City of Kosciusko v. Mississippi Power & Light Co.

• Decision Date: 09 May 1979
• Docket Number: No. 51094,51094
• Parties: CITY OF KOSCIUSKO, Mississippi and Kosciusko Light & Water Commission, Defendants-Appellants, v. MISSISSIPPI POWER & LIGHT COMPANY, Complainant-Appellee.
• Court: Mississippi Supreme Court

Page 1339

370 So.2d 1339

CITY OF KOSCIUSKO, Mississippi and Kosciusko Light & Water

Commission, Defendants-Appellants, v. MISSISSIPPI POWER & LIGHT COMPANY, Complainant-Appellee.

No. 51094.

Supreme Court of Mississippi.

May 9, 1979.

John D. Guyton, Kosciusko, for defendants-appellants.

Wise, Carter, Child, Steen & Caraway, James K. Child, Jr., Jackson, for complainant-appellee.

Before PATTERSON, BROOM and BOWLING, JJ.

PATTERSON, Chief Justice, for the Court:

This is an appeal from the Chancery Court of Attala County which court enjoined the City of Kosciusko and the Kosciusko Light & Water Commission from extending electric service into newly-annexed areas of the city.

The Kosciusko Light & Water Commission was created in 1947 by order of the city's mayor and board of aldermen. Until 1951 the commission generated its own power; during that year it commenced purchasing power from Mississippi Power & Light Company, hereinafter MP&L, but controlling the distribution.

During the legislative session of 1956 the Public Utilities Act of 1956, now found in its amended form at Mississippi Code Annotated section 77-3-1, et seq. (1972), was enacted. It organized the previously relatively uncontrolled utilities and created the Mississippi Public Service Commission to govern and issue certificates of necessity and convenience. Municipally owned utilities were specifically exempt from this certification.

On May 12, 1959, before MP&L applied for the necessary certification in the questioned area, an agreement was entered into with the City of Kosciusko providing:

Neither party shall distribute or furnish electric energy to anyone who at the time of the proposed service is receiving electric service from the other; provided, however, that customers shall have the right to serve any customer of company located inside the corporate limits as they now exist or may hereafter be extended by compensating company for its local facilities used to serve such customer. Specific consent is hereby given by customer to company to continue to serve Superior Coach Corporation's plant including the right and privilege of constructing, maintaining, and operating electric facilities necessary thereto along such streets, alleys, ways, bridges, and public places as required.

MP&L then obtained an interim and partial certificate on November 29, 1959, from the Public Service Commission. This certification did not extend within the then corporate limits of Kosciusko except for the Superior Coach Corporation, MP & L's long-time customer. In 1966 the City of Kosciusko annexed a considerable area, including the future site of Forest Hills Subdivision and Pasquale's Restaurant which service areas are the subject of this suit.

In 1968 the Public Service Commission made final MP & L's earlier certificate of public convenience and necessity. In 1970 MP & L and Kosciusko entered into an agreement continuing the same boundary clause as in 1956. In 1974 another agreement was entered, with the following substituted for the earlier clause:

It is mutually agreed that each party to this agreement shall retain and continue to render service to the customers and service locations to which the parties' facilities were connected on April 2, 1974.

In 1976 the Kosciusko Light & Water Commission began establishing its distribution services in the Forest Hills Subdivision. MP & L commenced an action to enjoin that expansion, and later added the area of Pasquale's Restaurant by amendment. Hearing was first had in the Chancery Court of Attala County on March 30, 1976, and thereafter a special chancellor was appointed. A long process of adjudication culminated in an order of November 4, 1977, which permanently enjoined the city from extending services beyond the municipal boundaries of November 25, 1959. The underlying rationale was that the certification of November 25, 1959, created a property right in MP & L which is immune to encroachment by annexation.

The central issue of this appeal is the propriety of restricting Kosciusko's municipally-owned utility service to the municipal limits of 1959. The city and its alter ego utility assert certification of MP & L by the Mississippi Public Service Commission cannot obstruct their expansion because municipalities are exempt from the necessity of certification and regulation. Miss.Code Ann. § 77-3-1 (1972). Therefore, the city suggests the agreement of May 12, 1959, because of the exemption must be construed in its favor, thereby allowing expansion.

We agree that a city needs no certification and rate regulation beyond the price structure of economics. See Mississippi Power Co. v. East Mississippi Electric Power Ass'n, ...