What about the cutting and sewing machines a towel manufacturer would need?” asked Bethel.
“No,” Reilly replied.
“When something is gutted, that is, wiped out, all the old equipment that was using your electricity is removed from the plant and replaced with new equipment that makes a completely different product … I understand your argument, but I don’t understand how we think that’s compatible with the non-essential nature (of the investment),” Bethel said.
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