• Georgia PSC Issues Initial Decision in “Reconstruction in Substantial Kind” Case
  • October 9, 2014 | Authors: Benjamin C. Morgan; James A. Orr
  • Law Firm: Sutherland Asbill & Brennan LLP - Atlanta Office
  • On September 17, 2014, a hearing officer for the Georgia Public Service Commission (PSC) issued an initial decision in a “reconstruction in substantial kind” case under Georgia’s Territorial Act, O.C.G.A. § 46-3-1 et seq.

    The dispute concerns a 67,000-square-foot plant where Sony used to manufacture compact discs and, prior to that, where CBS Records used to manufacture audio records. Carroll EMC had served the plant since it opened in 1980. In 2013, Southwire purchased the plant with the intention of manufacturing wire for commercial and industrial use. Southwire initially signed a membership application with Carroll EMC, but after continuing to receive service from Carroll EMC, Southwire contracted with Georgia Power on the basis that Southwire’s planned modifications to the plant created an entirely new premises, and not a reconstruction in substantial kind of the old plant. Carroll EMC disagreed, and the matter was brought before the PSC.

    After a hearing and briefing, the hearing officer concluded that Georgia Power had the right to serve the plant. In determining that the Southwire plant was a new premises, and not a reconstruction in substantial kind, the hearing officer discussed changes to the physical layout of the plant, its operation, and the type of electric service needed.

    The hearing officer noted various physical changes to the plant, including the following:

    • The dismantling and removal of walls, partitions, a 22,000-square-foot mezzanine, and warehousing facilities that occupied the building
    • The demolition of much of the floor and foundation and the installation of new foundations for heavy machinery and building support
    • Removal of much of the HVAC system
    • The extension of the footprint of the building by 12,500 square feet for a filtering system
    • Changes to the parking lot and the addition of security fencing
    • The addition of 25 feet to the elevation of the building
    • Creation of openings to the outside
    • The addition of industrial silos
    • Changes to the exterior of the building

    Changes in the operation of the plant included the following:

    • Change from light manufacturing, warehousing and distribution of CDs, records and tapes to heavy manufacturing of wire to be stored in the open air for shipment and sale to commercial and utility users
    • Change from a labor-intensive operation to a capital-intensive operation
    • Use of large variable speed alternating current and direct current motors by Southwire

    Changes in the power delivery system and electrical infrastructure included the following:

    • The old plant took service from distribution circuits in order to protect its consumer product operations from the corona effects of high voltage lines and transformers.
    • The Southwire operation required taking service from the transmission system to maintain reliability.
    • A new switchyard was constructed at the site to deliver power from the 115-kV network.
    • Virtually the entire electrical infrastructure was changed because the Sony plant was operated on a delta-delta configuration, and the Southwire operation required a delta-wye system.

    The hearing officer also noted the $47.6 million cost to modify the plant, as compared with the $11 million purchase price.

    Based on all of these factors, the hearing officer concluded that the modifications rendered the plant “no longer suitable for its original purposes” and, instead, rendered it a new premises.

    Carroll EMC intends to appeal the decision to the full Commission.

    Carroll EMC is represented by G. Mark Cole and Roland Hall of Autry, Cole, Hanrahan, Hall & Cook, LLP. Georgia Power is represented by Robert P. Edwards of Troutman Sanders LLP.