September 30, 2022 By Breeauna Sagdal

Amidst the back-drop of lush and rolling farms, signs opposing two proposed carbon capture pipelines span the rural countryside of Eastern South Dakota. While farmers and landowners are opposed to the new carbon pipeline, various Chambers of Commerce have backed the idea and welcome the new business venture. In the middle of these two sides, sits the impartial elected watchdog group known as the South Dakota (PUC) Public Utilities Commission.

The Public Utilities Commission was created in 1882 by South Dakota's legislature, and has been given legislative and statutory authority under Title 49 of the South Dakota Code. The state of South Dakota determines, via the legislature, how the PUC is to operate and arbitrate each case filing that comes before the Commission.

Additionally, under South Dakota state code, ex-parte law prohibits any Commissioner from espousing an opinion, or discussing the details of an open docket case. While legally unable to give details, PUC Chair Chris Nelson spoke to The Dakota Leader in an effort to explain the process, outlined in state code, which defines how the PUC is allowed to operate.

Nelson has served on the Commission for eleven and a half years and says, "the role of the PUC, in most simplistic terms, is to protect utility consumers or rate-payers in the state of SD."

Public utility providers are often limited in quantity due to the infrastructure needed to provide each utility. Infrastructure that is not only expensive, but expansive in order to link structures like schools, homes, businesses, and farms across an entire grid of water pipes, electrical lines, or telecom towers.

According to Nelson, this creates an almost monopolistic-like environment in which the Public Utilities Commission was created to regulate for price and service quality.

"The companies who provide utility services are limited, which creates an almost monopolistic-like environment," Nelson shares in an interview with TDL. "It's the role of the PUC to make sure these companies keep prices reasonable, or capped, while also ensuring that the floor doesn't drop out on the quality of services provided."

A D V E R T I S E M E N T

A D V E R T I S E M E N T

Nelson also explains that the Commission does not have the ability to make laws, but instead the Commission operates more like a court under a quasi-judicial jurisdiction called, administrative procedure.

"The PUC does not have legislative authority, instead the state legislature tells the PUC how it is allowed to proceed, or make quasi-judicial decisions called Administrative decisions. There is a strict formal process we must go through before ever coming to a decision. That formal process, laid out in state law, requires a process of fact finding, evidence and public testimony, and even after the Commission makes an Administrative decision, that decision can immediately be appealed to the circuit court and over-turned," Nelson shares.

Like a judge, South Dakota law compels Commissioners to be impartial and unbiased in how they approach every hearing. "The law is very clear, and requires PUC Commissioners to be unbiased in how they approach each case," Nelson shares. "Commissioners are not allowed to espouse their own opinions, and any conflicts of interest actually require Commissioners to recuse themselves," Nelson points out.

Recently, Summit Carbon Solutions requested an extension on their application for a pipeline in order to work out route changes. Nelson says that the pipeline proposed by Summit has been placed on an indefinite hold, until the mapped route is finalized.

However, Nelson says before Commissioners ever vote on the issue, a process of discovery, pre-filings and testimony will take place throughout various procedural hearings. During this time, the PUC will set aside time for briefs when the company, PUC staff and interveners opposed to the pipeline will all have ample opportunities to voice their views.

This process can take an entire year, and Nelson shares that it will likely be well into next year before the pipeline case will go to a vote before the Commission.

In stark contrast to legislators, when Commissioners are judging if a utility has a right to a permit, it is based on a criteria in state law, not the personal views of any Commissioner. This is also the case with Eminent Domain, a process made confusing by neighboring state's laws.

Eminent domain is a hot topic right now, with around twenty different lawsuits currently pending related to the Summit Carbon pipeline alone. Again, the PUC does not have jurisdiction or authority over Eminent Domain, because it too is defined in state law. According to state law, "Eminent Domain can be exercised in acquiring right of way as prescribed by statute," and "by any pipeline companies owning a pipeline which is a common carrier as defined by § 49-7-11."

In neighboring Iowa, state law gives some discretionary authority to the Utility Board to declare Eminent Domain. However, under South Dakota state law, the PUC has no involvement regarding Eminent Domain, or who can exercise it. Disputes over Eminent Domain are likewise settled by the Circuit Court, and of the twenty cases currently pending, some are preemptive landowner cases, while others appear to be filed by Summit for surveying access.

South Dakota lawmakers are currently reviewing the laws that govern the PUC, and Eminent Domain. Representative Marty Overweg (R-HD19) chairs the Natural Resources Committee in the South Dakota state legislature. Rep. Overweg tells The Dakota Leader that lawmakers are looking into changes that can be made to state law for this coming legislative session. "Legislation can be expected this coming session," Overweg states.

In addition to arbitrating the pipeline cases, the PUC has also received an application for a 17.9% rate increase by Xcel Energy. The PUC has a full year in which to process the rate increase request, and has suspended the rate increase for six months the longest amount of time allowed by law. Nelson shares that the Commission will take this time to fully review the financial disclosures of Xcel in order to make sure the company's request is "reasonable, necessary and prudent."

Xcel has come under fire for spending money on green energy infrastructure, which critics allege the company is now looking to recoup from South Dakota rate-payers, as they did last year in Colorado. According to Nelson, the PUC is not able to tell companies what they can or cannot spend money on, but it is their job to ensure that South Dakota's rate-payers experience reasonable increases related to costs that are reasonable, necessary and prudent.

This legislative session may impact how the PUC is able to proceed going forward. However, state legislation will hinge upon how Federal law will be interpreted, support from the Governor, and Congressional Representatives of South Dakota, in Washington D.C.

An FAQ can be located on the front page of the PUC website to help the public understand the process better. In addition, the meeting minutes, documents filed, audio of each hearing, and final orders (granting or denying applications) can be found at puc.sd.gov.



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--Breeauna Sagdal- Editor At Large

Post Date: 2022-09-30 08:04:19

Last Update: 2022-10-03 13:17:16