Georgia Power denied grandfather rights to provide electric service to textile plant converted to pet food plant

Eversheds Sutherland (US) LLP

Eversheds Sutherland (US) LLPThe Georgia Public Service Commission (PSC) recently ruled in favor of Walton EMC in a dispute arising from a textile manufacturing plant that was transformed into a plant producing pet food. Georgia Power Company v. Walton EMC, Docket No. 42509. Georgia Power served the plant from 1991 to 2006, during which time the plant underwent multiple expansions. Thereafter, the facility sat vacant for more than a decade before being purchased by Nestle Purina in 2017. Because Nestle Purina considered the plant dilapidated and unsuited for food manufacturing, it demolished portions of the property and renovated others. Nestle Purina selected Walton EMC as the electric supplier for the plant under the large load (900 kW) exception of the Georgia Territorial Act. Georgia Power claimed service rights under the Territorial Act’s grandfather clause. To resolve the dispute, Georgia Power initiated proceedings at the PSC.

After hearing evidence from both parties, the PSC hearing officer sided with Walton EMC, concluding the premises “was destroyed or dismantled, that a new premises exists and there has been no reconstruction in kind so as to afford Georgia Power any grandfather rights.” In finding that the premises had been “destroyed or dismantled,” the hearing officer noted that Nestle Purina had, among other things, taken apart and stripped away the electrical system, HVAC system, crane system, air handling system, wastewater system, storm water system, and various parts of the roof, in addition to removing and replacing flooring and foundation in parts of the facility. 

The hearing officer also concluded the premises had not been “reconstructed in substantial kind.” Citing prior PSC decisions, the hearing officer found that “in substantial kind” means “a facility that is largely, but not wholly, of the same fundamental nature or quality as the previous facility.” In finding that the premises had not been reconstructed in substantial kind, the hearing officer was particularly persuaded by evidence showing that Nestle Purina had: (1) replaced a wastewater treatment facility; (2) changed the overall structure and design of the facility; (3) added 120,000 square feet of new building space; (4) replaced existing electrical systems; (5) replaced the air handling systems; (6) sealed off the interior of the plant to protect against pests and other food contaminants; and (7) added a freezer in one of the new buildings. The hearing officer concluded that there were “countless differences” between the textile plant and pet food plant “in terms of both physical appearance and structure, and primary purpose and function.”  

On June 9, 2020, the full PSC affirmed the hearing officer’s decision in its entirety. 

This is the latest in a series of “renovation” cases decided by the PSC over the last few years. Legal alerts reporting on these prior decisions can be accessed by clicking here (Ga. Power v. Carroll EMC), here (Ga. Power v. Jackson EMC), and here (GreyStone Power v. Ga. Power).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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