Court of Appeals affirms “grandfather” rights in Territorial Act renovation dispute

Georgia Power had serviced the facility since its construction in 1991, but after acquiring the building in 2017, Nestlé Purina Petcare Company decided to switch electric service providers from Georgia Power to Walton EMC. Georgia Power challenged Walton EMC’s assertion of service rights before the Georgia Public Service Commission, arguing that Georgia Power had the right to serve the premises under the “grandfather clause” of the Georgia Territorial Act. That provision grants an incumbent electric supplier the “exclusive right to continue serving any premises” to which it has lawfully extended service. 

Walton EMC, however, argued that it had the right to serve the premises as a new large load customer under the “in substantial kind” provision of the grandfather clause, which provides that an incumbent supplier’s right to continue serving a premise persists even if the premises “have been destroyed or dismantled and . . . reconstructed . . . in substantial kind on approximately the same site.” Walton EMC argued that because the facility had been destroyed or dismantled and reconstructed in different kind, Georgia Power’s grandfather rights were extinguished, and Walton EMC could serve the facility under the large load exception.

Walton EMC prevailed before the PSC, which found, based on Nestlé’s many substantial modifications to the premises, that the old facility had been destroyed or dismantled and not reconstructed in substantial kind. Georgia Power appealed that decision, and as we have previously reported, the Fulton County Superior Court reversed the PSC, holding that the facility was not destroyed or dismantled. Georgia Power Co. v. Ga. PSC, Case No. 2020-cv-338123. [Link to Apr. 5, 2023 Article.]

Walton EMC and Nestlé then appealed the case to the Georgia Court of Appeals. In deciding the case, the court affirmed the superior court decision, finding that Georgia Power had grandfather rights to serve the premises, because the facility was not destroyed or dismantled. The court ruled that Nestlé would have had to “take apart,” “disassemble,” or cause “complete ruin” to the facility “in a wholistic rather than partial manner.” The court reasoned that “there is nothing in the plain language of the statute suggesting that a partial reconstruction of a premises is sufficient to prevent the application of the grandfather clause.” Accordingly, the court of appeals affirmed the superior court’s decision reversing the original PSC decision. 

Walton EMC and Nestlé have petitioned for writ of certiorari to the Georgia Supreme Court. Walton EMC is represented by David Cook of Autry, Hall & Cook, LLP.

This is one of several “renovation” cases decided over the past few years. Others included Carroll EMC, Jackson EMC, and GreyStone Power.

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