City of Olive Hill v. Public Service Com'n

• Citation: 203 S.W.2d 68,305 Ky. 249
• Parties: CITY OF OLIVE HILL v. PUBLIC SERVICE COMMISSION et al.
• Decision Date: 20 June 1947
• Court: Court of Appeals of Kentucky

203 S.W.2d 68

305 Ky. 249

CITY OF OLIVE HILL v. PUBLIC SERVICE COMMISSION et al.

Court of Appeals of Kentucky

June 20, 1947

Appeal from Circuit Court, Franklin County; William B. Ardery Judge.

Proceedings by the Public Service Commission of Kentucky against the City of Olive Hill, the Fleming-Mason Rural Electric Co-operative Corporation and the Kentucky West Virginia Power Company to show cause why the city should not cease selling and distributing electric current to patrons residing outside city and why the co-operative corporation and power company should not extend their electric lines to serve such patrons. From a judgment sustaining the commission's order directing the city to discontinue distribution of electric current outside its corporate limits and granting the co-operative corporation and power company certificates of convenience and necessity to construct lines to serve such patrons, the city appeals.

Reversed.

H. R. Wilhoit, of Grayson, and R. T. Kennard, of Olive Hill, for appellant.

Ora F Duvall, of Olive Hill, Dennis B. Wooton, Asst. Atty. Gen and Pritchard & Ardery, C. L. Hobson and Smith & Leary, all of Frankfort, for appellees.

SIMS Justice.

This appeal presents two questions: (1) Whether or not the Public Service Commission (hereinafter referred to as the Commission) had jurisdiction to order the City of Olive Hill (hereinafter referred to as the City) to cease selling and distributing electric current to patrons outside but contiguous to the city limits, and (2) whether or not the Commission should have issued certificates of convenience and necessity to the Fleming-Mason Electric Co-operative Corporation (hereinafter referred to as REC) and the Kentucky West Virginia Power Company (hereinafter referred to as the Company) to serve these customers outside the city. The Franklin Circuit Court answered both questions in the affirmative and the City appeals.

The record shows that Olive Hill, a fourth-class city, originally owned and operated an electric plant from which it sold surplus current to patrons residing just outside of the city limits through lines which these patrons constructed. About the year 1926, the City discontinued its generating plant and purchased electricity from the Company, with which it supplies its citizens as well as its patrons who reside without the city. At the time this controversy arose the City was furnishing electricity to some 805 customers, of whom 446 resided within and 359 outside the city; thus, about 45% of the customers resided beyond the corporate limits. It further appears that the sale of electricity was quite a profitable enterprise and one from which the City derived much of the revenue with which it met its municipal obligations.

In 1946, some 80 patrons residing without the city filed petitions with the Commission complaining of the rates charged and service rendered by the City. They asked the Commission to conduct a hearing and to allow them to contract with some other source of supply which would render adequate service at a lower rate. Whereupon, the Commission on July 17, 1946, issued a 'show cause order' directed to the City to answer on or before Aug. 22, 1946, and at a hearing on that date to show its legal authority to sell and distribute current without the city. The order further directed REC and the Company to show cause why they should not be required to extend their lines to serve these patrons who resided beyond the city limits.

In answer to this 'show cause order' the City pleaded that the Commission had no jurisdiction over it; that it had legal authority to furnish current to patrons residing beyond its boundary and was doing so in a satisfactory manner, and there was no necessity to require any other firm or corporation to furnish service, and to do so would result in great harm to the City. The petitioners replied to the City's answer and pleaded it was furnishing inadequate service at excessive rates and asked that the 'show cause order' be amended so as to require the City to show cause why its rates should not be reduced. The REC and the Company both answered the 'show cause order' and pleaded they were ready and able to furnish service to these patrons and asked authority from the Commission so to do. The City's response to the answer of REC contained practically the same averments as its original answer, but we do not see where it replied to the Company's pleading.

After this hearing, the Commission entered an order on Dec. 13, 1946, holding that the City was without authority to purchase electricity at wholesale and distribute same outside its corporate limits, and ordered the City to discontinue so doing as soon as the REC and the Company constructed lines to serve these patrons, which the latter were granted certificates of convenience and necessity to do. The patrons who resided beyond its corporate limits were divided by the order between REC and the Company upon certain terms and conditions set out in the order, which are not necessary to here state. The Franklin Circuit Court sustained the order of the Commission and it is from it that this appeal is taken.

The City insists that the powers of the Commission are purely statutory and are limited to the regulation of the rates and service of utilities; that under KRS 278.010(3) utilities...