State Ex Rel. Utilities Commission v. Woodstock Electric Membership Corp.

171 S.E.2d 406 (1970) 276 N.C. 108

STATE of North Carolina ex rel. UTILITIES COMMISSION and Virginia Electric and Power Company
v.
WOODSTOCK ELECTRIC MEMBERSHIP CORPORATION and North Carolina Electric Membership Corporation.

No. 47.

Supreme Court of North Carolina.

January 6, 1970.

Crisp, Twiggs & Wells, Raleigh, for Woodstock Electric Membership Corp. and North Carolina Electric Membership Corp.

Edward B. Hipp and Larry G. Ford, Raleigh, Commission Attys., for North Carolina Utilities Commission.

Joyner, Moore & Howison, Raleigh, for Virginia Electric and Power Co.

LAKE, Justice.

G.S. § 62-110.2 was enacted in 1965. Prior to its enactment, electric membership cooperatives, such as Woodstock, and investor-owned public utility companies, such as VEPCO, were free to compete in the rural portions of this State, in the absence of contractual restrictions upon such right, irrespective of the fact that such competition resulted in substantial duplication of power lines and facilities. State ex rel. Utilities Commission v. Lumbee River Electric Membership Corp., 275 N.C. 250, 166 S.E.2d 663; Blue Ridge Electric Membership Corp. v. Duke Power Co., 258 N.C. 278, 128 S.E.2d 405; Pitt & Greene Electric Membership Corp. v. Carolina Power & Light Co., 255 N.C. 258, 120 S.E.2d 749; Carolina Power & Light Co. v. Johnston County Electric Membership Corp., 211 N.C. 717, 192 S.E. 105. It is not contended that there is any contract of either supplier involved in this proceeding which restricts its right to compete for the business of potential users of its service within the six territories in question. Thus, prior to the Act of 1965, G.S. § 62-110.2, neither Woodstock nor VEPCO had a monopoly upon the right to sell electric power to the potential users of such power in the six territories here in question, or to any class of those users.

The Act of 1965 did not, without more, alter this situation. By its terms, G.S. § 62-110.2(b), there was conferred upon each electric supplier in the State, i. e., upon both Woodstock and VEPCO, the right, in territories outside of municipalities, to serve all "premises" being served by it on 20 April 1965, and the right to serve "premises" initially requiring service after that date, located within 300 feet of a line of such supplier and not in a territory assigned by the Utilities Commission to a different supplier, pursuant to G.S. § 62-110.2(c). However, all parts of all six of the territories here in controversy lie more than 300 feet from the line of any electric supplied. Under the provisions of the Act, G.S. § 62-110.2(b), Clauses (5) and (10), any "premises" within the territories here in question could, prior to such an assignment of such territory by the Utilities Commission, have been served by any supplier chosen by the user, and service of such "premises" by any other supplier was prohibited. State ex rel. Utilities Comm. v. Lumbee River Electric Membership Corp., supra.

Thus, prior to the enactment of G.S. § 62-110.2, Woodstock never had any exclusive right to serve any user upon any "premises" within any territory here in controversy. After the effective date of G.S. § 62-110.2, and prior to the assignment by the Utilities Commission out of which this appeal arises, Woodstock had no right whatever to serve any such user unless chosen by such user. It obviously follows that the assignment, of which Woodstock here complains, took from Woodstock no right previously enjoyed by it.

Woodstock applied to the Utilities Commission for the assignment to it of the exclusive right to serve every user, i. e., every prospective user, within all of the six territories here in controversy. Thus, the assignment, of which Woodstock complains, does not impose upon it the duty to serve any user Woodstock did not request permission to serve.

It does not appear upon the record before us that any user of any type within any territory here in controversy has demanded service from Woodstock. Thus, we do not have before us, and we do not determine, whether Woodstock, not having been granted its application in its entirety, may be compelled to serve any user which the order of the Commission authorizes Woodstock to serve. Woodstock has not suggested in the record, or in its brief or oral argument before us, that any service right granted it by the order is not presently desired by it, or that to serve any user which the order permits it to serve would be unprofitable or burdensome to Woodstock. Thus, Woodstock has shown no duty imposed upon it by the order amounting to an unconstitutional deprivation of its property or liberty.

The order denies to Woodstock no right to serve any user of electric power, large or small, within any territory here in controversy, which user desires service by Woodstock. Woodstock's sole complaint is that, under the terms of the order, it will not have the right to serve certain, presently hypothetical users who, if and when they come into existence, will not want its services. The right of a potential user of electric power to choose between vendors of such power seeking his patronage is not lightly to be denied. Blue Ridge Electric Membership Corp. v. Duke Power Co., supra. Prior to the assignment of which it complains, no statute of this State, no order of any administrative agency of this State and no decision of this Court, conferred upon Woodstock the right to compel such user to choose between using power sold by Woodstock and having no electric service at all. This being true, the assignment in question deprived Woodstock of no property and of no liberty. Since, by the terms of the order of which Woodstock complains, any user in any of the six territories, whose demand for electric power exceeds 400 KW, may choose Woodstock as its supplier, the order confers no monopoly upon VEPCO.

Woodstock does not challenge the constitutional validity of G.S. § 62-110.2. On the contrary, this proceeding was initiated by Woodstock's application to the Utilities Commission for an assignment to it of territorial rights pursuant to this statute. One may not, in the same proceeding, seek an advantage which is authorized by a specific statute only and, at the same time, deny the constitutionality of the statute. Ramsey v. North Carolina Veterans Commission, 261 N.C. 645, 135 S.E.2d 659; Convent of the Sisters of St. Joseph of Chestnut Hill v. City of Winston-Salem, 243 N.C. 316, 90 S.E.2d 879. Woodstock does not here attempt to do so.

There is, therefore, no merit in the contention of the appellants that the order of the Utilities Commission violates their rights under Art. I, § 7 or § 17, of the Constitution of North Carolina, or under the Fourteenth Amendment to the Constitution of the United States.

We turn to the contention that the order of the Utilities Commission exceeds its authority under G.S. § 62-110.2. Woodstock contends that subsection (c) of this statute requires that the six territories in question be assigned to one supplier exclusively. Its contention is not that some demand level other than 400 KW should have been used as the dividing line between the exclusive right of Woodstock to serve and the right of the user to select its supplier. Woodstock contends that, under the statute, no user may be permitted to choose between two or more suppliers in the territories in question. To so construe the statute not only deprives VEPCO of a right previously enjoyed by it, but also deprives the potential user of the right he formerly had to choose between willing suppliers. The statute should not be so construed unless this is clearly its intent. Blue Ridge Electric Membership Corp. v. Duke Power Co., supra.

The statute provides:

"(c) (1) In order to avoid unnecessary duplication of electric facilities, the Commission is authorized and directed to assign, * * * to electric suppliers all areas, by adequately defined boundaries, that are outside the corporate limits of municipalities and that are more than 300 feet from the lines of all electric suppliers as such lines exist on the dates of the assignments; provided, that the Commission may leave unassigned any area in which the Commission, in its discretion, determines that the existing lines of two or more electric suppliers are in such close proximity that no substantial avoidance of duplication of facilities would be accomplished by assignment of such area. The Commission shall make assignment of areas in accordance with public convenience and necessity, considering, among other things, the location of existing lines and facilities of electric suppliers and the adequacy and dependability of the service of electric suppliers, but not considering rate differentials among electric suppliers. * * *" (Emphasis added.)

The Utilities Commission has no authority to assign any service right in these six territories, either to Woodstock or to VEPCO, except insofar as that authority has been conferred upon it by this statute. Obviously, it may not make an assignment which is contrary to the provisions of the statute. State ex rel. Utilities Commission v. Lumbee River Electric Membership Corp., supra; State ex rel. Utilities Commission v. Thurston Motor Lines, 240 N.C. 166, 81 S.E.2d 404. In the Lumbee River case, we said of the statute here in question:

"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. * * * 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 collaboration and agreement between the two types of suppliers."

Woodstock contends that since the proviso in subsection (c) (1) permits the Commission to leave a territory unassigned under specified circumstances, it may not leave a territory unassigned where, as here, those circumstances do not exist. We need not now determine that question, for we agree with the Court of Appeals that the Commission did not leave the six territories here in question unassigned. Each territory, in its entirety, is assigned to Woodstock alone for service of all users whose demands do not exceed 400 KW. Each territory is assigned in its entirety to both Woodstock and VEPCO for the service of users whose demands exceed 400 KW, each such user to have the choice of Woodstock's service or of VEPCO's service. This raises two questions: (1) Can the same territory be treated by the Commission as two service "areas," one including users of a specified type and the other including users of other types? (2) If so, can one of these "areas" be assigned to more than one supplier ?

Subsection (c) declares the purpose for which the authority to assign "areas" is conferred upon the Commission. That purpose is "to avoid unnecessary duplication of electric facilities." (Emphasis added.) To accomplish this objective, the statute directs the Commission to make assignments "in accordance with public convenience and necessity." In determining whether an assignment is in accord with "public convenience and necessity," the Commission is directed to consider the "adequacy and dependability of the service of electric suppliers." It is also directed to consider "other things."

The overriding purpose of this statute is to promote the public interest, not the business of the electric membership co-operative or that of the investor-owned utility. The attraction to a sparsely settled rural territory of industry, which will develop its natural resources and provide opportunity of employment to its residents, is one of the "other things" to be considered by the Commission in determining what assignment of the territory will be in accord with public convenience and necessity. None of the things which the statute directs the Commission "to consider" is determinative, per se, of the requisite accord between the assignment and public convenience and necessity. The past history of service to residential, agricultural, and small commercial users in adjacent territories is another factor to be considered in this determination. The capital required for supplying electric power to large users in such a territory and the past experience, or lack of experience, of a supplier in serving such users is also a factor which may properly be considered. The demonstrated preference of a substantial class of potential users of electric power for the service of one supplier rather than that of another supplier is also a matter properly to be considered, both for the reason that such users are part of the "public" whose convenience and necessity is to be promoted and for the further reason that, if such potential users are not satisfied with the available service in the territory, they may elect to establish their own plants elsewhere and thus deprive the entire "public" of the desired industrial development of the territory.

Obviously, subsection (c) of G.S. § 62-110.2 contemplates the assignment of a territory to a single supplier for all classes of users of electric power, nothing else appearing. However, in our opinion, the statutory direction that the Commission assign service areas "by adequately defined boundaries" does not compel the conclusion that the intent of the Legislature was to require the Commission to choose between (1) jeopardizing the industrial development of a geographic area by assigning it exclusively to an electric membership cooperative, or (2) boxing the cooperative into the narrow strips bordering its existing lines by assigning the territory outside those strips to an investor-owned utility for all types of electric service. In such a situation, we think the statute leaves the Utilities Commission free to promote the public convenience and necessity by treating the geographic area as two separate service areas, the "adequately defined boundary" between which is the level of the user's demand for electric service. Thus, we hold that it is within the statutory authority of the Commission, when the public convenience and necessity so requires, to assign a territory to one supplier for service below a specified level of demand and to another supplier for service above that level of demand.

We also construe subsection (c) of G.S. § 62-110.2 to authorize the Commission, having determined, upon sufficient and competent evidence, that the public convenience and necessity would best be promoted by dividing the geographic area into two service areas on the basis of the users' demand levels, to permit, on the basis of public convenience and necessity, an electric membership cooperative, to which the area of the smaller demands has been assigned, to serve a user whose demand is above the division line, if that user desires to become a member of the cooperative and thus to use its service. We do not have before us any question as to the authority of the Commission to require an unwilling cooperative to build the facilities necessary to serve such a user and we express no opinion thereon.

The evidence before the Utilities Commission not having been brought forward into the record on appeal, all of the findings of fact made by the Commission are deemed supported by competent and sufficient evidence. In re Housing Authority of City of Charlotte, 233 N.C. 649, 65 S.E.2d 761. These findings are, therefore, binding upon this Court. State ex rel. Utilities Commission v. Champion Papers, Inc., 259 N.C. 449, 130 S.E.2d 890. The conclusion of the Commission that the public convenience and necessity requires the division of each of these six geographic areas into two service areas based upon the level of the users' demands cannot be deemed arbitrary and capricious in view of these findings of fact.

There remains for consideration the question of whether the facts found by the Commission are sufficient to support the determination that the "boundary" between the two service areas within each of the six geographic areas be the demand level of 400 KW. We conclude that the findings are sufficient to support that determination by the Commission.

The drawing of this division line at the demand level of 400 KW throws into the service area assigned to Woodstock all users whose demands for service are similar to those heretofore served by Woodstock. The findings by the Commission establish the adequacy and dependability of Woodstock's service at those demand levels. Considering the context, it is implicit in the findings that the anticipated mining operations and related industrial activities will require "large blocks of available power," will have "large power requirements" and "heavy electric loads," and that the demand of many of these establishments will exceed 400 KW. Thus, the findings by the Commission are sufficient to support, though not to require, its conclusion that contemplated mining operations and related industrial operations in the geographic area, upon which the contemplated industrial development of the territory depends, will necessitate the use of equipment and installation resulting in a demand above that level. The Commission found Woodstock has never served a demand larger than 400 KW but VEPCO had demonstrated its ability to do so. Under these circumstances, the Commission's expert choice of the level of 400 KW as the "boundary" between the two service areas cannot be deemed arbitrary or capricious. Consequently, it was error for the Court of Appeals to reverse the order of the Commission.

The judgment of the Court of Appeals is, therefore, reversed and the matter is remanded to that court for the entry of a judgment affirming the order of the Utilities Commission.

Reversed and remanded to the Court of Appeals.

MOORE, J., took no part in the consideration or decision of this case.