Data Foundry, Inc. v. City of Austin
Supreme Court of Texas
December 3, 2020, Argued; April 9, 2021, Opinion Delivered
[*693] Justice Huddle delivered the opinion of the Court.
The City of Austin, through its city council, sets the rates that Austin Energy, an electric utility owned by the City, charges to Austin residents for retail electric services. Data Foundry, Inc., an internet service [**2] provider, purchases electricity from Austin Energy for its facilities in Austin. Data Foundry alleges that the rates charged by the City are illegal, and it filed a lawsuit to challenge those rates. The City filed a motion to dismiss under Texas Rule of Civil Procedure 91a. The trial court granted the motion on the sole ground that Data Foundry lacked standing because it failed to allege it had suffered a particularized injury. The court of appeals concluded Data Foundry suffered a particularized injury sufficient to confer standing but affirmed the dismissal of Data Foundry's claims in part on other grounds. We conclude that Data Foundry has standing to bring its claims, and we remand the case to the trial court.
Data Foundry is an internet service provider that operates data centers located within the boundaries of the City of Austin. The City owns and operates Austin Energy, an electric utility system, as authorized by statute. Tex. Loc. Gov'T Code § 552.001(b). Like many utility systems, Austin Energy has traditionally operated as a monopoly; any City resident wishing to purchase electric services must obtain those services from Austin Energy. The City sets the rates that Austin Energy charges to retail customers through rate ordinances passed [**3] by the Austin City Council.
In 2016, Austin Energy proposed to change the retail rates it was charging for electric services. The City hired a hearing examiner to conduct a review of the proposed new rates. Several ratepayers, including Data Foundry, intervened and participated in the hearing process. Ratepayers were permitted to conduct discovery, provide testimony, and cross-examine witnesses at a public hearing. Data Foundry submitted briefs in which it argued, as it does here, that Austin Energy's proposed [*694] rate structure would result in rates that were unreasonable, unlawful, and confiscatory. In particular, Data Foundry asserted that it was improper for Austin Energy to recoup losses resulting from its power-generation operations (over $200 million, according to Data Foundry) through the rates it charges to captive retail customers. Ultimately, the Austin City Council rejected Data Foundry's arguments and passed an ordinance establishing new "base" charges and various "pass-through" charges that Austin Energy would charge to retail customers of electric services.
620 S.W.3d 692 *; 2021 Tex. LEXIS 274 **; 2021 WL 1323405
DATA FOUNDRY, INC., PETITIONER, v. CITY OF AUSTIN, TEXAS, RESPONDENT
Prior History: [**1] ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS.
Data Foundry, Inc. v. City of Austin, 575 S.W.3d 92, 2019 Tex. App. LEXIS 3224, 2019 WL 1768615 (Tex. App. Houston 14th Dist., Apr. 23, 2019)
rates, court of appeals, trial court, municipally, ratepayers, particularized, discriminatory, unbundle, exclusive jurisdiction, charges, retail, lack standing, electric, power-generation, exhaustion, customers, city resident, ordinance, alleges, courts, Amici, electric utility, alleged injury, challenges, costs, electric service, city council, justiciable, common-law, residents
Civil Procedure, Pretrial Judgments, Nonsuits, Voluntary Nonsuits, Energy & Utilities Law, Utility Companies, Buying & Selling of Power, Ownership & Restructuring, Rates, Ratemaking Factors, Rate of Return, Antitrust Issues, Monopolization, Business & Corporate Compliance, Electric Power Industry, State Regulation, Stranded Cost Recovery, Operating Expenses, Overcharging, Justiciability, Standing, Injury in Fact, Constitutional Law, Case or Controversy, Elements, Burdens of Proof, Liability, Regulators, Public Utility Commissions, Ratemaking Procedures, Administrative Law, Separation of Powers, Constitutional Controls, Nondelegation Doctrine, The Judiciary, Advisory Opinions, Separation of Powers, State Constitutional Operation, Governments, Local Governments, Claims By & Against, Ordinances & Regulations, Property