Com. v. Virginia Elec. & Power Co.

• Decision Date: 14 January 1974
• Citation: 201 S.E.2d 771,214 Va. 457
• Parties: , 3 P.U.R.4th 152 COMMONWEALTH of Virginia et al. v. VIRGINIA ELECTRIC AND POWER COMPANY et al.
• Court: Virginia Supreme Court

Page 771

201 S.E.2d 771

214 Va. 457, 3 P.U.R.4th 152

COMMONWEALTH of Virginia et al. v. VIRGINIA ELECTRIC AND POWER COMPANY et al.

Supreme Court of Virginia.

Jan. 14, 1974.

Andrew P. Miller, Atty. Gen., Henry M. Massie, Jr., Asst. Atty. Gen., for Commonwealth of Virginia.

Harlington Wood, Jr., Asst. U.S. Atty. Gen., Robert E. Kopp, Thomas G. Wilson, Washington, D.C., for Administrator of General Services.

Conard B. Mattox, Jr., City Atty., James R. Saul, Asst. City Atty., for City of Richmond.

R. D. McIlwaine, III, Richmond, J. Dale Bimson, City Atty., for City of Virginia Beach.

R. D. McIlwaine, III, Richmond, Andrew W. Wood, County Atty., for County of Henrico.

Frederick T. Gray, Walter E. Rogers, Richmond, Oliver D. Rudy, Commonwealth's Atty., for County of Chesterfield.

C. F. Hicks, Gloucester, for Virginia Assn. of Counties.

George D. Gibson, John W. Riely, Evans B. Brasfield, Guy T. Tripp, III, Richmond, for Virginia Electric and Power Co.

Richard D. Rogers, Jr., Richmond, Lewis S. Minter, Roanoke, for State Corp. Comm.

Before SNEAD, C.J., and I'ANSON, CARRICO, HARRISON, COCHRAN, HARMAN and POFF, JJ.

CARRICO, Justice.

The question for decision in this case is whether the State Corporation Commission (hereinafter the SCC) has the power and is under the duty to regulate the rates charged by electric companies for service furnished to certain governmental entities for purposes such as lighting streets and public buildings.

Involved in the question are several statutory and constitutional provisions. Chapter 10 of Title 56 of the Code, which chapter pertains to light, power, and other utility companies generally, includes §§ 56--234 ¹ and 56--235. Section 56--234, so far as this case is concerned, imposes upon electric utilities the duty to furnish reasonably adequate service at reasonable and just rates and to charge uniformly therefor all persons or corporations using such service under like conditions. The Code section further provides, however, that 'nothing herein contained shall be construed as applicable to schedules of rates, or contracts for service rendered by any (electric utility) to any municipal corporation or to the State or federal government.'

Code § 56--235 provides, so far as this case is concerned, that if, upon investigation, the rates of any electric utility 'shall be found to be unjust, unreasonable, insufficient or unjustly discriminatory or . . . preferential or otherwise in violation of any of the provisions of law,' the SCC 'shall have power to fix and order substituted therefor such . . . rates . . . as shall be just and reasonable.'

Article IX, § 2 of the Constitution of Virginia of 1971 provides, insofar as is pertinent here, that '(s)ubject to such criteria and other requirements as may be prescribed by law, the (SCC) shall have the power and be charged with the duty of regulating the rates, charges, and services . . . of . . . electric companies.'

The foregoing statutory and constitutional provisions present these issues:

1. Does Code § 56--235 prevail over and render inoperative the provision of Code § 56--234 which purports to exempt from regulation the rates charged by electric companies for service furnished to municipal corporations or to the state or federal government?

2. If the answer to question No. 1 is in the negative, does Code § 56--234 violate Article IX, § 2 of the constitution of Virginia of 1971 to the extent that the Code section purports to exempt such rates from regulation?

These issues arose in this manner: on September 11, 1972, Virginia Electric and Power Company (hereinafter VEPCO or the power company) filed with the SCC an application for declaratory judgment praying for an adjudication that the SCC had the power and duty to regulate the retail rates for service furnished to municipal corporations, counties, the Commonwealth, and the federal government. Such rates, it was alleged, had not theretofore been regulated because of the exemptive provision of Code § 56--234. The ground of VEPCO's application for relief was that the adoption of Article IX, § 2 of the Constitution of 1971 had rendered void and of no effect the exemptive provision of Code § 56--234.

A number of interested parties, including the present appellants ², intervened in opposition to VEPCO's application. Argument was held before the SCC, and the matter was taken under advisement.

On December 12, 1972, the SCC entered a final order declaring that VEPCO was required 'to furnish adequate service at just and reasonable rates . . . to all its customers without discrimination between governmental and other customers.' Commissioner Catterall wrote the majority opinion of the SCC, and Commissioner Shannon concurred in a separate opinion. Commissioner Bradshaw dissented.

Although holding in favor of VEPCO, the SCC did not base its decision upon the ground asserted by the power company, Viz., that the adoption of Article IX, § 2 of the new constitution had invalidated Code § 56--234 to the extent that it purported to exempt from regulation the rates charged governmental entities for electric service. Instead, Commissioner Catterall ruled that Code § 56--235, which empowers the SCC to substitute just and reasonable rates where it finds unjust and unreasonable charges to exist, 'prevails over anything to the contrary in 56--234.' Similarly, Commissioner Shannon ruled that Code § 56--235 'takes precedence over § 56--234' and 'makes it (the) duty (of the SCC) to prescribe just and reasonable and nondiscriminatory rates in all cases.'

In connection with the first issue in the case, Viz., whether Code § 56--235 prevails over and renders inoperative the exemptive provision of Code § 56--234, w have been treated to extensive discourses upon the constitutional, legislative, and interpretative history of the two code sections. Interesting though that history might be and however strongly it might support the conclusion we utilimately reach, we think much of it unnecessary to our decision.

Suffice to say, the SCC was created by the Constitution of 1902 ³, but that instrument did not confer jurisdiction upon the SCC to regulate the rates of electric companies. The right to confer such power was reserved to the General Assembly ⁴. In 1914 ⁵, the General Assembly conferred upon the SCC the power to regulate electric companies, among other public utilities. This grant of power included not only the authority to regulate the rates of electric companies, but also the authority, now contained in Code § 56--235, to correct unjust and unreasonable rates. However, the legislation also contained the exemptive provision, now found in Code § 56--234, with respect to schedules of rates or contracts for service rendered to municipal corporations or to the state or federal government. And, until the decision of the majority was announced below in the present case, the rates charged the governmental entities had never been regulated.

Code §§ 56--234 and 56--235, insofar as applicable to electric companies, are parts of a comprehensive legislative plan for the regulation of the rates charged by those companies, which plan is fully detailed in the 14 sections comprising Articles 1 and 2 of Chapter 10, Title 56 of the Code. When §§ 56--234 and 56--235 are held up side by side and viewed in context with the entire chapter, there is no apparent conflict between the two Code sections. Section 56--234 appears to exempt from regulation the rates charged by electric companies for service rendered bgovernmental entities and § 56--235 appears to authorize correction of unreasonable and unjust rates, if found to exist, in those Other areas where the powers of the SCC are operative.

We would be disposed, therefore, to conclude that Code § 56--235 does not prevail over and render inoperative the exemptive provision of § 56--234. But the majority below expressed the view that our prior decisions dictate the opposite result. So we must defer the outcome until we have examined the earlier cases.

In this connection, we note that Commissioner Catterall stated in his opinion that the 'Virginia Supreme Court has repeatedly held that . . . Section 56--235 prevails over anything to the contrary in 56--234.' We also note that Commissioner Shannon stated that this court has 'often held that § 56--235 takes precedence over § 56--234.' In our research, however, we have been unable to find an understandable basis for these statements.

In one case upon which Commissioner Catterall relied, Town of Victoria v. Victoria Ice, Light and Power Company, 134 Va. 134, 114 S.E. 92 (1922), the forerunner of Code § 56--234, § 4066, was mentioned, and then only in passing, merely as being a part of the series of Code sections in which the section operative in that case, § 4071, now § 56--235, was also a part. We made no statement concerning the effect of the one Code section upon the other. Indeed, such a statement would not have been appropriate, because the rates there in dispute, which had been fixed by a municipal ordinance granting a franchise, were for service furnished the resident-customers of the town and not, as contemplated by Code § 56--234, for service to the town itself.

The only possible relevance of Victoria to the instant case lies in the contention now urged by VEPCO and the SCC that unless Code § 56--235 is held to prevail over § 56--234, there will result an abridgement of the police power of the state in violation of Article IX, § 6 of the Constitution of Virginia of 1971. The Victoria case is authority for the proposition that if the state grants a municipality the power to enter into an Inviolable agreement fixing utility rates for the consuming public, an unconstitutional abridgement of the police power would result. But aside from the difference between the types of rates involved in Victoria and the case before us, the answer to the contention now urged is that the exemption purportedly granted...