Public Service Commission v. City of Lebanon , 219 Ind. 62 ( 1941 )

ON PETITION FOR REHEARING. In addition to the facts set out in the opinion, it appears that in 1931 the appellant purchased a transmission line from the Receiver of the Terre Haute, Indianapolis and Eastern 6. Traction Company and reconstructed the line to serve as a power transmission line, which it connected with its generating plant in another county and with the substation owned and operated by the Northern Indiana Power Company in the City of Lebanon, and that thereafter power for the City of Lebanon was furnished over this line, and the transmission line of the Northern Indiana Power Company was used only as a stand-by source of energy. Afterward the appellant purchased the substation. The appellant suggests that it may have to remove its substation from the City of Lebanon, since it no longer has a franchise to operate a utility in that city. But the substation was built within the limits of the city by the Northern Indiana Power Company, and was purchased by the appellant after the proceeding to purchase its utility property was begun. By building the substation within the city limits without a franchise, the Northern Indiana Power Company took the risk that it might be required to remove the property. It was purchased by the appellant after these proceedings were begun, subject to that risk, and no reason can be seen why the city should be required to assume the burden of the risk by compensating the appellant in an amount equal to the cost of removing the station, even though it had been established that the station must be removed.

It cannot be seen that the additional facts change the situation with respect to severance damages. The franchise was to furnish electricity at retail to the local community. The 7. appellant company was engaged in business elsewhere under franchises to furnish electricity to other local communities, and it was also engaged in the wholesale business of manufacturing and furnishing current at wholesale to local distribution plants which it owned and to plants owned by others. The power line from the appellant's generating plant serves other communities and other distribution systems, some of which, as the facts are understood, are served through the substation in the City of Lebanon. It is as though one private individual had franchises to conduct retail businesses in several cities, with a provision in the franchise that the local communities may purchase that retail business, and the same private individual was engaged in the manufacture of the commodity dealt in by the retail businesses under the franchises and furnished that commodity at wholesale to his own retail businesses and to other retail establishments operated in other cities. The manufacturing and wholesaling must of necessity be considered as a separate and distinct enterprise as though it were operated by a separate and distinct person.

Our Public Service Commission law was taken from Wisconsin. The Supreme Court of Wisconsin has repeatedly held that the local distribution plant must be treated as a unit, and that the 8. statute so contemplates; that the agreement that the local community may purchase the property used and useful, operated under the franchise in the local community, does not contemplate that the community must purchase a part of a wholesale manufacturing and distribution system serving many communities, and that the local community may not be charged with the diminution in value of the generating and wholesale distribution plants occasioned by the loss of the local community as a customer. See Wisconsin Power Light Co. v. PublicService Commission (1935), 219 Wis. 104, 261 N.W. 711, andWisconsin Power Light Co. v. Public Service Commission etal. (1939), 232 Wis. 59, 286 N.W. 588. We cannot see that the fact that the power is generated and distributed at wholesale by the owner of the local franchise rather than by a stranger in any way changes the situation. A stranger who constructs generating and wholesale distribution plants to serve local retail distribution plants operated under local franchises does so at his own risk. If the municipality should purchase the local plant it would be free to continue procuring current from the same wholesaler or to look elsewhere for its supply, and in the latter event the independent wholesaler could claim no compensation from the local municipality because of his loss of a customer or the diminution in value of his property because of the loss of income. Reference is made in the Wisconsin cases cited to situations in which the severance of the local distribution plant from a large system has required a reconstruction or rearrangement of leads or feeder lines or other equipment used as part of the local plant and also as part of the general distribution system, and it is intimated that the expense of physical severance and rearrangement is an item that may be taken into consideration, but there is no such situation apparent here. So far as the record discloses, the physical severance may be accomplished by merely disconnecting the wires at the substation (if there is to be a physical severance, and if the municipality does not continue to purchase its current at wholesale from the appellant). The rule applicable to condemnation of property under the power of eminent domain, in which the value of the property and damage to the remaining property from which it is severed must be paid, does not apply, since, under the statute and the agreement entered into by the appellant when it accepted the indeterminate permit, the local utility property is treated as a unit which may be purchased as a unit and not as a part of some larger unit. The contention that the eminent domain rule applies was made in Wisconsin, but in a well-reasoned opinion in one of the cases above referred to the contention was denied.

Petition for rehearing denied.

NOTE. — Reported in 36 N.E.2d 852.