W. Ky. Rural Elec. Coop. Corp. v. City of Bardwell

• Decision Date: 16 December 2011
• Docket Number: No. 2010–CA–001140–MR.,2010–CA–001140–MR.
• Parties: WEST KENTUCKY RURAL ELECTRIC COOPERATIVE CORPORATION, Appellant, v. CITY OF BARDWELL, Kentucky, Appellee.
• Court: Kentucky Court of Appeals

362 S.W.3d 351

WEST KENTUCKY RURAL ELECTRIC COOPERATIVE CORPORATION, Appellant,

v.CITY OF BARDWELL, Kentucky, Appellee.

No. 2010–CA–001140–MR.

Court of Appeals of Kentucky.

Dec. 16, 2011.

Melissa D. Yates (Argued), Glenn D. Denton, Paducah, KY, for appellant.

Kerry D. Smith (Argued), Paducah, KY, for appellee.

Before MOORE, STUMBO, and WINE, Judges.

OPINION

WINE, Judge.

West Kentucky Rural Electric Cooperative Corporation (WKRECC) appeals from a summary judgment by the Carlisle Circuit Court resolving a utility service dispute in favor of the City of Bardwell, Kentucky. Upon a thorough review of the record, we affirm the Carlisle Circuit Court.

Facts

This case involves a territorial dispute between a rural electric cooperative and a municipal electric utility over the right to provide electrical service to an area annexed by the City of Bardwell in February 2008, for the construction of a new county courthouse. The old Carlisle County Courthouse, formerly located at 77 East Court St. North, in Bardwell, Kentucky, was destroyed by a fire on December 26, 2007. The Kentucky General Assembly approved a new courthouse and authorized the funding for it in 2008. The annexed area is now the site of the new Carlisle County Courthouse.

WKRECC is a rural electric cooperative supplying energy to consumers in Carlisle County and the surrounding areas. Bardwell City Utilities (BCU) is a municipal electric utility that supplies energy to consumers in the city of Bardwell. However, electrical service to Bardwell and the area surrounding the city is provided by four different utilities. Kentucky Utilities Company provides service in the area to the north, WKRECC provides service in the area to the east, Hickman–Fulton Counties Rural Electric Cooperative Corporation provides service generally to the south and WKRECC, and BCU provides service to much of the city of Bardwell itself.

The dispute in this action centers around the right to provide utility service to the annexed area, which is an area in the northeastern side of the city comprised of three tracts of land. The new courthouse is situated in this area. Tract I is owned by the Carlisle Fiscal Court and is approximately forty-one (41) acres in size. Tract II is also owned by the Carlisle Fiscal Court and is approximately four (4) acres in size. Tract III is owned by the Carlisle County Park and Recreation Board and is approximately twenty (20) acres in size. Tracts I, II, and III compose the area referred to herein as "the annexed area."

Tract I was conveyed to the Carlisle Fiscal Court in 2008 from a larger tract of farmland containing approximately one-hundred (100) acres, referred to in the record as the "Mantle Farm." Tract II was a small previously undeveloped strip of land and Tract III was a public park. All three tracts are contiguous. The entire area was annexed into the city limits of Bardwell in 2008.

At the time this action was filed, no building, other than the initial construction of the new courthouse, had occurred on Tract I or Tract II. However, Tract III contained a ballpark owned by the Carlisle County Park and Recreation Board which has been serviced with energy by BCU since 1972. WKRECC maintains that BCU had previously been able to service the ballpark, even though it is within WKRECC's certified territory, only because WKRECC gave permission for BCU to do so.

In the early 1970s, the county park was developed just outside of the city limits. Also in the early 1970s, the Public Service Commission (PSC) certified various "territories" to different retail electric suppliers operating in the vicinity of Bardwell. Tract III, on which the park sits, was drawn within the territory certified to WKRECC. BCU notes that it was not a party to the map drawn by the PSC and was not a signatory to the agreement. It further argues that, as a municipal utility, the PSC has no jurisdiction over it.¹

Regardless, in 1972, when the Carlisle County Park and Recreation Board sought to have electrical service provided for the park, WKRECC did not provide service to the park. BCU maintains that the park was seen as a "bad load," meaning that it would produce insufficient capital sold per unit to make it worthwhile for an electrical supplier to build the necessary infrastructure improvements on the land. BCU further maintains that despite the park being a "bad load," it was willing to make the necessary improvements and provide electricity to the park.

WKRECC sent a letter to BCU in November of 1972 conveying that it did not object to BCU furnishing electricity to the park. BCU has provided electricity to the park continuously since that time and the bills for the service have been paid for by the Carlisle Fiscal Court.

After the Carlisle County Courthouse was destroyed by fire, plans were approved for a larger structure. Due to the size of the new structure, the new Judicial Center was to be built outside the then-existing city limits. The property described above as Tract I was annexed by the City of Bardwell along with Tract II and III.

BCU argues that since a large structure was being built on the property, it would no longer be a "bad load," but instead, was poised to be quite profitable. In 2009, the Project Development Board for the Carlisle County Courthouse requested that BCU provide service to the new facility.² As stated, BCU had provided service to Tract III of the disputed area since the 1970s. However, in 2009, once BCU ran its service line over Tracts I and II, WKRECC filed a declaratory judgment action alleging that the site of the new courthouse was within its service territory and it was entitled to provide the electrical service.

After the filing of the petition, discovery was allowed to proceed and both parties filed motions for summary judgment, each claiming to be entitled to judgment as a matter of law. On April 30, 2010, the trial court entered summary judgment in favor of BCU. The court treated the annexation as a single annexation, rather than a separate annexation of each individual tract and the trial court concluded that the PSC service territory map was inapplicable to BCU. Further, the court found that since the Carlisle Fiscal Court was an existing customer of BCU, that BCU had the dominant right to continue to serve the Carlisle County Courthouse in its new location.

WKRECC now appeals. On appeal, WKRECC contends that KRS 96.538³ was misinterpreted by the trial court, that the court erred in its interpretation of the word "consumer," and that the court erred by treating the annexation of the three tracts as a single unit.

Standard of Review

The standard of review employed by this Court when reviewing the grant or denial of a motion for summary judgment is "whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky.App.1996). See also Godman v. City of Fort Wright, 234 S.W.3d 362, 368 (Ky.App.2007). In doing so, we review the record in a light most favorable to the non-moving party and resolve any doubts in their favor. Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky.1991).

Analysis

On appeal, WKRECC contends that the trial court erred as a matter of law by misinterpreting KRS 96.538 regarding the providing of electric services after annexation, by conflating the terms "consumer" and "customer," and by considering the three tracts in question as one tract.

KRS 96.538(1) provides as follows:

Any utility providing electric service in any area annexed, subsequent to June 16, 1960, by any municipality shall have the dominant right to continue to provide electric service in said area to consumers then being served and to new consumers located nearer to its facilities than to the facilities of any other utility as all those facilities were located immediately prior to annexation.

WKRECC contends that while KRS 96.538(1) is intended to guarantee utilities will not lose consumers by virtue of annexation, the statute cannot be interpreted so broadly as to mean that the utilities will get an exclusive right to provide energy to those consumers, including for new or expanded services. WKRECC also argues that the trial court's focus on "who is paying the bill" is misguided, and that the word "consumer" is not synonymous with "customer." Specifically, WKRECC argues that the Carlisle Recreation Board is the consumer, while the Carlisle Fiscal Court is the customer. WKRECC cites Webster's dictionary for the proposition that a "consumer" is one who "utilizes" goods or services, while a "customer" is one who "purchases" goods or services.

Statutory interpretation is a question of law for the courts. City of Worthington Hills v. Worthington Fire Protection Dist., 140 S.W.3d 584 (Ky.App.2004). We interpret a statute according to its plain meaning, construing all words and phrases in accordance with their common usage. KRS 446.080(4). It is a general principle of statutory construction that we will not be guided by a single word or sentence in the statute, however, but that we will consider the statute as a whole with an eye towards promoting its object and purpose. County of Harlan v. Appalachian Regional Healthcare, Inc., 85 S.W.3d 607, 611 (Ky.2002). In doing so, we keep in mind that the aim of statutory construction is always to effectuate the intent of the legislature. Id.

The legislature has authority under its police power "to regulate [the] rates and modes of conducting business of public utilities [.]" City of Florence v. Owen Elec. Co-op., Inc., 832 S.W.2d 876 (Ky.1992). KRS 96.538 was enacted by the General Assembly through the exercise of this power. Id. We have previously construed " KRS 96.538 as validly prohibiting a city from extending the services of its municipally owned" utility into an area of...