Mayor and Council of Berlin v. Delmarva Power & Light Co., 1094

• Decision Date: 01 September 1992
• Docket Number: No. 1094,1094
• Citation: 95 Md.App. 585,622 A.2d 763
• Parties: , Util. L. Rep. P 26,308 The MAYOR AND COUNCIL OF BERLIN v. DELMARVA POWER & LIGHT COMPANY. ,
• Court: Court of Special Appeals of Maryland

Page 585

95 Md.App. 585

622 A.2d 763, Util. L. Rep. P 26,308

The MAYOR AND COUNCIL OF BERLIN v. DELMARVA POWER & LIGHT COMPANY.

No. 1094, Sept. Term, 1992.

Court of Special Appeals of Maryland.

April 5, 1993.

Robin R. Cockey (Banks, Nason, Hickson & Sullivan, P.A., on the brief), Salisbury, for appellant.

Thomas P. Perkins, III (Elizabeth Cooper Block, Christine J. Collins and Venable, Baetjer and Howard, Baltimore Dale G. Stoodley, Peter F. Clark, Wilmington, DE, on the brief), for appellee, Delmarva.

Susan S. White (Bryan G. Moorhouse, on the brief), Baltimore, for appellee, Public Service Com'n.

Argued before WILNER, C.J., and BISHOP and GARRITY, JJ.

WILNER, Chief Judge.

This is a battle between the Mayor and Council of Berlin (i.e., the Town of Berlin, Maryland), on the one hand, and Delmarva Power & Light Company (Delmarva) and the Public Service Commission (PSC), on the other, over who has the authority to provide electric service to about 60 acres of land that the Town annexed in 1980 and 1982. The PSC determined that Delmarva had that exclusive right. Upon the affirmance of that determination by the Circuit Court for Worcester County, the Town has brought this appeal to us. We shall affirm.

The Town is a municipal corporation within Worcester County that has manufactured and sold electricity to customers within its borders since the early 1900's. Delmarva is a public service company with a State and Worcester County franchise to sell electric power in Worcester County. In a 1966 order (Order No. 56203 entered in Case No. 6017), the PSC demarked the service territories of the various electric companies in the State, including Delmarva and the Town. Delmarva was granted by that order the exclusive right to sell electric power in the 60 acres in question here. At the time, those 60 acres lay outside the corporate borders of the Town, and the Town therefore neither had nor claimed any right to supply service to that area.

As noted, the territory in question was annexed by the Town in 1980 and 1982. At the time of the annexations, and since, there were some customers living or conducting business in the territory who were supplied with electricity by Delmarva. A Delmarva transmission line extends through the area. In 1983, the Town sought to supply electricity itself within that area and petitioned the PSC for an order modifying the Town's and Delmarva's service areas as established in the 1966 order. The PSC denied the petition, finding that Delmarva was supplying adequate service in the area, that to allow the Town to provide service there would result in a duplication of facilities, and that that was not in the public interest.

The Town did not appeal that decision. Instead, through its local delegates, it petitioned the General Assembly to allow it to provide service in the annexed area without PSC approval. House Bill 846, introduced into the 1983 session, would have allowed any municipal corporation in the business of supplying electricity for other than municipal purposes, in its sole discretion, to acquire the exclusive right to supply electricity within an annexed area and, also in its sole discretion, to acquire the existing electric plants of all other electric companies in the annexed area through the exercise of eminent domain. That bill did not pass. Nor did identical House Bill 948, introduced into the 1989 session. What did ultimately pass, in 1990, was House Bill 431, adding two new subsections--(c) and (d)--to Md.Code art. 78, § 53. Under subsection (c), a municipal corporation may acquire the exclusive right to supply electricity within an area annexed by the municipal corporation if, among other things, a petition is filed with the PSC seeking approval of the acquisition and the PSC "determines that the modification of the service territory of an electric company and the transfer of any franchise or right thereunder is in the public interest."

Unhappy with its lack of success before both the PSC and the General Assembly, the Town decided, in effect, to ignore both. In September, 1990, it amended the Town Charter to accord itself the exclusive right to provide electric service to new customers in any area annexed by the Town. The amendment provided:

"[W]henever the town shall annex an area, no electric company may thereafter extend electric service to any customer within the boundaries of the annexation (other than to existing customers of such electric company and subject to the town's right to extend electric service to such customers as hereinbefore provided), as of the effective date of the annexation." ¹

Upon the adoption of this amendment, the Town began construction of transmission lines into the areas annexed in 1980 and 1982, intending ultimately to serve all customers in those areas, but immediately to serve two prospective customers then in the process of constructing facilities there--Atlantic General Hospital and the Worcester County Health Department. When this came to Delmarva's attention, it filed a complaint with the PSC, seeking an order confirming Delmarva's exclusive right to provide service in that area and directing the Town to halt its unauthorized solicitation of customers in the area.

The issue, as framed by the Town, was whether it could "claim for itself the right to serve prospective customers in the annexed territory." Notwithstanding its apparent obligation to serve all customers in the area, including those currently served by Delmarva (see note 1, ante ), it did not assert, before the PSC, the right to serve existing customers in that territory. Its right to serve prospective customers, it averred, arose from a 1910 enactment of the General Assembly which is now part of Md.Code art. 23, § 167. That section generally authorizes any electric power company organized under art. 23 to furnish power in any city or town in which it is located, or which it adjoins. The 1910 amendment added the proviso, "after first securing the proper assent of the municipal authorities of said city or town." 1910 Md.Laws, ch. 55.

Under that 1910 amendment, the Town asserted that, as its assent was required before any electric company could supply service within its borders, it could (1) withhold that assent and thus deny Delmarva the right to provide service within the town borders, including any territory coming within those borders by annexation, and (2) authorize only itself, as a generator of electricity, to provide that service. It argued that Delmarva had no valid franchise to provide service in the area and that, in any event, as the Town was seeking to provide service only to new or prospective customers, its arrogation of the exclusive right to provide that service would not contravene any vested right of Delmarva.

The PSC concluded first that Delmarva had a perpetual State franchise to serve the territory in question that predated the 1910 Act, as well as a Worcester County franchise granted in 1929 to sell electricity throughout all unincorporated areas of the county. It next recounted its 1966 Order authorizing Delmarva to exercise, exclusively, its franchise in the disputed area, and that, by...