84 W. Va. 662 | W. Va. | 1919
The questions presented upon this appeal originated in an application made by the Appalachian Power Company, a Virginia corporation doing business in this state as well as in 'Virginia, to the Public Service Commission of West Virginia
The Appalachian Power Company was organized in 1911 for the purpose of engaging in the business of a general electric lighting and power company “for the production of electric power intended to be used for public service.” Hydroelectric stations of great capacity were constructed on New River in Virginia, and the current there generated carried into "West Virginia by two high-tension transmission lines to three sub-stations in this state, where it is transformed or reduced from 88,000 volts to commercial voltages ranging from 13,200 to 110, and from these points distributed, measured and sold to the company’s West Virginia consumers. These three transforming or reducing sub-stations alone, one at Switchback, one at Bluefield, and one at .Coalwood, represent an investment, exclusive of generating machinery, •of $400,000, $80,000 and $60,000, respectively. The Commit sion found that the fair value of the power company’s investment as a rate base upon which it was entitled to earn ■a reasonable return, as of-September 30, 1918, was approximately $9,860,000. It further found that the company had hot during any year of its history earned a return sufficient to pay its fixed charges and to enable it to set aside a fund to cover accrued depreciation, and that the operations of the
At the time of the applications foF increased rates and of the orders of the Commission allowing them many of the customers of the power company were using its current under-unexpired contracts having several years yet to run. These contracts definitely fixed the rates chargeable for the service rendered. The Commission, however, in effect annulled the provisions of these agreements in so far as they related to-rates by authorizing a total and aggregate increase of 40%,. finding that the new rates were necessary in order to enable the company to earn a fair return on its investment.
In support of their contention that the Commission exceeded its jurisdiction and powers in authorizing the increase in. the face of specific rates fixed by contracts having several years yet to run protestants rely upon four propositions: (1) That the Appalachian Power Company, disposing in West Virginia of electric power generated outside of this state, is not within the purview of the West Virginia Public Service Commission Act — Chapter 15-0 of the Code; (2) that as the electric power furnished in West Virginia originates at the-power company’s developments in Virginia, its business in this state is interstate commerce, and the Public Service Commission, therefore, has no jurisdiction in the premises; (3) that protestants’ rates are fixed by contracts entered into-•prior to the passage of the act creating the Commission, ánd any interference now with such contracts would impair the obligations thereof and deprive protestants of their property without due process of law; (4) that the rates fixed are unreasonable.
With respect to the first ground relied on by petitioners, there can be no reasonable doubt. The charter of the Appalachian Power Company states that the purposes of its organization, among others, are: “ To do the business of a general electric lighting and power company, with works to be purchased, leased or constructed, maintained and operated for the production of electric power intended to be used for public service, and for the sale and disposal thereof to the
Not only is the public character of the service to be rendered by the Appalachian Power Company expressly asserted in the articles of incorporation, but its subsequent acts, pursuant thereto have partaken distinctly of the same characteristics. The findings of fact of the Public Service Commission sufficiently disclose that fact: “The applicant is-, now serving as a public utility with light, heat and power” twelve towns in Virginia, six in West Virginia; twenty-five coal mining plants in Virginia, seventy-six in West Virginia; and the street railway system of the Bluestone Traction Company and the Princeton Traction Company. “It furnishes 60% of the power used in coal mining in the Norfolk & Western and Pocahontas territory, and all the power used in mining in the Mullens district on the Virginian Railroad, and 90% of the power used in coal mining in the Clinchfield district.” Its charter requires it to serve the public along rts lines at reasonable and uniform rates and subjects all phases of its business to the laws and regulations “of the governmental power having jurisdiction in the place or places
Furthermore, the power company involved here falls within the express language of the West Virginia Public Service Commission Act. Chapter 15-0, Code. Section 3 provides: “The jurisdiction of the Commission shall extend to and include: (c) Gas companies, electric lighting companies and municipalities furnishing gas or electricity for lighting, heating or power purposes; and (d) hydro-electric companies for the generation and transmission of light, heat or power. # # # The words ‘Public Service Corporation’ used in this act shall include all persons, firms, corporations, municipalities and agencies engaged or employed in any business herein enumerated, or in any other public service business, whether above enumerated or not, whether incorporated or not. ’ ’ There can be no doubt that the power company is a public service corporation within the scope of that act. Wingrove v. Public Service Commission, 74 W. Va. 190.
But protestants raise the further jurisdictional question that, granting, certain phases of applicant’s business to be public in nature, such as the service rendered to domestic consumers and traction companies, the furnishing of electric current to industrial concerns to be used by them for private profit is not of such a public character as- to subject such service to regulation by the Commission. They contend that such service is purely a matter of private concern to be regulated by individual contract between the power company and the management of the industrial enterprise, and that if the Legislature did include"that phase of applicant’s business within the scope of the Public Service Commission Act, it had no constitutional authority to exercise its regulatory power with respect thereto. This question is not argued at
With respect to the second point raised by protestants, we concur in their conclusion that the business of the power company is interstate commerce, but cannot agree that, the Public Service Commission, therefore, has no jurisdiction in the premises. No longer can there be any doubt that the transportation or transmission of electric current from state
It is settled beyond all doubt by repeated decisions of the 'Supreme Court of the United States that it is the essential character of the commerce which determines whether it is interstate or intrastate. Western Oil Ref’g Co. v. Lipscomb, 244 U. S. 346. There an Indiana corporation, for the purpose •of filling orders taken by its salesmen in Tennessee, shipped into that state a tank car of oil billed to the shipper to a point in Tennessee where part of the orders were filled, and thence rebilled to the shipper to another point in that state where the remaining orders were filled. It was held that the movement -of the goods to the first point and its continuance thence to the second, the second shipment being between points within the state, were' connected parts of a continuing interstate •commerce movement, when considered in its entirety. The place of the rebilling was termed a “temporary stop en -■route. ’ ’
So it has been held that a telegram- forwarded by the ‘Stock Exchange in New York City to a telegraph company •in Boston, with the intention that the latter should transmit It to selected brokers in that city, approved in advance by
In this case the transmission from hydro-electric generators in Virginia to consumers in West Virginia was as expeditious and continuous as science could make it. So far as these appellant coal companies are concerned, this is not a case where the current transported into West Virginia is sold to independent distributing companies for resale to local consumers, as was the situation in Public Utilities Commission v. Landon, 249 U. S. 236, but a direct transmission from seller to buyer, with an incidental and temporary stop en route for the purpose of transformation into a commercial voltage. As held in the case last cited, the interposition of such independent local distributing companies breaks the chain of interstate commerce. Nor is there present any evidence indicating a storage of the current in this state for later distribution to consumers, which might, though we do not decide the question, require us to hold that the interstate commerce feature of the transmission terminated at the place of storage.
We are not unmindful that the Court of Appeals of Maryland in a recent decision, West Virginia & Maryland Gas Co. v. Towers, 106 Atl. 265, has held that where gas is transported from West Virginia to Maryland in high-pressure mains, and at various points in the latter state reduced to a lower pressure for local consumption, such reduction terminates the interstate commerce portion of the transportation. At the time that opinion was written the Supreme Court of the United States had not yet decided the case of Public Utilities Commission v. Landon, supra. We are, therefore, not disposed to adopt the conclusion reached in the Tower case, but
But, though interstate commerce is involved, the state is not necessarily deprived of the right to regulate and supervise under its police power. That which is attempted here is the regulation of the rates at which electric power produced in Virginia shall be sold in West Virginia. It is settled law that the police power of the state embraces regulations designed to promote the public convenience or the general welfare or prosperity, as well as those in the interest of the public health, morals and safety. Lake Shore & Mich. Southern Ry. v. Ohio, 173 U. S. 285, 292; C. B. & Q. Ry. v. Drainage Commissioners, 200 U. S. 561, 592; Bacon v. Walker, 204 U. S. 311, 317; Chicago & Alton R. R. v. Tranbarger, 238 U. S. 67, 77. And it is clear that the regulation of the rates of public utilities is for the public convenience and general welfare, and hence a proper exercise of the police power of the state. City of Benwood v. Public Service Commission, 75 W. Va. 127; Virginia-Western Power Co. v. Commonwealth, 125 Va. 469, 99 S. E. 723. See also German Alliance Ins Co. v. Kansas, 233 U. S. 389.
But not every exercise of the police power affecting interstate commerce is valid. No direct or undue burden may be imposed. Since the clarifying opinion of the. United States Supreme Court in the Minnesota Rate Cases, 230 U. S. 352, much of the vagueness and ambiguity as to the respective powers of state and federal governments! over interstate commerce have been removed. At page 399 of the opinion
Again at page 402 it is said: “But within these limitations there necessarily remains to the states, until Congress acts, a wide range for the permissible exercise of power appropriate to their territorial jurisdiction, although interstate commerce may be affected. It extends to those matters of a local nature as to which it is impossible to derive; from the constitutional grant an intention that they should! go uncontrolled pending federal intervention. * * * Further,, it is competent for a state to govern its internal commerce,, to provide local improvements, to create and regulate local facilities, to adopt protective measures of a reasonable character in the interest of the health, safety, morals and welfare of its people, although interstate commerce,may incidentally or indirectly be involved.- * * * Where the subject is peculiarly one of local concern, and from its nature belongs to the class with which the. state appropriately deals in making reasonable provision for local needs, it cannot be regarded as ■left to the unrestrained wills of individuals because Congress has not acted, although it may have such a relation to interstate commerce as to be within the reach of the federal power. ’ ’
Congress has never asserted its paramount power over interstate transmission of electric power; hence it only remains .to consider whether the regulation of rates at which electric current shall be sold is essentially local, or of such national importance as to require a general system or uniformity of regulation. The vital distinction should be noted between regulation of rates of transportation and of the rates. at •which a commodity shall be sold. Transportation across state lines, involving as it frequently does many or all states, is
In fixing the rates of sale, however, as distinguished from rates of transportation, the duty regulated is of an entirely «different nature. The duty of the power company to sell at reasonable rates was one owed both to citizens of Virginia and to the public in this state. But the two duties do not overlap ■as they do where rates of transportation are concerned. The .price at which a commodity is sold is essentially local, affecting chiefly those in the community where it is made, and only incidentally, if at all, touching' those outside of the community. So long as the rate fixed is not discriminatory or confiscatory, but yields a fair return, upon the valuation of the property, it throws no burden upon citizens of other communities or states. As said in Re Pennsylvania Gas Co., 225 N. Y. 397, respecting the regulation of the sale of gas 'imported from another state: “It is idle to speak of the need -of uniformity of action by states of équa.l competence when there is only one state whose action is involved. But even within the state diversity rather than uniformity is exacted by the conditions of the business. Rates adequate in one city are inadequate in another. The local needs are best known to local agencies of government. No central authority acting for the nation as a whole will readily discern them.” A : •similar conclusion was reached in Manufacturers’ Light & Heat Co. v. Ott, 215 Fed. 940. The local regulation stands until Congress occupies the field.
But protestants further claim that their rates are fixed by contracts entered into prior to the passage of the Public 'Service Commission Act, and any interference with such ■contracts would impair the obligations thereof and deprive
If the point were not so seriously pressed, it would be thought unnecessary to enter into any extended discussion ■of the question. In Manigault v. Springs, 199 U. S. 473,480, the court said: “It is the settled law of this court that the interdiction of'statutes impairing the obligation of contracts does not prevent the state from exercising such powers •as are vested in it for the promotion of the common weal, or '■are necessary for the general good of the public, though contracts previously entered into between individuals may thereby be affected. This power, which in its various ramifications is known as the police power, is an exercise of' the sovereign right of the government to protect the lives, health, morals, comfort and general welfare of the people, and is
In Chicago & Alton R. R. Co. v. Tranbarger, 238 U. S. 67, 76-77, it is said: “ It is established by repeated decisions of this court that neither of these provisions (the contract and due process clauses) of the federal Constitution has the effect of overriding the power of the state to establish all regulations reasonably necessary to secure the health, safety, or general welfare of the community; that this power can neither be abdicated nor bargained away, and is inalienable even by express grant; and that all contract and property rights are held subject to its fair exercise. * * * And it is also settled that the police power embraces regulations designed to promote the public convenience or the general welfare and prosperity, as well as those in the interest of 'the public health, morals or safety. ”
We have held in the case of City of Benwood v. Public Service Commission, 75 W. Va. 127, that the rate-making power is an incident of 'the police power of the state, and may be exercised without impairing the obligation of contracts or depriving of property without due process of law within the meaning of the federal and • state Constitutions. Is it not proper that it be so ? Surely it . is in the interest of public convenience and of the general welfare that rates of public utilities be subject to regulation, both as a protection against extortionate charges and at the same time for the purpose of safeguarding to a utility so restricted a reasonable return upon its investment. It must of course be recognized that a peculiar sanctity inheres in contracts entered into between parties competent to contract, and that the obligations thereby imposed will not lightly be disturbed. But the same policy that forbids to a utility total freedom of action likewise limits the extent to which contracts with a utility will be recognized when the public need necessitates a partial or total annulment. The duty of the utility to subordinate its right of control over rates in the interest- of the public welfare is balanced by a corresponding duty oh the part of individuals contracting with such utility to subordinate their rights of contract to the same public
A case quite analogous to this was recently decided in Union Dry Goods Co. v. Georgia Public Service Corporation, 248 U. S. 372, affirming 145 Ga. 658. There the state of Georgia, through its Railroad Commission, fixed reasonable rates to be charged by a utility for supplying electricity to the inhabitants of a city, which superseded lower rates agreed upon in an existing time contract made previously between the company and a consume^. That result, however, was held to be a legitimate effect of a valid exercise of the police power, not impairing the obligation of contract or depriving the consumer of property without due process of law. See also Portland Ry. Co. v. Railroad Commission, 229 U. S. 397, 412; United Fuel Gas Co. v. Public Service Commission, 73 W. Va. 571, 591; B. & O. R. R. v. Public Service Commission; 81 W. Va. 457; Raymond Lumber Co. v. Raymond Light & Water Co., 92 Wash. 330; Note to Pinney & Boyle Co. v. Los Angeles Gas & Electric Corp., L. R. A. 1915-C 282.
But it is said the contracts in this case were entered into before the Public Service Commission law was enacted, and, therefore, are on a different and higher plane than those of subsequent date. To adopt such a holding would be to per
There is presented here no question involving the capacity of the state to contract away its right to the proper exercise of its police power, such as was presented in Interurban Ry. & Terminal Co. v. Public Utilities Commission, 98 Oh St. 287, and Virginia-Western Power Co. v. Commonwealth, 125 Va. 469, 99 S. E. 723. Nor is any such question raised as was before the Supreme Court of the United States in Columbus, Ry. Power & Light Co. v. City of Columbus, 249 U. S. 399, recently decided.
The last ground upon which protestants attack the order of the Commission is that the rates allowed are unreasonable. The Commission found as a fact that the fair value of the power company’s investment as a rate base, upon which it was entitled to earn a reasonable return, as of September 30, 1918, was approximately $9,860,000. It further found that
For the reasons stated we affirm the order of the Commission. Order Affirmed.