TOLEDO EDISON COMPANY, APPELLANT, v. CITY OF BRYAN ET AL., APPELLEES.
No. 99-1280
SUPREME COURT OF OHIO
Submitted June 7, 2000—Decided November 15, 2000.
90 Ohio St.3d 288 | 2000-Ohio-169
APPEAL from the Court of Appeals for Williams County, No. WM-98-017.
{¶ 1} This appeal addresses whether a municipality has the right to purchase electricity solely for the purpose of reselling the electricity to an entity outside the municipality’s geographic boundaries. Generally public utilities that produce electricity have exclusive authority to provide electrical service to persons outside municiрalities. However, under
{¶ 2} Because the trial court dismissed the appellant, Toledo Edison’s, сomplaint for failure to state a claim, the facts stated here are as alleged in the complaint. Toledo Edison Company is a public utility that generates, transmits, distributes, and sells electric power to customers in northwest Ohio, including Williams County, pursuant to the Certified Territories Act (“CTA”),
{¶ 3} The municipalities, through AMP-Ohio, constructed an electric power transmission line in Williams County that runs from one of Bryan’s municipal electrical substations directly to Chase Brass. In July 1995, all the municipalities adopted ordinances authorizing them to sell electricity to Chase Brass viа the Chase Brass transmission line. On October 17, 1995, Chase Brass terminated its thirty-three-year history of purchasing electricity from Toledo Edison and began purchasing electricity from the municipalities. The municipalities had to purchase electricity in order to fulfill their obligation to provide Chase Brass with electricity. Toledo Edison believed that the municipalities’ purchase and sale of electricity to Chase Brass was not within the municipalities’ authority. Consequently, counsel for Toledo Edison wrote letters to the law director or village solicitor of each of the municipalities, demanding that they seek injunctions to restrain their municipalities from expеnding public money for the purpose of promoting the electrical service agreements or taking any other action to promote the sale of electricity to Chase Brass. These officers failed to take any legal action against the municipalities.
{¶ 4} On February 23, 1996, Toledo Edison filed a complaint for injunсtive and declaratory relief in the Williams County Court of Common Pleas, seeking a declaration that the municipalities’ sale of electricity to Chase Brass was illegal and unconstitutional. Specifically, Toledo Edison alleged that the municipalities were purchasing electricity to sell to Chase Brass in violation of
{¶ 5} Toledo Edison also alleged that the municipalities’ sale of electricity to Chase Brass violated
{¶ 6} The municipalities filed a motion to dismiss that alleged that Toledo Edison lacked standing to challenge the municipalities’ sale of electricity to Chase Brass. On August 18, 1998, the trial court issued a judgment entry granting the motion to dismiss for lack of standing. The court also decided that Toledo Edison’s claims were without merit even assuming that Toledo Edison had standing. Toledo Edison appealed.
{¶ 7} The Court of Appeals for Williams County affirmed in part and reversed in part the trial court’s judgment. The appellate court reversed the trial court’s holding that Toledo Edison lаcked standing to file suit against the municipalities, finding that Toledo Edison had standing under
{¶ 8} This cause is now before the court pursuant to the аllowance of a discretionary appeal.
Fuller & Henry, Ltd., Craig J. Van Horsten and Mary Ann Whipple; and Michael R. Beiting, for appellant.
Kent L. North, Bryan City Attorney; Chester, Willcox & Saxbe, L.P.A., and John W. Bentine; Duncan & Allen and John P. Coyle, for appellees.
Jones, Day, Reavis & Pogue and Paul T. Ruxin, urging reversal for amici curiae Allegheny Power, Cincinnati Gas & Electric Company, Dayton Power & Light Company, Ohio Edison Company, and the Cleveland Electric Illuminating Company.
Gary A. Jack, urging reversal for amicus curiae Allegheny Power.
James B. Gainer, urging reversal for amicus curiae Cincinnati Gas & Electric Company.
Arthur G. Meyer, urging reversal for amicus curiae Dayton Power & Light Company.
Chester, Willcox & Saxbe, L.L.P., J. Craig Wright and Jeffrey L. Small, urging affirmance for amicus curiae AMP-Ohio.
Zoll & Kranz, L.L.C., and David W. Zoll; Vorys, Sater, Seymour & Pease, L.L.P., Sheldon A. Taft and Jason J. Kelroy, urging affirmance for amicus curiae Chase Brass and Copper Company.
McNees, Wallace & Nurick and Samuel C. Randazzo, urging affirmance for amicus curiae Industrial Energy Users-Ohio.
Lawrence J. Seltzer, Jr., urging affirmance for amicus curiae Ohio Council of Retail Merchants.
John E. Gotherman, urging affirmance for amicus curiae Ohio Municipal League.
David C. Reinbolt, urging affirmance for amicus curiae Ohio Partners for Affordable Energy.
LUNDBERG STRATTON, J.
{¶ 9} We are asked to determine whether a municipality has constitutional authority to purchase electricity solely for direct resale to an entity that is not an inhabitant of the municipality and nоt within the municipality’s limits. For the following reasons we find that the answer is no.
{¶ 10} Many of Ohio’s inhabitants are provided electrical service by public utilities. The Ohio Public Utilities Commission has divided Ohio into territories pursuant to the Certified Territories Act (“CTA”). See
{¶ 11} The Ohio Constitution addresses a municipality’s authority to produce and acquire a public utility product or service in
“Any municipality may acquire, construct, own, lease and operate within or without its corporate limits, any public utility the product or service of which is or is to be supplied to the municipality or its inhabitants, and may contract with others for any such product or service.” (Emphasis added.)
{¶ 12}
{¶ 13}
“Any municipality, owning or operating a public utility for the purpose of supplying the service or product thereof to the municipality or its inhabitants, may also sell and deliver to others any transportation service of such utility and the surplus product of any other utility in an аmount not exceeding in either case fifty per cent of the total service or product supplied by such utility within the municipality * * *.” (Emphasis added.)
{¶ 14}
{¶ 15} Where provisiоns of the Constitution address the same subject matter, they must be read in pari materia and harmonized if possible. State ex rel. Mitchell v. Council of Village of Milan (1938), 133 Ohio St. 499, 11 O.O. 187, 14 N.E.2d 772; Isaac v. Intercoast Sales Corp. (1937), 132 Ohio St. 289, 8 O.O. 49, 7 N.E.2d 216.
{¶ 16}
{¶ 17} This holding comports with this court’s determination that the framers “intended to * * * prevent * * * municipalities from entering into the genеral public-utility business outside their boundaries in competition with private enterprise.” Hance, 169 Ohio St. at 461, 8 O.O.2d at 473, 159 N.E.2d at 744. Public utilities that provide electricity, such as Toledo Edison, are subject to substantial regulatory controls by the Public Utilities Commission of Ohio, including regulation of rates. See, e.g.,
{¶ 18} Thus, we hold that
{¶ 19} Ultimately, determination of this issue requires fact-finding by the trial court as to whether the electricity purchased by the municipalities herein was solely for the purpose of resale to an entity outside the geographic boundaries of the municipalities. Thus, we reverse the judgment of the court of appeals and remand this cause to the trial court for further proceedings on Toledo Edison’s claims.
Judgment reversed and cause remanded.
F.E. SWEENEY, Aсting C.J., GWIN, O’NEILL and YOUNG, JJ., concur.
PFEIFER, J., concurs in judgment only.
HADLEY, J., dissents.
W. SCOTT GWIN, J., of the Fifth Appellate District, sitting for MOYER, C.J.
WILLIAM M. O’NEILL, J., of the Eleventh Appellate District, sitting for RESNICK, J.
WILLIAM W. YOUNG, J., of the Twelfth Appellate District, sitting for COOK, J.
HADLEY, J., dissenting.
{¶ 20} I respectfully dissent.
{¶ 21} I agree with the majority’s statement that “[t]he Ohio Constitution provides that municipalities may acquire or produce utility services or products for the municipality and its inhabitаnts and sell surplus product or service.” I disagree with the majority when it states that a municipality is limited in this endeavor by any means other than the fifty-percent limitation set forth in
{¶ 22} Under the
{¶ 23} In Travelers Ins. Co. v. Wadsworth (1924), 109 Ohio St. 440, 142 N.E. 900, at paragraph two of the syllabus, this court held that “in the absence of specific prohibition, the city acting in a proprietary capacity may exercise its powеrs as would an individual or private corporation.”
{¶ 24} In State ex rel. Indian Hill Acres, Inc. v. Kellogg (1948), 149 Ohio St. 461, 37 O.O. 137, 79 N.E.2d 319, the court held that a municipality has full power to determine the policy to be followed in regard to the sale and delivery of a surplus product of a municipally owned utility to others and that it may sell and
{¶ 25} Specifically referring to electrical utilities, in State ex rel. McCann v. Defiance (1958), 167 Ohio St. 313, 4 O.O.2d 369, 148 N.E.2d 221, paragraph one of the syllabus, the court ruled, “The General Assembly has no power to * * * [limit] the * * * authority of a municipality * * * to sell and deliver to others the portion of the surplus product of such utility that it is authorized by Sections 4 and 6 of Article XVIII of the Constitution to sell and dеliver to such others.”
{¶ 26} The majority cities as its authority to limit the sale by municipal utilities the case of State ex rel. Wilson v. Hance (1959), 169 Ohio St. 457, 461, 8 O.O.2d 471, 473, 159 N.E.2d 741, 744. A close examination of that case reveals that the court found that the Constitution did in fact authorize municipalities to acquire public utilities and contract with others for their products and services, but pointed out that the disposition of surplus products or services of the utilities was limited by
{¶ 27} In conjunction with the constitutional power regarding utilities, the General Assembly has enacted
{¶ 28} Thus a municipality has full and complete рower to enter into whatever arrangement it deems necessary for the ownership, operation, and control
{¶ 29} The majority concludes without authority that since municipalities are not regulated by the Public Utility Commission, “[t]o allow municipalities the unfettered authority to purchase and then resell electricity to entities outside their boundaries could create unfair competition for the heavily regulated public utilities.”
{¶ 30} Examining the limitation provision, I find that “Any municipality, owning or operating a public utility for the purpose of supplying the service or product thereof to the municipality or its inhabitants, may also sell and deliver to others any transportation service of such utility and the surplus product of any other utility in an amount not exceeding in either case fifty per cent of the total service or product supplied by such utility within the municipality, provided that such fifty per cent limitation shall not apply tо the sale of water or sewage services.” {¶ 31} The debates and proceedings of the constitutional convention clearly indicate that the framers considered whether municipalities would be competitive with private corporations for utilities and concluded that the fifty-percent provision would be the only necessary limitation and that the implementation of that limitation should be left to the courts. The court of appeals made the correct assessment of this matter and remanded it to the trial court for determination regarding fifty-percent limitation. I believe that the decision of the court of appeals should be affirmed.