Orr Felt Co. v. City of Piqua

443 N.E.2d 521, 2 Ohio St. 3d 166

• Court: Ohio Supreme Court
• Decided: January 5, 1983
• Docket: No. 81-1824
• Status: Published

Opinions

Per Curiam.

The issue presented in this case is whether appellant class is entitled to a refund by appellee of alleged overcharges in electric rates. Appellant’s argument is essentially twofold. First, it asserts that appellee set base rates which were too low to recover the costs of operation of the municipal power facility, ostensibly to impress local voters with the economy of their administration, and then billed for fuel adjustment charges which were excessive in order to recover costs. The fuel adjustment figures were, appellant argues, arbitrarily selected by appellee without relation to the ordinance then in force and were excessive. Second, appellant contends that appellee improperly passed through the fuel adjustment factor of Ordinance No. 21-75 costs associated with the purchase of power from Dayton Power & Light Co., which also resulted in excessive fuel adjustment factor charges. For the following reasons, we reject the arguments of appellant and affirm the judgment of the court of appeals.

Appellee is a chartered municipal corporation of the state of Ohio. Pursuant to the self-executing provisions of Section 4, Article XVIII of the Ohio Constitution, municipal corporations are authorized to establish, maintain and operate municipal lighting, power, and heating plants, for the generation, transmission and supplying of electricity to the municipal corporation and its inhabitants. “[T]he General Assembly is without authority to impose restrictions or limitations upon that power.” Swank v. Shiloh (1957), 166 Ohio St. 415 [2 O.O.2d 401], paragraph one of the syllabus. See, also, State, ex rel. McCann, v. Defiance (1958), 167 Ohio St. 313 [4 O.O.2d 369], paragraph one of the syllabus; Euclid v. Camp Wise Assn. (1921), 102 Ohio St. 207, paragraph one of the syllabus; and Bd. of Edn. of Columbus v. Columbus (1928), 118 Ohio St. 295, paragraph three of the syllabus.

When a municipal corporation chooses to operate a public utility pursuant to a constitutional grant of authority, it functions in a proprietary capacity and is entitled to a “reasonable profit.” Niles v. Union Ice Corp. (1938), 133 Ohio St. 169, 181 [10 O.O. 239]. The only restraint imposed by law upon a municipality’s proprietary undertaking of providing electrical energy is “that the rates charged be reasonable and that there be no unjust discrimination among the customers served, taking into account their situation and classification.” State, ex rel. Mt. Sinai Hospital, v. Hickey (1940), 137 Ohio St. 474, 477 [19 O.O. 159].

Given these well-established principles, we decline to discover, as did the trial court, a common law of municipal utility rate making. In particular, we find no Ohio authority to support the proposition that a municipality must conform to a symmetry between the components of base rates and adjustment clauses. Rate making is, as the court of appeals pointed out in its well-reasoned opinion, an inexact science. The critical focus in an examination of the reasonableness of a rate ordinance is the totality of the ordinance, not isolated factors such as a fuel adjustment clause, which clause a municipality is not required to adopt.

In the instant case, the record does not reveal sufficient evidence to indicate that appellant class has carried its burden of demonstrating that the aggregate revenues collected under the base rates and adjustment clauses exceeded that permitted by both the base rate and the fuel ordinances. This is especially so with regard to Ordinance No. 21-75, where the record revealed that appellee’s- energy purchases from Dayton Power & Light Co. cost $877,000 less than the cost appellee would have had to incur to have generated the energy itself. Accordingly, the judgment of the court of appeals is affirmed.

Judgment affirmed.

W. Brown, Sweeney, Locher, Holmes, C. Brown and Krupansky, JJ., concur. Celebrezze, C.J., dissents.