Logan City v. Public Utilities Commission of Utah

Decision Date24 November 1928
Docket Number4679
CourtUtah Supreme Court
PartiesLOGAN CITY v. PUBLIC UTILITIES COMMISSION OF UTAH et al

Original proceeding by certiorari by Logan City against the Public Utilities Commission of Utah and another, to review proceedings before the Commission, wherein it fixed a rate to be charged by the City in furnishing electricity.

ORDER OF COMMISSION ANNULLED IN PART.

Leon Fonnesbeck, of Logan, for Logan City.

Harvey H. Cluff, Atty. Gen., and W. Hal Farr, Asst. Atty. Gen., for the Commission.

John F MacLane and George R. Corey, both of Salt Lake City, for Utah Power & Light Co.

Young &amp Bullen, of Logan, for intervening taxpayers.

STRAUP J. HANSEN, J., concurs. GIDEON, J., WOOLLEY, District Judge, concurring in part. CHERRY, J., dissents. THURMAN, C. J., being disqualified, did not participate.

OPINION

STRAUP, J.

This cause involves a review of proceedings before the Public Utilities Commission, wherein, among other things, it fixed the rate to be charged by Logan City in furnishing through an electrical plant owned and operated by it electrical energy to inhabitants of the city for lighting, domestic, and commercial purposes. On a prior submission of the cause, and on a review of the proceedings by this court, consisting of four members, an opinion concurred in by three of them, one dissenting, was filed, annulling the order of the commission. On application for a rehearing, on the ground that the judgment so rendered by us was erroneous and that the parties interested were entitled to a review by a full bench, consisting of five members, a rehearing at large was granted. A district judge was thus called in to sit in lieu of the disqualified member of this court. The case was thereupon reargued and resubmitted. On a re-examination and further consideration of the record, and upon further arguments and briefs of counsel four members of the court, one member dissenting, are of the opinion that the order of the commission should be annulled and vacated, on grounds and for reasons stated in opinions now filed, which supersede the opinions heretofore filed in the cause.

Logan City owns and operates its own electric plant and distributing system, by means of which electrical energy is furnished and supplied to light its streets and public buildings and for use of inhabitants of the city for lighting, heating, cooking, and for other domestic and commercial purposes. The Utah Power & Light Company is a public utility owning and operating a number of extensive hydroelectric and interconnected generating plants, transmission and distributing systems in and throughout the state, among which is a plant owned and operated by it at or near Logan City, by means of which it also furnishes and supplies inhabitants of the city for the same uses and purposes for which the city furnishes and supplies electrical energy. The real controversy is one between the city and the company.

The first electrical plant built and operated at or near Logan, by means of which the inhabitants of Logan City were furnished and supplied electrical energy, was built by Lundberg & Garff some time prior to 1890. At that time the city acquired the plant from them, and operated it in furnishing and supplying electrical energy to the inhabitants of the city. In about 1896 or 1897 the predecessors of the Utah Power & Light Company built and operated an electrical plant at or near Logan City, by means of which they also furnished energy, among others, to the inhabitants of Logan City, for all general purposes. Later they or the company acquired the plant owned and operated by the city. Soon after the plant was acquired from the city, the company or its predecessors raised the rates or charges for electrical energy furnished inhabitants of the city to 75 cents per month for each 40-watt lamp on a flat rate service. That continued until 1903, when the city, claiming that the charge was excessive and that the energy could be furnished for 33 1/3 cents per 40-watt lamp, voted and issued bonds to build and operate the city's present plant and distributing system.

As soon as the city's plant and system was built, and the city began to furnish and supply inhabitants of the city with electrical energy at the reduced rate, the company reduced its rate to a flat rate of 10 cents per kilowatt hour per month for lighting purposes. The city thereupon reduced its rate to 15 cents. The rates of both for other purposes was less, but all service was on a flat or unmeasured rate. Such operations on a flat rate basis continued until the early spring of 1927, when the city and the company, recognizing that the service of both on a flat or unmeasured rate caused a great waste and an extravagant use of electrical current and energy, agreed to abandon the service on a flat rate, to install meters, and to change from the one to the other system by September 1, 1927.

In pursuance of the agreement the city solicited and procured about 1,400 customers, inhabitants of the city, and entered into a written contract with them to serve them, and were ready to serve all other inhabitants of the city who desired to purchase electrical energy from it on a meter basis, the city to furnish the meters at its own expense, and to supply electrical energy for a period of 3 years at a rate of 5 cents per kilowatt hour for the first 50 kilowatt hours consumed per month for lighting purposes, 4 cents for the next 150 kilowatt hours, 3 cents for all electricity used over and above 200 kilowatt hours per month, with 10 per cent discount on prompt payment, 2 cents per kilowatt hour for all monthly consumption for general heating and cooking purposes, with 5 per cent discount for prompt payment, 5 to 2 cents per kilowatt hour up to a monthly consumption of 1,200 kilowatt hours, and one cent in excess thereof, with 5 per cent discount for prompt payment for general power purposes. In pursuance of the agreement the city also, at great expense, procured and installed meters for its customers, and made necessary changes and improvements in its distributing system to put it on a meter basis.

Among its customers so procured, and who entered into contracts with the city to take electricity on a meter basis, and for whom meters were installed, were a number who, prior thereto, had been customers of the company. Such prior customers, by written notice to the company, notified it that they had entered into contracts with the city to take electrical energy from it on a meter basis, and requested the company to remove its wires and equipments on their premises. The company, in some instances, declined to do so unless such customers appeared in person at the company's office. Agents and servants of the company, at Logan, in some instances gave out to customers of the company that it had no intention of going on a meter basis, and that it would continue to furnish and supply its customers, and all others who desired to take electricity from it, on a flat or unmeasured rate or charge, and at which it had theretofore furnished and supplied its product in Logan City, and that the company had not indicated to them any intention to go on a meter basis service. Some of the customers, who had signed contracts with the city to purchase electrical energy from it on a meter basis, and preferring a service on a flat instead of a meter rate, declined to go on with their contracts with the city, claiming that they had entered into the contracts with the understanding that both the company and the city were to go on a meter basis.

Thereupon the city filed a petition with the Public Utilities Commission of the state, alleging the foregoing and other facts; that a flat rate service caused a waste and an extravagant use of electricity, a detriment and a needless expense to both the city and the company, and asked that a hearing be had and that the company be required to abandon its flat or unmeasured rate service and install a meter system. The city by its petition did not, nor did it otherwise, ask that the commission fix a rate or charge, either for itself or for the company. All it did was to petition the commission, for the reasons stated in the petition, to require the company to abandon its service on a flat or unmeasured rate and install a meter system in Logan City.

The company answered the petition, admitting that a flat or unmeasured rate service led to a waste of electrical energy and to an extravagant use of it; that the flat rate system was improper and should be abandoned, and that the service ought to be on a meter system basis; and that the company was willing to abandon its flat rate service and go on a meter basis, provided reasonable rates or charges were established by the commission for both the city and the company, in lieu of the flat rate theretofore charged. The company further alleged that the meter rates fixed and adopted by the city were unjust, unreasonably low, and below cost of service; that the rate so fixed by the city, if applied to the systems of both the company and the city, would produce a less gross revenue than the rates theretofore charged on a flat rate service, and would not produce a sufficient revenue to pay expenses of operation, maintenance of the plant, interest charges, and provide for a sinking fund, and that, if the city be permitted to establish and carry out its proposed rate, the company, in order to continue in business, furnishing electrical energy to inhabitants of the city, would be required to meet such rate, which would result in a great loss to it, and to a destruction of its business.

Forty-six taxpayers of the city, customers of the company, filed a petition in intervention, in which they alleged, on information and belief, that the...

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