City of Greeley v. Poudre Valley Rural Elec. Ass'n, Inc., 85SA293

• Decision Date: 08 September 1987
• Docket Number: No. 85SA293,85SA293
• Citation: 744 P.2d 739
• Parties: The CITY OF GREELEY, a municipal corporation, and Home Light and Power Company, a Colorado corporation, Plaintiffs-Appellants, v. POUDRE VALLEY RURAL ELECTRIC ASSOCIATION, INC., Defendant-Appellee.
• Court: Colorado Supreme Court

Page 739

744 P.2d 739

The CITY OF GREELEY, a municipal corporation, and Home Light and Power Company, a Colorado corporation Plaintiffs-Appellants, v. POUDRE VALLEY RURAL ELECTRIC ASSOCIATION, INC., Defendant-Appellee.

No. 85SA293.

Supreme Court of Colorado En Banc.

Sept. 8, 1987.

Rehearing Denied Oct. 5, 1987.

Law Department City of Greeley, Don K. DeFord, Glenwood Springs, Edward "Jed" M. Caswall, John P. DiFalco, Greeley, for plaintiff-appellant The City of Greeley.

Kelly, Stansfield & O'Donnell, James R. McCotter, James K. Tarpey, Denver, for plaintiff-appellant Home Light and Power Co.

Holmes & Starr, P.C., Kenneth L. Starr, Ann Livedalen, Randolph W. Starr, Denver, for defendant-appellee Poudre Valley Rural Elec. Ass'n, Inc.

John J. Conway, Denver, for amicus curiae Colorado Rural Elec. Ass'n, Inc.

Gerald E. Dahl, Tami A. Tanoue, Denver, for amicus curiae Colorado Mun. League.

Gorsuch, Kirgis, Campbell, Walker and Grover, Paula M. Connelly, Joseph B. Wilson, Denver, for amicus curiae Colorado Assoc. of Mun. Utilities.

ERICKSON, Justice.

The City of Greeley (City) and the Home Light and Power Company (Home Light), plaintiffs below, appeal from an adverse judgment of the Weld County District Court. ¹ The trial court held that provisions of the City Charter and City Code, which require public utilities to obtain a franchise to use city streets, were unenforceable against the defendant, Poudre Valley Rural Electric Association (REA). REA claimed, and the trial court held, that REA had the right to continue and expand electric service in a portion of an area annexed by the City, because the relevant annexed area previously was served by REA pursuant to a certificate of public convenience and necessity issued by the Public Utilities Commission (PUC). We conclude that REA is not required to obtain a city franchise to operate and maintain its electric distribution system within the City as it existed at the time of the annexation. REA must obtain a city franchise if it desires to use city streets or public places in order to expand and provide new service within that portion of its certificated service area that was annexed by the City. We affirm the district court in part, reverse in part, and remand for further proceedings consistent with this opinion.

I.

The facts are largely undisputed and are contained in the findings of the trial court. The present action is the culmination of a fifteen-year dispute between Home Light and REA over the right to provide electric service in certain areas of Weld County.

Greeley is a home rule city under Article XX, section 6 of the Colorado Constitution. Home Light is a private corporation operating as an investor-owned utility. REA is a cooperative electric association and is a public utility under section 40-1-103(2), 17 C.R.S. (1984). ²

On June 18, 1968, Home Light obtained a twenty-five-year franchise from the City, which granted Home Light the right to provide electric service within the territorial boundaries of the City. The franchise was approved by qualified electors in accordance with Colo. Const. art. XX, §§ 4 and 6, and provides: "The Company [Home Light] shall furnish electric energy within the corporate limits of the city as such limits now exist or may during the term of this franchise be extended...." The franchise was confirmed by PUC Decision No. 71606 on July 18, 1968. ³

Before the 1968 franchise was granted, Home Light, REA, and the Public Service Company of Colorado were parties involved in litigation relating to their respective rights to serve Boulder, Weld, and Larimer Counties. The litigation culminated in Public Utilities Commission v. Home Light and Power Co., 163 Colo. 72, 428 P.2d 928 (1967) (Home Light I ). The district court in Home Light I reversed a PUC decision dividing the disputed service areas among the various electric companies. We affirmed the judgment of the district court in part and reversed in part. Following the decision in Home Light I, Home Light and REA stipulated to a division of some of the disputed service areas. The stipulation was submitted to the PUC and, in PUC Decision No. 74654 (April 3, 1970), the PUC approved the territorial division agreed to by the companies. Each utility was granted a certificate of public convenience and necessity to provide service in the area allocated by stipulation. The PUC's confirmation of the stipulation made no provision for changing the territorial allocation in the event of municipal annexation, and, when PUC Decision No. 74654 was announced, no part of the territory assigned to REA was within the corporate boundaries of the City.

In 1981, the City annexed areas to the south and west, including a parcel known as Highland Park West. ⁴ REA was authorized to serve a portion of Highland Park West pursuant to the 1970 stipulated territorial division approved by the PUC. At the time of trial, REA was providing service to approximately five customers in Highland Park West and its certificate of public convenience and necessity authorized REA to serve only the area within the western edge of the subdivision. The remainder of the subdivision was certificated to Home Light.

On July 15, 1981, Home Light filed Application No. 34000 with the PUC to determine whether Home Light's 1968 City franchise included the right to provide electric service in the annexed area, including that portion of Highland Park certificated to REA. A hearing was held and the hearing officer recommended that the application be dismissed. Home Light sought review by the PUC and filed exceptions to the hearing officer's recommendation. The PUC adopted the hearing officer's recommendation and concluded that REA rather than Home Light was authorized to provide service in its certificated area within the annexed territory. The PUC declared that a certificated area constitutes a valuable property right that cannot be taken except by due process of law, and that due process is satisfied only upon a showing that the certificated utility is unwilling or unable to serve its certificated area. The PUC determined that Home Light did not introduce any evidence "to establish unfitness on the part of Poudre Valley [REA] to serve the area in question," and dismissed Home Light's application. The final paragraph of the PUC decision states:

Home Light contends ... that it obtained a franchise from Greeley to provide utility service within the Greeley municipal boundaries. Home Light further contends that this right extends to future annexations of the city, and areas certificated to Poudre Valley outside of such area must give way to the franchise right. The Commission need not decide whether this abstract statement by Home Light is legally correct, [because] in any event this contention disregards the 1970 agreement between Home Light and Poudre Valley, where these parties agreed to serve certain areas on an exclusive basis. By the 1970 agreement, territory to the south and west of the 1970 city limits of Greeley, the area involved in this proceeding, was to be served by Poudre Valley on an exclusive basis. The Commission gave specific approval and effect to this agreement in Decision No. 74654, dated April 3, 1970. Accordingly, Home Light and Power voluntarily surrendered its right to serve in the area in question.

Home Light did not seek judicial review of the PUC order dismissing its application. See § 40-6-115, 17 C.R.S. (1984).

On May 18, 1982, ⁵ the City Council enacted Ordinances 26 and 27. Ordinance 26, codified as Chapter 14.40 of the City Code, required an electric utility to obtain a city franchise before operating within the city limits:

14.40.010 Compliance. It is unlawful to maintain or install any wires, cables or other equipment for the transmission of electric current impulses in, on, under or over any street, alley, sidewalk or other public place in the city, or to maintain or install any pole or mast to support or hold such wires or equipment in any such place, without having fully complied with the provisions of this chapter.

14.40.020 Franchise--Required. After the effective date of the ordinance codified in this section, no such wire, cable, pole or other equipment shall be installed or maintained over, on or under any such place unless, pursuant to Article XVIII of the Charter of the city, a franchise has been granted for such installation or maintenance. In order to permit the necessary time to obtain a franchise pursuant to Article XVIII of the City Charter, any facilities described in Section 14.40.010 which exist on the effective date of the ordinance codified in this section may continue to be maintained for a period of one hundred eighty days after the effective date of the ordinance codified in this section without the requirement of a franchise.

Section 18-3 of Article XVIII of the City Charter prohibited the City from granting any franchise "except upon the majority vote of the qualified electors voting thereon at a special election called for such purpose." ⁶ Ordinance 27 authorized an election by qualified electors to determine whether a franchise should be awarded to REA. The terms of the proposed franchise were essentially the same as those of the franchise granted to Home Light in 1968. The election was held on July 13, 1982, and the electorate rejected the proposed franchise by a vote of 1,505 to 419.

On September 22, 1982, the City commenced this action for declaratory judgment against REA in the Weld County District Court. The original complaint sought (1) a declaration that REA could not operate that portion of its electric distribution system installed within the City without obtaining a franchise, and (2) an injunction ordering REA to cease operating that system and dispose of it. Home Light was permitted to intervene, and its complaint sought (1) a declaration that Home Light was the proper utility to render electric service within the city limits, and (2) an...