Citizens Utilities Co. v. Illinois Commerce Commission

276 N.E.2d 330, 50 Ill. 2d 35, 1971 Ill. LEXIS 247
Illinois Supreme Court·Decided November 30, 1971·No. 43813·Published·Cited by 25 cases

Opinion

MR. JUSTICE WARD

delivered the opinion of the court:

Eleven private utility companies have appealed from a judgment of the circuit court of Cook County which affirmed an order of the Illinois Commerce Commission denying their petition for relief from allegedly illegal rates for electricity supplied by the Commonwealth Edison Company. The companies are: Citizens Utilities Company of Illinois, Arbury Utilities Co., Inc., Illinois Municipal Water Company, Preston Utilities Corporation, Warrenville Water Company, Country Club Hills Utilities Company, Woodridge Sewer and Water Co., Buffalo Utility Company, Du Page Utility Company, Ferndale Heights Utilities Co. and Grandwood Park Utility Corp.

The appellants, which we will call “the Companies,” purchase electricity from the Commonwealth Edison Company, an appellee and, hereafter, “Edison,” for use in operating water supply and sewage pumping plants. Various municipalities in the same service area as the Companies also purchase electricity from Edison to operate municipal water supply and sewage pumping plants and to operate street lighting systems. The charges for electricity furnished the municipalities are determined under Edison’s Rate 24, a rate available only to municipalities which have granted franchises to Edison. The Companies are charged for electricity provided under Edison’s Rate 6, which is a higher rate than Rate 24. The record shows that electric utilities in Illinois other than Edison have made similar municipal service classifications.

Claiming a right to purchase electricity under the more favorable terms of Rate 24, the Companies petitioned the Illinois Commerce Commission, the other appellee, to direct Edison to provide them electricity under that rate, rather than under Rate 6. They petitioned, too, for damages from Edison under section 72 of the Public Utilities Act (Ill.Rev.Stat. 1969 Ch. 111-2/3, par. 76) calculated on the difference between the amounts they paid Edison under Rate 6 and the lesser amount they would have paid under Rate 24 for the year prior to the filing of the complaint. This amount was alleged to be approximately $77,000, based on an average charge per kilowatt hour of 2.13 cents paid under Rate 6 and a charge of 1.27 cents which would have been available under Rate 24.

After hearings, the Commission on March 11, 1970, denied the petition and later denied the Companies’ petition for rehearing. On August 31, 1970, the circuit court of Cook County affirmed the order of the Commission.

The Companies contended that the sales to them under Rate 6 violated sections 38 and 32 of the Public Utilities Act. (Ill.Rev.Stat. 1969 ch. 111-2/3, pars. 32, 38.) Section 38 prohibits a public utility from establishing or maintaining “any unreasonable difference as to rates or other charges *** either as between localities or as between classes of service.” Section 32 of the act permits “[a] ny public utility *** as a basis for the determination of the charges made by it [to] classify its service according to the amount used, the time when used, the purpose for which used, and other relevant factors.”

It was stipulated before the Commission that under section 32 there was no significant difference between the amount of electricity used by the Companies and the municipalities, the time when the electricity was used, the purpose for which it was used or the cost to Edison of providing the service. The Commission did find that there were “other relevant factors” within the meaning of section 32, which justified Edison in placing the service to municipalities in a separate classification and under Rate 24.

The Companies basically make three contentions on appeal. First, they contend that a public utility may not sell electricity to one class of customers on more favorable rate and payment terms than to a similarly situated class of customers on the basis of “other relevant factors” which bear no relation to the type of electric service provided. Second, even if a separate rate classification can be supported by factors unrelated to the type of service, the franchising power of municipalities over public utilities, the existence of competition for municipal business, or the status of municipalities as public bodies cannot be considered to be “relevant factors,” as Edison contended. Third, the Companies argue that the findings of the Commission are against the manifest weight of the evidence. The Companies make no contention that Rate 24 is in itself an unreasonable classification, nor that the difference in charges between the two classes of service is unreasonable.

To rebut the charges of violations of section 32 and 38 and to defend its sales to the Companies under Rate 6, Edison contended before the Commission, as it does here, that the unique position occupied by municipalities in relation to public utilities justifies the lower rate afforded them. In support of this Edison points out that municipalities have the authority to grant franchises authorizing the use of streets and other municipal property in the course of providing electrical service. These franchises are granted for limited periods, and must be periodically renegotiated. Since suitable franchise ordinances are essential to Edison’s operations, the more favorable terms given municipalities are justifiable as proper inducements to grant franchises suitable to Edison.

Another argument, which in Edison’s view entitles it to place municipalities in a more favorable rate classification, is the existence of competition for municipal business among suppliers of power. Edison contended, and the Commission found, that suppliers of other forms of power, e.g., natural gas, actively seek to supply municipalities with the power necessary to operate water supply pumping plants and sewage pumping plants. The record shows that by contrast the competition among suppliers of power to meet the needs of the Companies is practically nonexistent. Edison argues, too, that municipalities have authority to operate their own power plants and the extension of favorable terms to them encourages their continued use of Edison’s facilities.

The range of review of orders of the Commission by courts is a limited one. This restricted authority to review was described in Produce Terminal Corp. v. Commerce Com., 414 Ill. 582, 589: “In reviewing an order of the Commission, the courts are limited to a consideration of the questions of whether the Commission acted within the scope of its authority, whether it made [proper] findings *** and whether constitutional rights have been infringed by the decision.”

Too, section 68 of the Public Utilities Act (Ill.Rev. Stat. 1969. ch. 111-2/3, par. 72) provides: “Rules, regulations, orders or decisions of the Commission shall be held to be prima facie reasonable, and the burden of proof upon all issues raised by the appeal shall be upon the person or corporation appealing from such rules, regulations, orders or decisions.”

Against these standards for review, we will consider whether there was an unreasonable discrimination under section 38 when the two classes of customers using electricity without significant differences as to amount, time and purpose of use were charged different rates on the basis of “other relevant factors” unrelated to the type of service provided.

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Citizens Utilities Co. v. Illinois Commerce Commission, 276 N.E.2d 330, 50 Ill. 2d 35, 1971 Ill. LEXIS 247 (Ill. 1971).

276 N.E.2d 330 (Citizens Utilities Co. v. Illinois Commerce Commission) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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