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CITY OF NEW BERN, a Municipal Corporation
v.
CARTERET-CRAVEN ELECTRIC MEMBERSHIP CORPORATION
On discretionary review pursuant to N.C.G.S. § 7A-31 of
a unanimous decision of the Court of Appeals, 145 N.C. App. 140,
548 S.E.2d 845 (2001), affirming an order for summary judgment
entered by Ragan, J., on 8 March 2000 in Superior Court, Craven
County. Heard in the Supreme Court 12 February 2002.
Poyner & Spruill LLP, by Nancy B. Essex and Gregory S.
Camp; and J. Phil Carlton, for plaintiff-appellee.
Taylor & Taylor, by Nelson W. Taylor, III, for
defendant-appellant.
Poyner & Spruill LLP, by Richard J. Rose, on behalf of
ElectriCities of North Carolina, Inc., amicus curiae.
North Carolina Electric Membership Corporation, by
Susan Barry, Associate General Counsel, and Robert B.
Schwentker, General Counsel, amicus curiae.
Adams Kleemeier Hagan Hannah & Fouts, by R. Harper
Heckman and Gregory T. Higgins, on behalf of Duke
Energy Corporation, amicus curiae.
LAKE, Chief Justice.
The question presented for review in this case is
whether a new building constructed by an electric customer
remained part of an existing, adjoining premises requiring
continued electric service from its original supplier, or whether
such building became a premises initially requiring electric
service under the terms of the Electric Territorial Assignment
Act of 1965 (the Electric Act), and thus was eligible toreceive electric service from a new supplier, Carteret-Craven
Electric Membership Corporation. See N.C.G.S. § 160A-332(a)(3)
(2001). The Court of Appeals affirmed the trial court, holding
that the new building was part of the existing premises and
that the existing service provider, the City of New Bern,
therefore retained its exclusive right to provide electric
service to the electric customer. City of New Bern v. Carteret-
Craven Elec. Membership Corp., 145 N.C. App. 140, 145-46, 548
S.E.2d 845, 848-49 (2001). For the reasons set forth below, we
conclude otherwise and reverse the decision of the Court of
Appeals.
This dispute revolves around the question of which
electric service provider maintains the right to provide electric
service to the Havelock Animal Hospital in Havelock, North
Carolina. Havelock is a municipal corporation located in Craven
County, North Carolina, which does not own or operate its own
municipal electric system. Plaintiff City of New Bern is a
municipal corporation in Craven County that owns and operates a
municipal electric distribution system. See N.C.G.S. § 160A-312
(2001). Defendant Carteret-Craven Electric Membership
Corporation (CCEMC) is an electric membership cooperative
organized pursuant to chapter 117, article 2 of the North
Carolina General Statutes, titled Electric Membership
Corporations, and authorized under N.C.G.S. § 117-18 to contract
for the sale of electricity. Both plaintiff and defendant serve
customers in Havelock, which is located approximately sixteen
miles from New Bern. In the late 1950s, plaintiff began providing electric
service to a veterinary clinic located in Havelock at 415 Miller
Boulevard and owned at that time by Dr. Rodman Lancaster, D.V.M.
Sometime during the 1970s, Dr. William P. McClees, Jr., D.V.M.,
operated a veterinary clinic at this location and first leased
and later bought the building in 1978. Thereafter, Dr. McClees
formed a corporation, the Havelock Animal Hospital, with Dr.
Larry S. Paul, Jr., D.V.M., to operate the veterinary practice,
and a partnership, the Havelock Animal Clinic, to own the real
estate used by the hospital.
In 1986, the partnership bought from Vance and Ruth
Harrington property located adjacent to the existing hospital.
In October 1995, the two veterinarians began construction of a
new hospital building located entirely on the land purchased from
the Harringtons. Workers completed construction of this building
in the autumn of 1996. In order to avoid the expenses of
printing new stationery and of changing their advertisements, the
clinic received permission from the post office to use the old
address, 415 Miller Boulevard, for the new building even though
it is actually located at a different, adjoining location, at 413
Miller Boulevard.
Plaintiff City of New Bern provided electric service to
the old building. After construction began on the new building,
Dr. Paul contacted defendant CCEMC and asked that it provide
service to the new building. In March 1996, the hospital filed a
membership application with CCEMC, and CCEMC began supplying
electric service to the new building. At this time, only some x-ray equipment was located in the new building. During the
construction of the new building, the veterinarians continued to
work out of their old building. In August 1996, the doctors
moved all operations except the kennel into the new building.
The doctors moved the kennel in September 1996. Plaintiff
discontinued electric service to the old building on 24 September
1996, at the request of the doctors. In February 1997, the
doctors demolished the older building. From March until
September 1996, the two buildings were separately billed and
metered, and the charges for electric power were calculated
independently for each of the buildings.
At the time construction of the new clinic began in
October 1995, both plaintiff and defendant had existing electric
lines located so that the new building was entirely within three
hundred feet of each party's lines. The municipality of Havelock
has never issued a franchise to any electric company or supplier.
Both parties agree that each is a secondary supplier for
Havelock, as such term is defined under the Electric Act.
Secondary supplier is there defined as a person, firm, or
corporation that furnishes electricity at retail to one or more
consumers other than itself within the limits of a city but is
not a primary supplier. N.C.G.S. § 160A-331(5) (2001).
On 20 January 1999, New Bern brought this action
against CCEMC, alleging that defendant had violated plaintiff's
exclusive statutory right to provide electric service to the
hospital. Plaintiff requested a permanent injunction and sought
damages. On 18 February 1999, defendant filed its answer to thecomplaint denying that plaintiff had an exclusive right to serve
the hospital. On 21 December 1999, plaintiff filed a motion for
summary judgment. On 8 March 2000, the trial court entered an
order granting partial summary judgment for plaintiff. In its
order, the trial court enjoined defendant from providing electric
service to the clinic and ordered it to disconnect its service.
The trial court also held that plaintiff should begin service to
the clinic within fourteen days from entry of the order. The
trial court ordered that plaintiff recover damages from defendant
in an amount to be determined at a subsequent trial on the issue.
Defendant filed its notice of appeal on 16 March 2000.
On 9 May 2000, the trial court entered an order suspending
execution and enforcement of the order granting partial summary
judgment until a final decision of this matter on appeal, and
defendant posted a bond in the amount of $3,000 for the payment
of such costs and damages as might be incurred or suffered by
plaintiff if it should be found to be wrongfully injured by that
order. The Court of Appeals affirmed the trial court's decision,
and this Court subsequently granted defendant's petition for
discretionary review.
Thus, the fact-specific question before this Court is
whether plaintiff New Bern possesses the exclusive statutory
right to provide electric service to the veterinary hospital now
operating in its new building. Plaintiff contends that the Court
of Appeals correctly determined that both the old and the new
hospital buildings constitute the same premises for purposes of
N.C.G.S. §§ 160A-331 and 160A-332, and therefore plaintiff hasthe exclusive right to provide electric service to the clinic.
Defendant counters that the new hospital building is part of a
separate premises, and thus, it may provide electric service to
the clinic pursuant to the doctors' request. We agree with
defendant and hold that under the specific facts of this case,
the customer hospital, pursuant to the Electric Act, was free to
choose CCEMC to provide its electric service.
Chapter 160A, article 16, part 2 of the Electric Act,
entitled Electric Service in Urban Areas, and codified at
N.C.G.S. §§ 160A-331 through 160A-338, governs the provision of
electric service within a municipality such as Havelock. The
Electric Act was intended to resolve the disputes of electric
suppliers with limited litigation. See State ex rel. Util.
Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 258,
166 S.E.2d 663, 669 (1969). The language of the Electric Act was
carefully chosen to provide certainty with respect to service
rights and to promote orderly competition among electric
suppliers. See Domestic Elec. Serv., Inc. v. City of Rocky
Mount, 285 N.C. 135, 141, 203 S.E.2d 838, 842 (1974). The
Electric Act, however, does not address specifically all
situations--such as the one before the Court today--that may
arise between suppliers. Nevertheless, given the intent of the
Electric Act, a close examination of the applicable statutes
provides guidance for our decision in this unique situation.
Section 160A-332(a) provides, in pertinent part:
(a) The suppliers of electric service
inside the corporate limits of any city in
which a secondary supplier was furnishing
electric service on the determination date. . . shall have rights and be subject to
restrictions as follows:
(1) The secondary supplier shall have
the right to serve all premises
being served by it, or to which any
of its facilities are attached, on
the determination date.
. . . .
(3) Any premises initially requiring
electric service after the
determination date which are
located wholly within 300 feet of a
secondary supplier's lines and
wholly within 300 feet of another
secondary supplier's lines, but
wholly more than 300 feet from the
primary supplier's lines, as the
lines of all suppliers existed on
the determination date, may be
served by the secondary supplier
which the consumer chooses, and no
other supplier shall thereafter
furnish electric service to such
premises, except with the written
consent of the supplier then
serving the premises.
N.C.G.S. § 160A-332(a)(1)(3) (emphasis added).
In the instant case, Havelock is not serviced by a
primary supplier, as defined by section 160A-331(4), because
the municipality neither owns and maintains its own electric
system nor contracts with another entity to do the same.
N.C.G.S. § 160A-331(4). The parties agree, however, that they
are both secondary suppliers for Havelock, as defined by
N.C.G.S. § 160A-331(5). They also agree that the applicable
determination date is 20 April 1965. See N.C.G.S. §§ 160A-
331(1b), 160A-332(a)(3). As of that date, both plaintiff and
defendant maintained power lines within the boundaries of
Havelock, and the veterinary clinic was wholly within 300 feetof the lines of both electric companies. See N.C.G.S. § 160A-
332(a)(3).
The only disagreement by the parties, and thus the
dispositive question on appeal, is whether the new hospital
building is a premises initially requiring electric service.
N.C.G.S. § 160A-332(a)(3). The Electric Act of 1965 defines
premises as
the building, structure, or facility to which
electricity is being or is to be furnished.
Two or more buildings, structures, or
facilities that are located on one tract or
contiguous tracts of land and are used by one
electric consumer for commercial, industrial,
institutional, or governmental purposes,
shall together constitute one premises,
except that any such building, structure, or
facility shall not, together with any other
building, structure, or facility, constitute
one premises if the electric service to it
is separately metered and the charges for
such service are calculated independently of
charges for service to any other building,
structure, or facility.
N.C.G.S. § 160A-331(3) (emphasis added).
When the language of a statute is clear and
unambiguous, it must be given effect and its clear meaning may
not be evaded by an administrative body or a court under the
guise of construction. State ex rel. Util. Comm'n v. Edmisten,
291 N.C. 451, 465, 232 S.E.2d 184, 192 (1977); see also Hlasnick
v. Federated Mut. Ins. Co., 353 N.C. 240, 244, 539 S.E.2d 274,
277 (2000). Thus, a close examination of the language of section
160A-331(3) is required to determine the rights of the parties in
the instant case.
Plaintiff correctly observes that the new hospital
building is located on a tract of land contiguous to the land onwhich the old hospital stood and that it is used by the same
electric consumer for the identical commercial purpose. While
the definition of the term premises states that [t]wo or more
buildings . . . that are located on one tract or contiguous
tracts of land and are used by one electric consumer for
commercial . . . purposes, shall together constitute one
'premises,' N.C.G.S. § 160A-331(3), these facts are not
dispositive of the issue.
The definition of premises also contains a very
specific exception: any such building . . . shall not, together
with any other building, . . . constitute one 'premises' if the
electric service to it is separately metered and the charges for
such service are calculated independently of charges for service
to any other building. Id. (emphasis added).
The new hospital building throughout all relevant
periods was and today remains separately metered, and the
charges for its electrical service were calculated independently
of charges for service to the old hospital building. Id. In
March 1996, the hospital filed a membership application with
CCEMC, and defendant began electric service to the new building.
The veterinarians moved all hospital operations into the new
building by September 1996. In February 1997, the doctors
demolished the older building. Thus, from March until September
1996, the two buildings were separately metered and billed, and
the charges for electric power were calculated independently for
each. The hospital falls squarely within the exception to the
general definition provided in section 160A-331(3), and thus theold and new hospital buildings do not constitute one premises
for purposes of the Electric Act.
Having determined that the new hospital building is a
separate premises under section 160A-331(3), we next examine
N.C.G.S. § 160A-332(a)(3) to determine the rights of the customer
to choose its electric service provider. Both plaintiff and
defendant are secondary suppliers for the municipality of
Havelock, N.C.G.S. § 160A-331(5), and competition between them
for the animal hospital's business is governed by section 160A-
332(a)(3).
As of the determination date, both plaintiff and
defendant had existing electric lines located wholly within 300
feet of the original building. These lines were also in place
at the time construction of the new premises began in October
1995. Section 160A-332(a)(3) speaks in terms of the premises,
not the customer, initially requiring electric service. As the
new hospital building constituted a new premises under section
160A-331(3), it initially requir[ed] electric service in March
1996, even if the same customer had previously used electricity
for an identical commercial enterprise in the old building on the
adjoining tract. The veterinarians were therefore free to choose
from among competing secondary suppliers, pursuant to section
160A-332(a).
We note that generally the State strictly regulates
where electric service providers may do business and which
consumers they may serve. Customer choice is very limited in
this context. See, e.g., N.C.G.S. § 160A-332. Nevertheless,where the State has chosen to allow consumer choice, such as
under section 160A-332(a)(3), 'the right of a potential user of
electric power to choose between vendors of such power seeking
his patronage is not lightly to be denied.' Domestic Elec., 285
N.C. at 143, 203 S.E.2d at 843 (quoting State ex rel. Util.
Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 118,
171 S.E.2d 406, 413 (1970)); see also Blue Ridge Elec. Membership
Corp. v. Duke Power Co., 258 N.C. 278, 281, 128 S.E.2d 405, 407
(1962). Here, the veterinarians believed that defendant would
provide better electric service for their animal hospital, and
under these particular circumstances, they were free to choose
this service provider.
Plaintiff's arguments for a contrary conclusion are not
persuasive. The fact that New Bern already maintained service to
the same address does not change our analysis. As Justice Lake,
Sr. stated for this Court soon after the General Assembly passed
the Electric Act, [i]f the Legislature has enacted a statute
declaring the right of a supplier of electricity to serve,
notwithstanding the availability of the service of another
supplier closer to the customer, neither this Court nor the
Utilities Commission may forbid service by such supplier merely
because it will necessitate an uneconomic or unsightly
duplication of transmission or distribution lines. Lumbee
River, 275 N.C. at 257, 166 S.E.2d at 668. Further, under the
circumstances of this case, the question or fact of duplication
of lines is irrelevant because from the outset both parties hadlines well within three hundred feet of both buildings, with
defendant's lines being closest to the new building.
Additionally, the use of the same address, 415 Miller
Boulevard, for both premises was merely a request granted by the
post office and does not change our conclusion. Customers
already knew of the old address and location of the hospital, and
continued use of the original street number merely allowed the
veterinarians to maintain their same stationery and
advertisements. This small matter of convenience should not be
viewed as supportive of the clinic's two buildings being one
premises within the meaning of the statute. Nor is the fact
that both buildings used the same level of electric service
material to our analysis.
There also is no evidence that the veterinarians
constructed an entirely new clinic for the purpose of
facilitating a change in electric service. The doctors stated
that a new building was necessary because of the increased
demands of their practice and the inadequacy of the old building.
In fact, the construction of a new building or facility, a large
and expensive project, weighs heavily in favor of defendant's
position. Such a project would not be undertaken merely to gain
a choice in electric service. There is no evidence that
defendant took part in any improper action to induce the hospital
to switch providers. In fact, Dr. Paul contacted CCEMC regarding
service. Furthermore, the separate metering of Havelock Animal
Hospital's two buildings cannot be considered an attempt to
circumvent the Electric Act. In light of the fact that the newpremises initially required service in March 1996, and that the
charges for this service could be calculated separately, the
customer was within its rights in this case to obtain separate
metering. Important to this conclusion is the fact that all
services performed in the old building were moved to the new
hospital, and the old building was demolished. The new building
thus required separate metering because of the old building's
planned destruction after the completion of the hospital's move.
Finally, plaintiff asserts that under subsections 160A-
332(a)(3) through (6), a secondary supplier has no right, without
prior written consent from the existing supplier, to commence
service to a customer who is already receiving service from
another supplier who has the right to provide service under the
Electric Act. Here, plaintiff did not give its written consent.
Written consent, however, is required only for a change in
service to the same premises. N.C.G.S. § 160A-332(a)(3). In the
instant case, there are only two secondary suppliers involved,
and section 160A-332(a)(3) clearly governs our analysis.
While it may be true that the statutes under the
Electric Act of 1965 do not expressly address the exact situation
before the Court today, we believe that our interpretation of the
applicable provisions best preserves the overall intent of the
General Assembly, as expressed in the Electric Act, and protects
the interests of electric providers as well as customers. Given
the very fact-specific nature of the dispute before us, this
situation will not arise often or otherwise threaten the delicate
balance struck by the General Assembly when it enacted theElectric Act of 1965. Put simply, the time and expense of
constructing a new building and demolishing an old one would
rarely, if ever, be undertaken merely to effect a change of the
electric service provider.
We therefore conclude that the Havelock Animal Hospital
was entitled to choose defendant CCEMC as its electric service
provider. The customer is located within a municipality without
a primary supplier, and the two secondary suppliers involved have
maintained distribution lines wholly within three hundred feet of
the customer as of the applicable determination date. When such
a customer constructs a new building that is separately metered
and charges separately calculated, and then demolishes the old
building, the new building must be considered a new premises
under the Electric Act of 1965, and such customer is free to
choose the secondary supplier that it believes will provide the
best electric service to the new premises. For the foregoing
reasons, the decision of the Court of Appeals is reversed, and
this case is remanded to that court for further remand to the
trial court for disposition in accord with this opinion.
REVERSED AND REMANDED.
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