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Trico Elec. Co-op., Inc. v. Corporation Commission of Ariz.

Supreme Court of Arizona

May 20, 1959

TRICO ELECTRIC COOPERATIVE, INC., a corporation, Appellant,
v.
CORPORATION COMMISSION OF The State of ARIZONA and William T. Brooks, George Senner and E. T. 'Eddie' Williams, Members of the Corporation, Commission of The State of Arizona; Tucson Gas, Electric Light and Power Company, a corporation; and Citizens Utilities Company, a corporation, Appellees.

Page 1047

Rehearing Denied July 7, 1959.

Page 1048

[86 Ariz. 29] Lewis, Roca, Scoville, Beauchamp & Linton, and John P. Frank, Phoenix, and Hall, Catlin & Jones, Tucson, for appellant and cross-appellee.

Robert Morrison, Atty. Gen., Jack G. Marks, Special Asst. Atty. Gen., for Corporation Commission of the State of Arizona.

Evans, Kitchel & Jenckes, and Earl H. Carroll, Phoenix, for Citizens Utility Co.

L. V. Robertson, Tucson, Jennings, Strouss, Salmon & Trask and Clarence [86 Ariz. 30] J. Duncan, Phoenix, for Tucson Gas, Electric Light and Power Co.

Snell & Wilmer, Perry M. Ling, and Nicholas H. Powell, Phoenix, for Arizona Public Service Co., amicus curiae.

PHELPS, Chief Justice.

This is an appeal by Trico Electric Cooperative, Inc., a corporation, from a judgment of the superior court and cross-appeals by the Corporation Commission and its members and by Tucson Gas, Electric Light and Power Company, a corporation, and Citizens Utilities Company, a corporation.

For the purpose of brevity and clarity the parties before the court will be hereinafter designated as Trico, Tucson Gas, the Commission, and Citizens as they appear in the respective briefs before us. Trico is an electric cooperative corporation organized under the laws of Arizona in October 1945, and authorized to engage in business as such in the State of Arizona. Its declared purpose was to generate, purchase and acquire electricity and sell and distribute the same to its members. Under its charter it operates a nonstock corporation on a nonprofit basis. Membership therein must be evidenced by a certificate of membership therein as fixed by its bylaws. Membership fees were fixed in its charter at five dollars which may be increased by its bylaws. The Arizona Corporation

Page 1049

Commission is a public body created and existing under and by authority of Article 15 of the Arizona Constitution, A.R.S. with powers set forth therein implemented by the provisions of Title 40 A.R.S. Tucson Gas, Electric Light and Power Company and Citizens Utilities Company are private corporations engaged in the distribution and sale of gas and electricity as public utilities, authorized to exercise many and sundry powers under their charters deemed necessary to efficiently serve as public utilities in Arizona.

This cause of action arose out of a complaint filed with the Commission by a group of members of Trico, representing others in that area similarly situated, and asked, among other things, that the Commission take jurisdiction of Trico as a public service corporation and control its rates. In answer to the complaint and an order to Trico to appear and show cause, Trico responded denying that it was a public service corporation subject to the jurisdiction of the Commission, and in the alternative incorporated in the response an application for a certificate of convenience and necessity to construct and operate an electric distribution system for the purpose of supplying electric energy to residences, farms, businesses and establishments in certain areas in Pinal, Pima and Santa Cruz Counties as described therein.

A hearing was had by the Commission on June 21, 1955, and evidence presented. [86 Ariz. 31] Tucson Gas made appearance at this hearing in opposition to the alternative application for certificate of public convenience and necessity. The hearing was continued to September 29, 1955 at which time appearances were made by both Tucson Gas and Citizens in opposition to the application of Trico for a certificate of public convenience and necessity. At the conclusion of this hearing the Commission took the matter under advisement and on February 24, 1956 it handed down its opinion and order holding that it had jurisdiction over Trico. It found that Trico was serving electricity to several hundred consumers in Pima, Pinal and Santa Cruz Counties, and that there had been and then was a need for such service to its members.

It further found that Trico operated under different economic conditions than do privately financed utilities; that Citizens had a valid certificate of convenience and necessity issued by the Commission to operate in Santa Cruz County; that three consumers in Santa Cruz County did seek service from Trico and were being served electricity by it; that Citizens was then ready, able and willing to serve said consumers; that Tucson Gas had been issued by it various certificates of convenience and necessity to operate in Pima County and portions of Pinal and Cochise Counties.

Upon the above findings the Commission assumed jurisdiction over Trico and ordered that a certificate of convenience and necessity be issued to it to operate in Pinal, Pima and Santa Cruz Counties upon its filing with the Commission all documents required by the Commission, and held that Trico is and shall be subject to the jurisdiction of the Commission.

By its order, Trico was to operate as a cooperative serving its member-consumers then being served in Pima, Pinal and Santa Cruz Counties, with a slight exception, and authorizing it to continue to expand its facilities and service in rural areas to member-consumers with the qualification that Trico was expressly prohibited from constructing electrical distribution lines that duplicate existing facilities of any other utility unless they first seek permission from such utility, and if refused it may then seek permission from the Commission. Trico was further prohibited from serving any consumer within one-half mile of lines of any other distributor of electricity whose lines were constructed prior to those of Trico without permission from the certified utility in the area. Trico under such circumstances was required to notify the certificated utility that application had been made to it for service and seek permission from it to serve within the one-half mile area. If agreement could

Page 1050

not be reached then the Commission would [86 Ariz. 32] determine the matter. Citizens was given ninety days within which to serve three consumers being served by Trico in Santa Cruz County. If it did not do so then Trico was authorized to continue its service; otherwise, it was to discontinue such service. Motions for rehearing were duly filed with the Commission by Trico and Tucson Gas which were denied.

Within the time prescribed under the provisions of A.R.S. § 40-254, Trico filed its complaint in the superior court of this state against the Commission and its members, alleging that the opinion and order of the Commission is unlawful and void, arbitrary, and in excess of its jurisdiction and power, and in contravention of the laws and Constitution of the State of Arizona; and praying that said opinion and order be set aside in certain particulars and that the Commission be declared to be without jurisdiction over Trico and, in the alternative, that it be issued a certificate of public convenience and necessity to construct and operate an electric transmission and distribution system as constructed by it and to expand in areas described as lying within certain sections, townships and ranges, all in southern townships and ranges east. The Commission duly answered said complaint.

Thereafter, on April 20, 1955, Tucson Gas duly filed a complaint in the Superior Court against the Commission and its members, alleging that at all times since the issuance of a certificate of convenience and necessity it has held itself out to the public throughout Pima County and in portions of Pinal and Cochise Counties as a public utility and has adequately served the public pursuant to the laws of Arizona, and rules and regulations of the Commission; and that Trico is a public service corporation subject to the jurisdiction of the Commission and alleged that in its opinion and order the Commission, paragraph 2(b) thereof, purports to authorize Trico to demand hearings in relation to serving electrical energy to consumers being served or previously served by Tucson Gas within its franchised area, and asserting that the Commission is without jurisdiction to authorize Trico to serve electric energy to consumers being served or previously served electric energy by Tucson Gas within its franchised area, and praying that the court enter an order adjudging that the Commission is without jurisdiction to permit or authorize Trico to serve electric energy to such consumers within its franchised area and asking for a ratification of said order in all other respects.

After the cause reached the superior court, Citizens on April 5, 1957 sought permission to and did intervene in said cause as a party defendant and adopted the answer of the Commission to Trico's complaint as its answer. The record is voluminous and has many ramifications.

[86 Ariz. 33] The trial court, after a long and tedious trial, took the matter under advisement, and after due consideration made findings of fact and conclusions of law and rendered judgment therein, affirming the order and opinion of the Commission in all of its particulars, except that it modified the portion thereof forbidding Trico from serving electicity to anyone within one-half mile of lines of any other distributor of electricity which were constructed prior to those of Trico. The court deleted the portion relating thereto to the effect that Trico must notify such other distributor that application had been made by a prospective consumer for electric service and obtain such distributor's consent to render the service ...


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