Domestic Elec. Service, Inc. v. City of Rocky Mount

• Decision Date: 10 April 1974
• Docket Number: No. 52,52
• Citation: 285 N.C. 135,203 S.E.2d 838
• Court: North Carolina Supreme Court
• Parties: DOMESTIC ELECTRIC SERVICE, INCORPORATED v. The CITY OF ROCKY MOUNT and Cokey Apartments, Ltd.

Page 838

203 S.E.2d 838

285 N.C. 135

DOMESTIC ELECTRIC SERVICE, INCORPORATED v. The CITY OF ROCKY MOUNT and Cokey Apartments, Ltd.

No. 52.

Supreme Court of North Carolina.

April 10, 1974.

Spruill, Trotter & Lane by D. C. McCotter III and Robert K. Smith, Rocky Mount, and Tally & Tally by J. O. Tally, Jr., and James D. Garrison, Fayetteville, for The City of Rocky Mount.

Battle, Winslow, Scott & Wiley, P.A., Rocky Mount, for Domestic Electric Service, Inc.

LAKE, Justice.

Prior to the enactment of Ch. 287 of the Session Laws of 1965, investor-owned electric power companies and electric membership corporations, unless restricted by contract, were free to compete, in areas outside the corporate limits of municipalities, for the patronage of users and potential users of electric power. Utilities Commission v. Lumbee River Electric Membership Corp., 275 N.C. 250, 166 S.E.2d 663; Pitt & Greene Electric Membership Corp. v. Light Co., 255 N.C. 258, 120 S.E.2d 749; Light Co. v. Johnston County Electric Membership Corp., 211 N.C. 717, 192 S.E. 105. In absence of such contract, an electric membership corporation was also free to continue to serve its members notwithstanding their having become residents of a municipality, by virtue of the annexation by the municipality of the territory in which such members were located, and notwithstanding the fact that it had no franchise from the municipality. Pee Dee Electric Membership Corp. v. Light Co., 253 N.C. 610, 117 S.E.2d 764; Power Co. v. Blue Ridge Electric Membership Corp., 253 N.C. 596, 117 S.E.2d 812. In addition, a municipality, operating its own electric distribution system for the service of its inhabitants, had the right, under Ch. 285 of the Public Laws of 1929, codified as G.S. § 160--255 (now G.S. § 160A--312), to extend its lines beyond its corporate limits 'within reasonable limitations' and thus to compete in rural areas with investor-owned power companies and with electric membership corporations. Grimesland v. Washington, 234 N.C. 117, 66 S.E.2d 794.

'In the absence of a valid grant of such right by statute, or by an administrative order issued pursuant to statutory authority, and in the absence of a valid contract with its competitor or with the person to be served, a supplier of electric power, or other public utility service, has no territorial monopoly, or other right to prevent its competitor from serving anyone who desires the competitor to do so.' Utilities Commission v. Lumbee River Electric Membership Corp., supra, 275 N.C. at p. 256, 166 S.E.2d at p. 668. Such three-way competition resulted in substantial dupolication of power lines and facilities, the lines of one supplier frequently paralleling or crossing those of its competitor. As we said in Utilities Commission v. Lumbee River Electric Membership Corp., supra, at p. 257, 166 S.E.2d at p. 668:

'It is for the Legislature, not for this Court or the Utilities Commission, to determine whether the policy of free competition between suppliers of electric power or the policy of territorial monopoly or an intermediate policy is in the interest. If the Legislature has enacted a statute declaring the right of a supplier of electricity to serve, notwithstanding the availability of the service of another supplier closer to the customer, neither this Court nor the Utilities Commission may forbid service by such supplier merely because it will necessitate an uneconomic or unsightly duplication of transmission or distribution lines. In such event, it is immaterial whether the Legislature has imposed upon such supplier a correlative duty to serve.'

Frequent litigation between investorowned power companies and electric membership corporations grew out of contracts between them defining and limiting territories to be served by each. To avoid or reduce such litigation and uneconomic duplication of transmission and distribution systems, the investor-owned electric utilities and the electric membership corporations, throughout the State, collaborated in recommending to the Legislature the enactment of Ch. 287 of the Session Laws of 1965. The language of the Act was the result of their collaboration and agreement and was carefully chosen for the accomplishment of this purpose. See, Utilities Commission v. Lumbee River Electric Membership Corp., supra, at p. 258. The Act contained two parts. The first, relating to electric service within the corporate limits of municipalities, is codified as G.S. § 160A--331 to G.S. § 160A--338, including subsequent amendments not pertinent to this appeal. The second, relating to electric service outside the corporate limits of municipalities, is codified as G.S. § 62--110.2.

The first part of the Act of 1965 sets forth, in great detail, the rights of a 'primary supplier's and the rights of a 'secondary supplier' to serve within the corporate limits of a municipality. A 'primary supplier' is a city which owns and maintains its own electric system, or a person, firm or corporation furnishing electric service within a city pursuant to a franchise granted by, or a contract with, the city or continuing to do so after the expiration of a previously held franchise or contract. A 'secondary supplier' is a person, firm or corporation, other than a primary supplier, who furnishes electricity at retail to one or more customers, other than itself, within the limits of a city. This part of the Act of 1965 has no direct bearing upon the question presented by the present appeal.

The second part of the Act of 1965, relating to electric service outside the corporate limits of municipalities, defines, also in great detail, the rights of, and restrictions upon, 'electric suppliers' in such areas. G.S. § 62--110.2(a)(3) defines 'electric supplier' to mean 'any public utility furnishing electric service or any electric membership corporation.' (Emphasis added.)

G.S. § 62--110.2, specifying the rights of, and restrictions upon, an 'electric supplier,' is, of course, a part of Ch. 62 of the General Statutes. G.S. § 62--3, defining terms 'as used in this chapter, unless the context otherwise requires,' states in Clause (23)(d), 'The term 'public utility', except as otherwise expressly provided in this chapter, Shall not include a municipality * * *.' (Emphasis added.) Thus, a municipality is not an 'electric supplier' as that term is used in G.S. § 62--110.2.

G.S. § 62--110.2(c)(1) provides:

'In order to avoid unecessary duplication of electric facilities, the (Utilities) Commission is authorized and directed to assign, as soon as practicable after January 1, 1966, to Electric suppliers all areas, by adequately defined boundaries, that are outside the corporate limits of municipalities and that are more than 300 feet from the lines of all Electric suppliers as such lines exist on the dates of the assignments * * *. The Commission shall make assignments of areas in accordance with public convenience and necessity, considering, among other things, the location of existing lines and facilities of Electric suppliers and the adequacy and dependability of the service of Electric suppliers, but not considering rate differentials among Electric suppliers.' (Emphasis added.)

G.S. § 62--110.2(b)(8) provides:

'Every Electric supplier shall have the Right to serve All premises located wholly within the service area assigned to it pursuant to subsection (c) hereof.' (Emphasis added.)

G.S. § 62--110.2(b)(10) provides:

'No Electric supplier shall furnish electric service to any premises in this State outside the limits of any incorporated city or town except as permitted by this section * * *.' (Emphasis added.)

The Act of 1965, including G.S. 62--110.2, did not, without more, alter the competitive rights of municipalities, investor-owned utilities and electric membership corporations to compete for patronage in areas outside the corporate limits of municipalities. Utilities Commission v. Woodstock Electric Membership Corp., 276 N.C. 108, 117, 171 S.E.2d 406. Any premises in any such area could, prior to an assignment of such area by the Utilities Commission, have been served by any of the three competitors chosen by the user (assuming no contract restricting competition and assuming an extension to serve such user would fall within the 'reasonable limitation,' applicable to service by the municipality.)

Here, we have more. The Utilities Commission has assigned the territory in question to Domestic. Thus, Domestic has the 'right to serve All premises' (emphasis added) located wholly within the territory in question, including the Cokey...