The Kansas Gas and Electric Company v. The Public Service Commission of The State of Kansas

Decision Date10 December 1927
Docket Number27,695
PartiesTHE KANSAS GAS AND ELECTRIC COMPANY, Appellant, v. THE PUBLIC SERVICE COMMISSION OF THE STATE OF KANSAS, LEW T. HUSSEY et al., Appellees
CourtKansas Supreme Court

Decided July, 1927

Appeal from Shawnee district court, division No. 3; OTIS E. HUNGATE judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. PUBLIC SERVICE COMMISSION -- Statutory Authority and Jurisdiction -- Restricting Similar Services in Community. The public utilities act confers upon the public service commission the power to determine whether a community already occupied and served by one utility may be invaded by another utility giving the same kind of service, and whether the public interest or that of the utilities would be subserved by the construction and installation of a second system in the community.

2. SAME--Necessity that Utility Obtain Permit to Enter New Territory. A provision of the act (R. S. 66-131) interpreted, and it is held that a utility that was doing business in the state when the act was passed, and is proposing to enter a community not theretofore occupied by it, must obtain from the commission a permit to do so, and may be required to conform to reasonable regulations of the commission in respect thereto.

3. SAME--Constitutional Law. Such a regulation and requirement is not a violation of the constitutional rights of the utility.

4. SAME--Statutory Authority and Jurisdiction--Regulating Entrance of Utility Into New Territory. It is within the power of the commission to determine whether a permission to a second utility would operate as a needless economic waste disadvantageous alike to the public and the utility, and if these facts were found to exist to make an order regulating the service, in effect substituting regulation for competition, and even going to the extent of excluding the applying utility from the zone or territory already occupied and being served by another utility with the permission of the commission.

Fred S. Jackson, James E. Smith, both of Topeka, and Henry L. McCune, of Kansas City, Mo., for the appellant.

William A. Smith, attorney-general, M. J. Healy, John M. Kinkel, both of Topeka, and Louis E. Clevenger, of Emporia, for the appellees.

OPINION

JOHNSTON, C. J.:

In this proceeding two electric power companies are contending for the right to supply a cement plant at Mildred, a large user of electric current, with the power necessary to the operation of the plant. The Kansas Utilities Company, hereinafter spoken of as the utilities company, was organized on September 19, 1919, and has been engaged in manufacturing, distributing and selling electric current to consumers in five counties near its headquarters at Fort Scott, to wit: Bourbon, Allen, Woodson, Coffey, Anderson and Linn counties. It applied to the public utilities commission, now called the public service commission, and hereinafter designated as the commission, for a certificate or permit to carry on the business for which it was organized, and this was awarded on August 4, 1920. Later, and on March 15, 1923, by an amendment it changed its corporate name to the name now used, and obtained from the commission a certificate of convenience and necessity to do business in the zone composing the counties named. It has transmission lines in this territory, and one of its lines reaches a point within thirteen miles of the current plant mentioned, and it had asked the commission for authority to extend the line to the cement plant. The plant, it appears, is close to the load center of the utilities company.

The Kansas Gas and Electric Company, hereinafter designated as the electric company, was duly organized in 1910, and was authorized by the charter board of the state to carry on the business of manufacturing, distributing and selling electric current in Kansas. It engaged in business and sold and distributed electric current to consumers in a number of counties in the state, but principally in Sedgwick and Butler counties. It appears to have a line to Bluffville, Wilson county, which was about forty-eight miles from the cement plant, and it applied for permission to construct a transmission line to Mildred with a view of furnishing electric current to the cement plant, but it had not obtained a certificate of convenience and necessity for the extension or the furnishing of current in that zone. It further appears that the cement plant was ready and willing to buy current from either of the power companies which it found was able to supply sufficient current for the operation of the plant at a reasonable cost. A hearing was had before the commission on January 3, 1925, nominally for authority of the utilities company to build a transmission line to the cement plant, and at the same time the electric company applied to the commission for permit to build a transmission line from Bluffville to Mildred.

Elaborate pleadings and statements were filed and made and much testimony produced before the commission by the parties, but there was a broadening of the issues, and both of the contending parties joined in asking for a decision as to the power of the commission to limit the territory in which a utilities company may operate. The electric company contended that the commission had no jurisdiction to define limits or to prevent duplication of service in a community, and in particular had no power to exclude it from supplying electric current to consumers in any territory within the state. The utilities company contended that the electric company should not be allowed to invade the territory for which the commission had granted it a certificate of convenience and necessity, it being shown that it was able, ready and willing to supply current to all consumers within the zone or district over which a certificate of convenience and necessity had been granted to it by the commission. At the end of the hearing the commission decided that it had power to regulate the service and define the limits in which a public service utility may do business in the state; that the utility has and should have the present and exclusive right to operate in the territory for which a certificate had been granted, and that the electric company should refrain from interfering with the public service already established and maintained by the utilities company in the territory defined until authority to do so had been given by the commission. Later, the electric company brought this action in the district court to enjoin the enforcement of the order, and upon a demurrer setting forth the facts, the court held that where--

"One utility is attempting to enter territory occupied and served by another utility of the same character, and where such competition would have the effect of duplication service to the injury of the users of the commodity furnished, that the public service commission has the jurisdiction and authority to exclude the applicant company."

Judgment was accordingly given for the defendants.

The question first argued relates to the interpretation and effect of a section of the public utility act, which provides:

"No common carrier or public utility governed by the provisions of this act shall transact business in the state of Kansas until it shall have obtained a certificate from the public utilities commission that public convenience will be promoted by the transaction of said business and permitting said applicants to transact the business of a common carrier or public utility in this state. This section shall not apply to any common carrier or public utility governed by the provisions of this act now transacting business in this state." (R. S. 66-131.)

It is contended by the plaintiff that the last clause of the section made it unnecessary for it to obtain a certificate or permit to extend its business into territory not occupied by it when the public utility act was passed and that in fact it was entitled to occupy new territory and carry on its business without permission or any interference or interruption by the state or the public service commission. The plaintiff, as well as some other utilities, had obtained authority and were already engaged in business when the public utilities law was enacted. The status of these companies as going concerns was recognized by the legislature and a permit to enter the state and do business was deemed to be unnecessary. As to new utilities or those not yet authorized to do business in the state, it was provided that they could not come in and begin business until they had obtained from the commission a certificate that the public convenience would be promoted by allowing them to enter the state and transact business as a public utility. A company already in the state which had an established business and was then giving service to the public was exempted from obtaining a permit, but the new company applying for admission was required to satisfy the commission that public convenience would be subserved by permitting them to transact business in the state. When that permit was granted to the new company it was placed on a par with those already in the state and engaged in serving the public. We think it was not the purpose of the legislature to relieve any public utility doing business in Kansas from the regulatory powers, supervision and control of the commission. It could not have been the intention, we think, to discriminate as between utilities admitted to and doing a like business in the state, supervising and regulating one and allowing another to run at large, doing business as it chose, free from regulation or control. The public utilities act is an elaborate one, giving the commission full power and authority to supervise and control...

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