State v. Public Service Commission

• Decision Date: 05 March 1921
• Docket Number: No. 21991.,21991.
• Court: Missouri Supreme Court
• Parties: STATE ex rel. OZARK POWER & WATER CO. v. PUBLIC SERVICE COMMISSION OF MISSOURI et al.

229 S.W. 782

287 Mo. 522

STATE ex rel. OZARK POWER & WATER CO. v. PUBLIC SERVICE COMMISSION OF MISSOURI et al.

No. 21991.

Supreme Court of Missouri, Division No. 1.

March 5, 1921.

Motion for Rehearing Denied April 9, 1921.

Appeal from Circuit Court, Cole County; J. G. Slate, Judge.

Proceedings by the State of Missouri, at the relation of the Ozark Power & Water Company, against the Public Service Commission of Missouri and others. Judgment for defendants, and plaintiff appeals. Affirmed.

A. E. Spencer, of Joplin, for appellant.

R. Perry Spencer, General Counsel, and James D. Lindsay, Asst. Counsel, both of Jefferson City, for Public Service Commission.

Grover C. James, of Joplin, for Brookshire Hardware Co.

RAGLAND, C.

This is an appeal from the judgment of the circuit court of Cole county affirming an order of the Public Service Commission, requiring relator to furnish electric service to the inhabitants of Diamond, in Newton county.

Relator is a public service corporation engaged in the business of generating, distributing, and selling to the public electric energy for light and power. It was incorporated under the laws of this state in 1911. The purposes for which it was formed, according to its charter, were:

"To generate, distribute and sell electric energy and supply water and water power in Missouri and elsewhere, * * * to acquire the consent of Congress to dam navigable streams, to dam other streams as provided by law, to use eminent domain as provided by law, to acquire franchises from municipalities * * * and to do any and all things and acts connected with or appertaining to or in any manner affecting the business of generating, distributing and selling electric energy and water."

In 1912 it obtained from the county court of Newton county a franchise authorizing it to erect and maintain poles and wires for electric light and power upon, along, and across the highways of that county. It acquired similar franchises in Jasper, Lawrence, Christian, Greene, and Taney counties. At the time of the making of the order of which relator complains, and for several years before that time, it owned and operated a water-power plant on the White river at Powersite, in Taney county. The electric energy generated there, it distributed and sold. Its entire plant and equipment, employed in its business of generating, distributing, and selling electric energy, it valued at $2,200,000. In 1918 it sold 37,000,000 kilowatt hours of electricity; a large part of this was sold to other public utilities, but relator itself served the cities of Granby and Pierce City. During that year and previously, relator delivered large quantities of electricity to the Empire District Electric Company at Joplin. This latter company and relator occupied in part the same field. The Empire District Electric Company was engaged in the production and sale of electricity in Jasper and Newton counties in this state and in some of the counties just across the state line in Kansas. It distributed and sold electricity in Neosho and in practically all of the cities and villages in Jasper county. Its franchise covered both counties, Newton and Jasper. The two corporations were officered, in part at least, by the same individuals, and an agreement existed between them for an exchange of electrical current in case the supply of either should fail. The gross operating revenue of relator in 1918 was $235,018.11; that of the Empire District Electric Company in 1917, $1,357,264.96.

Diamond is an unincorporated town and has a population of about 500. The town contains twelve mercantile concerns, one bank, two mills, one elevator, two garages, three churches, a school building, and one hundred residences. The population has increased 35 per cent. within the last five years. Relator owns and operates a line of poles and wires extending from its dam at Powersite to Joplin for the transmission of electricity for distribution and sale. The line was built in 1913, and it passes along a public road through Newton county. Relator erected a substation on the line at a point one mile east of the business center of Diamond. At this substation electricity is taken from the transmission line on which it is carried at 66,000 volts and its voltage reduced for transmission on lines owned by relator to the nearby towns of Granby and Neosho.

George Clark, an employee of relator, went to Diamond in the year 1913, in behalf of relator, with a view to selling its inhabitants electricity, the same to be furnished by relator by a line to be constructed from its substation on the transmission line to the town. Clark canvassed the town, offering the residents electricty at the same rate as that charged at Granby, which was 10 cents per kilowatt hour. Practically all of the persons he called upon agreed to take electricity. Soon afterwards he again came to Diamond accompanied by a representative of a company engaged in selling and installing wires and electrical equipment. Clark represented that it was agreeable to relator for this company to install the wires in the houses at Diamond and that relator would be ready to deliver electricity there when the wiring was completed. Thereupon the owners of 15 houses had them wired and equipped ready to receive electricity. After the wiring was completed in November, 1913, and from time to time during the ensuing period of about five years, residents" of Diamond called upon relator and urged that it construct the line from its substation and give them electric service. Relator at such times promised, rather evasively, that it would build the line as soon as it could get to it. Finally, in 1918, relator announced that Diamond did not offer sufficient business to justify the preliminary expenditure that would be necessary to enable it to furnish the service, but that it the people of Diamond would build out to the substation it would sell and deliver to them there electricity at wholesale.

Relator's vice president, B. C. Adams, testified that Clark had no authority to bind it to furnish electrical service at Diamond; that it was the established policy of his company to not even consider building into a community like Diamond, unless and until, from previously gathered information, it appeared that a profitable business could be secured; and that pursuant to its customary methods, Clark was sent to Diamond merely to ascertain how many people would use lights if the company concluded to build in and offer the service.

Mr. Adams further testified that relator, by extending its service into Diamond, would sustain an annual loss of $712.50. He based his estimates on the assumption that 50 customers could be procured. From these customers, by charging them at the rate of 10 cents a kilowatt hour, with a minimum of $1 per month, a gross annual revenue of $1,050 would be obtained. As against this he estimated the annual operating expense for the service at $506.50, and depreciation and return—on $5,749.56, the cost of the additional construction required, and on $3,920, the proportionate part of the plant investment chargeable to Diamond—at $1,256, making a total of $1,762.50.

In relator's estimates 6 per cent. was allowed for depreciation and 7 per cent. for return on the investment. The Commission ruled that 6 per cent. was excessive for annual depreciation; that 4 per cent. would fully cover it. As thus modified, relator's estimates indicate that there would be an annual deficit of $520. This amount the Commission held could he overcome by applying a rate of 15 cents per kilowatt hour, with a monthly minimum charge of $1.50, instead of 10 cents per kilowatt, used by relator as the basis of its calculations. Thereupon the Commission made an order requiring relator to extend its line to Diamond and to furnish electric service there, on the condition: That residents of Diamond would, within 30 days thereafter, by written agreement,...