Mill Greek Coal & Coke Co v. Pub. Serv. Comm'n

Decision Date07 October 1919
Docket Number(No. 3857.)
Citation100 S.E. 557
CourtWest Virginia Supreme Court
PartiesMILL GREEK COAL & COKE CO. et al. v. PUBLIC SERVICE COMMISSION.

(Syllabus by the Court.)

[Ed. Note.—For other definitions, see Words and Phrases, Second Series, Public Service Corporation.]

[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, Public Service.]

[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, Commerce.]

[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, Interstate Commerce.]

(Additional Syllabus by Editorial Staff.)

[Ed. Note.—For other definitions, see Won Is and Phrases, First and Second Series, Police Power.]

Petition by the Mill Creek Coal & Coke Company and others for suspension of an order of the Public Service Commission directing the continuance of a former increase of 20 per cent. in the existing rates of the Appalachian Power Company, and allowing a further increase of the same amount. Order affirmed.

A. G. Fox and Sanders & Crockett, all of Bluefield, and W. B. Kegley, of Wytheville, Va., for petitioners.

Geo. W. Johnson, of Parkersburg, R. Dennis Steed, of Charleston, R. E. Scott, of Richmond, Va., and Price, Smith, Spilman & Clay, of Charleston, for respondent.

LYNCH, J. The questions presented upon this appeal originated in an application made by the Appalachian Power Company, a Virginia corporation doing business in this state as well as in Virginia, to the Public Service Commission of West Virginia for an increase of 30 per cent, in the rates in force December 31, 1918. Thirteen months prior to that date the commission had ordered an increase of 20 per cent. in the rates theretofore existing, pursuant to an agreement between the power company and its customers, and as an emergency measure made necessary by the war, though many of such customers, including appellants, held unexpired contracts with the company fixing lower rates to be paid for its service. The increase of 20 per cent. presumably not proving sufficient to enable the company to meet the additional costs incident to war conditions, application was made for the additional 30 per cent. increase. After full investigation and hearing, the commission by an order of April 28, 1919, directed the continuance of the former increase of 20 per cent, and allowed a further increase of the same amount effective April 1, 1919. It is from that order that the present appeal was taken by numerous coal companies served by the power company in this state.

The Appalachian Power Company was or-ganized in 1911 for the purpose of engaging in the business of a general electric lighting and power company "for the production of electric power intended to be used for public service." Hydro-electric stations of great capacity were constructed on New river, in Virginia, and the current there generated carried into West Virginia by two high-tension transmission lines to three substations in this state, where it is transformed or reduced from 88, 000 volts to commercial voltages ranging from 13, 200 to 110, and from these points distributed, measured, and sold to the company's West Virginia consumers. Those three transforming or reducing substations alone, one at Switchback, one at Bluefield, and one at Coalwood, represent an investment, exclusive of generating machinery, of $400,000, $80,000, and $60,000, respectively. The commission found that the fair value of the power company's investment as a rate base upon which it was entitled to earn a reasonable return, as of September 30, 1918, was approximately $9, S00, 000. It further found that the company had not during any year of its history earned a return sufficient to pay its fixed charges and to enable it to set aside a fund to cover accrued depreciation, and that the operations of the company since it commenced business had resulted, as of September 30, 1918, in a deficit of "something in excess of $1,000, 000."

At the time of the applications for increased rates and of the orders of the commission allowing them, many of the customers of the power company were using its current under unexpired contracts having several years yet to run. These contracts definitely fixed the rates chargeable for the service rendered. The commission, however, in effect annulled the provisions of these agreements in so far as they related to rates by authorizing a total and aggregate increase of 40 per cent., finding that the new rates were necessary in order to enable the company to earn a fair return on its investment.

In support of their contention that the commission exceeded its jurisdiction and powers in authorizing the increase in the face of specific rates fixed by contracts having several years yet to run, protestants rely upon four propositions: (1) That the Appalachian Power Company, disposing in West Virginia of electric power generated outside of this state, is not within the purview of the West Virginia Public Service Commission Act, chapter 150 of the Code; (2) that as the electric power furnished in West Virginia originates at the power company's developments in Virginia, its business in this state is interstate commerce, and the Public Service Commission, therefore, has no jurisdiction in the premises; (3) that protestants' rates are fixed by contracts entered into prior to the passage of the act creating the commission, and any interference now with such contracts would impair the obligations thereof, and deprive protestants of their property without due process of law; (4) that the rates fixed are unreasonable.

With respect to the first ground relied on by petitioners there can be no reasonable doubt. The charter of the Appalachian Power Company states that the purposes of its organization, among others, are:

"To do the business of a general electric lighting and power company, with works to be purchased, leased or constructed, maintained and operated for the production of electric power intended to be used for public service, and for the sale and disposal thereof to the public."

The charter authorizes the company to transmit, use, or dispose of its electrical power or energy in the states of Virginia, West Virginia. Tennessee, and North Carolina. While it is given full power to contract with the public "for such price or prices and on such terms and conditions as to this corporation may seem proper, " yet in the same connection it is provided expressly that—

"Said company shall be bound to furnish at reasonable rates any person, company or corporation along its lines with electric energy, and to charge uniformly therefor to all persons, companies or corporations using the same under like conditions as to cost of supply; all subject to the laws and regulations of the governmental power having jurisdiction in the place or places in which such business or businesses are conducted." (Italics ours.)

A certified copy of its certificate of incorporation was duly filed with the secretary of state of this state, and properly recorded, as required by section 30, c. 54 (sec. 2929), Code of West Virginia. It was under such provisions as these that the power company commenced, and has continued, to transact its business in this state.

Not only is the public character of the service to be rendered by the Appalachian Power Company expressly asserted in the articles of incorporation, but its subsequent acts pursuant thereto have partaken distinctly of the same characteristics. The findings of fact of the Public Service Commission sufficiently disclose that fact:

"The applicant is now serving as a public utility with, light, heat, and power" 12 towns in Virginia, 6 in West Virginia; 25 coal-mining plants in Virginia, 76 in West Virginia; and the street railway systems of the Bluestone Traction Company and the Princeton Traction Company. "It furnishes 60 per cent. of the power used in coal mining in the Norfolk & Western and Pocahontas territory, and all the power used in mining in the Mullens district on the Virginian Railroad, and 90 per cent. of the power used in coal mining in the Clinchfield district."

Its charter requires it to serve the public along its lines at reasonable and uniformrates, and subjects all phases of its business to the laws and regulations "of the governmental power having jurisdiction in the place or places in which such business or businesses are conducted." The scope of its activities in West Virginia shows the generality of the service performed here, and state officials having occasion to deal with it, including the Public Service Commission, have recognized and treated it as a public service corporation. Moreover, a like service furnished by electric power, heat, and light companies is of such a public nature as warrants the bestowal upon them of the power of eminent domain. Pittsburg Hydro-Electric Co. v. Liston, 70 W. Va. 83, 73 S. E. 8.6, 40 L. R. A. (N. S.) 602.

Furthermore, the power company involved here falls within the express language of the West Virginia Public Service Commission Act, chapter 150, Code. Section 3 (sec. 638) provides:

"The jurisdiction of the commission shall extend to and include: * * * (c) Gas companies, electric lighting companies and municipalities furnishing gas or electricity for lighting, heating or power purposes; and (d) hydroelectric companies for the generation and transmission of light, heat or power. * * * The words 'public service corporation' used in this act shall include all persons, * * * firms, corporations, municipalities and agencies engaged or employed in any business herein enumerated, or in any other public service business whether ab6ve enumerated or not, whether incorporated or not."

There can be no doubt that the power company is a public service corporation within the scope of that act. Wingrove v. Public Service Commission, 74 W. Va. 190, 81 S. E. 734, L. R. A. 1918B, 210.

But protestants raise the further jurisdictional question that, granting certain...

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