GRAYSON RURAL ELECTRIC CORPORATION; AND EAST KENTUCKY POWER COOPERATIVE, INC. V. CITY OF VANCEBURG; ELECTRIC PLANT BOARD OF THE CITY OF VANCEBURG; KENTUCKY POWER COMPANY
Annotate this Case
Download PDF
RENDERED:
JUNE 17, 1999
AS MODIFIED:
NOVEMBER 18, 1999
TO BE PUBLISHED
GRAYSON RURAL
ELECTRIC CORPORATION;
AND EAST KENTUCKY
POWER COOPERATIVE, INC.
APPELLANTS
ON REVIEW FROM COURT OF APPEALS
96-CA-001990
LEWIS CIRCUIT COURT NO. 93-CI-000189
HONORABLE LEWIS D. NICHOLLS, JUDGE
V.
CITY OF VANCEBURG;
ELECTRIC PLANT BOARD OF THE
CITY OF VANCEBURG; KENTUCKY
POWER COMPANY
APPELLEES
OPINION OF THE COURT BY JUSTICE GRAVES
REVERSING
AND
REMANDING
This case involves the determination of the superior right
between competing utilities to furnish retail electric service to
new customers in an area now served by the Vanceburg Electric
Plant
Board
assigned
to
(hereinafter
(hereinafter
Grayson
Rural
l'Grayson'l)
(hereinafter IIKPSC") .
"EPB"),
by
but being in the territory
Electric
the
Because
Cooperative
Kentucky
the
Public
contested
Corporation
Service
area
once
Commission
produced
insufficient revenue to make the area competitively desirable,
for years Grayson did not exercise any of its rights to provide
the retail electrical service.
The environment and attention of
the competing utilities changed substantially when a large
industrial customer recently expressed an interest in locating a
plant in the area.
Even though the EPB and its predecessors had
served smaller customers in Grayson's territory, it lacked the
capacity to satisfy the requirements for a large industrial
customer.
Power
Consequently,
Company.
the EPB assigned its rights to Kentucky
When Kentucky Power Company sought approval of
the assignment from the KPSC, Grayson
The
EPB's
predecessor
(Vanceburg
intervened.
Utility
Commission)
then
brought suit in Lewis Circuit Court seeking a declaratory
judgment that it had the right to provide retail electrical
service to the contested area and to the potential industrial
customer.
The circuit court entered judgment for the EPB.
The
Court of Appeals affirmed the judgment of the circuit court.
After hearing oral arguments and having reviewed the record; we
reverse the lower courts and remand to the circuit court for
entry of a judgment consistent with this opinion.
A historical review of the parties' positions is helpful.
In 1939, the City of Vanceburg created the Vanceburg Utility
(hereinafter ltVUC1l)
Commission
electric
company.
when it purchased a bankrupt
The WC was organized to provide electric
service to the city of Vanceburg, as well as to all other
residential,
commercial and industrial customers located within a
twenty mile strip of land along the Ohio River from Vanceburg in
Lewis County to South Portsmouth in Greenup
2
County, the location
of the electric distribution plant.
The
WC
retailed
electric
energy which it purchased wholesale from the Kentucky Power
Company.
The WC's
20-mile distribution line from Kentucky Power
at South Portsmouth was described as a gigantic extension cord
connecting rural customers to the line all the way to Vanceburg.
Being a municipal utility, the WC was exempt from regulation by
the. KPSC.
Grayson
Rural Electric Cooperative is a retail supplier of
electric energy which was organized in 1951 and which is
regulated by the KPSC.
the WC and Grayson
solicited
the
For fifty-four years from 1939 to 1993,
honored an unwritten boundary and neither
other's
Their "gentleman's
customers.
was discarded in 1993, when
a
potential
customer
agreement"
expressed
interest in a 1400 acre industrial site located in the community
of St. Paul, which lies within the 20-mile corridor being served
by the then WC.
requirements
of
The
the
WC, lacking the capacity to satisfy the
potential
customer's
electric
needs,
entered
into an agreement with Kentucky Power Company to supply the
necessary
power.
When Kentucky Power Company sought KPSC's
approval of the agreement to serve an industrial customer outside
of its certified territory, Grayson
Grayson
objected.
The KPSC allowed
to intervene since the industrial site was within
Grayson's certified territory on the KPSC maps.
Kentucky
Power
Company then abated its KPSC application and joined with the City
of Vanceburg and the WC in filing an action for a declaration of
rights in the Lewis Circuit Court.
3
Grayson
moved for summary judgment on the grounds that the
industrial tract was.within its service area and the WC was not
permitted
to
boundaries.
resell
purchased
electricity
outside
its
municipal
The City of Vanceburg then obtained a ten-month
continuance during which time an ordinance was passed
transforming the WC into the current Electric Plant Board (EPB).
Under KRS 96.570, an EPB is permitted to provide electric service
"within and without the boundaries" of the municipality.
The
complaint for a declaratory judgment was amended to substitute
the EPB for the WC.
Ruling in favor of the City, the EPB and Kentucky Power, the
trial court found, inter alia,
regulate
showed
municipal
boundaries
utility
between
(1) the KPSC lacked authority to
corporations;
nonmunicipal
such as Kentucky Power and Grayson;
(2) the KPSC maps only
retail
electric
(3) Grayson
suppliers
had recognized
the existence of the WC boundary for a number of years as
evidenced by a partial green line on the map of its certified
service area;
(4) Grayson's claim based on the KPSC map of
certified areas was flawed because the KPSC lacked jurisdiction
to
resolve
disputes
involving
municipalities;
(5)
KRS
96.550
to
96.900 gives the EPB the authority to provide service in the
disputed area as long as it does not interfere with any other
board, municipality or electric cooperative; and (6) the
legislature intended for each utility to operate exclusively in
its area and thus the EPB's right to operate in the disputed
corridor
was
exclusive.
4
However in 1972, the
legislature
enacted
Kentucky's
Territorial Law which granted the right to the KPSC to establish
geographical boundaries of certified areas within which its
regulated utilities have the exclusive right and obligation to
furnish
retail
facilities.
electric
service
KRS 278.018.
to
all
electric-consuming
This legislation was designed to
encourage an orderly development of retail electric service, and
its constitutional validity was upheld in Citv of Florence v.
Owen Elec.
Co-op., Ky., 832 S.W.2d 876 (1990) and Citv of
Nicholasville v. Blue Grass E.R. Coop.
(1974).
Corp., KY.,
514 S.W.2d
414
It "has a substantial relation to the public welfare,
safety and health and, in a real degree, promotes these
objectives." Citv of Florence, supra,
at 882.
The Territorial Law was enacted to protect each KPSCregulated utility in its certified territory against invasion or
competition
by
another
KPSC-regulated
utility.
The
statute
provides that no KPSC-regulated utility may, "furnish, make
available,
consumer
render or extend its retail electric service to a
for
use
in
electric-consuming
facilities
located
within
the certified territory of another retail electric supplier."
KRS 278.018(l).
Municipally-owned
electric
utilities
are
creatures
of
statute having only such authority as the Legislature grants to
them.
This principle was recognized in Citv of Nicholasville,
supra, and affirmed in Citv of Florence, suora.
denied
municipally-owned
or
Both
municipally-franchised
5
opinions
electric
utilities an exclusive right to provide retail electric service
to all utility customers within the city's boundaries.
This
Court has held that the Legislature determines the extent of
authority which cities have to operate their own or franchised
electric
That is, a municipally-owned
systems.
or
municipally-
franchised electric utility has no exclusive service rights even
within municipal boundaries in the absence of statutory
authority.
334 S.W.2d
KY.,
Citv of Cold Spring v. Camnbell Co. Water Dist., KY.,
269 (1960) and Citv of Corbin v. Kv. Utilities Co.,
447 S.W.2d
356 (1969).
The WC operated under KRS 96.520 for 56 years (1939-1995).
The statute confers authority to own and operate the system only
for purposes of supplying the city and its inhabitants with
electric light, heat and power.
Any city of the second, third, fourth, fifth or sixth
class may purchase, establish, erect, maintain and
operate electric light, heat and power plants with
extensions and necessary appurtenances thereto, within
or without the corporate limits of the city, for the
purpose of supplying the city and its inhabitants with
KFS 96.520
electric light, heat and power.
The statute confers no authority to serve non-residents outside
the city.
Further,
no cases have interpreted the statute so
broadly as to authorize an exclusive service area outside the
city.
During
this
litigation, the
City
of
Vanceburg
reconstituted
its utility as an EPB which is authorized by KRS 96.550 to
provide retail electric service to any user or consumer within or
without the boundaries of a municipality.
6
An EPB's rights are
not exclusive and the statute does not create or authorize an
exclusive service area outside the city in which an EPB is free
from competition regardless of its ability, willingness or
obligation to serve customers within the area.
The statute allows an EPB to serve non-resident customers,
but does not compel it.
An EPB "may provide electric service to
any user or consumer within and without the boundaries of any
municipality . . . .I1
KFS 96.570(2).
KRS 96.890 provides:
No municipality or board operating an electric plant under
the provision of KFG 96.550 to 96.900 shall enter into
competition with, or construct, maintain, or operate, any
facilities or service in competition with any rural electric
cooperative corporation or electric plant operated by
another municipality or board organized under the laws of
this state in any territory being serviced by any such rural
electric cooperative corporation or other municipality or
board; but any municipality or board operating an electric
plant under the provision of KRS 96.550 to 96.900 may enter
into cooperative agreements with any such rural electric
cooperative corporation or other municipality or board for a
connection for cooperative service upon such terms and
conditions as may be mutually agreed upon between any such
municipality or board and any such rural electric
cooperative corporation or other municipality or board.
Such agreements may provide, but not by way of limitation,
for exchange of electric service the cooperative use of
transmission lines and other facilities, and the common use
or exchange of other service or facilities.
The WC acknowledged an inability to meet the electrical demands
of the potential customer within the contested service area.
Moreover,
it lacks any statutory obligation to serve customers
within this area should it choose not do so.
The Legislature has never chosen to authorize exclusive
service
rights
or
exclusive
service
7
areas
for
municipally-owned
electric
have
utilities.
exclusive
Should the Legislature intend for a city to
rights, it will so provide as it has for KPSC-
regulated utilities in the Territorial Law.
For a municipally-owned utility to have the exclusive
service rights or an exclusive service area over which there was
no statutory or regulatory oversight enables it to assign those
rights to third parties.
such
assignments.
There is no statutory authority for
Moreover,
Legislature's
control
electricity.
The
such
assignments
disrupt
the
over the retail distribution of
proposed assignment
between
the
WC
and
Kentucky Power Company was recognized by KPSC as an invasion of
the certified territory of Grayson.
The Court in Citv of Cold
Snrinq,
service
suora, rejected
an exclusive
area
claim
stating
that,
Perhaps even more disastrously, this holding completely
ignores the need for service of those residents within the
Water District territory whom the Water District may be
unable, or unwilling, to serve, and whom the Water District
has no obligation to serve.
Id. at 272.
Similarly,
KY.,
in Louisville Water Co. v. Public Service Com'n.,
318 S.W.2d
537 (1958),
our
predecessor
Court
recognized
that
voting power gave residents of a city some means of protection
against excessive rates or inadequate service of a utility owned
by the city.
Id. at 539.
have no such protection.
However,
Moreover,
customers
rural
outside
consumers
the
city
serviced
the EPB lack any recourse regarding rates charged or services
extended or denied.
8
by
The EPB claimed that KRS 96.520 gave it authority to provide
retail
electric
service
to
non-residents.
Citv of Owensboro, Ky., 343 S.W.2d
However,
398 (1961),
Miller v.
construed the
statute to mean exactly what it says, that is, that a city is
authorized to acquire and operate an electric plant only "for the
purpose of supplying the city and its inhabitants" with electric
energy.
Id. at 401.
entitlement,
At issue in Miller was the city's
under the statute, to build a generating plant
having surplus capacity above or in excess of the immediate needs
of the city and its inhabitants.
The Court found that
construction of the generating plant was not in violation of the
statute since its primary purpose was to serve the needs of the
city and its inhabitants and that it was "a matter of sound
economic planning to provide initially for a surplus capacity
rather than to add to the plant on a piecemeal basis as the needs
from time to time arise; . . . .I1 Id. at 401.
recognized
that
the
surplus "will
The Court
gradually diminish and within
fifteen years it is probable that the entire capacity will be
needed for city consumers, . . . .I' Id.
The decision was further
supported by well-established case law recognizing a city's right
to sell the surplus production of city-owned utilities to nonresidents.
KRS 96.520 was construed in Citv of Corbin, suora, to
prohibit
the
municipally-owned
electric
utility
from
constructing
facilities and providing retail electric service to an industrial
plant located about two miles outside the city.
9
Corbin,
like
Vanceburg,
power
had no power generation of its own, but acquired its
through
wholesale
purchases.
In reaching the decision, our
predecessor Court found that the proposed activity did not serve
the purpose of supplying the city and its inhabitants with
electric light, heat and power, and rejected the idea that the
making of a profit by engaging in the business of retailing
electricity beyond the municipal limits qualifies as a legitimate
municipal
purpose.
Id. at 358-359.
The
decision from Citv of Owensboro, supra,
Court
distinguished
its
by pointing out that
Owensboro was selling surplus generation, for a limited time,
from its own generating plant as part of a sound plan to provide
for the future needs of the city and the city's inhabitants. &J.
at 359.
This Court has held that a municipally-owned utility might
be permitted to extend its service outside the city to areas
which fell naturally into its territory and which would likely in
the future be embraced by an extension of the city limits.
Warren Rural Elec.
S.W.2d
Coon. Corp.
117 (1960).
v. Electric Plant Bd., KY.,
331
No such claim is being made about the 2d mile
corridor outside the City of Vanceburg.
The Lewis Circuit Court concluded
authorized
to
provide
that
Vanceburg
was
retail electric service to non-
residents for the reason that the supplying of non-residents
with electric power was correlated with serving the
municipal
customers.
The circuit court's rationale was
that,
10
[Tlhe rural non-municipal customers paying their
utility bills immediately became a vital source of
revenue for WC.
Without this source of revenue, WC
would be unable to function in 1939 as well as today.
Furthermore, from 1939 to present, the City of
Vanceburg would be unable to financially run their
municipal utility without the support of the additional
rural customers which the city inherited when they
obtained the utility company.
Thus, the contested
corridor served by WC is correlated with the purpose
of supplying the city and its inhabitants with electric
power.
The Court believes that all of these facts
create the necessary set of circumstances to make it a
valid exception to legitimatize the WC's operation
outside the municipal boundaries under KRS 96.520-540.
While it may be financially advantageous for Vanceburg and
its EPB to service non-residents outside the city as a means of
subsidizing the cost of providing retail electric service to the
city and its residents, the statute and the cases construing it
do not so provide.
proposed
the Citv of Corbin, i
supra,
at who.lesale
from
The EPB's operation is comparable to that
n buying
electrical power
and reselling at retail for purposes of making money
non-residents.
Vanceburg
operates
its
municipally-owned
electric
utility
as
an EPB under KRS 96.550, and although it may provide electric
service to users or consumers outside the city (but not to a
designated
with, or
area),
it is restricted from entering into competition
constructing, maintaining
or
operating
any
facilities
service in competition with any rural electric cooperative
corporation such as Grayson.
No municipality or board operating an electric plant
under the provision of KRS 96.550 to 96.900 shall enter
into competition with, or construct, maintain, or
operate, any facilities or service in competition with
any rural electric cooperative corporation or electric
plant operated by another municipality or board
11
or
organized under the laws of this state in any territory
being serviced by any such rural electric cooperative
corporation . . . . KRS 96.890.
Any authority conferred upon Vanceburg's EPB by statute was not
exercised before July 1, 1995, and by that date, Kentucky's
Territorial Law had been in effect for over 20 years and Grayson
was statutorily certified as the exclusive retail supplier for
the
entire
territory with
includes
Vanceburg's
claimed
exclusive
service area.
Grayson
sought to protect its territory and claimed the
entirety of the area when Vanceburg converted its electric
operations to an EPB.
KRS 96.550 does not confer transfer rights
to or from a pre-existing municipal system, but expressly limits
an EPB's
authority to operate under its provision "from
the time
of the exercise of such election and the appointment of a board
upon
enactment
of City of Vanceburg Ordinance 650.00 on July 1, 1995.
The EPB
hereunder . . . .I' KRS 96.560(l).
That
occurred
came into existence with rights subordinate to those of Grayson
to provide retail electric service in the entirety of its service
area since the territorial certification to Grayson
to
specific
legislation
which
controls
legislation on the same subject.
S.W.2d
739 (1957).
earlier,
was pursuant
general
Brown v. Hobitzell,
Ky.,
307
That is, rights accorded to parties by
statute become a part of the operative facts which govern their
relationships.
City of Nicholasville, sunra,
and Citv of Florence, suwra,
hold the Legislature is entitled to establish the operating
12
parameters of a municipally-owned electric system, and in the
exercise of that power, the Legislature restricted the EPB from
competing in territory served by Grayson.
territory
includes
the 20-mile
and by statute Grayson
Grayson's
certified
so-called exclusive service area,
is required to serve the entirety of this
boundary as the exclusive supplier of retail electric service.
After July 1, 1995, the EPB entered into competition with Grayson
by serving customers in an area certified by state law to
Grayson.
However,
since Grayson
chose not to compete for the existing
non-municipal customers being served by EPB and its predecessor
WC, we find that Grayson
has acquiesced in and is estopped from
contesting Vanceburg's EPB's
disputed
learned
area.
of
the
Until Grayson
potential
current service rights in the
and East Kentucky Power Company
industrial
ever sought to serve the 20-mile
customer,
neither
utility
corridor.
In Hunts Branch Coal Co. v. Canada, KY., 599 S.W.2d 154, 155
(1980),
this Court reaffirmed the principles of equitable
estoppel:
One who knows or should know of a situation or a
material fact is precluded from denying it or asserting
the contrary where by his words or conduct he has
misled or prejudiced another person or induced him to
change his position.
Estoppel is established where another party relies in good faith
on the representations made by the estopped party.
Electric
Water Plant Bd. v. Suburban Acres Development, KY.,
513 S.W.2d
489,
491 (1974).
&
An estoppel can be created by a party's words
13
or by a party's conduct.
Hunts Branch Coal, suora, at 155.
The trial court detailed the evidence establishing the WC’S
continuous investment and service in the area which occurred
without objection by Grayson.
The
evidence
demonstrated
that
Grayson has always been aware of Vanceburg's service to the
customers in this area.
supplier,
WC on
Grayson
and its wholesale power
East Kentucky Power Company, worked closely with the
the construction of a $140,000,000
hydroelectric plant to
meet expected growth in industrial sites east of the city that
Vanceburg was to serve.
Throughout
the
project,
including
applications made to the Federal Power Commission, Grayson
acknowledged that Vanceburg served the area lying between South
Portsmouth
and
Vanceburg.
in the 1950's, 1980's,
In addition to the plant construction
and as late as 1990, Vanceburg has made
significant capital investments in facilities located in the
disputed area to improve service to those customers as well as
the city and its inhabitants.
reliance,
As a result of this reasonable
Vanceburg changed its position to its detriment.
The decision of the Court of Appeals is reversed and this
matter is remanded to the Lewis Circuit Court for entry of a
judgment holding that Grayson
is entitled to serve new customers
within its certified territory in the contested area and the EPB
is entitled to serve its existing customers in the contested
area.
Lambert,
Stumbo,
J.J.,
C-J.,
Cooper, Graves, Johnstone, Keller, and
concur.
Wintersheimer,
14
J., dissents in a separate
opinion.
COUNSEL
FOR
APPELLANTS:
Foster J. Collis
Dale W. Henley
P.O. Box 707
Winchester, KY 40392-0707
W. Jeffrey Scott
311 West Main Street
P.O. Box 608
Grayson, KY 41143
COUNSEL FOR APPELLEES CITY OF VANCEBURG AND ELECTRIC PLANT BOARD
OF THE CITY OF VANCEBURG:
E.V. Holder, Jr.
409 Second Street
Vanceburg, KY 41179
Clayton G. Lykins, Jr.
P.O. Box 160
Vanceburg, KY 41179
COUNSEL FOR APPELLEE KENTUCKY
Bruce F. Clark
Elizabeth K. Broyles
Jason Patrick Thomas
Stites & Harbison
421 West Main Street
P-0. Box 634
Frankfort, KY 40602-0634
POWER
15
COMPANY:
RENDERED:
JUNE 17, 1999
TO BE PUBLISHED
98-SC-000202-DG
GRAYSON RURAL
ELECTRIC CORPORATION; .
AND EAST KENTUCKY
POWER COOPERATIVE, INC.
ON
APPELLANTS
FROM COURT OF APPEALS
96-CA-001990
LEWIS CIRCUIT COURT NO. 93-CI-000189
HONORABLE LEWIS D. NICHOLLS, JUDGE
V.
REVIEW
CITY OF VANCEBURG;
ELECTRIC PLANT BOARD OF THE
CITY OF VANCEBURG; KENTUCKY
POWER COMPANY
DISSENTING
I
must
APPELLEES
OPINION
respectfully
BY
dissent
JUSTICE
from
WINTERSHEIMER
the
majority
opinion
because the Vanceburg Electric Plant Board has the exclusive
right
to
serve
its
existing
customers
in
the
contested
area
as
well as the absolute right to serve new customers in the area. I
would affirm the Court of Appeals and the circuit court in their
decisions.,
KRS 96.520 and City of Corbin v. Kentucky Utilities Companv,
KY., 447 S.W.2d
356 (19691,
support
the
proper
legal
conclusion
that the Vanceburg Electric Plant Board has the authority to
supply
power
pertinent
to
part
the
as
disputed
The statute provides in
area.
follows:
Any city of the . . . fourth . . . class may
purchase, establish, erect, maintain and operate
electric light, heat and power plants with extensions
and necessary appurtenances thereto, within or
without the corporate limits of the city, for the
purpose of supplying the city and its inhabitants
with electric light, heat and power, and for such
purpose, may enter into and fulfill the terms of an
interconnection agreement with any utility . . . .
KRS
96.520.
of Corbin, supra, states
Citv
its
correlated
“under
exceptional
the supplying of those outside the city limits may
circumstances,
be
that
to" the
inhabitants
with
primary
purpose
electricity.
of
supplying
the
city
and
The trial judge correctly
found that the facts existing in this case create the necessary
circumstances to make it a valid exception so as to permit the
Vanceburg
utility
entities
to
operate
outside
the
municipal
I must fully agree with
boundaries pursuant to KRS 96.520-540.
the Court of Appeals that the findings of the trial court were
not
clearly
erroneous
and
should
not
be
set
aside.
The trial judge correctly found that as a matter of fact,
the Grayson
to
was
supply
no
Rural Electric Corporation had no facilities or means
power
to
the
The
competition.
contested
trial
area,
judge
and
further
consequently,
correctly
there
held
that
the public service commission has no authority to regulate the
service
Vanceburg
area
of
Electric
the
Vanceburg
Plant
Utilities
Commission
or
the
This is not a case which
Board.
involves a usurpation of the authority of the PSC.
2
The
conduct
involved
is
This
clearly
is
a
circumstances
same
area
service
contemplated
very
fact-specific
presented
for
and
here
nearly
given
by
where
sixty
the
case,
one
years
appropriate
and
under
utility
with
the
has
and
unique
served
unchallenged,
knowledge, acquiescence
the
statutes.
the
uninterrupted
the
assistance
of the other utility there can be no basis to object at this
time.
Any decision that permits the existing provider of
electric
service
promote
any
to
continue
disorder
or
to
provide
that
The
instability.
service
benefits
does
that
not
accrue
to
the Vanceburg Electric Plant Board are benefits that are clearly
contemplated by the rural electric acts over more than seven
There are no far-reaching implications that in any way
decades.
disturb the existing order of providing necessary electric
service
at
affordable
Commonwealth.
rates
to
Clearly, this
all
the
decision
consumers
avoids
of
the
the
wasteful
duplication of distribution facilities sought to be promoted by
KRS
Exclusive
278.016.
service
areas
are
no
more
unstable
when
a
municipality exercises that privilege than when an electric
cooperative
exercises
it.
I
disagree
with
must
the
majority
on
its
interpretation
of
Citv of Florence v. Owen Electric Cooperative, Inc., KY., 832
S.W.2d
876 (1992).
In that case, a utility had been granted a
franchise by the city and the utility sought to have the right to
serve an area that the city had recently annexed.
The newly
annexed area was located in the certified territory of another
utility
which
had
been
providing
service.
3
This Court correctly
held that the legislature has authority to limit the grant and
operation
of
municipal
The
franchises.
Court
further
held
that
because the area had been certified as the territory of the other
utility under the territorial act, the other utility had
exclusive
right
to
serve.
of Nicholasville v. Blue
In the Citv
Cooperative Corp., KY., 514 S.W.2d
Grass
Rural
Electric
414 (1974), the city was
attempting to serve an area where it did not have facilities but
where a cooperative did have facilities and was already providing
This
service.
Court
affirmed
the
ruling
that
under
the
relevant
96.538, the city could not compete with the
statute, KRS
cooperative.
In
this
prohibition
clearly
case
of
Vanceburg
statutes
the
right
from
both
supra, because
Nicholasville,
that
to
prohibit
serve
the
not
challenge
the
statutory
In that respect, this case is
competition.
distinguishable
the
does
Florence,
Vanceburg
competition
disputed
area
supra,
relies
on
when
it
free
from
and
the
claims
premise
that
other
it
of
has
competition.
It is somewhat curious to note that since 1939 and until
1990,
Vanceburg
Electric
Plant
Board
or
its
predecessor
served
only a small number of city residents and an equally small number
of
rural
residents
outside
the
municipal
boundaries.
In 1990,
Vanceburg made a substantial investment in upgrading its
facilities
customers
miles
for
the
located
outside
the
purpose
in
Black
city
of
providing
Oak, an
limits.
power
industrial
to
industrial
site
located
three
The only customer in the St. Paul
4
vicinity served by Grayson
area.
RECC is located outside the disputed
Vanceburg has continuously relied upon their belief that
the disputed area was being served exclusively by Vanceburg and
this view was based on the acquiescence of Grayson
RECC and East
Kentucky Power as found by the trial judge.
It was only in late
1993
expressed
that
a
prospective
industrial
customer
in locating and purchasing a 1400-acre
Kentucky
Power
Under
allied
all
power
electric
Company
the
in
have
the
interest
site in St. Paul owned by
1975.
circumstances
suppliers
service
since
an
an
disputed
of
this
case,
Vanceburg
exclusive
right
to
area.
and
its
provide
Such a result would not
undermine the orderly distribution of retail electric service as
required
by
Kentucky
law.
I would affirm the decision of the circuit court and the
Court
of
Appeals.
98-SC-0202-DG
GRAYSON RURAL ELECTRIC CORPORATION;
AND EAST KENTUCKY POWER
COOPERATIVE, INC.
APPELLANTS
ON REVIEW FROM COURT OF APPEALS
96-CA-1990
LEWIS CIRCUIT COURT NO. 93-CI-189
V.
CITY OF VANCEBURG; ELECTRIC PLANT BOARD
OF THE CITY OF VANCEBURG; AND KENTUCKY
POWER COMPANY
APPELLEES
ORDER DENYING APPELLEES' PETITION FOR REHEARING AND
MODIFICATION AND MODIFYING OPINION ON COURT'S OWN MOTION
petition for rehearing and modification of this
Appellees'
Court's opinion is hereby denied.
On the Court's own motion, the opinion of the Court rendered
herein on June 17, 1999, is modified by the substitution of new
pages 1,
14 and 15, attached
hereto,
in lieu of pages 1, 14 and
15 of the opinion as originally rendered.
Said
modification
does
not affect the holding of the case, or the dissenting opinion.
All
concur.
ENTERED:
November 18, 1999.
/
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.