• Walton EMC Prevails in “Reconstruction in Substantial Kind” Georgia Territorial Act Case
  • August 25, 2015 | Authors: Matthew J. Bowness; Benjamin C. Morgan; James A. Orr
  • Law Firm: Sutherland Asbill & Brennan LLP - Atlanta Office
  • A hearing officer of the Georgia Public Service Commission recently decided in favor of Walton EMC in a Territorial Act dispute with Georgia Power over the right to provide electric service to a CVS drugstore in Athens, Georgia. (Docket No. 34390.) The CVS was built on the site of what used to be a Johnny Carino’s restaurant. The restaurant - which had been lawfully served by Walton EMC - was torn down, and the CVS was built in its place. CVS selected Georgia Power over Walton EMC to provide electric service to the premises. Walton EMC filed a petition with the Commission arguing that it had the exclusive right to serve the CVS under the Territorial Act’s “grandfather clause.”

    The Act’s grandfather clause provides that an electric supplier has the right to continue serving any premises lawfully served by it, including any premises lawfully served by it that has been “destroyed or dismantled” and subsequently reconstructed “in substantial kind on approximately the same site.”

    The hearing officer decided in favor of Walton EMC, finding that the CVS building was a “reconstruction in substantial kind” of the old Johnny Carino’s and that Walton EMC thus had the exclusive right to provide electric service to the CVS.

    In reaching this conclusion, the hearing officer stated that “[t]he Territorial Act does not require reconstruction in ‘exact kind.’” Instead, the Act only requires that the new building be “largely, but not wholly, of the same fundamental nature or quality as the previous facility.” The hearing officer found that this requirement had been met because: (1) the two buildings “share[d] the same basic physical characteristics: single-story, rectangular slab-on-grade buildings”; and (2) the two buildings had similar square footage - 8000 square feet and 13,000 square feet, respectively. The hearing officer found that despite some physical difference between the old and new building, these factors meant that the new building was “plainly” a reconstruction in substantial kind within the meaning of the Act’s grandfather clause.

    The Commission emphasized the importance of the physical characteristics of the new and old building in this type of case, noting that the grandfather clause does not require that the business or function of the new building be substantially the same as that of the old building. Rather, if the building was reconstructed in substantial kind “and used for any of the purposes that its predecessor in interest was used, it clearly cannot be regarded as a new premises.” The hearing officer found that the basic function of the old and new buildings - retail sales to the public - remained the same. Also, both Johnny Carino’s and CVS sold food and beverages to the public; in fact, CVS sold some of the very products sold by its predecessor, including pasta, soft drinks, wine, and beer. Thus, the “any prior use” standard was met.