State ex rel. Utilities Commission v. Lumbee River Elec. Membership Corp.

• Decision Date: 09 April 1969
• Docket Number: No. 17,17
• Citation: 166 S.E.2d 663,275 N.C. 250
• Court: North Carolina Supreme Court
• Parties: STATE of North Carolina ex rel. UTILITIES COMMISSION, and Carolina Power & Light Company and Acme Electric Corporation and Acme Electric Corporation of Lumberton, North Carolina, Appellees, v. LUMBEE RIVER ELECTRIC MEMBERSHIP CORPORATION, Appellant.

Page 663

166 S.E.2d 663

275 N.C. 250

STATE of North Carolina ex rel. UTILITIES COMMISSION, and Carolina Power & Light Company and Acme Electric Corporation and Acme Electric Corporation of Lumberton North Carolina, Appellees, v. LUMBEE RIVER ELECTRIC MEMBERSHIP CORPORATION, Appellant.

No. 17.

Supreme Court of North Carolina.

April 9, 1969.

Crisp, Twiggs & Wells, Raleigh, for appellant.

Edward B. Hipp, Commission Atty., and Larry G. Ford, Associate Commission Atty., Raleigh, for North Carolina Utilities Commission, appellee.

Sherwood H. Smith, Jr., Charles F. Rouse and W. Reid Thompson, Raleigh, for Carolina Power & Light Co., appellee.

McLean & Stacy, Lumberton, for intervenor appellee.

LAKE, Justice.

Acme desires to purchase from CP&L the electric power it requires for the operation of its manufacturing plant. CP&L desires to sell that power to Acme. They have entered into a contract for such purchase and sale. We are not required to determine whether Acme could compel an unwilling CP&L to serve it.

Lumbee is a customer of CP&L. We are not, however, presently required to determine whether, as such customer, it may bring a proceeding before the Utilities Commission to prevent CP&L from constructing an extension of CP& L's facilities on the theory that such extension will be unprofitable and, therefore, may, at some future date, make it necessary for CP&L to charge Lumbee rates higher than CP&L would otherwise need in order to earn a fair return on the fair value of CP&L's total plant. Lumbee does not proceed here upon that theory. While it does not stipulate that CP&L will derive from its service to Acme a fair return upon that portion of its total rate base attributable to such service, Lumbee does not allege the contrary. It proceeds here upon the theory that it, as a supplier of electric power, has the exclusive right to serve Acme though Acme prefers another supplier.

Again, we do not presently have before us the question of Lumbee's right to have the Utilities Commission assign to Lumbee, as its exclusive service area, any territory pursuant to G.S. § 62--110.2(c). That statute confers upon the commission the authority, and imposes upon it the duty, to make such assignments to electric membership corporations, such as Lumbee, and to electric utility companies, such as CP&L, of all territory outside the corporate limits of municipalities and more than 300 feet from the lines of any such supplier. It provides that 'in order to avoid unnecessary duplication of electric facilities,' the commission shall, 'as soon as practicable after January 1, 1966,' so assign all such territory 'in accordance with public convenience and necessity.' The record before us shows that, despite the passage of three years, there has been no such division of such territory in Robeson County, either by agreement of the suppliers or by order of the commission. Originally, in this proceeding Lumbee combined its prayer for a restraining order against CP&L with its application for an order so assigning to Lumbee the territory which includes the Acme plant. However, Lumbee did not except to the order of the commission which separated its application for such assignment of territory from its complaint against CP&L. Only the latter was heard by the commission and it alone is now before us.

Thus, the question before us is whether Lumbee, as a competitor of CP&L, has a right, in the absence of such assignment of territory by the commission and in the absence of any contract between Lumbee and CP&L or between Lumbee and Acme, to an order by the Utilities Commission forbidding CP&L to serve Acme in accordance with Acme's request. Lumbee asserts that it is entitled to the entry of such order solely because, at the time Acme's initial need for service arose, Lumbee had in operation a single-phase power line within 300 feet of a portion of Acme's plant, and a three-phase line a short distance further therefrom, whereas CP&L had to build approximately four miles of line, substantially paralleling and duplicating Lumbee's line, in order to reach the Acme plant.

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. In Blue Ridge Electric Membership Corp. v. Duke Power Co., 258 N.C. 278, 128 S.E.2d 405, this Court said, 'Unless compelled by some cogent reason, one seeking electric service should not be denied the right to choose between vendors.' In Pitt & Greene Electric Membership Corp. v. Carolina Power & Light Co., 255 N.C. 258, 120 S.E.2d 749, and in Carolina Power and Light Co. v. Johnston County Electric Membership Corp., 211 N.C. 717, 192 S.E. 105, this Court recognized that, except as restricted by contract, electric membership corporations and public utility companies supplying electricity are free to compete in the rural areas of this State, notwithstanding the fact that such competition may result in substantial dupulication of electric power lines and other facilities.

It is well settled, that the police power of the State is broad enough to include a statute providing that a public utility company, desiring to serve a new area, must obtain from the Utilities Commission a certificate that public convenience and necessity requires the proposed extension of its distribution facilities. It is, however, equally well settled that the Utilities Commission is a creature of the Legislature and has no authority to restrict competition between suppliers of electricity, except insofar as that authority has been conferred upon it by statute. State of North Carolina ex rel. Utilities Comm. v. Thurston Motor Lines, 240 N.C. 166, 81 S.E.2d 404; North Carolina Utilities Comm. v. Atlantic Greyhound Corp., 224 N.C. 293, 29 S.E.2d 909.

Obviously, the commission may not, by its rule or order, forbid the exercise of a right expressly conferred by statute. See North Carolina Utilities Comm. v. Atlantic Coast Line R.R. Co., 224 N.C. 283, 29 S.E.2d 912. The legislative body is under no compulsion to exercise the police power of the State to its fullest extent, or to exercise it in a manner which the courts, or an administrative agency, may deem wise or best suited to the public welfare. Zopfi v. City of Wilmington, 273 N.C. 430, 160 S.E.2d 325; In re Markham, 259 N.C. 566, 131 S.E.2d 329. 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 public 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.

In the light of these principles, we turn, to G.S. § 62--110.2, enacted in 1965, prior to which time there was no restraint upon competition in rural areas between electric membership corporations and public utility suppliers of electric power except as established by contract. Pitt & Greene Electric Membership Corp. v. Carolina Power & Light Co., supra.

The former absence of statutory provisions restricting competition between electric membership corporations and public utility suppliers of electric power gave rise to many contracts between these two types of suppliers designed to fix their respective territorial rights, which contracts, in turn, gave rise to much litigation. See Blue Ridge Electric Membership Corp. v. Duke Power Co., supra. In the hope of putting an end to or reducing this turmoil, the 1965 Legislature enacted G.S. § 62--110.2, the language of which was the result of...