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Coles-moultrie Elec. v. Ill. Comm. Com.

OPINION FILED MARCH 29, 1985.

COLES-MOULTRIE ELECTRIC COOPERATIVE, PLAINTIFF-APPELLANT,

v.

THE ILLINOIS COMMERCE COMMISSION ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Sangamon County; the Hon. Jerry S. Rhodes, Judge, presiding.

JUSTICE TRAPP DELIVERED THE OPINION OF THE COURT:

The plaintiff, Coles-Moultrie Cooperative (CM), appeals a circuit court order affirming a decision of the Illinois Commerce Commission (Commission) that CM and defendant Central Illinois Public Service Company (CIPS) have an equal right to provide electric service to customers residing within a particular area.

The area as to which the parties dispute the right to furnish electricity is located immediately north of Illinois Route 133 and east of Interstate Highway 57, and is known as "Industrial Estates." The first electrical service on this tract of land apparently commenced in September 1968, when CIPS began providing service to a concrete mixing plant located there, which provided concrete for the construction of Interstate 57. The next electrical service in the area began on March 3, 1969, when CM began providing power for use in the construction of a building for G&S Services (G&S). Prior to CM's commencing this service, G&S applied to CIPS for electrical service, but was referred to CM.

On March 17, 1969, the city of Arcola annexed the Industrial Estates area. Prior to annexation, CIPS had apparently ceased providing service to the concrete mixing plant. Shortly after annexation, a dispute developed between CM and CIPS as to which of them was entitled to permanently serve the G&S premises. In 1970, the Commission resolved this dispute in favor of CM, holding that it has the exclusive right to serve G&S.

Between April 1970 and March 1983, CIPS connected eight commercial electricity customers in the Industrial Estates area, and CM connected one additional commercial customer as well as some mobile homes in that area.

The events which form the basis for the present dispute began in 1980 when the Sukup Manufacturing Company began construction of a building in Industrial Estates. During construction of the Sukup building, CM provided temporary service to the premises by means of a circuit from the G&S building. On April 30, 1981, pursuant to section 7 of the Electric Supplier Act (ESA) (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 407), CM provided CIPS with a notice of its intent to construct a permanent distribution line to serve Sukup. On the same day, CIPS wrote Sukup, describing the method by which it proposed to serve its premises. On the following day, a Sukup representative submitted a written request for electric service to CIPS, and CIPS commenced installation of facilities to provide that service on the same day.

On May 5, 1981, CM obtained an ex parte injunction prohibiting CIPS from serving Sukup, but this injunction was dissolved seven days later. On May 15, 1981, CIPS completed installation of facilities to serve Sukup, and has provided electricity to the Sukup premises since that date.

CIPS is the holder of a 75-year franchise, granted October 1, 1945, entitling it to "construct, maintain and operate within [Arcola's] corporate limits as the same exists or may hereafter be extended * * * an electric light, heat and power system * * *." Also, CM is entitled to provide electricity to limited areas of Arcola, pursuant to a 25-year franchise granted June 3, 1969. The areas of Arcola to which CM may serve are described as follows:

"[A]ll areas, tracts and premises heretofore annexed to the City of Arcola, in which area, tract or premise there are existing lines of Coles-Moultrie Electric Cooperative on the effective date of this ordinance. The rights granted herein shall furthermore extend to all areas, tracts and premises hereafter annexed to said City in which: (1) Coles-Moultrie Electric Cooperative has an existing line or lines at the time of such annexation; or, (b) Coles-Moultrie Electric Cooperative would be entitled to serve by virtue of the provisions of the Electric Supplier Act, as enacted by the 74th General Assembly of the State of Illinois, and approved on July 2, 1965, if such territory had not been annexed; or, (c) no electric service is being rendered by any supplier of electric energy at the time of such annexation."

On May 20, 1981, CIPS filed a complaint with the Commission, requesting: (1) that CM be ordered to cease and desist from representing to customers other than G&S that it has the exclusive right to extend its lines to provide electricity to customers within the corporate limits of any incorporated municipality in which CIPS had a valid franchise as of the ESA's effective date; and (2) that the Commission declare the parties' rights pursuant to the ESA, the Commission's order finding that CM is exclusively entitled to serve G&S and the franchises granted by Arcola, and in connection therewith find that (a) with respect to the Industrial Estates area, either CM or CIPS may provide electricity to any customer in the area, provided that the supplier has permission from the city to provide such service, (b) that for the duration of its franchise, CIPS "has the right to extend its lines for providing electric service within the territorial limits of the municipality of Arcola as they may be extended from time to time" without further necessity for Commission approval, and (c) "that for purposes of this Complaint being a timely response to" CM's notice of intent to serve Sukup, the Commission find that it lacks jurisdiction under the ESA to determine which of the parties is exclusively entitled to serve the Sukup premises. In its answer, filed June 8, 1981, CM denied the salient allegations of CIPS' complaint and requested a finding that CM, and not CIPS, is entitled to serve the Sukup premises.

In a decision filed March 22, 1983, the Commission held that both CM and CIPS are entitled to serve customers (other than those on the G&S premises) located in the Industrial Estates area; that CM had ample foundation for sending CIPS a notice of intent to serve Sukup (thus rejecting CIPS' jurisdictional argument); and that CM's conduct in informing Sukup that it had an alleged exclusive right to serve its premises did not warrant corrective action.

On April 22, 1983, CIPS filed a complaint in administrative review, requesting reversal of the Commission's decision on the basis that the findings that CM had ample foundation for sending CIPS its notice of intent to serve Sukup and that CM's conduct did not warrant corrective action were against the manifest weight of the evidence, and on the basis that the Commission's order failed to make any findings of facts or conclusions of law as to the propriety of CM's obtaining a preliminary injunction in an ex parte proceeding. (The complaint which CIPS filed with the Commission requested no specific relief as to the latter matter.) On April 28, 1983, CM filed a motion to dismiss CIPS' complaint, and also filed a countercomplaint requesting reversal of the Commission's decision on grounds, inter alia, that CM is exclusively entitled to serve Sukup, that the Commission's allowing CIPS to serve Sukup resulted in wasteful duplication of CM's existing lines, and that the Commission's decision, contrary to the intent of the ESA, gives electricity customers in the Industrial Estates the right to change suppliers whenever they wish.

On December 5, 1983, the circuit court dismissed with prejudice CIPS' complaint for administrative review and realigned the parties in that CM became the plaintiff and CIPS the defendant in administrative review. The circuit court affirmed the Commission's decision on May 8, 1984.

Reduced to their most elemental terms, the positions of the parties to this appeal are relatively straightforward — CIPS and the Commission contend that both CIPS and CM are entitled to serve the Industrial Estates area (with the exception of the G&S premises) and that electricity customers (other than those on the G&S premises) located in that area may decide for themselves by which of the two suppliers they wish to be served. CM, on the other hand, asserts that by virtue of its serving G&S when the Industrial Estates area was annexed to Arcola, it is exclusively entitled to serve all electricity customers residing in the area.

• 1 A brief overview of the regulatory scheme applicable to electricity suppliers is essential to an understanding of the issues involved in the case at bar. Illinois municipalities have long had discretion to grant (or to refuse to grant) franchises to electricity suppliers. This power derives from the right of municipalities to control and regulate the use of their streets. (City of Geneseo v. Illinois Northern Utilities Co. (1941), 378 Ill. 506, 39 N.E.2d 26, cert. denied sub nom. Illinois Northern Utilities Co. v. City of Geneseo (1942), 316 U.S. 670, 86 L.Ed. 1746, 62 S.Ct. 1046.) The City of Geneseo decision has been interpreted as establishing that the power of municipalities to regulate the use of their ...


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