On March 23, 2018, the Georgia Public Service Commission (PSC) ruled in favor of GreyStone Power Corporation in a Territorial Act dispute with Georgia Power. The dispute arose when Georgia Power extended service to a building that had been lawfully served by GreyStone Power since 2007. Georgia Power extended service to the building—which is located in Lithia Springs near Douglasville—in 2014, after it was purchased by Keurig Green Mountain.

The building itself is essentially a large box, with the bulk of its square footage devoted to a large, open room. Prior to being purchased by Keurig, the building was outfitted with 80 truck docks and was used by another company for warehousing purposes. Keurig purchased the building with the intent of retrofitting it for use as a manufacturing facility for its Kold beverage platform. The facility was to be retrofitted with manufacturing lines that were capable of producing Kold beverage “pods.” The pods—when used with Keurig’s Kold beverage machine—were capable of producing freshly mixed soft drinks.

Keurig’s conversion of the building required substantial renovations. Keurig removed some residual warehousing equipment from the building, blocked up most of the existing truck docks, upgraded the existing building systems, and added new systems to support its manufacturing lines. Keurig then installed manufacturing lines throughout the floor of approximately one-third of the building, with plans to install additional lines throughout the remaining two-thirds as demand for the Kold beverage pods increased.

Georgia Power extended service to the building early on in the renovation process. When challenged by GreyStone, Georgia Power took the position that Keurig’s renovations to the building—which were substantial, with a total estimated cost of $337 million had they been completed—made the building a “new premises” subject to customer choice under the Territorial Act.

GreyStone responded by filing a petition with the PSC disputing Georgia Power’s right to serve the building. While the dispute was pending before the PSC, Keurig abandoned the project due to the Kold beverage machine’s poor sales performance. By the time the case reached the evidentiary hearing before the PSC’s Hearing Officer, Keurig was in the process of decommissioning and removing its equipment from the building, some of which had never been installed.

Following the hearing, the Hearing Officer issued an initial decision finding that GreyStone Power had the exclusive right to continue serving the building. The Hearing Officer concluded that—despite the extent of Keurig’s renovations to the building—Georgia Power had failed to demonstrate that the building itself constituted a “new premises” because it did not “recently [come] into existence.” It had existed since 2007, long before it was purchased and renovated by Keurig. According to the Hearing Officer, this undisputed fact was, “by itself, dispositive of the issues” in the case.

The Hearing Officer also rejected Georgia Power’s argument that the “reconstruction in substantial kind” provision of the Territorial Act’s “grandfather clause,” O.C.G.A. § 46-3-8(b), gave Georgia Power the right to serve the building. That provision states that “[e]very electric supplier shall have the exclusive right to continue serving any premises lawfully served by it . . . including premises which . . . have been destroyed or dismantled and . . . reconstructed . . . in substantial kind on approximately the same site.” The Hearing Officer concluded that this provision did not come into play because Keurig had not “destroyed or dismantled” the building. Keurig had renovated the building, but renovations—even substantial ones—do not trigger the grandfather clause’s reconstruction provision.

Finally, the Hearing Officer found that even if Georgia Power could have demonstrated that the building was a new premises, it had failed to prove that its connected load was more than 900 kW. Georgia Power had attempted to prove the connected load of the building by relying on meter records. The Hearing Officer rejected this evidence, however, noting that “under settled Commission precedent, [Georgia Power’s] reliance on metered load cannot satisfy [its] burden of proving the [b]uilding’s connected load.” The Hearing Officer also noted that the proper procedure for proving connected load involves a load count conducted by an expert electrical engineer. The Hearing Officer found that due to Georgia Power’s failure to conduct such a load count, its proof regarding connected load was both “procedurally deficient and substantively inadequate.”

Based on these conclusions, the Hearing Offer ordered Georgia Power to disconnect its service from the building. Georgia Power has decided not to appeal the Hearing Officer’s decision.

This decision is consistent with the Commission’s 2015 decision in favor of Jackson EMC regarding a wood manufacturing plant.

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GreyStone Power was represented by James A. Orr and Matthew J. Bowness of Eversheds Sutherland (US) LLP.