State ex rel. Public Utility Dist. No. 1 of Okanogan County v. Department of Public Service

• Decision Date: 18 July 1944
• Docket Number: 29292,29293.
• Citation: 21 Wn.2d 201,150 P.2d 709
• Parties: STATE ex rel. PUBLIC UTILITY DIST. NO. 1 OF OKANOGAN COUNTY v. DEPARTMENT OF PUBLIC SERVICE et al. STATE ex rel. PUBLIC UTILITY DIST. NO. 1 OF DOUGLAS COUNTY v. SAME.
• Court: Washington Supreme Court

150 P.2d 709

21 Wn.2d 201

STATE ex rel. PUBLIC UTILITY DIST. NO. 1 OF OKANOGAN COUNTY v. DEPARTMENT OF PUBLIC SERVICE et al.

STATE ex rel. PUBLIC UTILITY DIST. NO. 1 OF DOUGLAS COUNTY v. SAME.

Nos. 29292, 29293.

Supreme Court of Washington, En Banc.

July 18, 1944

Separate proceedings consolidated on appeal by the State of Washington, on the relation of Public Utility District No. 1 of Okanogan County, and by the State of Washington, on the relation of Public Utility District No. 1 of Douglas County to compel the Washington Water Power Company to file with the Department of Public Service a schedule showing the rate at which it would furnish to the public utility districts the power required in the operation of alleged electrical properties. Judgment sustaining the action of the Department of Public Service which sustained demurrers to the complaints, and the public utility districts appeal.

Affirmed.

Appeal from Superior Court, Thurston County; John M. Wilson, judge.

E. K. Murray, of Tacoma, and Houghton, Cluck &amp Coughlin, of Seattle, for appellants.

Smith Troy and R. A. Moen, both of Olympia, Paine, Lowe, Davis &amp Russell and H. E. T. Herman, all of Spokane, for respondents.

STEINERT Justice.

Two public utility districts, located in adjoining counties, filed with the department of public service of the state of Washington their separate complaints, each seeking to compel a power company operating in the same area to file with the department a schedule showing the rate at which it would furnish to the particular public utility district the power required by it in the operation of its alleged electrical properties. The power company demurred to each of the complaints, and the demurrers were sustained by the department. Upon proceedings by writs of review, in which the department of public service, its departmental heads, and the power company were named as defendants, the superior court, after a hearing, filed a memorandum opinion and entered judgments sustaining the action of the department. The public utility districts thereupon appealed to this court, and on the appeal the two causes have been consolidated for hearing and judgment.

Since the allegations of appellants' pleadings stand admitted by the demurrers, we look to the complaints for a delineation of the facts. The two complaints are virtually the same in narrative and the facts, as stated therein respectively, are substantially as follows:

The public utility districts, appellants herein and referred to hereinafter simply as the 'districts' or as 'appellants,' are municipal corporations. The Washington Water Power Company, the principal respondent herein, to which we shall hereinafter refer simply as the 'power company' or as the 'respondent company,' is a corporation, owning, operating and managing an electrical system for hire in this state, and furnishing electrical service to ultimate consumers and also to retailers of public power. The power company holds itself out to the public as being in the business of selling electrical energy at wholesale for purposes of resale to both privately and publicly owned electrical utilities.

Sometime prior to 1943, the districs instituted in the respective superior courts condemnation proceedings in which the districts sought to acquire all electrical works, plants, and facilities then owned and operated by the power company within the territory of the respective districts, excepting certain facilities and rights not material here. In the event the districts ultimately acquire these properties, they intend to furnish electricity to private persons and to public and private corporations.

These condemnation actions were consolidated for trial in the superior court for Okanogan county, and, upon the trial, verdicts were returned on January 2, 1943, fixing the values of the properties sought to be condemned at $2,227,531 and $139,165, respectively. Judgments on the verdicts were entered February 4, 1943. From those judgments, appeals were taken to this court, in the one case by both the district and the power company, and in the other by the district alone. The appeals by the districts were only from those portions of the judgments which allowed the power company interest on the verdicts at six per cent per annum but made no provision for offsetting concurrent net earnings against such interest. It may be stated parenthetically that on April 7, 1944, which was subsequent to the time the appeals in the instant cases were taken, this court rendered its opinion in the foregoing condemnation actions, consolidated, affirming the judgments therein on the appeal of the power company and modifying the judgments on the appeals of the districts to the extent of allowing to the districts offsets of earnings against interest between the date of the verdicts and the date of payment of the awards. Public Utility District No. 1 of Douglas County v. Washington Water Power Company, consolidated with Public Utility District No. 1 of Okanogan County v. Washington Water Power Company, Wash., 147 P.2d 923. However, that circumstance does not affect our consideration of the issues now Before us.

In paragraph III of each of the complaints in the present cases it is alleged that

'It is necessary for the district to determine as soon as possible whether it can and whether it should pay into court the amount of the award and take title to the properties or whether it must abandon the proceeding. If the properties are acquired, the acquisition will be financed entirely by the issuance of revenue bonds which will be paid for only out of the earnings derived from the properties. Before prospective buyers of revenue bonds can determine whether they will buy the bonds proposed to be issued, and Before they can determine what rate of interest the bonds should bear, they must ascertain the probable net earnings of the properties under operation by the district, and they must decide whether these earnings are sufficient to provide for payment of the principal of and interest on the bonds and whether there is sufficient excess over bare requirements to make the bonds saleable to their clients and to the general public. To determine these probable net earnings they must know what the district will have to pay for electric power.

'The company [power company] is the only source from which the district can obtain electric power for the operation of the properties being condemned. If the district is able to finance the award through revenue bonds and determines that it should acquire the properties at the price fixed by the award, the district will of necessity purchase from the company all the electric power required to operate the condemned properties.'

There being on file no rate of the power company applicable to the type of service which would be required by the districts, these respective municipal corporations on June 21, 1943, requested the power company to file with the department of public service a schedule of the rates at which it would furnish to the districts the power required by them in the operation of the electrical properties included in the condemnation proceedings. The power company refused, or neglected and failed, to file such schedule of rates.

Paragraph V of each complaint then alleged: 'The longer the district goes without knowing the wholesale rate, the more delay there will be in financing the acquisition and in the district's taking over operation of the properties. The verdict will bear interest at the rate of six per cent per annum from the time the verdict was returned, and it may be decided by the Supreme Court of the State of Washington that the company is also entitled to keep the earnings of the properties received prior to the time when the district pays into court the amount of the award and takes title to the properties. Any further delay in filing the rate will therefore deprive the district of the earnings of the properties during the period of delay. [In Public Utility District No. 1 v. Washington Water Power Co., supra, this court has, as stated Before , in the meantime decided that earnings may be offset against interest.]'

Upon this set of facts, as pleaded in the complaints, the districts prayed that the department of public service require the power company to file immediately a schedule showing the rates at which it will furnish to the districts the power required by them in the operation of the electrical properties of the power company which are included in the condemnation proceedings and to set forth any other supplementary conditions under which it will furnish such power in the event the districts acquire such electrical properties by virtue of the condemnation proceedings.

It is to be noted that the complaints do not allege that the appellant districts (1) were in position, at the time of requesting rate schedules, to receive electrical service from the respondent power company or from any one else; or (2) had previously demanded electrical service from the respondent company; or (3) were reasonably entitled to such electrical service; or (4) would accept such electrical service; or (5) that the power company contemplated furnishing the type of service with reference to which appellants were seeking to require the company to publish rates.

The demurrers filed by the respondent company Before the department of public service were based on three grounds: (1) that the department has no jurisdiction of the subject matter of the proceedings brought Before it; (2) that the complaining districts had no legal capacity to sue or to file their complaints; and (3) that the complaints did not state facts sufficient to constitute causes of action or to entitle the districts to the relief...