State v. PIEDMONT NATURAL GAS COMPANY

Annotate this Case

120 S.E.2d 77 (1961)

254 N.C. 734

STATE of North Carolina, ex rel. UTILITIES COMMISSION, and North Carolina Association of Launderers and Cleaners, v. PIEDMONT NATURAL GAS COMPANY, Inc.

No. 249.

Supreme Court of North Carolina.

May 24, 1961.

*79 Stanley Winborne, Vaughan S. Winborne, Raleigh, for complainant.

*80 McLendon, Brim, Holderness & Brooks, Hubert Humphrey, Jr., Greensboro, for appellee.

DENNY, Justice.

The complainant entered but one exception in the hearing below and that was to the judgment, reversing the decision and order of the Commission and remanding the cause to the Commission with directions to dismiss the complaint of the complainant. Therefore, the exception to the judgment presents this single question: Does error in law appear on the face of the record? Gibson v. Central Mfrs. Mut. Insurance Co., 232 N.C. 712, 62 S.E.2d 320; Moore v. Crosswell, 240 N.C. 473, 82 S.E.2d 208; Barnette v. Woody, 242 N.C. 424, 88 S.E.2d 223; Goldsboro v. Atlantic Coast Line R. R. Co., 246 N.C. 101, 97 S.E.2d 486.

Since the court below held that the findings of fact by the Commission are not supported by, but are contrary to, the competent, material, and substantial evidence set out in the record, and that the inferences and conclusions in the order of the Commission are affected by errors of law, we shall examine and consider the record in light of the ruling of the court below.

Finding of fact No. 1 of the Commission, set out hereinabove, simply finds that the specific type of laundry under consideration in this proceeding is not so substantially different from that used by Piedmont's residential customers as to justify a difference in rates. Likewise, finding of fact No. 2 is to the effect that the washing machines and dryers referred to by the complainants and Piedmont are similar to the type of machines used by Piedmont's residential customers to such an extent as to justify the application of similar rates.

We do not consider the fact that many of the washers and dryers used in coin-operated and fast-service laundries are similar to those used by residential consumers has any material bearing on the question of rates. The coin-operated and fast-service laundries operated by the complainant's members are commercial enterprises and operated for profit. The washers are operated by electricity and not by gas. Gas is used only to heat water for use in the washers and to heat the air in some types of dryers. The evidence is to the effect that the washing machines used by many of the laundries involved are larger than those in residential use. Even so, since gas is used only to heat air in some of the dryers and to heat the water used in the washing machines, and not for the operation of the machines, the type and kind of machines used in a commercial laundry do not constitute a proper basis for determining proper rates for gas used in heating air and water used in such machines.

The test for determining classifications and rates depends upon a number of factors, such as the quantity of gas used, the time of use, the manner of service, and the equipment which the utility must provide and maintain in order to take care of the customers' requirements. North Carolina Utilities Commission v. Municipal Corporations, 243 N.C. 193, 90 S.E.2d 519.

The evidence on this record tends to show that the residential customers average using about 25 per cent of maximum capacity or peak load available, while the laundries involved herein use an average of only 11 per cent of the peak load Piedmont has to keep available at all times. It is common knowledge that a residential consumer uses on the average about the same amount of gas each day, dependent of course upon the number of appliances used by the residential customer. The peak period of a residential consumer usually comes at the time meals are being prepared and during the early hours of the night. A utility, however, furnishing gas to its commercial or industrial users must invest sufficient money in its plant and equipment to meet the peak demands of its customers, and when the load falls below the peak, the utility obtains payment only for the percentage *81 of the peak load actually consumed. This may be a sufficient factor in some cases to affect a rate. North Carolina Utilities Commission v. Municipal Corporations, supra.

We said in State ex rel. Utilities Com. v. Mead Corp., 238 N.C. 451, 78 S.E.2d 290, 298, "There must be substantial differences in service or conditions to justify difference in rates. There must be no unreasonable discrimination between those receiving the same kind and degree of service."

Likewise, in Brown v. Pennsylvania Public Utility Comm., 152 Pa.Super. 58, 31 A.2d 435, 437, it is said: "The charging of different rates for service rendered under varying conditions and circumstances is not unlawful." Certainly the installation of equipment necessary to furnish an ample amount of gas to heat water and air in quantities sufficient to operate a coin-operated or fast-service laundry for 24 hours a day at peak capacity if required, constitutes service rendered under conditions not applicable to the ordinary residential customers.

Finding of fact No. 3 of the Commission is to the effect that customer participation in the operation of these laundries renders them dissimilar to other consumers of gas to which Schedule No. 11 is available, to such an extent as to justify their removal from Schedule No. 11 and to permit the application of the rates applicable to residential users.

Finding of fact No. 4 is to the effect that the rates charged complainant by Piedmont in Schedule No. 11 discriminates against complainant to the extent that the rates therein exceed those charged residential users in Schedule No. 10, and are, therefore, unjust and unreasonable.

We are unable to ascertain from the evidence on this record how or in what respect the customer participation has any bearing on the question of rates, or why the rates set out in Piedmont's Schedule No. 11 are discriminatory as between coin-operated and fast-service laundries and other commercial customers.

Evidence was admitted without objection in the hearing below that tends to show that all utility companies distributing natural gas in North Carolina, except Piedmont, have on file with the Commission schedules of rates for coin-operated and fast-service laundries that are lower than their commercial rates. However, evidence in which the rates of different utilities are sought to be compared is not competent or proper in the absence of evidence showing the comparative costs and conditions under which the respective companies operate. North Carolina Utilities Commission v. Municipal Corporations, supra; Board of Supervisors of Arlington County v. Virginia Electric & Power Co., 196 Va. 1102, 87 S.E.2d 139; Smyth v. Ames, 169 U.S. 466, 18 S. Ct. 418, 42 L. Ed. 819.

In our opinion, the evidence on this record is insufficient to support the findings of the Commission and the conclusions of law based thereon. Utilities Com. v. Mead Corp., supra. However, we think, in the interest of justice, the order entered below should be modified to the extent of allowing the Commission to hear additional evidence in order to determine in the manner provided by law whether or not there is any unfair and unjust discrimination as between the type of service rendered the members of the complainant and other commercial customers under Schedule No. 11, and, if so, to determine whether or not such schedule should be modified in any respect or whether a new schedule of rates should be filed by Piedmont for coin-operated or fast-service laundries, as the evidence tends to show all other utilities distributing natural gas in North Carolina have done.

G.S. ยง 62-70 prohibits discrimination by public service corporations in the following language: "No public utility shall, as to rates or services, make or grant any unreasonable *82 preference or advantage to any corporation or person or subject any corporation or person to any unreasonable prejudice or disadvantage. No public utility shall establish or maintain any unreasonable difference as to rates or services either as between localities or as between classes of service. The Commission may determine any questions of fact arising under this section."

Except as modified, the judgment below is affirmed.

Modified and affirmed.