Ohio Edison Co. v. Public Utilities Commission ( 1997 )

Lundberg Stratton, J.

Appellant poses numerous propositions of law arguing that the commission erred in its interpretation of R.C. 4905.34 and overstepped its authority in finding that Ohio Edison violated R.C. 4905.33. Each party also filed supplemental briefs on the two questions that we raised sua sponte: “Did the commission find that R.C. 4905.34 applies in the case at bar?” and “Does R.C. 4905.34 apply in a case involving a competitive bidding situation?” For the reasons that follow, we find that R.C. 4905.33 and 4905.34 are clear,'unambiguous, and not in conflict. We also hold that a public utility’s right to enter into a reduced-rate utility service contract with a political subdivision under R.C. 4905.34 is not limited by the last sentence of R.C. 4905.33, which prohibits below-cost utility service contracts that attempt to destroy competition. Accordingly, we reverse the commission’s order.¹

We will not reverse a commission order unless it is against the manifest weight of the evidence. R.C. 4903.13. Nor will we reweigh the evidence or substitute our judgment for that of the commission on factual questions where there is sufficient probative evidence in the record to show that the commission’s decision is not manifestly against the weight of the evidence and is not so clearly unsupported by the record as to show misapprehension, mistake, or willful disregard of duty. Canton Storage & Transfer Co. v. Pub. Util. Comm. (1995), 72 Ohio St.3d 1, 4, 647 N.E.2d 136, 140; MCI Telecommunications Corp. v. Pub. Util. Comm. (1988), 38 Ohio St.3d 266, 268, 527 N.E.2d 777, 780. However, we have complete and independent power of review as to all questions of law. Id.; Indus. Energy Consumers of Ohio Power Co. v. Pub. Util. Comm. (1994), 68 Ohio St.3d 559, 563, 629 N.E.2d 423, 426.

This case involves the interplay between R.C. 4905.33 and 4905.34 and, more specifically, the commission’s resolution of that interplay. Determining whether the commission applied the proper legal standard is a question of law. Time Warner AxS v. Pub. Util. Comm. (1996), 75 Ohio St.3d 229, 234, 661 N.E.2d 1097, 1101; Canton Storage & Transfer Co., 72 Ohio St.3d at 5, 647 N.E.2d at 140. Accordingly, we consider this question on a de novo basis. MCI Telecommunications Corp., 38 Ohio St.3d at 268, 527 N.E.2d at 780.

R.C. 4905.34 contracts are exempt from R.C. Chapters 4901, 4903, 4905, 4907, 4909, 4921, 4923, and 4925, including commission review under R.C. 4905.26. However, the commission has limited authority to determine the extent of its jurisdiction and whether a complaint pending before it actually involves an R.C. 4905.34 contract. In re Complaint of Residents of Struthers (1989), 45 Ohio St.3d 227, 543 N.E.2d 794. Once the commission determines that the complaint pending before it involves an R.C. 4905.34 contract, the commission’s jurisdiction is at an end and the case must be dismissed. Id. The commission, therefore, erred when it exercised jurisdiction over the Ohio Edison service agreement.

Thermal brought an R.C. 4905.26 and 4905.33 complaint against Ohio Edison. Ohio Edison sought to dismiss the complaint, asserting that R.C. 4905.34 expressly permits reduced-rate contracts with political subdivisions. Thus, the commission should have initially determined whether R.C. 4905.34 precluded its review of the complaint. Instead, all parties simply presumed that R.C. 4905.34 applied in the case at bar. The commission then proceeded to apply R.C. 4905.33 to limit the application of R.C. 4905.34. This was error. We find that R.C. 4905.34 applies in this case and is not subject to the R.C. 4905.33 prohibition against furnishing below-cost utility service for the purpose of destroying competition.

R.C. 4905.33 provides:

“No public utility shall directly or indirectly, or by any special rate, rebate, drawback, or other device or method, charge, demand, collect, or receive from any person, firm, or corporation a greater or lesser compensation for any services rendered, or to be rendered, except as provided in Chapters 4901., 4903., 4905., 4907., 4909., 4921., 4923., and 4925. of the Revised Code, than it charges, demands, collects, or receives from any other person, firm, or corporation for doing a like and contemporaneous service under substantially the same circumstances and conditions. No public utility shall furnish free service or service for less than actual cost for the purpose of destroying competition.” (Emphasis added.)

Thus, public utilities must charge all similarly situated customers the same rates (Allnet Communications Serv., Inc. v. Pub. Util. Comm. [1994], 70 Ohio St.3d 202, 205-207, 638 N.E.2d 516, 519-520) and cannot furnish free service or service below their actual costs for the purpose of destroying competition. R.C. 4905.33 is clear and unambiguous.

Immediately following this prohibition, R.C. 4905.34, prior to being amended in 1996, provided:

“Chapters 4901., 4903., 1.905., 4907., 4909., 4921., 4923., and 4925. of the Revised Code do not prevent any public utility or railroad from granting any of its property for any public purpose, or granting reduced rates or free service of any kind to the United States, to the state or any political subdivision of the state, for charitable purposes, for fairs or expositions, or to any officer or employee of such public utility or railroad or his family. All contracts and agreements made or entered into by such public utility or railroad for such use, reduced rates, or free service are valid and enforceable] at law. As used in this section, ‘employee’ includes furloughed, pensioned, and superannuated employees.” (Emphasis added.)

In R.C. 4905.34, the General Assembly has declared that public utilities may provide the state or its political subdivisions with reduced-rate or even free utility service notwithstanding R.C. 4905.33. We do not read R.C. 4905.34 to mean that reduced rates or free service may be granted to governmental entities only for charitable purposes, fairs, or expositions. These categories are merely examples of other purposes or entities to whom a public utility may grant reduced rates or free service. The public utility may grant any of its property for any public purpose, including those so enumerated in the statute. Furthermore, all such reduced-rate contracts are “valid and enforceable] at law.” R.C. 4905.34 is also clear and unambiguous.

We find no conflict between R.C. 4905.33 and 4905.34.² R.C. 4905.33 prohibits a utility from furnishing service below that utility’s “actual cost for the purpose of destroying competition.” R.C. 4905.34 is exempt from the limitation in R.C. 4905.33 and not only permits a utility to enter into a reduced-rate contract with a political subdivision, but also states that these contracts are “valid and enforceable] at law.” Thus, public utilities can charge governmental entities special utility rates. Had the General Assembly intended its grant of authority in R.C. 4905.34 to be limited by the last sentence in R.C. 4905.33, it would have said so. For example, the General Assembly could have said that public utilities can grant reduced-rate or free utility service to political subdivisions except for the purpose of destroying competition, but it chose not to. Therefore, R.C. 4905.34 needs no interpretation and the commission should not have limited its application by R.C. 4905.33. Time Warner AxS, 75 Ohio St.3d at 237, 661 N.E.2d at 1104, citing Provident Bank v. Wood (1973), 36 Ohio St.2d 101, 105-106, 65 O.O.2d 296, 298, 304 N.E.2d 378, 381.

Intervening appellee argues that Ohio Edison did not intend to use R.C. 4905.34 as authority for its reduced-rate contract with the county. However, Ohio Edison’s intent is not material. The grant of authority in R.C. 4905.34 contains no requirement of prior intent and we decline to read one into this statute.

The General Assembly has expressly given public utilities the authority to enter into reduced-rate contracts with political subdivisions without limitation. The General Assembly, not the commission, must make changes in the regulatory scheme to limit a utility’s rights under R.C. 4905.34. If a utility’s authority to enter into a reduced-rate utility contract with a political subdivision is to be limited by anti-competitive conduct, the General Assembly must effect that change. The General Assembly makes policy decisions expanding or restricting free competition. See, e.g., Time Warner AxS, 75 Ohio St.3d at 241, 661 N.E.2d at 1106; Canton Storage & Transfer Co., 72 Ohio St.3d at 5, 647 N.E.2d at 141. Absent such a change in Ohio’s statutory framework, the commission is required, as we are, to apply the existing statutory provisions to all complaints and cases presented to us.

We, therefore, find that R.C. 4905.34 is clear and unambiguous. We further hold that pursuant to R.C. 4905.34, a public utility’s authority to grant reduced-rate utility service to a political subdivision is not subject to the R.C. 4905.33 prohibition against furnishing below-cost utility service for the purpose of destroying competition. Accordingly, the commission’s order is reversed.

Order reversed.

Douglas, F.E. Sweeney and Close, JJ., concur. Douglas, J., concurs separately. Resnick, J., concurs in the syllabus and judgment only. Moyer, C.J., and Pfeifer, J., dissent. Michael L. Close, J., of the Tenth Appellate District, sitting for Cook, J.

1 . Given our finding that the commission erred when interpreting R.C. 4905.33 and 4905.34, we need not reach the remaining legal and factual issues propounded by the parties.

2 . Even were we to find these two sections to be in conflict, the result would be the same. R.C. 4905.33 is a general statute, prohibiting utilities from entering into an agreement to furnish service below their actual cost for the purpose of destroying competition. R.C. 4905.34 is a specific statute, exempting itself from the prohibitions in R.C. 4905.33. Absent a manifest legislative intent in R.C. 4905.33 that it should prevail in a conflict with R.C. 4905.34, the specific section takes precedence over the general section. R.C. 1.51. Since R.C. 4905.33 contains no such intent, a utility’s right to offer a reduced-rate contract to a political subdivision under R.C. 4905.34 takes precedence. See Springdale v. CSX Ry. Corp. (1994), 68 Ohio St.3d 371, 376, 627 N.E.2d 534, 538.