Article 1. General Provisions.

§ 62-1. Short title.

This Chapter shall be known and may be cited as the Public Utilities Act.

History. 1963, c. 1165, s. 1.

Editor’s Note.

Session Laws 1963, c. 1165, amended, revised and rewrote Chapters 56, 60, and 62 of the General Statutes and recodified them as Chapter 62 and Chapter 74A.

Chapter 74A was repealed by Session Laws 1991 (Regular Session, 1992), c. 1043, s. 8, effective July 25, 1992. For present provisions pertaining to the subject matter of repealed Chapter 74A, see Chapter 74E.

Legal Periodicals.

For case law survey on public utilities, see 41 N.C.L. Rev. 498 (1963).

CASE NOTES

Editor’s Note. —

Cases construing provisions of former Chapter 62 have been placed in the annotations under appropriate sections of Chapters 62 and 74E.

Scope of Authority of Utilities Commission. —

The Utilities Commission, being an administrative agency created by statute, has no regulatory authority except such as is conferred upon it by this Chapter, and the Commission may not, by its order, require or authorize a rule or practice by a public utility company which is forbidden by statute, or authorize such company to refuse to perform a duty imposed upon it by statute, unless this Chapter has conferred such authority upon the Commission. State ex rel. Utils. Comm'n v. National Merchandising Corp., 288 N.C. 715, 220 S.E.2d 304, 1975 N.C. LEXIS 1038 (1975).

As to the jurisdiction of the utilities commission to require rail carrier to open drainage ditches along its tracks and to keep its drainage ditches open, see State ex rel. Utils. Comm'n v. Seaboard C.L.R.R., 62 N.C. App. 631, 303 S.E.2d 549, 1983 N.C. App. LEXIS 2988 (1983).

Findings Concerning Company Debt Ratios. —

Conclusion of the Utilities Commission’s that a natural gas company’s capital structure should include a short-term debt ratio of 4.02%, based on a short-term debt equal to stored gas inventory rather than “the daily average balance amount of short-term debt for the most recent twelve month period,” was supported by substantial evidence and satisfied requirements of this chapter. State ex rel. Utilities Comm'n v. Carolina Util. Customers Ass'n, 351 N.C. 223, 524 S.E.2d 10, 2000 N.C. LEXIS 6 (2000).

§ 62-2. Declaration of policy.

  1. Upon investigation, it has been determined that the rates, services and operations of public utilities as defined herein, are affected with the public interest and that the availability of an adequate and reliable supply of electric power and natural gas to the people, economy and government of North Carolina is a matter of public policy. It is hereby declared to be the policy of the State of North Carolina:
    1. To provide fair regulation of public utilities in the interest of the public;
    2. To promote the inherent advantage of regulated public utilities;
    3. To promote adequate, reliable and economical utility service to all of the citizens and residents of the State;
    4. To assure that resources necessary to meet future growth through the provision of adequate, reliable utility service include use of the entire spectrum of demand-side options, including but not limited to conservation, load management and efficiency programs, as additional sources of energy supply and/or energy demand reductions. To that end, to require energy planning and fixing of rates in a manner to result in the least cost mix of generation and demand-reduction measures which is achievable, including consideration of appropriate rewards to utilities for efficiency and conservation which decrease utility bills;
    5. To provide just and reasonable rates and charges for public utility services without unjust discrimination, undue preferences or advantages, or unfair or destructive competitive practices and consistent with long-term management and conservation of energy resources by avoiding wasteful, uneconomic and inefficient uses of energy;
    6. To assure that facilities necessary to meet future growth can be financed by the utilities operating in this State on terms which are reasonable and fair to both the customers and existing investors of such utilities; and to that end to authorize fixing of rates in such a manner as to result in lower costs of new facilities and lower rates over the operating lives of such new facilities by making provisions in the ratemaking process for the investment of public utilities in plants under construction;
    7. To encourage and promote harmony between public utilities, their users and the environment;
    8. To foster the continued service of public utilities on a well-planned and coordinated basis that is consistent with the level of energy needed for the protection of public health and safety and for the promotion of the general welfare as expressed in the State energy policy;
    9. To seek to adjust the rate of growth of regulated energy supply facilities serving the State to the policy requirements of statewide development;
    10. To cooperate with other states and with the federal government in promoting and coordinating interstate and intrastate public utility service and reliability of public utility energy supply;
    11. To facilitate the construction of facilities in and the extension of natural gas service to unserved areas in order to promote the public welfare throughout the State and to that end to authorize the creation of expansion funds for natural gas local distribution companies or gas districts to be administered under the supervision of the North Carolina Utilities Commission; and
    12. To promote the development of renewable energy and energy efficiency through the implementation of a Renewable Energy and Energy Efficiency Portfolio Standard (REPS) that will do all of the following:
      1. Diversify the resources used to reliably meet the energy needs of consumers in the State.
      2. Provide greater energy security through the use of indigenous energy resources available within the State.
      3. Encourage private investment in renewable energy and energy efficiency.
      4. Provide improved air quality and other benefits to energy consumers and citizens of the State.
  2. To these ends, therefore, authority shall be vested in the North Carolina Utilities Commission to regulate public utilities generally, their rates, services and operations, and their expansion in relation to long-term energy conservation and management policies and statewide development requirements, and in the manner and in accordance with the policies set forth in this Chapter. Nothing in this Chapter shall be construed to imply any extension of Utilities Commission regulatory jurisdiction over any industry or enterprise that is not subject to the regulatory jurisdiction of said Commission.Because of technological changes in the equipment and facilities now available and needed to provide telephone and telecommunications services, changes in regulatory policies by the federal government, and changes resulting from the court-ordered divestiture of the American Telephone and Telegraph Company, competitive offerings of certain types of telephone and telecommunications services may be in the public interest. Consequently, authority shall be vested in the North Carolina Utilities Commission to allow competitive offerings of local exchange, exchange access, and long distance services by public utilities defined in G.S. 62-3(23)a.6. and certified in accordance with the provisions of G.S. 62-110, and the Commission is further authorized after notice to affected parties and hearing to deregulate or to exempt from regulation under any or all provisions of this Chapter: (i) a service provided by any public utility as defined in G.S. 62-3(23)a.6. upon a finding that such service is competitive and that such deregulation or exemption from regulation is in the public interest; or (ii) a public utility as defined in G.S. 62-3(23)a.6., or a portion of the business of such public utility, upon a finding that the service or business of such public utility is competitive and that such deregulation or exemption from regulation is in the public interest.Notwithstanding the provisions of G.S. 62-110(b) and G.S. 62-134(h), the following services provided by public utilities defined in G.S. 62-3(23)a.6. are sufficiently competitive and shall no longer be regulated by the Commission: (i) intraLATA long distance service; (ii) interLATA long distance service; and (iii) long distance operator services. A public utility providing such services shall be permitted, at its own election, to file and maintain tariffs for such services with the Commission up to and including September 1, 2003. Nothing in this subsection shall limit the Commission’s authority regarding certification of providers of such services or its authority to hear and resolve complaints against providers of such services alleged to have made changes to the services of customers or imposed charges without appropriate authorization. For purposes of this subsection, and notwithstanding G.S. 62-110(b), “long distance services” shall not include existing or future extended area service, local measured service, or other local calling arrangements, and any future extended area service shall be implemented consistent with Commission rules governing extended area service existing as of May 1, 2003.The North Carolina Utilities Commission may develop regulatory policies to govern the provision of telecommunications services to the public which promote efficiency, technological innovation, economic growth, and permit telecommunications utilities a reasonable opportunity to compete in an emerging competitive environment, giving due regard to consumers, stockholders, and maintenance of reasonably affordable local exchange service and long distance service.
  3. Broadband service provided by public utilities as defined in G.S. 62-3(23)a.6. is sufficiently competitive and shall not be regulated by the Commission.
  4. The policy and authority stated in this section shall be applicable to common carriers of passengers by motor vehicle and their regulation by the North Carolina Utilities Commission only to the extent that they are consistent with the provisions of the Bus Regulatory Reform Act of 1985.

History. 1963, c. 1165, s. 1; 1975, c. 877, s. 2; 1977, c. 691, s. 1; 1983 (Reg. Sess., 1984), c. 1043, s. 1; 1985, c. 676, s. 3; 1987, c. 354; 1989, c. 112, s. 1; 1991, c. 598, s. 1; 1995, c. 27, s. 1; 1995 (Reg. Sess., 1996), c. 742, ss. 29-32; 1998-132, s. 18; 2003-91, s. 1; 2005-95, s. 1; 2007-397, s. 1; 2021-23, s. 25.

Editor’s Note.

Session Laws 2021-23, s. 25, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “ratemaking” for the terms “rate-making” or “rate making” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in subdivision (a)(4a).

Effect of Amendments.

Session Laws 2005-95, s. 1, effective June 21, 2005, added subsection (b1).

Session Laws 2007-397, s. 1, effective January 1, 2008, substituted “Commission; and” for “Commission,” at the end of subdivision (a)(9); added subdivision (a)(10); and made a minor stylistic change.

Legal Periodicals.

For survey of 1976 case law dealing with administrative law, see 55 N.C.L. Rev. 898 (1977).

For article, “Ripening on the Vine: North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standard Should Be Left Unchanged Ahead of 2012 Compliance Deadline,” see 34 N.C. Cent. L. Rev. 111 (2012).

For article, “Seeing Green: North Carolina’s Clean Energy Plan, the Social Cost of Carbon, and a Way Forward Under a Least-Cost Framework,” see 99 N.C. L. Rev. Addendum 59 (2020).

CASE NOTES

Rate Scheme Held Unconstitutional Burden on United States. —

The State regulatory scheme by which the Utilities Commission sets rates for franchised carriers to charge the U.S. Army in transportation of household goods violates the national procurement policy and is an unconstitutional burden on the United States in the exercise of its constitutional powers. United States v. North Carolina Utils. Comm'n, 352 F. Supp. 274, 1972 U.S. Dist. LEXIS 10620 (E.D.N.C. 1972).

Delegation of Authority to Commission Constitutional. —

The standard of public convenience and necessity and the policies of the State were sufficient to guide the North Carolina Utilities Commission in deciding a certificate of public convenience and necessity case, and the legislature’s delegation of this authority to the Commission was not unconstitutional. State ex rel. Utils. Comm'n v. Empire Power Co., 112 N.C. App. 265, 435 S.E.2d 553, 1993 N.C. App. LEXIS 1092 (1993).

The expansion fund legislation is a proper delegation of legislative authority to an administrative agency and is not unconstitutional. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 336 N.C. 657, 446 S.E.2d 332, 1994 N.C. LEXIS 397 (1994).

As an administrative agency created by the legislature, the Commission has not been given jurisdiction to determine the constitutionality of legislative enactments, specifically subdivision (a)(9) of this section or G.S. 62-158. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 336 N.C. 657, 446 S.E.2d 332, 1994 N.C. LEXIS 397 (1994).

Purpose of Chapter. —

The clear purpose of this Chapter is to confer upon the Utilities Commission the power and the duty to compel a public utility company to render adequate service and to fix therefor reasonable rates pursuant to the procedure prescribed in G.S. 62-133. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970); State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

The primary purpose of this Chapter is not to guarantee to the stockholders of a public utility constant growth in the value of and in the dividend yield from their investment, but is to assure the public of adequate service at a reasonable charge. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

The provisions of this Chapter, such as G.S. 62-133, designed to assure the utility of adequate revenues, are in the nature of corollaries to the basic proposition that the public is entitled to adequate service at reasonable rates and safeguards against administrative action which would violate constitutional protections by confiscation of the utility’s property. Without such assurance, the owners of capital would not invest it in the utility’s bonds or stock and the utility could not provide the plant necessary for the rendering of adequate service. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

This section declares the policy of the State, which it is the purpose of this Chapter to put into effect. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

The purpose of the Public Utilities Act is to put the policies enumerated in this section into effect. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Commission to Be Guided by Public Interest. —

While the Utilities Commission seeks to establish the lowest possible rates, that is not the polar star by which the Commission conducts its business; rather, the Commission is guided by considerations of the public interest. State ex rel. Utils. Comm'n v. Piedmont Natural Gas Co., 346 N.C. 558, 488 S.E.2d 591, 1997 N.C. LEXIS 487 (1997).

The entire Chapter is a single, integrated plan. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

The status of an entity as a public utility, entitled to the rights conferred by statute and subject to the jurisdiction of the Commission, does not depend upon whether it has secured a certificate of public convenience and necessity, pursuant to G.S. 62-110, but is determined instead according to whether it is, in fact, operating a business defined by the Legislature as a public utility. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

If an entity is, in fact, operating as a public utility, it is subject to the regulatory powers of the Commission, notwithstanding the fact that it has failed to comply with G.S. 62-110 before beginning its operation. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

The Commission, not the courts, has been given the authority to regulate the rates of public utilities. State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

Court Must Affirm Commission’s Decision. —

The General Assembly has given the North Carolina Utilities Commission, not the courts, the authority to regulate the operations of the public utilities; therefore, if the findings and conclusions of the Commission are supported by competent, substantial and material evidence, the Court must affirm the decision even if it may have reached a different determination upon the evidence. State ex rel. Utils. Comm'n v. Public Staff — North Carolina Utils. Comm'n, 123 N.C. App. 43, 472 S.E.2d 193, 1996 N.C. App. LEXIS 583 (1996).

The Utilities Commission may pass on to the ratepayers the benefits of the Tax Reform Act of 1986 through a rule making procedure rather than a rate making procedure. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 326 N.C. 190, 388 S.E.2d 118, 1990 N.C. LEXIS 12 (1990).

This section does not require the Utilities Commission to adopt a rule of the Interstate Commerce Commission; the Commission must make its own independent investigations, determinations and findings of fact based upon the evidence presented to it. State ex rel. Utilities Comm'n v. Associated Petro. Carriers, 13 N.C. App. 554, 186 S.E.2d 612, 1972 N.C. App. LEXIS 2279, cert. denied, 281 N.C. 158, 188 S.E.2d 364, 1972 N.C. LEXIS 1040 (1972).

This section does not confer an exclusive emolument or privilege by creating a private benefit only for those residents of unserved areas in violation of N.C. Const., Art. I, § 32. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 336 N.C. 657, 446 S.E.2d 332, 1994 N.C. LEXIS 397 (1994).

Only Unfair or Destructive Competition Condemned. —

There is no public policy condemning competition as such in the field of public utilities; the public policy only condemns unfair or destructive competition. State ex rel. N.C. Utils. Comm'n v. Carolina Coach Co., 261 N.C. 384, 134 S.E.2d 689, 1964 N.C. LEXIS 483 (1964).

Prerogative to Recognize Private Agreements. —

The authority to regulate includes the prerogative to recognize private agreements that may have been entered into between parties with respect to the operation of a public utility, as such agreements may be “in the interest of the public”. Ocean Glen Townhouse Condominium Owners Ass'n Phase I v. State ex rel. N.C. Utils. Comm'n, 126 N.C. App. 495, 486 S.E.2d 223, 1997 N.C. App. LEXIS 532 (1997).

Third-Party Sales of Electricity. —

Statutory pronouncements of policy are meant to coexist with North Carolina’s well-established ban on third-party sales of electricity rather than supersede it until such time as the monopoly model is abandoned by our legislature; if the legislature desires to except third-party sales of electricity, it is within its province to do so, and it is not for the court to determine the advisability of any change in the law declared in the Public Utilities Act. State ex rel. Utils. Comm'n v. N.C. Waste Awareness & Reduction Network, 255 N.C. App. 613, 805 S.E.2d 712, 2017 N.C. App. LEXIS 759 (2017), aff'd, 371 N.C. 109, 812 S.E.2d 804, 2018 N.C. LEXIS 330 (2018).

Transportation of passengers by motor carriers for compensation is a business affected with a public interest. State ex rel. N.C. Utils. Comm'n v. Carolina Coach Co., 261 N.C. 384, 134 S.E.2d 689, 1964 N.C. LEXIS 483 (1964).

All who ship goods with common carriers are required to be treated equally with respect to the same category of service. State ex rel. Utils. Comm'n v. Bird Oil Co., 47 N.C. App. 1, 266 S.E.2d 838, 1980 N.C. App. LEXIS 2977, rev'd, 302 N.C. 14, 273 S.E.2d 232, 1981 N.C. LEXIS 1011 (1980).

Interconnection with Competitor Cannot Be Required. —

There is no provision in this Chapter which requires, or authorizes the Commission to require, a utility, with large investments in its own plant and facilities, to permit interconnection with such plant and facilities by a competitor in order to increase the competitor’s opportunity to take away its customers or prospective customers. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Contractual obligation to provide water service to a recreational subdivision, as well as the actual delivery thereof, directly affect a utility’s ability to function as a utility. State ex rel. Utils. Comm'n v. Carolina Forest Util., Inc., 21 N.C. App. 146, 203 S.E.2d 410, 1974 N.C. App. LEXIS 1741 (1974).

Authority to Allow Use of Availability Charge. —

The Utilities Commission has jurisdiction and authority to allow the use of an availability charge in a rate schedule for a recreational subdivision, should any be deserved. State ex rel. Utils. Comm'n v. Carolina Forest Util., Inc., 21 N.C. App. 146, 203 S.E.2d 410, 1974 N.C. App. LEXIS 1741 (1974).

Landowners in a recreational subdivision who pay availability charges are “consumers” or stand in a consumer-like relationship to the utility providing water service. State ex rel. Utils. Comm'n v. Carolina Forest Util., Inc., 21 N.C. App. 146, 203 S.E.2d 410, 1974 N.C. App. LEXIS 1741 (1974).

Jurisdiction over Rates and Service of Duke Power Company. —

The Utilities Commission has general and supervisory jurisdiction over the retail electric rates and service of Duke Power Company pursuant to this Chapter. Duke Power Co. v. City of High Point, 22 N.C. App. 91, 205 S.E.2d 774, 1974 N.C. App. LEXIS 2253, cert. denied, 285 N.C. 661, 207 S.E.2d 752, 1974 N.C. LEXIS 1084 (1974).

North Carolina rates may not be structured by external system usage. Such action is outside the intended scope of the Commission’s authority under this section. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

Recovery of Reasonable Cost of Approved Gas Exploration Projects. —

The Commission, in ordering that the reasonable costs of approved exploration projects were to be recoverable through tracking rate increases, acted within its acknowledged duty and authority to compel adequate and efficient utility service to the citizens of this State, where it was clear from the Commission’s findings that, without additional gas supplies, the gas utilities would be unable to render adequate service to their customers, that exploration programs were the most feasible means for obtaining these additional supplies, and that the utilities were unable, through traditional methods of financing, to fund sufficient exploration projects to obtain these supplies. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Order prescribing different Private Line Service rates for AT&T’s nonreseller (end user) customers and its reseller customers upon its face was discriminatory, and absent legally adequate reasons in the order why it was not unjustly discriminatory within the meaning of subdivision (4) of this section, the order would be vacated and the cause remanded to the Commission for further proceedings. State ex rel. Utils. Comm'n v. AT&T Communications of S. States, Inc., 321 N.C. 586, 364 S.E.2d 386, 1988 N.C. LEXIS 15 (1988).

The capture of supplier refunds for the purpose of funding the expansion fund does not constitute a taking without compensation in violation of the Fifth and Fourteenth Amendments to the United States Constitution and the “law of the land” clause of N.C. Const., Art. I, § 19. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 336 N.C. 657, 446 S.E.2d 332, 1994 N.C. LEXIS 397 (1994).

Plan for Compensation to Local Exchange Companies for Lost Revenues During Transition — Not Invalid. —

Plan requiring compensation to local exchange companies for lost revenues during transition period did not violate the equal protection clause or the commerce clause, nor conflict with federal antitrust and communications objectives. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Distribution of Gain From Sale of Water and Sewage Facilities. —

North Carolina Utilities Commission’s assigning a portion of the gain on sale from a municipal utility’s purchase of the existing water and sewer facilities of a publicly franchised utility to the publicly franchised utility’s remaining ratepayers, instead of assigning all of the gain on sale to the publicly franchised utility’s shareholders, was approved on review pursuant to G.S. 62-94 because the Commission did not violate the Commission’s authority under G.S. 62-2 and G.S. 62-23. State ex rel. Utils. Comm'n v. Carolina Water Serv., 225 N.C. App. 120, 738 S.E.2d 187, 2013 N.C. App. LEXIS 55 (2013).

Federal Jurisdiction over Disputes Arising Under This Statute. —

The district court erred in asserting federal jurisdiction under 47 U.S.C. § 252(e)(6) over disputes involving contract administration, interpretation and enforcement; the interconnection agreements at the core of those disputes were submitted to the NCUC and approved by it, and no judicial review was sought from these State commission determinations pursuant to this section. BellSouth Telecomms. v. North Carolina Utils. Comm'n, 240 F.3d 270, 2001 U.S. App. LEXIS 2159 (4th Cir. 2001), vacated, 535 U.S. 1091, 122 S. Ct. 2287, 152 L. Ed. 2d 1047, 2002 U.S. LEXIS 3820 (2002).

Same — Not a Penalty or Damages. —

Plan requiring compensation to local exchange companies for lost revenues during transition period did not impose a “penalty” or constitute money damages, and could more appropriately be considered as a prerequisite to receiving a certificate. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Same — Statutorily Authorized. —

Plan requiring compensation to local exchange companies for lost revenues during transition period was reasonably calculated to provide protection for the local exchanges which provided needed services to local exchange customers, and was a proper “term” or “condition” of certification which was consistent with the public interest. The plan was therefore statutorily authorized. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

§ 62-3. Definitions.

As used in this Chapter, unless the context otherwise requires, the term:

  1. “Broadband service” means any service that consists of or includes a high-speed access capability to transmit at a rate of not less than 200 kilobits per second in either the upstream or downstream direction and either (i) is used to provide access to the Internet, or (ii) provides computer processing, information storage, information content, or protocol conversion, including any service applications or information service provided over such high-speed access service. “Broadband service” does not include intrastate service that was tariffed by the Commission and in effect as of the effective date of this subdivision.
  2. “Broker,” with regard to motor carriers of passengers, means any person not included in the term “motor carrier” and not a bona fide employee or agent of any such carrier, who or which as principal or agent engages in the business of selling or offering for sale any transportation of passengers by motor carrier, or negotiates for or holds himself, or itself, out by solicitation, advertisements, or otherwise, as one who sells, provides, furnishes, contracts, or arranges for such transportation for compensation, either directly or indirectly.
  3. “Bus company” means any common carrier by motor vehicle which holds itself out to the general public to engage in the transportation by motor vehicle in intrastate commerce of passengers over fixed routes or in charter operations, or both, except as exempted in G.S. 62-260.
  4. “Certificate” means a certificate of public convenience and necessity issued by the Commission to a person or public utility or a certificate of authority issued by the Commission to a bus company.
  5. “Certified mail” means such mail only when a return receipt is requested.
  6. “Charter operations” with regard to bus companies means the transportation of a group of persons for sightseeing purposes, pleasure tours, and other types of special operations, or the transportation of a group of persons who, pursuant to a common purpose and under a single contract, and for a fixed charge for the vehicle, have acquired the exclusive use of a passenger-carrying motor vehicle to travel together as a group to a specified destination or for a particular itinerary, either agreed upon in advance or modified by the chartered group after having left the place of origin.
  7. “Commission” means the North Carolina Utilities Commission.
  8. “Common carrier” means any person, other than a carrier by rail, which holds itself out to the general public to engage in transportation of persons or household goods for compensation, including transportation by bus, truck, boat or other conveyance, except as exempted in G.S. 62-260.
  9. “Common carrier by motor vehicle” means any person which holds itself out to the general public to engage in the transportation by motor vehicle in intrastate commerce of persons or household goods or any class or classes thereof for compensation, whether over regular or irregular routes, or in charter operations, except as exempted in G.S. 62-260.
  10. “Competing local provider” means any person applying for a certificate to provide local exchange or exchange access services in competition with a local exchange company.
  11. , (9) Repealed by Session Laws 1995, c. 523, s. 1.
  12. “Fixed route” means the specific highway or highways over which a bus company is authorized to operate between fixed termini.
  13. “Foreign commerce” means commerce between any place in the United States and any place in a foreign country, or between places in the United States through any foreign country.
  14. “Franchise” means the grant of authority by the Commission to any person to engage in business as a public utility, whether or not exclusive or shared with others or restricted as to terms and conditions and whether described by area or territory or not, and includes certificates, and all other forms of licenses or orders and decisions granting such authority.
  15. “Highway” means any road or street in this State used by the public or dedicated or appropriated to public use.
  16. “Industrial plant” means any plant, mill, or factory engaged in the business of manufacturing.
  17. “Interstate commerce” means commerce between any place in a state and any place in another state or between places in the same state through another state.
  18. “Intrastate commerce” means commerce between points and over a route or within a territory wholly within this State, which commerce is not a part of a prior or subsequent movement to or from points outside of this State in interstate or foreign commerce, and includes all transportation within this State for compensation in interstate or foreign commerce which has been exempted by Congress from federal regulation.
  19. “Intrastate operations” means the transportation of persons or household goods for compensation in intrastate commerce.
  20. “Local exchange company” means a person holding, on January 1, 1995, a certificate to provide local exchange services or exchange access services.
  21. “Motor carrier” means a common carrier by motor vehicle.
  22. “Motor vehicle” means any vehicle, machine, tractor, semi-trailer, or any combination thereof, which is propelled or drawn by mechanical power and used upon the highways within the State.
  23. “Municipality” means any incorporated community, whether designated in its charter as a city, town, or village.
  24. Repealed by Session Laws 1995, c. 523, s. 1.
  25. “Person” means a corporation, individual, copartnership, company, association, or any combination of individuals or organizations doing business as a unit, and includes any trustee, receiver, assignee, lessee, or personal representative thereof.
  26. “Plug-in electric vehicle” [means] a four-wheeled motor vehicle that meets each of the following requirements:
    1. Is made by a manufacturer primarily for use on public streets, roads, and highways and meets National Highway Traffic Safety Administration standards included in 49 C.F.R. § 571.
    2. Has not been modified from original manufacturer specifications with regard to power train or any manner of powering the vehicle.
    3. Is rated at not more than 8,500 pounds unloaded gross vehicle weight.
    4. Has a maximum speed capability of at least 65 miles per hour.
    5. Draws electricity from a battery that has all of the following characteristics:
      1. A capacity of not less than four kilowatt hours.
      2. Capable of being recharged from an external source of electricity.
      3. Transporting persons or household goods by street, suburban or interurban bus for the public for compensation;
      4. Transporting persons or household goods by motor vehicles or any other form of transportation for the public for compensation, except motor carriers exempted in G.S. 62-260, carriers by rail, and carriers by air;
      5. Transporting or conveying gas, crude oil or other fluid substance by pipeline for the public for compensation;
      6. Conveying or transmitting messages or communications by telephone or telegraph, or any other means of transmission, where such service is offered to the public for compensation.
  27. “Private carrier” means any person, other than a carrier by rail, not included in the definitions of common carrier, which transports in intrastate commerce in its own vehicle or vehicles property of which such person is the owner, lessee, or bailee, when such transportation is for the purpose of sale, lease, rent, or bailment, or when such transportation is purely an incidental adjunct to some other established private business owned and operated by such person other than the transportation of household goods for compensation.
  28. a. “Public utility” means a person, whether organized under the laws of this State or under the laws of any other state or country, now or hereafter owning or operating in this State equipment or facilities for:
  29. “Rate” means every compensation, charge, fare, tariff, schedule, toll, rental and classification, or any of them, demanded, observed, charged or collected by any public utility, for any service product or commodity offered by it to the public, and any rules, regulations, practices or contracts affecting any such compensation, charge, fare, tariff, schedule, toll, rental or classification.
  30. “Route” means the course or way which is traveled; the road or highway over which motor vehicles operate.
  31. “Securities” means stock, stock certificates, bonds, notes, debentures, or other evidences of ownership or of indebtedness, and any assumption or guaranty thereof.
  32. “Service” means any service furnished by a public utility, including any commodity furnished as a part of such service and any ancillary service or facility used in connection with such service.
  33. “Small power producer” means a person or corporation owning or operating an electrical power production facility that qualifies as a “small power production facility” under 16 U.S.C. § 796, as amended.
  34. The word “State” means the State of North Carolina; “state” means any state.
  35. “Town” means any unincorporated community or collection of people having a geographical name by which it may be generally known and is so generally designated.
  36. “Panel” means a panel of three commissioners, a division of the Utilities Commission authorized for the purpose of carrying out certain functions of the Commission.

1. Producing, generating, transmitting, delivering or furnishing electricity, piped gas, steam or any other like agency for the production of light, heat or power to or for the public for compensation; provided, however, that the term “public utility” shall not include persons who construct or operate an electric generating facility, the primary purpose of which facility is either for (i) a person’s own use and not for the primary purpose of producing electricity, heat, or steam for sale to or for the public for compensation or (ii) a person who constructs or operates an eligible solar energy facility on the site of a customer’s property and leases such facility to that customer, as provided by and subject to the limitations of Article 6B of this Chapter;

2. Diverting, developing, pumping, impounding, distributing or furnishing water to or for the public for compensation, or operating a public sewerage system for compensation; provided, however, that the term “public utility” shall not include any person or company whose sole operation consists of selling water or sewer service to less than 15 residential customers, except that any person or company which constructs a water or sewer system in a subdivision with plans for 15 or more lots and which holds itself out by contracts or other means at the time of said construction to serve an area containing more than 15 residential building lots shall be a public utility at the time of such planning or holding out to serve such 15 or more building lots, without regard to the number of actual customers connected;

b. The term “public utility” shall for ratemaking purposes include any person producing, generating or furnishing any of the foregoing services to another person for distribution to or for the public for compensation.

c. The term “public utility” shall include all persons affiliated through stock ownership with a public utility doing business in this State as parent corporation or subsidiary corporation to such an extent that the Commission shall find that such affiliation has an effect on the rates or service of such public utility.

d. The term “public utility,” except as otherwise expressly provided in this Chapter, shall not include the following:

1. A municipality, county, or a city, town, or village.

2. A special district, public authority, or unit of local government, as those terms are defined in G.S. 159-7(b) and that is subject to the provisions of Chapter 159, Subchapter III, Article 3 of the General Statutes.

3. An electric or telephone membership corporation.

4. Any person not otherwise a public utility who furnishes such service or commodity only to himself, his employees or tenants when such service or commodity is not resold to or used by others.

d1. Any person other than a nonprofit organization serving only its members, who distributes or provides utility service to his employees or tenants by individual meters or by other coin-operated devices with a charge for metered or coin-operated utility service shall be a public utility within the definition and meaning of this Chapter with respect to the regulation of rates and provisions of service rendered through such meter or coin-operated device imposing such separate metered utility charge.

d2. If any person conducting a public utility shall also conduct any enterprise not a public utility, such enterprise is not subject to the provisions of this Chapter.

d3. A water or sewer system owned by a homeowners’ association that provides water or sewer service only to members or leaseholds of members is not subject to the provisions of this Chapter.

e. The term “public utility” shall include the University of North Carolina insofar as said University supplies telephone service, electricity or water to the public for compensation from the University Enterprises defined in G.S. 116-41.1(9).

f. The term “public utility” shall include the Town of Pineville insofar as said town supplies telephone services to the public for compensation. The territory to be served by the Town of Pineville in furnishing telephone services, subject to the Public Utilities Act, shall include the town limits as they exist on May 8, 1973, and shall also include the area proposed to be annexed under the town’s ordinance adopted May 3, 1971, until January 1, 1975.

g. The term “public utility” shall not include a hotel, motel, time share or condominium complex operated primarily to serve transient occupants, which imposes charges to occupants for local, long-distance, or wide area telecommunication services when such calls are completed through the use of facilities provided by a public utility, and provided further that the local services received are rated in accordance with the provisions of G.S. 62-110(d) and the applicable charges for telephone calls are prominently displayed in each area where occupant rooms are located.

h. The term “public utility” shall not include the resale of electricity by (i) a campground operated primarily to serve transient occupants, or (ii) a marina; provided that (i) the campground or marina charges no more than the actual cost of the electricity supplied to it, (ii) the amount of electricity used by each campsite or marina slip occupant is measured by an individual metering device, (iii) the applicable rates are prominently displayed at or near each campsite or marina slip, and (iv) the campground or marina only resells electricity to campsite or marina slip occupants.

i. The term “public utility” shall not include the State, the Department of Information Technology, or the Microelectronics Center of North Carolina in the provision or sharing of broadband telecommunications services with non-State entities or organizations of the kind or type set forth in G.S. 143B-1371.

j. The term “public utility” shall not include any person, not otherwise a public utility, conveying or transmitting messages or communications by mobile radio communications service. Mobile radio communications service includes one-way or two-way radio service provided to mobile or fixed stations or receivers using mobile radio service frequencies.

k. The term “public utility” shall not include a regional natural gas district organized and operated pursuant to Article 28 of Chapter 160A of the General Statutes.

l . The term “public utility” shall include a city or a joint agency under Part 1 of Article 20 of Chapter 160A of the General Statutes that provides service as defined in G.S. 62-3(23)a.6. and is subject to the provisions of G.S. 160A-340.1.

m. The term “public utility” shall not include a Ferry Transportation Authority created pursuant to Article 29 of Chapter 160A of the General Statutes.

n. The term “public utility” shall not include a person who uses an electric vehicle charging station to resell electricity to the public for compensation, provided that all of the following apply:

1. The reseller has procured the electricity from an electric power supplier, as defined in G.S. 62-133.8(a)(3), that is authorized to engage in the retail sale of electricity within the territory in which the electric vehicle charging service is provided.

2. All resales are exclusively for the charging of plug-in electric vehicles.

3. The charging station is immobile.

4. Utility service to an electric vehicle charging station shall be provided subject to the electric power supplier’s terms and conditions.

Nothing in this sub-subdivision shall be construed to limit the ability of an electric power supplier to use electric vehicle charging stations to furnish electricity for charging electric vehicles. Any increases in customer demand or energy consumption associated with transportation electrification shall not constitute found revenues for an electric public utility.

History. 1913, c. 127, s. 7; C.S., s. 1112(b); 1933, c. 134, ss. 3, 8; c. 307, s. 1; 1937, c. 108, s. 2; 1941, cc. 59, 97; 1947, c. 1008, s. 3; 1949, c. 1132, s. 4; 1953, c. 1140, s. 1; 1957, c. 1152, s. 13; 1959, c. 639, ss. 12, 13; 1963, c. 1165, s. 1; 1967, c. 1094, ss. 1, 2; 1971, c. 553; c. 634, s. 1; cc. 894, 895; 1973, c. 372, s. 1; 1975, c. 243, s. 2; cc. 254, 415; 1979, c. 652, s. 1; 1979, 2nd Sess., c. 1219, s. 1; 1981 (Reg. Sess., 1982), c. 1186, s. 2; 1985, c. 676, s. 4; 1987, c. 445, s. 2; 1989, c. 110; 1993, c. 349, s. 1; 1993 (Reg. Sess., 1994), c. 777, s. 1(b); 1995, c. 27, ss. 2, 3; c. 509, s. 34; c. 523, s. 1; 1997-426, s. 8; 1997-437, s. 1; 1998-128, ss. 1-3; 2004-199, s. 1; 2004-203, s. 37(a); 2005-95, s. 2; 2011-84, s. 2(a); 2015-241, s. 7A.4(e); 2017-120, s. 2; 2017-192, ss. 1(a), 6(b); 2019-132, s. 1(a), (b); 2021-23, ss. 2, 25.

Cross References.

For provision making small power producers as defined in subdivision (27a) of this section subject to the provisions of Part 3 of Article 21 of Chapter 143, the Dam Safety Law, even though certified by the North Carolina Utilities Commission, see G.S. 143-215.25A.

Editor’s Note.

Chapter 55, referred to in subdivision (23)c of this section, was rewritten, effective July 1, 1990. For definitions applicable to that chapter, see now G.S. 55-1-40.

Session Laws 2011-84, s. 2(a), which added subdivision (23)( l ), was applicable to the provision of communications service by a city or joint agency under Part 1 of Article 20 of Chapter 160A of the General Statutes on and after May 21, 2011.

Session Laws 2011-84, s. 2(b), provides: “This section shall not be construed to change the regulatory nature of or requirements applicable to any particular service currently regulated by the Commission under Chapter 62 of the General Statutes.”

Session Laws 2011-84, s. 5, as amended by Session Laws 2014-115, s. 16.1, provides: “Sections 2, 3, and 4 of this act do not apply to a city or joint agency providing communications service as of January 1, 2011, provided the city or joint agency limits the provision of communications service as provided in G.S. 160A-340.2(c). In the event a city subject to the exemption set forth in this section provides communications service to a customer outside the limits set forth in G.S. 160A-340.2(c), the city shall have 30 days from the date of notice or discovery to cease providing service to the customer without loss of the exemption.”

Session Laws 2011-84, s. 6, provides: “Any city that is designated as a public utility under Chapter 62 of the General Statutes when this act becomes law shall not be subject to the provisions of this act with respect to any of its operations that are authorized by that Chapter.”

Session Laws 2021-23, s. 25, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “ratemaking” for the terms “rate-making” or “rate making” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in subdivision (23)b.

Effect of Amendments.

Session Laws 2004-199, s. 1, and 2004-203, s. 37(a), both effective August 17, 2004, substituted “Office of Information Technology Services” for “Office of the State Controller” in sub-subdivision (23)i.

Session Laws 2005-95, s. 2, effective June 21, 2005, added present subsection (1) and redesignated former subsections (1) and (1a) as present subsections (1a) and (1b).

Session Laws 2015-241, s. 7A.4(e), effective September 18, 2015, substituted “Department of Information Technology” for “Office of Information Technology Services” in subdivision (23)i.

Session Laws 2017-120, s. 2, effective July 18, 2017, added subdivision (23)m.

Session Laws 2017-192, ss. 1(a) and 6(b), effective July 27, 2017, in sub-sub-subdivision (23)a.1., substituted “facility is either for (i) a person’s” for “facility is for such person’s”, added “or (ii) a person who constructs or operates an eligible solar energy facility on the site of a customer’s property and leases such facility to that customer, as provided by and subject to the limitations of Article 6B of this Chapter”, and made a related punctuation change; and substituted “that qualifies as a ‘small power production facility’ under 16 U.S.C. § 796, as amended.” for “with a power production capacity which, together with any other facilities located at the same site, does not exceed 80 megawatts of electricity and which depends upon renewable resources for its primary source of energy. For the purposes of this section, renewable resources shall mean: hydroelectric power. A small power producer shall not include persons primarily engaged in the generation or sale of electricity from other than small power production facilities” at the end of subdivision (27a).

Session Laws 2019-132, s. 1(a), (b), effective July 19, 2019, added subdivision (21a) and sub-subdivision (23)n.

Session Laws 2021-23, s. 2, effective May 17, 2021, inserted “person or” prior to “public utility” in subdivision (2); inserted “or sewer service” prior to “to less than 15 residential customers” and “or sewer” prior to “system in a subdivision” in subdivision (23)a.2; deleted “as defined in G.S. 55-2” in subdivision (23)c; rewrote subdivision (23)d; deleted “switched” prior to “broadband” and substituted “G.S. 143B-1371” for “G.S. 143B-426.39” in subdivision (23)i.

Legal Periodicals.

For survey of 1978 administrative law, see 57 N.C.L. Rev. 831 (1979).

CASE NOTES

Definitions Not Controlling Where Terms Are Used Elsewhere. —

The definitions of “public utility” and “franchise” contained in this section are not controlling in determining whether an agreement of a municipality constitutes a franchise or a license, since the definitions of the statute do not purport to be authoritative definitions of those terms as used elsewhere. Shaw v. City of Asheville, 269 N.C. 90, 152 S.E.2d 139, 1967 N.C. LEXIS 1029 (1967).

The term “franchise,” as used by the courts and by text writers, is not limited to a special right granted to a public utility, as it is defined in this section. Shaw v. City of Asheville, 269 N.C. 90, 152 S.E.2d 139, 1967 N.C. LEXIS 1029 (1967).

Applicability of Article 8. —

The General Assembly intended Article 8 to apply to all public utilities doing business in this State, whether they be foreign or domestic corporations, and even though they are also engaged in interstate commerce. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 288 N.C. 201, 217 S.E.2d 543, 1975 N.C. LEXIS 894 (1975).

There is nothing in the language of Article 8 or of the Public Utilities Act generally to support the contention that Article 8 is not applicable to a multistate foreign corporation engaged in interstate commerce. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 22 N.C. App. 714, 207 S.E.2d 771, 1974 N.C. App. LEXIS 2427 (1974), aff'd, 288 N.C. 201, 217 S.E.2d 543, 1975 N.C. LEXIS 894 (1975).

“Public” means the whole body politic, the body of the people at large, the people as a whole. State ex rel. Utils. Comm'n v. Edmisten, 40 N.C. App. 109, 252 S.E.2d 516, 1979 N.C. App. LEXIS 2599 (1979), aff'd in part and rev'd in part, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980).

What Is the “Public” Dependent on Regulatory Circumstances. —

Whether any given enterprise is a public utility within the meaning of a regulatory scheme does not depend on some abstract, formulistic definition of “public” to be thereafter universally applied. What is the “public” in any given case depends rather on the regulatory circumstances of that case. Some of these circumstances are: (1) the nature of the industry sought to be regulated; (2) the type of market served by the industry; (3) the kind of competition that naturally inheres in that market; and (4) the effect of nonregulation or exemption from regulation of one or more persons engaged in the industry. The meaning of “public” must, in the final analysis, be such as will, in the context of the regulatory circumstances, accomplish the legislature’s purpose and comport with its public policy. State ex rel. Utils. Comm'n v. Simpson, 295 N.C. 519, 246 S.E.2d 753, 1978 N.C. LEXIS 1018 (1978).

In determining the scope of the Commission’s authority, the emphasis should be placed on the public utility function rather than a literal reading of the statutory definition of “public utility,” and the statutory definition should not be read so narrowly as to preclude commission’s jurisdiction over a function which is required to provide adequate service to the subscribers. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Definition of “Public Utility” Cannot Be Expanded. —

Neither the Commission nor the Supreme Court has authority to add to the types of business defined by the legislature as public utilities. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966); State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 93 N.C. App. 260, 377 S.E.2d 772, 1989 N.C. App. LEXIS 173 (1989), rev'd, 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Test of System as Public Utility. —

One test to determine whether a plant or system is a public utility is whether the public may enjoy it by right or by permission only. It is immaterial that the service is limited to a specified area and that the facilities are limited in capacity. State ex rel. Utils. Comm'n v. Edmisten, 40 N.C. App. 109, 252 S.E.2d 516, 1979 N.C. App. LEXIS 2599 (1979), aff'd in part and rev'd in part, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980).

Service Up to Capacity as Service to “Public”. —

One offers service to the “public” within the meaning of subparagraph 6 of paragraph a of subdivision (23) when he holds himself out as willing to serve all who apply up to the capacity of his facilities. It is immaterial, in this connection, that his service is limited to a specified area and his facilities are limited in capacity. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Sewage Treatment System Is Public Utility. —

The operation of a sewage treatment system for compensation is a public utility within the meaning of the Public Utilities Act. Ocean Glen Townhouse Condominium Owners Ass'n Phase I v. State ex rel. N.C. Utils. Comm'n, 126 N.C. App. 495, 486 S.E.2d 223, 1997 N.C. App. LEXIS 532 (1997).

Sanitary District Was Not a Utility. —

Water customer who was charged late fees failed to state a claim against the sanitary district for overcharging under N.C. Admin. Code tit. 4, r. 11.R12-9 (June 2010) because the sanitary district was a quasi-municipal corporation and therefore not a “utility” within the North Carolina Public Utilities Commission’s purview under G.S. 62-3(19) and (23). There was a complete absence of justiciable fact, justifying the trial court’s award of attorney’s fees against the customers under G.S. 6-21.5. Wayne St. Mobile Home Park, LLC v. N. Brunswick Sanitary Dist., 213 N.C. App. 554, 713 S.E.2d 748, 2011 N.C. App. LEXIS 1481 (2011).

As to “service” rendered in contemplation of former statute, see State v. Andrews, 191 N.C. 545, 132 S.E. 568, 1926 N.C. LEXIS 120 (1926).

Status of the grantee was a material factor in determining the validity of a grant of a franchise under the authority of former G.S. 160-2, for that statute authorized municipal corporations to grant franchises only to “public utilities,” though it did not necessarily follow that such grantee had to be the operator of a business within the definition of “public utility” contained in this section. Kornegay v. City of Raleigh, 269 N.C. 155, 152 S.E.2d 186, 1967 N.C. LEXIS 1037 (1967).

If Applicant Is Not “Public Utility,” Issuance of Certificate Is Nullity. —

If an applicant’s proposed service is not within the definition of “public utility” contained in subdivision (23) of this section, the issuance of a certificate of public convenience and necessity by the Commission to the applicant would be a nullity. It would not supply a basis for a further order conferring upon the applicant a right which may be granted only to a public utility. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Campground Not Within Exception. —

Because owners of a campground charged occupants more than the actual cost of electricity supplied to the campground by an electric company, the owners were not excluded from the statutory definition of public utility under G.S. 62-3(23)(h). Shepard v. Bonita Vista Props., L.P., 191 N.C. App. 614, 664 S.E.2d 388, 2008 N.C. App. LEXIS 1489 (2008), aff'd, 363 N.C. 252, 675 S.E.2d 332, 2009 N.C. LEXIS 343 (2009).

The fact that a corporation has the authority to, and does, engage in private business in addition to its public service does not deprive it of its status as a public service corporation. A public service (public utility) corporation having the power of eminent domain makes such corporation amenable to State control through the Utilities Commission. State ex rel. Utils. Comm'n v. Edmisten, 40 N.C. App. 109, 252 S.E.2d 516, 1979 N.C. App. LEXIS 2599 (1979), aff'd in part and rev'd in part, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980).

A mobile radio service falls clearly within the definition of “public utility” in subparagraph 6 of paragraph a of subdivision (23). State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

A medical doctor whose communication service consisted of seven two-way radios, three “beeper” radio devices and one base station, who was providing service only to 10 other members of the County Medical Society, was engaged in the operation of a public utility within the meaning of G.S. 62-3(23)a6 and former 62-119(3). State ex rel. Utils. Comm'n v. Simpson, 32 N.C. App. 543, 232 S.E.2d 871, 1977 N.C. App. LEXIS 1990 (1977), aff'd, 295 N.C. 519, 246 S.E.2d 753, 1978 N.C. LEXIS 1018 (1978).

Telephone Answering or Message Relaying Service Not a “Public Utility”. —

Neither a telephone answering nor a message relaying service is a public utility within the purview of subdivision (23). State ex rel. Utils. Comm'n v. Two Way Radio Serv., Inc., 272 N.C. 591, 158 S.E.2d 855, 1968 N.C. LEXIS 703 (1968).

Sand-Pit Company Not a “Public Utility.” —

Sand-pit company which did not own or operate any trucks to haul its sand was not a “public utility” as defined by this section. Gordon v. Garner, 127 N.C. App. 649, 493 S.E.2d 58, 1997 N.C. App. LEXIS 1192 (1997).

Municipal corporations are specifically excluded from the definition of a “public utility” in subdivision (23) of this section. Dale v. City of Morganton, 270 N.C. 567, 155 S.E.2d 136, 1967 N.C. LEXIS 1389 (1967); State ex rel. Utils. Comm'n v. Town of Pineville, 13 N.C. App. 663, 187 S.E.2d 473, 1972 N.C. App. LEXIS 2308 (1972); State ex rel. Utils. Comm'n v. Hunt Mfg. Co., 16 N.C. App. 335, 192 S.E.2d 16, 1972 N.C. App. LEXIS 1699 (1972).

And Are Not Subject to Commission’s Regulation. —

A municipal corporation distributing and selling electric energy to its inhabitants, and to others in its vicinity, is not subject to regulation by the North Carolina Utilities Commission, and the provisions of this Chapter do not apply to it, except as otherwise expressly stated therein. Dale v. City of Morganton, 270 N.C. 567, 155 S.E.2d 136, 1967 N.C. LEXIS 1389 (1967); State ex rel. Utils. Comm'n v. Hunt Mfg. Co., 16 N.C. App. 335, 192 S.E.2d 16, 1972 N.C. App. LEXIS 1699 (1972).

Where parties constructed water mains from end of municipal lines to their properties, permitting others to tap into the mains, and the municipality installed meters and furnished water to the others directly, parties were not public utilities within the Public Utilities Act of 1933 so as to give the Utilities Commission jurisdiction. State ex rel. N.C. Utils. Comm'n v. New Hope Rd. Water Co., 248 N.C. 27, 102 S.E.2d 377, 1958 N.C. LEXIS 320 (1958).

Appellate Court Had No Jurisdiction to Review Commission’s Interlocutory Order. —

Water and sewer processing facilities part-owner’s appeal of interlocutory orders of the North Carolina Utilities Commission holding that the part-owner was a public utility under G.S. 62-3(23)a.2 and was subject to the Commission’s jurisdiction was dismissed as the absence of any exceptions to G.S. 62-90 or G.S. 7A-29, allowing review of interlocutory orders of the Commission, required the appellate court to conclude that it had no jurisdiction to consider appeals of interlocutory orders of the Commission; further, the appellate court did not have authority under G.S. 7A-32(c) to review the part-owner’s issues as there was no final order of the Commission. State ex rel. Utils. Comm'n v. Buck Island, Inc., 158 N.C. App. 536, 581 S.E.2d 122, 2003 N.C. App. LEXIS 1186 (2003).

The delivery of power by a Tennessee corporation domesticated to do business in this State to Tennessee Valley Authority and the distribution by TVA of that power under pooling and apportionment agreements to North Carolina utilities for distribution in North Carolina was the furnishing of electricity “to another person for distribution to or for the public for compensation” within the meaning of subdivision (23)b of this section. State ex rel. Utils. Comm'n v. Edmisten, 40 N.C. App. 109, 252 S.E.2d 516, 1979 N.C. App. LEXIS 2599 (1979), aff'd in part and rev'd in part, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980).

The word “rate,” as used in the Public Utilities Act, refers not only to the monetary amount which each customer must ultimately pay, but also to the published method or schedule by which that amount is figured. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

Rate Formula Permissible. —

The definition of “rate” contained in this section is worded in such a broad manner as to encompass the use of a formula, and the fact that the formula must be computed each month does not render it so imprecise as to be statutorily impermissible. State ex rel. Utils. Comm'n v. Edmisten, 26 N.C. App. 662, 217 S.E.2d 201, 1975 N.C. App. LEXIS 2132 (1975), aff'd, 291 N.C. 361, 230 S.E.2d 671, 1976 N.C. LEXIS 996 (1976).

Extension of Rate Increase Unauthorized. —

The contention of the companies and the Commission that other provisions of this Chapter, including subdivision (24) of this section authorizing the Commission to fix reasonable and just rates for public utility service, permit the Commission to extend its previously authorized rate increases “based solely upon the increased cost of fuel” beyond Sept. 1, 1975, contrary to the mandate of G.S. 62-134(e) (now repealed), was utterly without merit. It is well established that when there are two statutes, one dealing specifically with the matter in issue and the other being in general terms which, nothing else appearing, would include the matter in question, the specific statute controls. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 451, 232 S.E.2d 184, 1977 N.C. LEXIS 1214 (1977).

A common carrier by motor vehicle may be defined as a person who is not exempted from regulation under the provisions of G.S. 62-260, and who holds himself out to the general public to engage in transportation of persons or property for compensation. State ex rel. Utils. Comm'n v. J.D. McCotter, Inc., 16 N.C. App. 475, 192 S.E.2d 629, 1972 N.C. App. LEXIS 1744 (1972), aff'd, 283 N.C. 104, 194 S.E.2d 859, 1973 N.C. LEXIS 905 (1973).

Common carrier of petroleum products which commits part of its equipment to dedicated use should not be regarded as a matter of law as a contract carrier, since common carriers participating in the dedicated rate arrangement are also rendering service to the public generally and are providing service impartially to all persons requesting such service. State ex rel. Utils. Comm'n v. Bird Oil Co., 302 N.C. 14, 273 S.E.2d 232, 1981 N.C. LEXIS 1011 (1980).

Whether Party Operating as Common Carrier Question of Law. —

Whether under the undisputed facts a party is operating as a common carrier is a question of law for the court. State ex rel. Utils. Comm'n v. Tar Heel Indus., Inc., 77 N.C. App. 75, 334 S.E.2d 396, 1985 N.C. App. LEXIS 4052 (1985).

The “crucial test” in determining whether an entity is operating as a common carrier is whether it is holding itself out as such. State ex rel. Utils. Comm'n v. Tar Heel Indus., Inc., 77 N.C. App. 75, 334 S.E.2d 396, 1985 N.C. App. LEXIS 4052 (1985).

A common carrier generally is not authorized to act as a contract carrier. State ex rel. Utils. Comm'n v. Tar Heel Indus., Inc., 77 N.C. App. 75, 334 S.E.2d 396, 1985 N.C. App. LEXIS 4052 (1985).

A common carrier must charge all customers uniform rates for the same kind and degree of services; contract carriers, by contrast, are not subject to this requirement. State ex rel. Utils. Comm'n v. Tar Heel Indus., Inc., 77 N.C. App. 75, 334 S.E.2d 396, 1985 N.C. App. LEXIS 4052 (1985).

A “certificate” authorizes performance as a common carrier, while a “permit” authorizes performance as a contract carrier. State ex rel. Utils. Comm'n v. Tar Heel Indus., Inc., 77 N.C. App. 75, 334 S.E.2d 396, 1985 N.C. App. LEXIS 4052 (1985).

A contract carrier is not authorized to act as a common carrier; it may not offer its services to the general public. Indeed, it may serve at most a very limited number of shippers, and then only under a private individual contract with each shipper to be served. State ex rel. Utils. Comm'n v. Tar Heel Indus., Inc., 77 N.C. App. 75, 334 S.E.2d 396, 1985 N.C. App. LEXIS 4052 (1985).

As to what constitutes a contract carrier, see State ex rel. Utils. Comm'n v. Petro. Transp., Inc., 2 N.C. App. 566, 163 S.E.2d 526, 1968 N.C. App. LEXIS 971 (1968).

A company which offers white-water rafting excursions is not a common carrier, because any “transportation” was merely incidental to primary purpose of outdoor adventure, camaraderie, excitement and thrills. Beavers v. Federal Ins. Co., 113 N.C. App. 254, 437 S.E.2d 881, 1994 N.C. App. LEXIS 5 (1994).

Requirements for Permit to Operate as Contract Carrier. —

In addition to the statutory requirements of G.S. 62-262 and subdivision (8) of this section, an applicant for a permit to operate as a contract carrier in North Carolina must conform to the standards set forth by the Utilities Commission. State ex rel. Utils. Comm'n v. American Courier Corp., 8 N.C. App. 358, 174 S.E.2d 814, 1970 N.C. App. LEXIS 1571 (1970).

The definition of “contract carrier” includes charter service. State ex rel. Utils. Comm'n v. Fleming, 235 N.C. 660, 71 S.E.2d 41, 1952 N.C. LEXIS 465 (1952).

Lessor of Vehicles Held Not Contract Carrier. —

Where the owner of trucks leased them to another corporation under an agreement requiring lessor to carry insurance and maintain the vehicles and giving lessee control over the operation of the trucks with right to use same exclusively for the transportation and delivery of lessee’s goods, the lessor was not a contract carrier within the meaning of the statute as it stood in 1949, since the lessor merely leased its vehicles and was not a carrier of any kind, and lessee was solely a private carrier; therefore, lessor was not liable for additional assessment at the “for hire” rates under the statute. Equipment Fin. Corp. v. Scheidt, 249 N.C. 334, 106 S.E.2d 555, 1959 N.C. LEXIS 354 (1959).

Former Definition of Contract Carrier Not Retroactive. —

The definition of “contract carrier” in the Bus Act of 1949 (former G.S. 62-121.43 through 62-121.79) was definitive or regulatory and intended to be applied prospectively with respect to applications for permits as contract carriers under the general provisions of the act, and had no bearing on or relation to the grandfather rights confirmed in the act. To make these definitive and regulatory provisions retroactive, so as to place a limitation on the rights of a carrier under the grandfather clause contained in the act, would be in contravention of his constitutional rights and contrary to due process of law. Moreover, such a construction would completely nullify the grandfather clause and make it feckless. State ex rel. Utils. Comm'n v. Fleming, 235 N.C. 660, 71 S.E.2d 41, 1952 N.C. LEXIS 465 (1952).

For comparison of definitions in Federal Motor Carrier Act and Bus Act of 1949 (former G.S. 62-121.43 through 62-121.79), see State ex rel. Utils. Comm'n v. Fleming, 235 N.C. 660, 71 S.E.2d 41, 1952 N.C. LEXIS 465 (1952).

Legislative Intent as to Water Systems. —

By excluding from its definition of public utility those water systems serving fewer than 10 customers, the General Assembly manifested its clear intent that systems serving 10 or more customers serve a sufficient segment of the public to create a public interest in their regulation, so as to make certain that adequate service is provided at fair rates. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

Provision of Water and Sewage Service “To or for the Public”. —

By selling water to 18 customers and providing sewage disposal service to 19 customers at the time of hearing, individual provided water and sewage disposal service “to or for the public,” where, since her acquisition of the water distribution and sewage disposal facilities, she had provided services to any resident of a house connected thereto who desired the services, and where although she had solicited no customers and had not extended her facilities to any residences not previously served, she had willingly provided service to new customers who moved into homes already connected to her facilities. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

Hospital Not a Public Utility. —

As a hospital was not a “public utility” pursuant to the statutory definition or pursuant to any other judicially recognized definition, a claim that a hospital violated the public utility doctrine when it denied a Canadian-trained doctor staff privileges was properly dismissed for failure to state an actionable claim. Kohn v. Firsthealth of the Carolinas, Inc., 229 N.C. App. 19, 747 S.E.2d 395, 2013 N.C. App. LEXIS 898 (2013).

Public Utility Found. —

North Carolina Utilities Commission properly ruled that the North Carolina Waste Awareness and Reduction Network’s (NC WARN) arrangement with a church to install and maintain a solar panel system constituted a public utility in violation of the Public Utilities Act because NC WARN was operating as a public utility within the meaning of the Public Utilities Act; NC WARN desired to serve customers of its own choosing within an energy company’s territory without oversight. State ex rel. Utils. Comm'n v. N.C. Waste Awareness & Reduction Network, 255 N.C. App. 613, 805 S.E.2d 712, 2017 N.C. App. LEXIS 759 (2017), aff'd, 371 N.C. 109, 812 S.E.2d 804, 2018 N.C. LEXIS 330 (2018).

OPINIONS OF ATTORNEY GENERAL

Municipalities and counties, bodies politic and corporate, are included in the definition of “person” under G.S. 62-3(21). See opinion of Attorney General to Mr. Robert H. Bennink, Jr., General Counsel and Hearing Examiner, North Carolina Utilities Commission, 55 N.C. Op. Att'y Gen. 18 (1985).

The Department of Correction (now Division of Adult Correction), as a State agency, is not a public utility and is not subject to the fee requirements of G.S. 62-302. See Opinion of Attorney General to LaVee Hamer, General Counsel, North Carolina Department of Correction (October 17, 1994).

Western Carolina University (WCU) is not a public utility subject to supervision by the Commission, except that, pursuant to G.S. 116-35, sales to the public of excess power must be “at a rate or rates approved by the Utilities Commission.” See opinion of Attorney General to Mr. Myron L. Coulter, Chancellor, Western Carolina University, 55 N.C. Op. Att'y Gen. 55 (1985).

§ 62-4. Applicability of Chapter.

This Chapter shall not terminate the preexisting Commission or appointments thereto, or any certificates, permits, orders, rules or regulations issued by it or any other action taken by it, unless and until revoked by it, nor affect in any manner the existing franchises, territories, tariffs, rates, contracts, service regulations and other obligations and rights of public utilities, unless and until altered or modified by or in accordance with the provisions of this Chapter.

History. 1963, c. 1165, s. 1.

§ 62-5. Utilities; property affected by boundary certification.

The owner or occupant of a dwelling unit or commercial establishment on improved property that shall be deemed located in whole or in part in the State of North Carolina as a result of the boundary certification described in G.S. 141-9 may continue to receive utility services from the South Carolina utility or its successor that is providing service to the dwelling unit or commercial establishment on January 1, 2017. However, the owner or occupant may, within his or her discretion, elect to have one or more of the utility services being provided to the property by a South Carolina utility on January 1, 2017, be provided by a North Carolina utility as long as the property is located within the North Carolina utility’s service area. A North Carolina utility that is a city or county may require the owner of the property to pay a periodic availability fee authorized by law only if the owner elects to have utility service provided to the dwelling unit or commercial establishment by the North Carolina utility. A South Carolina utility that provides service to the property as authorized in this section is not a public utility under G.S. 62-3(23), and is not subject to regulation by the North Carolina Utilities Commission as it relates to providing the particular utility service involved. For purposes of this section only, the term “South Carolina utility” has the same meaning as the term “utility” or “utilities” in the Code of Laws of South Carolina, and the term “North Carolina utility” has the same meaning as the term “public utility” which is defined in G.S. 62-3(23), and also includes a city or county that provides any of the services listed in G.S. 160A-311 or G.S. 153A-274, an authority organized under the North Carolina Water and Sewer Authorities Act, or an electric or telephone membership corporation.

History. 2016-23, s. 11(a).

Editor’s Note.

Session Laws 2016-23, s. 11(a), effective June 22, 2016, was codified as this section at the direction of the Revisor of Statutes.

Session Laws 2016-23, s. 12(a), is a severability clause.

§§ 62-6 through 62-9.

Reserved for future codification purposes.

Article 2. Organization of Utilities Commission.

§ 62-10. Number; appointment; terms; qualifications; chairman; vacancies; compensation; other employment prohibited.

  1. The North Carolina Utilities Commission shall consist of seven commissioners who shall be appointed by the Governor subject to confirmation by the General Assembly by joint resolution. The names of commissioners to be appointed by the Governor shall be submitted by the Governor to the General Assembly for confirmation by the General Assembly on or before May 1, of the year in which the terms for which the appointments are to be made are to expire. Upon failure of the Governor to submit names as herein provided, the Lieutenant Governor and Speaker of the House jointly shall submit the names of a like number of commissioners to the General Assembly on or before May 15 of the same year for confirmation by the General Assembly. Regardless of the way in which names of commissioners are submitted, confirmation of commissioners must be accomplished prior to adjournment of the then current session of the General Assembly. This subsection shall be subject to the provisions of subsection (c) of this section.
  2. The terms of the commissioners now serving shall expire at the conclusion of the term for which they were appointed which shall remain as before with two regular eight-year terms expiring on July 1 of each fourth year after July 1, 1965, and the fifth term expiring on July 1 of each eighth year after July 1, 1963. The terms of office of utilities commissioners thereafter shall be six years commencing on July 1 of the year in which the predecessor terms expired, and ending on July 1 of the sixth year thereafter.
  3. In order to increase the number of commissioners to seven, the names of two additional commissioners shall be submitted to the General Assembly on or before May 27, 1975, for confirmation by the General Assembly as provided in G.S. 62-10(a). The commissioners so appointed and confirmed shall serve new terms commencing on July 1, 1975, one of which shall be for a period of two years (with the immediate successor serving for a period of six years), and one of which shall be for a period of two years.Thereafter, the terms of office of the additional commissioners shall be for six years as provided in G.S. 62-10(b).
  4. A commissioner in office shall continue to serve until his successor is duly confirmed and qualified but such holdover shall not affect the expiration date of such succeeding term.
  5. On July 1, 1965, and every four years thereafter, one of the commissioners shall be designated by the Governor to serve as chairman of the Commission for the succeeding four years and until his successor is duly confirmed and qualifies. Upon death or resignation of the commissioner appointed as chairman, the Governor shall designate the chairman from the remaining commissioners and appoint a successor as hereinafter provided to fill the vacancy on the Commission.
  6. In case of death, incapacity, resignation or vacancy for any other reason in the office of any commissioner prior to the expiration of his term of office, the name of his successor shall be submitted by the Governor within four weeks after the vacancy arises to the General Assembly for confirmation by the General Assembly. Upon failure of the Governor to submit the name of the successor, the Lieutenant Governor and Speaker of the House jointly shall submit the name of a successor to the General Assembly within six weeks after the vacancy arises. Regardless of the way in which names of commissioners are submitted, confirmation of commissioners must be accomplished prior to the adjournment of the then current session of the General Assembly.
  7. If a vacancy arises or exists pursuant to either subsection (a) or (c) or (f) of this section when the General Assembly is not in session, and the appointment is deemed urgent by the Governor, the commissioner may be appointed and serve on an interim basis pending confirmation by the General Assembly; provided, however, no person may be appointed to serve on an interim basis pending confirmation by the General Assembly if the person was subject to but not confirmed by the General Assembly within the preceding four years. The limitation on appointment contained in this subsection includes, among other things, unfavorable action on a joint resolution for confirmation, such as the resolution failing on any reading in either chamber of the General Assembly, and failure to ratify a joint resolution for confirmation prior to adjournment of the then current session of the General Assembly.
  8. The salary of each commissioner and that of the commissioner designated as chairman shall be set by the General Assembly in the Current Operations Appropriations Act. In lieu of merit and other increment raises paid to regular State employees, each commissioner, including the commissioner designated as chairman, shall receive as longevity pay an amount equal to four and eight-tenths percent (4.8%) of the annual salary set forth in the Current Operations Appropriations Act payable monthly after five years of service, and nine and six-tenths percent (9.6%) after 10 years of service. “Service” means service as a member of the Utilities Commission.
  9. In addition to compensation for their services, each member of the Commission who lives at least 50 miles from the City of Raleigh shall be paid a weekly travel allowance for each week the member travels to the City of Raleigh from the member’s home for business of the Commission. The allowance shall be calculated for each member by multiplying the actual round-trip mileage from that member’s home to the City of Raleigh by the rate-per-mile which is the business standard mileage rate set by the Internal Revenue Service in Rev. Proc. 93-51, December 27, 1993.
  10. The standards of judicial conduct provided for judges in Article 30 of Chapter 7A of the General Statutes shall apply to members of the Commission. Members of the Commission shall be liable to impeachment for the causes and in the manner provided for judges of the General Court of Justice in Chapter 123 of the General Statutes. Members of the Commission shall not engage in any other employment, business, profession, or vocation while in office.
  11. Except as provided in subsection (h1) of this section, members of the Commission shall be reimbursed for travel and subsistence expenses at the rates allowed to State officers and employees by G.S. 138-6(a).

History. 1941, c. 97, s. 2; 1949, c. 1009, s. 1; 1959, c. 1319; 1963, c. 1165, s. 1; 1967, c. 1238; 1975, c. 243, s. 3; c. 867, ss. 1, 2; 1977, c. 468, s. 1; c. 913, s. 2; 1983 (Reg. Sess., 1984), c. 1116, s. 91; 1989, c. 781, s. 41.2; 1993 (Reg. Sess., 1994), c. 769, s. 7.4(b); 1996, 2nd Ex. Sess., c. 18, s. 28.2(b); 1997-443, s. 33.5; 1999-237, s. 28.21(a), (b); 2011-145, s. 14.8A(a); 2018-114, s. 23(a).

Editor’s Note.

Session Laws 2018-114, s. 23(c), made the amendment of subsection (g) by Session Laws 2018-114, s. 23(a), effective June 27, 2018, and applicable to appointments made on or after that date.

Sessions Laws 2018-114, s. 29 is a severability clause.

Effect of Amendments.

Session Laws 2011-145, s. 14.8A(a), effective January 1, 2012, and applicable to all vacancies on the Utilities Commission occurring on or after that date, in the last sentence of subsection (b), substituted “six years” for “eight years” and “sixth year” for “eighth year”; in the last paragraph of subsection (c), substituted “six years” for “eight years”; and made a minor stylistic change in subsection (i).

Session Laws 2018-114, s. 23(a), rewrote subsection (g). For effective date and applicability, see editor’s note.

State Government Reorganization.

The Utilities Commission was transferred to the Department of Commerce by former G.S. 143A-174.

§ 62-11. Oath of office.

Each utilities commissioner before entering upon the duties of his office shall file with the Secretary of State his oath of office to support the Constitution and laws of the United States and the Constitution and laws of the State of North Carolina, and to well and truly perform the duties of his said office as utilities commissioner, and that he is not the agent or attorney of any public utility, or an employee thereof, and that he has no interest in any public utility.

History. 1933, c. 134, s. 5; 1935, c. 280; 1939, c. 404; 1941, c. 97; 1963, c. 1165, s. 1.

§ 62-12. Organization of Commission; adoption of rules and regulations therefor.

To facilitate the work of the Commission and for administrative purposes, the chairman of the Commission, with the consent and approval of the Commission, may organize the work of the Commission in several hearing divisions and operating departments and may designate a member of the Commission as the head of any division or divisions and assign to members of the Commission various duties in connection therewith. Subject to the provisions of the North Carolina Human Resources Act (Article 2 of Chapter 143 of the General Statutes), the Commission shall prepare and adopt rules and regulations governing the personnel, departments or divisions and all internal affairs and business of the Commission.

History. 1941, c. 97, s. 3; 1949, c. 1009, s. 2; 1957, c. 1062, s. 1; 1963, c. 1165, s. 1; 2013-382, s. 9.1(c).

Editor’s Note.

Article 2, Chapter 143, referred to in this section, was repealed by Session Laws 1965, c. 640, s. 1. For present provisions as to State Human Resources System, see G.S. 126-1 through 126-12.

Effect of Amendments.

Session Laws 2013-382, s. 9.1(c), effective August 21, 2013, substituted “North Carolina Human Resources Act” for “State Personnel Act.”

§ 62-13. Chairman to direct Commission.

  1. The chairman shall be the chief executive and administrative officer of the Commission.
  2. The chairman shall determine whether matters pending before the Commission shall be considered or heard initially by the full Commission, a panel of three commissioners, a hearing commissioner, or a hearing examiner. Subject to the rules of the Commission, the chairman shall assign members of the Commission to proceedings and shall assign members to preside at proceedings before the full Commission or a panel of three commissioners.
  3. The chairman, the presiding commissioner, hearing commissioner, or hearing examiner shall hear and determine procedural motions or petitions not determinative of the merits of the proceedings and made prior to hearing; and at hearing shall make all rulings on motions and objections.
  4. The chairman acting alone, or any three commissioners, may initiate investigations, complaints, or any other proceedings within the jurisdiction of the Commission.

History. 1941, c. 97, s. 4; 1957, c. 1062, s. 2; 1963, c. 1165, s. 1; 1975, c. 243, ss. 9, 10; 1977, c. 468, s. 2; c. 913, s. 2.

§ 62-14. Commission staff; structure and function.

  1. The Commission is authorized and empowered to employ hearing examiners; court reporters; a chief clerk and deputy clerk; a commission attorney and assistant commission attorney; transportation and pipeline safety inspectors; and such other professional, administrative, technical, and clerical personnel as the Commission may determine to be necessary in the proper discharge of the Commission’s duty and responsibility as provided by law. The chairman shall organize and direct the work of the Commission staff.
  2. The salaries and compensation of all such personnel shall be fixed in the manner provided by law for fixing and regulating salaries and compensation by other State agencies.
  3. The chairman, within allowed budgetary limits and as allowed by law, shall authorize and approve travel, subsistence and related expenses of such personnel, incurred while traveling on official business.

History. 1963, c. 1165, s. 1; 1977, c. 468, s. 3.

§ 62-15. Office of executive director; Public Staff, structure and function.

  1. There is established in the Commission the office of executive director, whose salary and longevity pay shall be the same as that fixed for members of the Commission. “Service” for purposes of longevity pay means service as executive director of the Public Staff. The executive director shall be appointed by the Governor subject to confirmation by the General Assembly by joint resolution. The name of the executive director appointed by the Governor shall be submitted to the General Assembly on or before May 1 of the year in which the term of his office begins. The term of office for the executive director shall be six years, and the initial term shall begin July 1, 1977. The executive director may be removed from office by the Governor in the event of his incapacity to serve; and the executive director shall be removed from office by the Governor upon the affirmative recommendation of a majority of the Commission, after consultation with the Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources, the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, and the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources of the General Assembly. In case of a vacancy in the office of executive director for any reason prior to the expiration of his term of office, the name of his successor shall be submitted by the Governor to the General Assembly, not later than four weeks after the vacancy arises. If a vacancy arises in the office when the General Assembly is not in session, the executive director shall be appointed by the Governor to serve on an interim basis pending confirmation by the General Assembly.
  2. There is established in the Commission a Public Staff. The Public Staff shall consist of the executive director and such other professional, administrative, technical, and clerical personnel as may be necessary in order for the Public Staff to represent the using and consuming public, as hereinafter provided. All such personnel shall be hired, supervised, and directed by the executive director, as provided by law. The Public Staff shall not be subject to the supervision, direction, or control of the Commission, the chairman, or members of the Commission.
  3. Except for the executive director, the salaries and compensation of all such personnel shall be fixed in the manner provided by law for fixing and regulating salaries and compensation by other State agencies.
  4. It shall be the duty and responsibility of the Public Staff to:
    1. Review, investigate, and make appropriate recommendations to the Commission with respect to the reasonableness of rates charged or proposed to be charged by any public utility and with respect to the consistency of such rates with the public policy of assuring an energy supply adequate to protect the public health and safety and to promote the general welfare;
    2. Review, investigate, and make appropriate recommendations to the Commission with respect to the service furnished, or proposed to be furnished by any public utility;
    3. Intervene on behalf of the using and consuming public, in all Commission proceedings affecting the rates or service of any public utility;
    4. When deemed necessary by the executive director in the interest of the using and consuming public, petition the Commission to initiate proceedings to review, investigate, and take appropriate action with respect to the rates, operations, or service of public utilities;
    5. Intervene on behalf of the using and consuming public in all certificate applications filed pursuant to the provisions of G.S. 62-110.1, and provide assistance to the Commission in making the analysis and plans required pursuant to the provisions of G.S. 62-110.1 and 62-155;
    6. Intervene on behalf of the using and consuming public in all proceedings wherein any public utility proposes to reduce or abandon service to the public;
    7. Investigate complaints affecting the using and consuming public generally which are directed to the Commission, members of the Commission, or the Public Staff and where appropriate make recommendations to the Commission with respect to such complaints;
    8. Make studies and recommendations to the Commission with respect to standards, regulations, practices, or service of any public utility pursuant to the provisions of G.S. 62-43; provided, however, that the Public Staff shall have no duty, responsibility, or authority with respect to the enforcement of natural gas pipeline safety laws, rules, or regulations;
    9. When deemed necessary by the executive director, in the interest of the using and consuming public, intervene in Commission proceedings with respect to transfers of franchises, mergers, consolidations, and combinations of public utilities pursuant to the provisions of G.S. 62-111;
    10. Repealed by Session Laws 2021-23, s. 3, effective May 17, 2021.
    11. Review, investigate, and make appropriate recommendations to the Commission with respect to contracts of public utilities with affiliates or subsidiaries, pursuant to the provisions of G.S. 62-153;
    12. When deemed necessary by the executive director, in the interest of the using and consuming public, advise the Commission with respect to securities, regulations, and transactions, pursuant to the provisions of Article 8 of this Chapter.
    13. When deemed necessary by the executive director in the interest of the using and consuming public, appear before State and federal courts and agencies in matters affecting public utility service.
  5. The Public Staff shall have no duty, responsibility, or authority with respect to the laws, rules or regulations pertaining to the physical facilities or equipment of common, contract and exempt carriers, the registration of vehicles or of insurance coverage of vehicles of common, contract and exempt carriers; the licensing, training, or qualifications of drivers or other persons employed by common, contract and exempt carriers, or the operation of motor vehicle equipment by common, contract and exempt carriers in the State.
  6. The executive director representing the Public Staff shall have the same rights of appeal from Commission orders or decisions as other parties to Commission proceedings.
  7. Upon request, the executive director shall employ the resources of the Public Staff to furnish to the Commission, its members, or the Attorney General, such information and reports or conduct such investigations and provide such other assistance as may reasonably be required in order to supervise and control the public utilities of the State as may be necessary to carry out the laws providing for their regulation.
  8. The executive director is authorized to employ, subject to approval by the State Budget Officer, expert witnesses and such other professional expertise as the executive director may deem necessary from time to time to assist the Public Staff in its participation in Commission proceedings, and the compensation and expenses therefor shall be paid by the utility or utilities participating in said proceedings. Such compensation and expenses shall be treated by the Commission, for ratemaking purposes, in a manner generally consistent with its treatment of similar expenditures incurred by utilities in the presentation of their cases before the Commission. An accounting of such compensation and expenses shall be reported annually to the Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources, the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, and the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources and to the Speaker of the House of Representatives and the President Pro Tempore of the Senate.
  9. The executive director, within established budgetary limits, and as allowed by law, shall authorize and approve travel, subsistence, and related necessary expenses of the executive director or members of the Public Staff, incurred while traveling on official business.

History. 1949, c. 1009, s. 3; 1963, c. 1165, s. 1; 1977, c. 468, s. 4; 1981, c. 475; 1983, c. 717, s. 12.1; 1985, c. 499, s. 4; 1989, c. 781, s. 41.3; 1989 (Reg. Sess., 1990), c. 1024, s. 13; 1999-237, s. 28.21A; 2011-291, ss. 2.8, 2.9; 2017-57, s. 14.1(p); 2021-23, ss. 3, 24, 25.

Editor’s Note.

Session Laws 2021-23, s. 24, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “Public Staff” for the term “public staff” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in this section.

Session Laws 2021-23, s. 25, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “ratemaking” for the terms “rate-making” or “rate making” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in subsection (h).

Effect of Amendments.

Session Laws 2011-291, ss. 2.8 and 2.9, effective June 24, 2011, in the sixth sentence of subsection (a) and in the last sentence of subsection (h), substituted “Joint Legislative Commission on Governmental Operations” for “Joint Legislative Utility Review Committee.”

Session Laws 2017-57, s. 14.1(p), effective July 1, 2017, substituted “Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources, the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, and the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources” for “Joint Legislative Commission on Governmental Operations” in the third sentence of subsection (a) and the last sentence of subsection (h).

Session Laws 2021-23, s. 3, effective May 17, 2021, substituted “hired” for “appointed” and “director, as provided by law” for “director” in the third sentence of subsection (a); substituted “rates, operations” for “rates” in subdivision (d)(4); deleted subdivision (d)(10); and added subdivision (d)(13).

Legal Periodicals.

For brief comment on this section, see 27 N.C.L. Rev. 489 (1949).

For survey of 1977 law on common carriers, see 56 N.C.L. Rev. 853 (1978).

For article, “Ripening on the Vine: North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standard Should Be Left Unchanged Ahead of 2012 Compliance Deadline,” see 34 N.C. Cent. L. Rev. 111 (2012).

CASE NOTES

Public staff represented all of a utility’s rate-paying customers in an investigation of regularities in the way in which the utility reported its regulated income to the North Carolina Utilities Commission and the Commission’s order approving a settlement agreement resulting from that investigation. Therefore, a utility customers association and a customer could not properly intervene in the investigation and the order as the public staff represented their interests. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 163 N.C. App. 1, 592 S.E.2d 277, 2004 N.C. App. LEXIS 261 (2004).

§ 62-16. [Repealed]

Repealed by Session Laws 1977, c. 468, s. 5.

Cross References.

For present provisions relating to Commission staff, see G.S. 62-14.

§ 62-17. Annual reports; monthly or quarterly release of certain information; publication of procedural orders and decisions.

  1. It shall be the duty of the Commission to make and publish annual reports to the Governor of Commission activities, including copies of its general orders and regulations, comparative statistical data on the operation of the various public utilities in the State, comparisons of rates in North Carolina with rates elsewhere, a detailed report of its investigative division, a review of significant developments in the fields of utility law, economics and planning, a report of pending matters before the Commission, and a digest of the principal decisions of the Commission and the North Carolina courts affecting public utilities. A monthly or quarterly release of such information shall be made if the Commission deems it advisable or if the Governor shall so request.
  2. The Public Staff of the Commission shall make and publish annual reports to the Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources, the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, and the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources on its activities in the interest of the using and consuming public.
  3. The Commission shall publish in a separate volume at least once each year its final decisions made on the merits in formal proceedings before the Commission, and may include significant procedural orders and decisions.

History. 1899, c. 164, s. 27; Rev., s. 1117; 1911, c. 211, s. 9; 1913, c. 10, s. 1; C.S., s. 1065; 1933, c. 134, s. 8; 1941, c. 97; 1955, c. 981; 1957, c. 1152, s. 1; 1963, c. 1165, s. 1; 1977, c. 468, s. 6; 2017-57, s. 14.1(o); 2021-23, s. 24.

Editor’s Note.

Session Laws 2017-57, s. 1.1, provides: “This act shall be known as the ‘Current Operations Appropriations Act of 2017.’ ”

Session Laws 2017-57, s. 39.6, is a severability clause.

Session Laws 2021-23, s. 24, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “Public Staff” for the term “public staff” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in subsection (a1).

Effect of Amendments.

Session Laws 2017-57, s. 14.1(o), effective July 1, 2017, substituted “Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources, the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, and the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources” for “General Assembly” in subsection (a1).

CASE NOTES

Matters of Public Record. —

Reports of the Corporation Commission (now Utilities Commission) of North Carolina are matters of public record, of which the courts therein will take judicial notice. Staton v. Atlantic C.L.R.R., 144 N.C. 135, 56 S.E. 794, 1907 N.C. LEXIS 120 (1907) (decided under former statutory provisions).

§ 62-18. Records of receipts and disbursements; payment into treasury.

  1. The Commission shall keep a record showing in detail all receipts and disbursements.
  2. Except as provided in G.S. 62-110.3, all license fees and seal taxes, all money received from fines and penalties, and all other fees paid into the office of the Utilities Commission shall be turned in to the State treasury.

History. 1899, c. 164, ss. 26, 33, 34; Rev., ss. 1114, 1115; C.S., ss. 1063, 1064; 1933, c. 134, s. 8; 1941, c. 97; 1963, c. 1165, s. 1; 1987, c. 490, s. 1.

§ 62-19. Public record of proceedings; chief clerk; seal.

  1. The Commission shall keep in the office of the chief clerk at all times a record of its official acts, rulings, orders, decisions, and transactions, and a current calendar of its scheduled activities and hearings, which shall be public records of the State of North Carolina.
  2. Upon receipt by the Commission, the chief clerk shall furnish to the executive director copies of all rates, tariffs, contracts, applications, petitions, pleadings, complaints, and all other documents filed with the Commission and shall furnish to the executive director copies of all orders and decisions entered by the Commission.
  3. The Commission shall have and adopt a seal with the words “North Carolina Utilities Commission” and such other design as it may prescribe engraved thereon by which it shall authenticate its proceedings and of which the courts shall take judicial notice. Where an exemplified copy of Commission records and proceedings is required for full faith and credit outside of the State, such records and proceedings shall be attested by the chief clerk, or deputy clerk, and the seal of the Commission annexed, and there shall be affixed a certificate of a member of the Commission that the said attestation is in proper form. Such exemplification shall constitute an authenticated or exemplified copy of an official record of a court of record of the State of North Carolina.

History. 1933, c. 134, ss. 13, 15; 1941, c. 97; 1963, c. 1165, s. 1; 1977, c. 468, s. 7.

§ 62-20. Participation by Attorney General in Commission proceedings.

The Attorney General may intervene, when he deems it to be advisable in the public interest, in proceedings before the Commission on behalf of the using and consuming public, including utility users generally and agencies of the State. The Attorney General may institute and originate proceedings before the Commission in the name of the State, its agencies or citizens, in matters within the jurisdiction of the Commission. The Attorney General may appear before such State and federal courts and agencies as he deems it advisable in matters affecting public utility services. In the performance of his responsibilities under this section, the Attorney General shall have the right to employ expert witnesses, and the compensation and expenses therefor shall be paid from the Contingency and Emergency Fund. Upon request, the Commission shall furnish the Attorney General with copies of all applications, petitions, pleadings, order and decisions filed with or entered by the Commission. The Attorney General shall have access to all books, papers, studies, reports and other documents filed with the Commission.

History. 1949, c. 989, s. 1; c. 1029, s. 3; 1959, c. 400; 1963, c. 1165, s. 1; 1977, c. 468, s. 8; 2021-23, s. 4.

Effect of Amendments.

Session Laws 2021-23, s. 4, effective May 17, 2021, substituted “Upon request, the” for “The” in the penultimate sentence of this section.

Legal Periodicals.

For brief comment on earlier section, see 27 N.C.L. Rev. 489 (1949).

§ 62-21. [Repealed]

Repealed by Session Laws 1977, c. 468, s. 9.

Cross References.

For present provisions relating to Commission staff, see G.S. 62-14.

§ 62-22. Utilities Commission and Department of Revenue to coordinate facilities for ratemaking and taxation purposes.

The Commission, at the request of the Department of Revenue, shall make available to the Department of Revenue the services of such of the personnel of the Commission as may be desired and required for the purpose of furnishing to the Department of Revenue advice and information as to the value of properties of public utilities, the valuations of which for ad valorem taxation are required by law to be determined by the Department of Revenue. It shall be the duty of the Commission and the Department of Revenue, with regard to the assessment and valuation of properties of public utilities doing business in North Carolina, to coordinate the activities of said agencies so that each of them shall receive the benefit of the exchange of information gathered by them with respect to the valuations of public utilities property for ratemaking and taxation purposes, and the facilities of each of said agencies shall be made fully available to both of them.

History. 1949, c. 1029, s. 3; 1963, c. 1165, s. 1; 1973, c. 476, s. 193; 2021-23, s. 25.

Editor’s Note.

Session Laws 2021-23, s. 25, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “ratemaking” for the terms “rate-making” or “rate making” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in this section.

§ 62-23. Commission as an administrative board or agency.

The Commission is hereby declared to be an administrative board or agency of the General Assembly created for the principal purpose of carrying out the administration and enforcement of this Chapter, and for the promulgation of rules and regulations and fixing utility rates pursuant to such administration; and in carrying out such purpose, the Commission shall assume the initiative in performing its duties and responsibilities in securing to the people of the State an efficient and economic system of public utilities in the same manner as commissions and administrative boards generally. In proceedings in which the Commission is exercising functions judicial in nature, it shall act in a judicial capacity as provided in G.S. 62-60. The Commission shall separate its administrative or executive functions, its rule making functions, and its functions judicial in nature to such extent as it deems practical and advisable in the public interest.

History. 1963, c. 1165, s. 1.

CASE NOTES

The rate making activities of the Commission are a legislative function. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Rule making is an exercise of the delegated legislative authority of the Commission, under G.S. 62-30 and G.S. 62-31, to supervise and control the public utilities of this State and to make reasonable rules and regulations to accomplish that end. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Benefits of 1986 Tax Reform Act to Ratepayers Through Rule Making Procedure. —

The Utilities Commission may pass on to the ratepayers the benefits of the Tax Reform Act of 1986 through a rule making procedure rather than a rate making procedure. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 326 N.C. 190, 388 S.E.2d 118, 1990 N.C. LEXIS 12 (1990).

Administrative Rule Making Not Res Judicata. —

Actions of an administrative agency which involve the exercise of a legislative rather than a judicial function are not res judicata. Exercises of the Commission’s rule making power, therefore, are not governed by the principles of res judicata and are reviewable by the Supreme Court in later appeals of closely related matters. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Distribution of Gain From Sale of Water and Sewage Facilities. —

North Carolina Utilities Commission’s assigning a portion of the gain on sale from a municipal utility’s purchase of the existing water and sewer facilities of a publicly franchised utility to the publicly franchised utility’s remaining ratepayers, instead of assigning all of the gain on sale to the publicly franchised utility’s shareholders, was approved on review pursuant to G.S. 62-94 because the Commission did not violate the Commission’s authority under G.S. 62-2 and G.S. 62-23. State ex rel. Utils. Comm'n v. Carolina Water Serv., 225 N.C. App. 120, 738 S.E.2d 187, 2013 N.C. App. LEXIS 55 (2013).

Policy Making. —

Where the North Carolina Utilities Commission enacted a policy which assigned gain or loss to shareholders within an adjudicative proceeding, the action did not constitute an abuse of discretion. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 123 N.C. App. 623, 473 S.E.2d 661, 1996 N.C. App. LEXIS 800 (1996).

§§ 62-24 through 62-29.

Reserved for future codification purposes.

Article 3. Powers and Duties of Utilities Commission.

§ 62-30. General powers of Commission.

The Commission shall have and exercise such general power and authority to supervise and control the public utilities of the State as may be necessary to carry out the laws providing for their regulation, and all such other powers and duties as may be necessary or incident to the proper discharge of its duties.

History. 1933, c. 134, s. 2; 1941, c. 97; 1963, c. 1165, s. 1.

Legal Periodicals.

For comment, see 12 N.C.L. Rev. 292 (1934).

CASE NOTES

Power of Legislature Through Agencies to Establish Reasonable Regulations. —

Power of the legislature, either directly or through appropriate agencies, to establish reasonable regulations for public service corporations in matters affecting the public interests is now universally recognized, and the principle has been approved in well considered decisions dealing directly with the question. SCC v. Railroad, 137 N.C. 1, 49 S.E. 191, 1904 N.C. LEXIS 321 (1904), aff'd, Atlantic C. L. R. Co. v. North Carolina Corp., 206 U.S. 1, 27 S. Ct. 585, 51 L. Ed. 933, 1907 U.S. LEXIS 1142 (1907); Corporation Comm'n v. Railroad, 140 N.C. 239, 52 S.E. 941, 1905 N.C. LEXIS 36 (1905); Atlantic Coastline R.R. v. City of Goldsboro, 155 N.C. 356, 71 S.E. 514, 1911 N.C. LEXIS 403 (1911), aff'd, 232 U.S. 548, 34 S. Ct. 364, 58 L. Ed. 721, 1914 U.S. LEXIS 1385 (1914); In re Southern Pub. Utils. Co., 179 N.C. 151, 101 S.E. 619, 1919 N.C. LEXIS 31 (1919). See also, Atlantic Express Co. v. Wilmington & W.R.R., 111 N.C. 463, 16 S.E. 393, 1892 N.C. LEXIS 206 (1892); SCC v. Seaboard Air Line Sys., 127 N.C. 283, 37 S.E. 266, 1900 N.C. LEXIS 67 (1900).

The reason for strict regulation of public utilities is that they are either monopolies by nature or given the security of monopolistic authority for better service to the public. The public is best served in many circumstances where destructive competition has been removed and the utility is a regulated monopoly. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

Commission Has No Authority Other Than Granted by Legislature. —

The Utilities Commission was created by the General Assembly. In fixing rates to be charged by utilities, it exercises a legislative function and has no authority other than that given to it by the legislature. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983).

General Power and Authority. —

Through this section and G.S. 62-32 the legislature has granted the Utilities Commission such general power and authority to supervise and control public utilities of the State as may be necessary. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Under G.S. 62-42(a)(5) the Commission has the authority to order the utility to take action necessary to secure reasonably adequate service for the public’s need and convenience. Undoubtedly yellow pages could fall within this provision. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

If the Commission may refuse to accept the uncontradicted evidence presented to it by a utility, it most certainly may reject the utility’s evidence in favor of evidence presented by other witnesses. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

North Carolina Utilities Commission properly ruled that the North Carolina Waste Awareness and Reduction Network’s (NC WARN) arrangement with a church to install and maintain a solar panel system constituted a public utility in violation of the Public Utilities Act because NC WARN was operating as a public utility within the meaning of the Public Utilities Act; NC WARN desired to serve customers of its own choosing within an energy company’s territory without oversight. State ex rel. Utils. Comm'n v. N.C. Waste Awareness & Reduction Network, 255 N.C. App. 613, 805 S.E.2d 712, 2017 N.C. App. LEXIS 759 (2017), aff'd, 371 N.C. 109, 812 S.E.2d 804, 2018 N.C. LEXIS 330 (2018).

Regulatory Condition was Authorized. —

Where G.S. 62-30 and G.S. 62-32(b) gave the Utility Commission “all powers necessary” to regulate public utilities to ensure the citizens of North Carolina were provided with reasonable service, a regulatory condition was authorized because the regulation’s purpose was to ensure the supply of electricity to retail customers. State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 174 N.C. App. 681, 622 S.E.2d 169, 2005 N.C. App. LEXIS 2590 (2005).

The Commission has no jurisdiction over parties unless they are public utilities within the meaning of the statute. State ex rel. N.C. Utils. Comm'n v. New Hope Rd. Water Co., 248 N.C. 27, 102 S.E.2d 377, 1958 N.C. LEXIS 320 (1958); State ex rel. Utils. Comm'n v. National Merchandising Corp., 288 N.C. 715, 220 S.E.2d 304, 1975 N.C. LEXIS 1038 (1975).

The rate making activities of the Commission are a legislative function. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Rule making is an exercise of the delegated legislative authority of the Commission, under this section and G.S. 62-31, to supervise and control the public utilities of this State and to make reasonable rules and regulations to accomplish that end. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Benefits of 1986 Tax Reform Act to Ratepayers Through Rule Making Procedure. —

The Utilities Commission may pass on to the ratepayers the benefits of the Tax Reform Act of 1986 through a rule making procedure rather than a rate making procedure. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 326 N.C. 190, 388 S.E.2d 118, 1990 N.C. LEXIS 12 (1990).

Commission, Not Courts, Is to Determine Fair Rate of Return. —

The Commission, not the courts, is authorized by the legislature to determine what is a fair rate of return. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Court’s Review of Commission’s Determination of Fair Rate of Return. —

In reviewing the Commission’s determination of fair rate of return, the court will only review the record and evidence to determine if the Commission’s order is supported by competent evidence. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Commission’s Rule Making Not Res Judicata. —

Actions of an administrative agency which involve the exercise of a legislative rather than a judicial function are not res judicata. Exercising of the Commission’s rule-making power, therefore, are not governed by the principles of res judicata and are reviewable by the Supreme Court in later appeals of closely related matters. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Yellow Page Revenue and Expenses Included When Utility Applies for Rate Increase. —

Yellow page revenue and expenses should be included in the revenues and expenses of the company when it applies for a rate increase. This is clearly the majority rule. State ex rel. Utils. Comm'n v. Central Tel. Co., 60 N.C. App. 393, 299 S.E.2d 264, 1983 N.C. App. LEXIS 2462 (1983).

Telephone utility enjoys a great advantage over all competitors in the field of directory advertising. In addition, this preferred position with all its benefits and revenues is directly related to and a result of the company’s public utility function. Therefore, the Utilities Commission does have the authority to include the expenses, revenues and investments related to directory advertising in its rate making proceedings. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Incorrect Telephone Number Listings. —

The Utilities Commission had jurisdiction over complaints concerning incorrect telephone number listings in the telephone directory even when the regulated utility had delegated to another company the public utility function of publishing its directory which also included paid advertising. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Proper Listings in Advertisements in Yellow Pages. —

If a utility elects to include yellow pages advertising in the directory which it is required to publish, then clearly proper listings in the advertisements in the yellow pages become a part of the utility’s “function of providing adequate service” to the public. The public is not well served by listings in the yellow pages or the white pages of the directory which are incorrect or confusing to the consuming public. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Providing a correct telephone listing in the yellow pages as well as in the white pages of the directory is a utility function, and the Commission properly has jurisdiction over complaints which arise from this function. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Whether there shall be competition in any given field and to what extent is largely a matter of policy committed to the sound judgment and discretion of the Commission. The Commission must maintain a reasonable balance to see that the public is adequately served and at the same time to see that the public and the public utilities involved are not prejudiced by the effects which flow from excessive competition brought about by excessive services. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

Authority of Commission to Authorize Sale of Facilities of Power Company to Municipality. —

A power company, with the consent and approval of the Commission, has the right to sell its facilities to a city, and thereby permit the city to assume the obligation for meeting the public convenience and necessity for the service theretofore rendered by the power company. The Commission has not only the authority but the duty to pass upon such a contract and to determine whether or not it is in the public interest to permit its consummation. State ex rel. N.C. Utils. Comm'n v. Casey, 245 N.C. 297, 96 S.E.2d 8, 1957 N.C. LEXIS 574 (1957); Duke Power Co. v. Blue Ridge Elec. Membership Corp., 253 N.C. 596, 117 S.E.2d 812, 1961 N.C. LEXIS 453 (1961).

As to the piercing of the corporate veil between corporation and its wholly-owned public utility subsidiary to establish refund obligation, see State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

Propriety of Order Requiring Continued Operation of Utilities. —

An order of the Commission, based upon proper findings and conclusions, requiring appellant to continue operation of her utilities would not violate constitutional prohibitions against involuntary servitude. Appellant voluntarily put her land and equipment to a public use and collected compensation for the services which she provided, and having done so, the Commission could require that she continue to use them in the service to which she voluntarily dedicated them, so long as she was justly compensated for such service. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

Former Railroad Commission did not interfere with interstate commerce, being concerned solely in domestic affairs and trade. State ex rel. Caldwell v. Wilson, 121 N.C. 425, 28 S.E. 554, 1897 N.C. LEXIS 255 (1897), writ of error dismissed, 169 U.S. 586, 18 S. Ct. 435, 42 L. Ed. 865, 1898 U.S. LEXIS 1509 (1898).

§ 62-31. Power to make and enforce rules and regulations for public utilities.

The Commission shall have and exercise full power and authority to administer and enforce the provisions of this Chapter, and to make and enforce reasonable and necessary rules and regulations to that end.

History. 1907, c. 469, s. 1a; 1913, c. 127, s. 2; C.S., s. 1037; 1933, c. 134, s. 8; 1941, c. 97; 1947, c. 1008, s. 2; 1949, c. 1132, s. 3; 1963, c. 1165, s. 1.

Editor’s Note.

Session Laws 2013-316, s. 4.2(a), as amended by Session Laws 2015-6, s. 2.4(b), provides: “The Utilities Commission must adjust the rate set for the following utilities:

“(1) Electricity to reflect the repeal of G.S. 105-116 and the resulting liability of electric power companies for the tax imposed under G.S. 105-122, the increase in the rate of tax imposed on sales of electricity under G.S. 105-164.4, and the reduction in the corporate income tax rate imposed under G.S. 105-130.3

“(2) Piped natural gas to reflect the repeal of Article 5E of Chapter 105 of the General Statutes, the repeal of the credit formerly allowed under G.S. 105-122(d1), the resulting liability of companies for the tax imposed on sales of piped natural gas under G.S. 105-164.4, and the reduction in the corporate income tax rate imposed under G.S. 105-130.3.

“(3) Public water and wastewater companies to reflect the repeal of G.S. 105-116 and the resulting liability of public water and wastewater companies under G.S. 105-122, and the reduction in the corporate income tax rate imposed under G.S. 105-130.3.”

Session Laws 2015-6, s. 2.4(a), provides: “The purpose of this section is to clarify the intent of the 2013 Session of the General Assembly that the Utilities Commission must adjust the rate for sales of electricity, piped natural gas, and water and wastewater services to reflect all of the tax changes as enacted in S.L. 2013-316.”

Session Laws 2015-6, s. 2.4(c), provides: “The Utilities Commission must order a utility to add interest to money refunded to its customers for refunds resulting from the reduction of the corporate income tax rate effective for taxable years beginning on or after January 1, 2014. Refunds subject to interest shall not include any amounts to be refunded arising from excess deferred income taxes due to the reduction in the corporate income tax rate effective for taxable years beginning on or after January 1, 2014. The interest rate applied to the refund must be set in accordance with G.S. 62-130.”

CASE NOTES

The rate making activities of the Commission are a legislative function. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Rule making is an exercise of the delegated legislative authority of the Commission, under G.S. 62-30 and this section, to supervise and control the public utilities of this State and to make reasonable rules and regulations to accomplish that end. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Tax Reform Benefits Passed on to Ratepayers by Rule Making Rather Than Rate Making Procedure. —

Utilities Commission may pass on to the ratepayers the benefits of the Tax Reform Act of 1986 (TRA-86) through a rule making procedure rather than a rate making procedure. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 326 N.C. 190, 388 S.E.2d 118, 1990 N.C. LEXIS 12 (1990).

Commission’s Rule Making Not Res Judicata. —

Actions of an administrative agency which involve the exercise of a legislative rather than a judicial function are not res judicata. Exercises of the Commission’s rule making power, therefore, are not governed by the principles of res judicata and are reviewable by the Supreme Court in later appeals of closely related matters. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Authority to determine adequacy of public utility’s service and rates to be charged therefor has been given to the Utilities Commission, not to the Supreme Court or the Court of Appeals. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 24 N.C. App. 327, 210 S.E.2d 543, 1975 N.C. App. LEXIS 2385 (1975), vacated, 289 N.C. 286, 221 S.E.2d 322, 1976 N.C. LEXIS 1253 (1976).

Finding That Rule Is Reasonable and Necessary Not Required. —

In adopting a rule pursuant to this section, the Utilities Commission need not make a finding of fact that the rule is reasonable and necessary in order for it to administer and enforce the provisions of the Public Utilities Act. State ex rel. Utilities Comm'n v. Associated Petro. Carriers, 13 N.C. App. 554, 186 S.E.2d 612, 1972 N.C. App. LEXIS 2279, cert. denied, 281 N.C. 158, 188 S.E.2d 364, 1972 N.C. LEXIS 1040 (1972).

Jurisdiction of Commission to Investigate. —

The Commission had the jurisdiction to investigate, upon complaint or upon its own initiative without complaint, to determine whether any motor carrier was operating in violation of the provisions of the Bus Act of 1949 (former G.S. 62-121.43 through 62-121.79). State ex rel. N.C. Utils. Comm'n v. McKinnon, 254 N.C. 1, 118 S.E.2d 134, 1961 N.C. LEXIS 371 (1961).

Rule Denying Rights Under Grandfather Clause. —

The Utilities Commission did not have the power to promulgate a rule and then to interpret or enforce the rule in such manner as to deny the exercise of rights which the legislature in clear and express terms preserved to all motor vehicle carriers of property who were in bona fide operation on January 1, 1947, and who met the additional requirements contained in the Bus Act of 1949 (former G.S. 62-121.43 through 62-121.79). State ex rel. Utils. Comm'n v. Fox, 239 N.C. 253, 79 S.E.2d 391, 1954 N.C. LEXIS 342 (1954).

Supervisory Powers of Former Corporation Commission. —

There was no intent to give a schedule of the thousands of appliances used in handling the business of common carriers, nor to enumerate the countless dealings between them and their patrons which the former Corporation Commission should supervise. The clearly declared purpose was to put the control and supervision of the whole matter in the hands of an impartial commission, with power to make reasonable rules and orders, subject to the right of appeal by either party, the shipper or the carrier, to the courts, instead of leaving such dealing to the unrestricted will of the carrier. SCC v. Railroad, 139 N.C. 126, 51 S.E. 793, 1905 N.C. LEXIS 101 (1905).

The former Corporation Commission was given the power to make orders and regulations for the safety, etc., of shippers or patrons of any public service corporation. Tilley v. Norfolk & W. Ry., 162 N.C. 37, 77 S.E. 994, 1913 N.C. LEXIS 307 (1913).

§ 62-32. Supervisory powers; rates and service.

  1. Under the rules herein prescribed and subject to the limitations hereinafter set forth, the Commission shall have general supervision over the rates charged and service rendered by all public utilities in this State.
  2. Except as provided in this Chapter for bus companies, the Commission is hereby vested with all power necessary to require and compel any public utility to provide and furnish to the citizens of this State reasonable service of the kind it undertakes to furnish and fix and regulate the reasonable rates and charges to be made for such service.

History. 1913, c. 127, s. 7; C.S., s. 1112(b); 1933, c. 134, s. 3; 1937, c. 108, s. 2; 1941, cc. 59, 97; 1959, c. 639, s. 12; 1963, c. 1165, s. 1; 1985, c. 676, s. 5.

Cross References.

As to report from municipality operating own utilities, see G.S. 62-47.

Legal Periodicals.

For note on control of public utilities through zoning ordinances, see 42 N.C.L. Rev. 761 (1964).

For article on antitrust and unfair trade practice law in North Carolina, comparing federal law, see 50 N.C.L. Rev. 199 (1972).

CASE NOTES

Editor’s Note. —

This section is similar to former G.S. 1035 of the Consolidated Statutes. Many of the following cases dated prior to 1963 were decided under that section and are given as an aid in construing the present law, but should be considered in light of the former law.

Right of State to Regulate. —

The right of the State to establish regulations for public service corporations, and over business enterprises in which the owners, corporate or individual, have devoted their property to a public use, and to enforce these regulations by appropriate penalties, is firmly established. Efland v. Southern Ry., 146 N.C. 135, 59 S.E. 355, 1907 N.C. LEXIS 13 (1907). See also Whiting Mfg. Co. v. Carolina Aluminum Co., 207 N.C. 52, 175 S.E. 698, 1934 N.C. LEXIS 381 (1934).

Railroad companies, due to the public nature of the business carried on by them and the interest which the public has in their operation, are subject as to their State business to State regulation, which may be exerted either directly by the legislative authority or by administrative bodies endowed with power to that end. Atlantic Coast Line R.R. v. North Carolina Corp. Comm'n, 206 U.S. 1, 27 S. Ct. 585, 51 L. Ed. 933, 1907 U.S. LEXIS 1142 (1907).

Purpose of Regulation. —

An uncontrolled legal monopoly in an essential service leads, normally and naturally, to poor service and exorbitant charges. To prevent such result, the legislature has conferred upon the Utilities Commission the power to police the operations of the utility company so as to require it to render service of good quality at charges which are reasonable. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

With public utilities the State has undertaken to protect the public from the customary consequences of monopoly, by making the rates and services of the certificate holder subject to regulation and control by the Utilities Commission. In re Aston Park Hosp., 282 N.C. 542, 193 S.E.2d 729, 1973 N.C. LEXIS 1106 (1973).

Regulatory Condition Authorized. —

Where G.S. 62-30 and G.S. 62-32(b) gave the Utility Commission “all powers necessary” to regulate public utilities to ensure the citizens of North Carolina were provided with reasonable service, a regulatory condition was authorized because the regulation’s purpose was to ensure the supply of electricity to retail customers. State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 174 N.C. App. 681, 622 S.E.2d 169, 2005 N.C. App. LEXIS 2590 (2005).

Rate Fixing Power May Be Delegated. —

The General Assembly has the power to establish a commission to supervise and regulate the rates of common carriers. Atlantic Express Co. v. Wilmington & W.R.R., 111 N.C. 463, 16 S.E. 393, 1892 N.C. LEXIS 206 (1892); SCC v. Seaboard Air Line Sys., 127 N.C. 283, 37 S.E. 266, 1900 N.C. LEXIS 67 (1900); SCC v. Railroad, 137 N.C. 1, 49 S.E. 191, 1904 N.C. LEXIS 321 (1904), aff'd, Atlantic C. L. R. Co. v. North Carolina Corp., 206 U.S. 1, 27 S. Ct. 585, 51 L. Ed. 933, 1907 U.S. LEXIS 1142 (1907); SCC v. Railroad, 139 N.C. 126, 51 S.E. 793, 1905 N.C. LEXIS 101 (1905); Corporation Comm'n v. Railroad, 140 N.C. 239, 52 S.E. 941, 1905 N.C. LEXIS 36 (1905).

Scope of Power Delegated to Commission Not a Federal Question. —

Whether a regulation of a state railroad commission otherwise legal is arbitrary and unreasonable because beyond the scope of the power delegated to the commission is not a federal question. Atlantic Coast Line R.R. v. North Carolina Corp. Comm'n, 206 U.S. 1, 27 S. Ct. 585, 51 L. Ed. 933, 1907 U.S. LEXIS 1142 (1907).

General Power and Authority of Commission. —

Through G.S. 62-30 and this section the legislature has granted the Utilities Commission such general power and authority to supervise and control public utilities of the State as may be necessary. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Under G.S. 62-42(a)(5) the Commission has the authority to order the utility to take action necessary to secure reasonably adequate service for the public’s need and convenience. Undoubtedly yellow pages could fall within this provision. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

If the Commission may refuse to accept the uncontradicted evidence presented to it by a utility, it most certainly may reject the utility’s evidence in favor of evidence presented by other witnesses. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Because G.S. 62-32 and G.S. 62-42 authorized the North Carolina Utilities Commission to compel utility companies to render adequate service and to set reasonable rates, the Commission was the proper body to hear a dispute between a power company and the town. Although the town could have granted a variance to its ordinance that would have allowed the company to build the proposed new line, the ordinance was not consistent with state law, and the town cited no statutory authority or precedent that required the company to seek such a variance where an administrative agency specifically designed to handle such disputes had jurisdiction. State ex rel. Utils. Comm'n v. Town of Kill Devil Hills, 194 N.C. App. 561, 670 S.E.2d 341, 2009 N.C. App. LEXIS 4, aff'd, 363 N.C. 739, 686 S.E.2d 151, 2009 N.C. LEXIS 1289 (2009).

Authority of Commission to Regulate Service and Rates. —

Under this section and G.S. 62-42, the Utilities Commission is given the power and the duty to compel utility companies to render adequate service and to set reasonable rates for such service. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

The Utilities Commission is the administrative agency charged with the duty of regulating the intrastate retail rates of public utilities within this State. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

Authority to determine adequacy of public utility’s service and rates to be charged therefor has been given to the Utilities Commission, not to the Supreme Court or to the Court of Appeals. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 24 N.C. App. 327, 210 S.E.2d 543, 1975 N.C. App. LEXIS 2385 (1975), vacated, 289 N.C. 286, 221 S.E.2d 322, 1976 N.C. LEXIS 1253 (1976).

The Commission, not the courts, is authorized by the legislature to determine what is a fair rate of return. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

In reviewing the Commission’s determination of fair rate of return, the court will only review the record and evidence to determine if the Commission’s order is supported by competent evidence. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Commission’s Regulatory Powers Limited. —

Notwithstanding the authority of the Commission to regulate its services and rates and other matters incidental thereto, the property of the utility is private property and the business is private business. Except as otherwise provided, expressly or by reasonable implication, in this Chapter, a utility is free to manage its property and business as it sees fit and the Commission may not restrict or control the discretion of the board of directors in the acquisition of property, or in the price paid for it. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Arbitrary Exercise of Regulatory Power. —

The public power to regulate railroads and the private right of ownership of such property coexist, and the one does not destroy the other; and where the power to regulate is so arbitrarily exercised as to infringe the rights of ownership, the exertion is void because repugnant to the due process and equal protection clauses of the Fourteenth Amendment. Atlantic Coast Line R.R. v. North Carolina Corp. Comm'n, 206 U.S. 1, 27 S. Ct. 585, 51 L. Ed. 933, 1907 U.S. LEXIS 1142 (1907).

As to intrastate or domestic matters, the General Assembly has the right to establish regulations for public service corporations and for business enterprises in which the owners have devoted their property to public use, and to apply these regulations to certain classes of pursuits and occupations, imposing these requirements equally on all members of a given class, the limitation of this right of classification being that the same must be on some reasonable ground that bears a just and proper relation to the attempted classification and is not a mere arbitrary selection. Efland v. Southern Ry., 146 N.C. 135, 59 S.E. 355, 1907 N.C. LEXIS 13 (1907).

Recovery of Reasonable Cost of Approved Gas Exploration Projects. —

The Commission, in ordering that the reasonable costs of approved exploration projects were to be recoverable through tracking rate increases, acted within its acknowledged duty and authority to compel adequate and efficient utility service to the citizens of this State, where it was clear from the Commission’s findings that, without additional gas supplies, the gas utilities would be unable to render adequate service to their customers, that exploration programs were the most feasible means for obtaining these additional supplies, and that the utilities were unable, through traditional methods of financing, to fund sufficient exploration projects to obtain these supplies. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Contractual obligation to provide water service to a recreational subdivision, as well as the actual delivery thereof, directly affect a utility’s ability to function as a utility. State ex rel. Utils. Comm'n v. Carolina Forest Util., Inc., 21 N.C. App. 146, 203 S.E.2d 410, 1974 N.C. App. LEXIS 1741 (1974).

Authority to Allow Use of Availability Charge. —

The Utilities Commission has jurisdiction and authority to allow the use of an availability charge in a rate schedule for a recreational subdivision, should any be deserved. State ex rel. Utils. Comm'n v. Carolina Forest Util., Inc., 21 N.C. App. 146, 203 S.E.2d 410, 1974 N.C. App. LEXIS 1741 (1974).

Landowners in a recreational subdivision who pay availability charges are “consumers” or stand in a consumer-like relationship to the utility providing water service. State ex rel. Utils. Comm'n v. Carolina Forest Util., Inc., 21 N.C. App. 146, 203 S.E.2d 410, 1974 N.C. App. LEXIS 1741 (1974).

Fees and Charges Made by Municipality. —

The North Carolina Utilities Commission has no jurisdiction to fix or supervise the fees and charges to be made by a municipality for connections with a city sewerage system, either within or without its corporate limits. Atlantic Constr. Co. v. City of Raleigh, 230 N.C. 365, 53 S.E.2d 165, 1949 N.C. LEXIS 633 (1949). See also Town of Grimesland v. City of Wash., 234 N.C. 117, 66 S.E.2d 794, 1951 N.C. LEXIS 434 (1951).

A rider approved by the Commission, which provided that the utility involved in a rate hearing would meter the protesting municipalities separately for purchases by the municipalities for normal resale and purchases by the municipalities for resale to industrial users, but which contained a provision that the municipalities were free to contract in respect to the price they would require the industrial users to pay, did not fix the rate at which the municipalities would be required to sell to industrial users in violation of the statute. State ex rel. N.C. Utils. Comm'n v. Municipal Corps., 243 N.C. 193, 90 S.E.2d 519, 1955 N.C. LEXIS 586 (1955).

A sanitary district which, as a part of its functions, furnishes drinking water to the public and also filters water for industrial consumers is a quasi-municipal corporation, and is not under the control and supervision of the North Carolina Utilities Commission as to services or rates. Halifax Paper Co. v. Roanoke Rapids San. Dist., 232 N.C. 421, 61 S.E.2d 378, 1950 N.C. LEXIS 567 (1950).

Former Corporation Commission had general control and supervision of all railroad corporations. Tilley v. Norfolk & W. Ry., 162 N.C. 37, 77 S.E. 994, 1913 N.C. LEXIS 307 (1913).

But No Power to Appraise and Assess. —

The former Corporation Commission was not clothed with the power of appraising and assessing railroad property. Southern Ry. v. North Carolina Corp. Comm'n, 97 F. 513, 1899 U.S. App. LEXIS 3318 (C.C.D.N.C. 1899).

The State has power to compel a railroad company to perform a particular and specified duty necessary for the convenience of the public, even though it may entail some pecuniary loss. Atlantic Coast Line R.R. v. North Carolina Corp. Comm'n, 206 U.S. 1, 27 S. Ct. 585, 51 L. Ed. 933, 1907 U.S. LEXIS 1142 (1907).

Commerce Between States. —

The power of Congress over commerce between the states is, as a general rule, exclusive, and its inaction is equivalent to a declaration that it shall be free from any restraint which it has the right to impose, except by such statutes as are passed by the states for the purpose of facilitating the safe transmission of goods and carriage of passengers, and are not in conflict with any valid federal legislation. Morris-Scarboro-Moffitt Co. v. Southern Express Co., 146 N.C. 167, 59 S.E. 667, 1907 N.C. LEXIS 19 (1907).

As to when a telegram is not interstate commerce, see State ex rel. R.R. Comm'rs v. Western Union Tel. Co., 113 N.C. 213, 18 S.E. 389, 1893 N.C. LEXIS 45 (1893), writ of error dismissed, 17 S. Ct. 1002, 41 L. Ed. 1187 (1897); Leavell v. Western Union Tel. Co., 116 N.C. 211, 21 S.E. 391, 1895 N.C. LEXIS 205 (1895), writ of error dismissed, 17 S. Ct. 1002, 41 L. Ed. 1187 (1897).

Telephone Company Subject to State Control. —

A telephone company, acting under a quasi-public franchise, is properly classified among the public service corporations, and as such is subject to public regulation and reasonable control. Leavell v. Western Union Tel. Co., 116 N.C. 211, 21 S.E. 391, 1895 N.C. LEXIS 205 (1895), writ of error dismissed, 17 S. Ct. 1002, 41 L. Ed. 1187 (1897); Godwin v. Telephone Co., 136 N.C. 479, 48 S.E. 813, 1904 N.C. LEXIS 294 (1904); Clinton-Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 159 N.C. 9, 74 S.E. 636, 1912 N.C. LEXIS 217 (1912).

A local telephone company having an arrangement for the transmission of long distance messages over the lines of another company for pay is a public service corporation and comes within the provisions of this section. Horton v. Interstate Tel. & Tel. Co., 202 N.C. 610, 163 S.E. 694, 1932 N.C. LEXIS 166 (1932).

Statute giving general control of telephone companies to former Corporation Commission did not oust court of its jurisdiction to compel the company to perform a public duty it owed to an individual. Walls v. Strickland, 174 N.C. 298, 93 S.E. 857, 1917 N.C. LEXIS 79 (1917).

Yellow page revenue and expenses should be included in the revenues and expenses of the company when it applies for a rate increase. This is clearly the majority rule. State ex rel. Utils. Comm'n v. Central Tel. Co., 60 N.C. App. 393, 299 S.E.2d 264, 1983 N.C. App. LEXIS 2462 (1983).

Classified Directory Advertising Revenues. —

In making judgment that telephone company’s classified directory was an essential aspect of telephone service generally Commission was clearly acting within its authority under G.S. 62-30 and this section, and the Commission correctly concluded that the classified directory advertising revenues should continue to be accounted for in establishing just and reasonable rates for the company in this State. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 57 N.C. App. 489, 291 S.E.2d 789, 1982 N.C. App. LEXIS 2656 (1982), modified, 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Telephone utility enjoys a great advantage over all competitors in the field of directory advertising. In addition, this preferred position with all its benefits and revenues is directly related to and a result of the company’s public utility function. Therefore, the Utilities Commission does have the authority to include the expenses, revenues and investments related to directory advertising in its rate making proceedings. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Propriety of Order Requiring Continued Operation of Utilities. —

An order of the Commission, based upon proper findings and conclusions, requiring appellant to continue operation of her utilities would not violate constitutional prohibitions against involuntary servitude. Appellant voluntarily put her land and equipment to a public use and collected compensation for the services which she provided, and having done so, the Commission may require that she continue to use it in the service to which she voluntarily dedicated it so long as she is justly compensated for such service. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

When the Utilities Commission found that natural gas corporation had received payments in lieu of what it would have received under a service contract and that the customers of the company were bearing the company’s contract costs, it was within the power of the Commission under subsection (b) of this section and G.S. 62-130(a) and (d) to take these payments into account in setting a reasonable rate. State ex rel. Utils. Comm'n v. North Carolina Natural Gas Corp., 76 N.C. App. 330, 332 S.E.2d 755, 1985 N.C. App. LEXIS 3864 (1985).

§ 62-33. Commission to keep informed as to utilities.

The Commission shall at all times keep informed as to the public utilities, their rates and charges for service, and the service supplied and the purposes for which it is supplied.

History. 1933, c. 134, s. 16; 1937, c. 165; 1939, c. 365, ss. 1, 2; 1941, c. 97; 1963, c. 1165, s. 1.

§ 62-34. To investigate companies under its control; visitation and inspection.

  1. The Commission shall from time to time visit the places of business and investigate the books and papers of all public utilities to ascertain if all the orders, rules and regulations of the Commission have been complied with, and shall have full power and authority to examine all officers, agents and employees of such public utilities, and all other persons, under oath or otherwise, and to compel the production of papers and the attendance of witnesses to obtain the information necessary for carrying into effect and otherwise enforcing the provisions of this Chapter.
  2. Members of the Commission, Commission staff, and Public Staff may during all reasonable hours enter upon any premises occupied by any public utility, for the purpose of making the examinations and tests and exercising any power provided for in this Article, and may set up and use on such premises any apparatus and appliances necessary therefor. Such public utility shall have the right to be represented at the making of such examinations, tests and inspections.
  3. The Public Staff shall have the right to examine confidential information as defined in G.S. 132-1.2 in exercising any power or performing any duty authorized by this Chapter. The Public Staff shall not disclose confidential information except as authorized by (i) the person or entity having the right to assert confidentiality, (ii) the Commission, or (iii) a court of competent jurisdiction. Any information not designated in writing as confidential by the person or entity disclosing it to the Public Staff is subject to disclosure. Any dispute about whether information has been properly designated as confidential shall be determined by the Commission upon motion and response of interested parties. Information shall be considered confidential only to the extent provided by law.

History. 1899, c. 164, s. 1; Rev., s. 1064; 1913, c. 127, ss. 1, 2, 7; 1917, c. 194; C.S., s. 1060; 1933, c. 134, s. 8; c. 307, s. 14; 1941, c. 97; 1963, c. 1165, s. 1; 1977, c. 468, s. 10; 2021-23, ss. 5, 24.

Editor’s Note.

Session Laws 2021-23, s. 24, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “Public Staff” for the term “public staff” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in subsection (b).

Effect of Amendments.

Session Laws 2021-23, s. 5, effective May 17, 2021, added subsection (c).

§ 62-35. System of accounts.

  1. The Commission may establish a system of accounts to be kept by the public utilities under its jurisdiction, or may classify said public utilities and establish a system of accounts for each class, and prescribe the manner of keeping such accounts.
  2. The Commission may require any public utility under its jurisdiction to keep separate or allocate the revenue from and the cost of doing interstate and intrastate business in North Carolina.
  3. The Commission may ascertain, determine, and prescribe what are proper and adequate charges for depreciation of the several classes of property for each public utility. The Commission may prescribe such changes in such charges for depreciation as it finds necessary.

History. Ex. Sess. 1913, c. 20, s. 14; C.S., s. 1088; 1931, c. 455; 1933, c. 134, s. 8; c. 307, s. 13; 1941, c. 97; 1963, c. 1165, s. 1.

CASE NOTES

Review of Annual Charge to Operating Expenses on Account of Depreciation. —

If a reasonably close relationship between the reserve for depreciation and the actual accumulated depreciation is not present, the Utilities Commission may and should review and make appropriate changes in the annual charge to operating expenses on account of depreciation. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

§ 62-36. Reports by utilities; canceling certificates for failure to file.

The Commission may require any public utility to file annual reports in such form and of such content as the Commission may require and special reports concerning any matter about which the Commission is authorized to inquire or to keep informed, or which it is required to enforce. All reports shall be under oath when required by the Commission. The Commission may issue an order, without notice or hearing, canceling or suspending any certificate of convenience and necessity or any certificate of authority 30 days after the date of service of the order for failing to file the required annual report at the time it was due. In the event the report is filed during the 30-day period, the order of cancellation or suspension shall be null and void.

History. 1931, c. 455; 1933, c. 134, s. 8; c. 307, s. 15; 1941, c. 97; 1959, c. 639, ss. 7, 8; 1963, c. 1165, s. 1; 1985, c. 676, s. 6.

Legal Periodicals.

For article on administrative evidence rules, see 49 N.C.L. Rev. 635 (1971).

§ 62-36A. [Repealed]

Repealed by Session Laws 2014-120, s. 10(a), effective September 18, 2014.

History. 1989, c. 338, s. 1; 1993 (Reg. Sess., 1994), c. 560, s. 1; 1995, c. 216, s. 1; c. 271, s. 1; 2011-291, s. 2.10; repealed by 2014-120, s. 10(a), effective September 18, 2014.

Local Modification.

Camden, Currituck, Dare and Tyrrell: 1998-8.

Editor’s Note.

Former G.S. 62-36A, which was recodified as G.S. 62-36.1 by Session Laws 2012-194, s. 16, pertained to natural gas planning.

Cross References.

As to current provisions relating to natural gas expansion, see G.S. 62-158.

As to current provisions relating to gas cost adjustment for natural gas local distribution companies, see G.S. 62-133.4.

§ 62-36B.

Recodified as G.S. 62-36.01 by Session Laws 2015-264, s. 10, effective October 1, 2015.

§ 62-36.01. Regulation of natural gas service agreements.

Whenever the Commission, after notice and hearing, finds that additional natural gas service agreements (including “backhaul” agreements) with interstate or intrastate pipelines will provide increased competition in North Carolina’s natural gas industry and (i) will likely result in lower costs to consumers without substantially increasing the risks of service interruptions to customers, or (ii) will substantially reduce the risks of service interruptions without unduly increasing costs to consumers, the Commission may enter and serve an order directing the franchised natural gas local distribution company to negotiate in good faith to enter into such service agreements within a reasonable time. In considering costs to consumers under this section, the Commission may consider both short-term and long-term costs.

History. 1989 (Reg. Sess., 1990), c. 962, s. 5; 2015-264, s. 10.

Editor’s Note.

This section is former G.S. 62-36B, as recodified by Session Laws 2015-264, s. 10, effective October 1, 2015.

§ 62-36.1. [Repealed]

Repealed by Session Laws 2014-120, s. 10(a), effective September 18, 2014.

History. 1989, c. 338, s. 1; 1993 (Reg. Sess., 1994), c. 560, s. 1; 1995, c. 216, s. 1; c. 271, s. 1; 2011-291, s. 2.10; 2012-194, s. 16; repealed by 2014-120, s. 10(a), effective September 18, 2014.

Editor’s Note.

Former G.S. 62-36.1, which was formerly codified as G.S. 62-36A and recodified as G.S. 62-36.1 by Session Laws 2012-194, s. 16, pertained to natural gas planning.

§ 62-37. Investigations.

  1. The Commission may, on its own motion and whenever it may be necessary in the performance of its duties, investigate and examine the condition and management of public utilities or of any particular public utility. In conducting such investigation the Commission may proceed either with or without a hearing as it may deem best, but shall make no order without affording the parties affected thereby notice and hearing.
  2. If after such an investigation, or investigation and hearing, the Commission, in its discretion, is of the opinion that the public interest shall be served by an appraisal of any properties in question, the investigation of any particular construction, the audit of any accounts or books, the investigation of any contracts, or the practices, contracts or other relations between the public utility in question and any holding or finance agency with which such public utility may be affiliated, it shall be the duty of the Commission to report its findings and recommendation to the Governor and Council of State with request for an allotment from the Contingency and Emergency Fund to defray the expense thereof, which may be granted as provided by law for expenditures from such fund or may be denied. Provided, however, that the Commission is authorized to order any such appraisal, investigations, or audit to be undertaken by a competent, qualified, and independent firm selected by the Commission, the cost of such appraisal, investigation or audit to be borne by the public utility in question. Notwithstanding any other provisions of this Chapter, the Commission is authorized to initiate a full and complete management audit of any public utility company once every five years, by a competent, qualified, and independent firm, such audit to thoroughly examine the efficiency and effectiveness of management decisions among other factors as directed by the Commission. The cost of such audit is to be borne by the particular public utility subject to the audit; provided, however, that carriers subject to regulation by and auditing of the Interstate Commerce Commission shall not be required to bear the expense of additional audit of accounts or management audit required hereunder.

History. 1931, c. 455; 1933, c. 134, s. 8; c. 307, s. 16; 1941, c. 97; 1963, c. 1165, s. 1; 1975, c. 867, s. 4.

CASE NOTES

Parties Affected. —

Decision of the North Carolina Utilities Commission to recognize a utility customers association and a customer as interveners in a settlement proceeding resulting from an investigation that was conducted, pursuant to G.S. 62-37, of accounting irregularities in the way in which a utility reported its regulated income to the Commission was an abuse of the Commission’s discretion; the association and the customer were not parties affected by the Commission’s order approving the settlement, within the meaning of G.S. 62-37, and as such had no standing to appeal the Commission’s approval of the settlement agreement. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 163 N.C. App. 1, 592 S.E.2d 277, 2004 N.C. App. LEXIS 261 (2004).

Utilities Commission properly denied a proposed intervenor’s motion to intervene because the proposed intervenor was not a party affected within the meaning of G.S. 62-37(a). In re Investigation of Duke Energy Corp. & Progress Energy, Inc., 234 N.C. App. 20, 760 S.E.2d 740, 2014 N.C. App. LEXIS 496 (2014).

OPINIONS OF ATTORNEY GENERAL

Where the Utilities Commission issues an order requiring an auditor to be hired at a public utility’s expense, neither Article 3 (Purchases and Contracts) of Chapter 143, G.S. 143-48 et seq., nor the rule promulgated thereunder, 1 N.C.A.C. 5B.0301, applies, as there is no expenditure of state funds to purchase contractual services. See opinion of Attorney General to Mr. Robert H. Bennink, Jr., General Counsel, Utilities Commission, 2001 N.C. AG LEXIS 41 (10/11/01).

§ 62-38. Power to regulate public utilities in municipalities.

The Commission shall have the same power and authority to regulate the operation of privately owned public utilities within municipalities as it has to regulate such public utilities operating outside of municipalities, with the exception of the rights of such municipalities to grant franchises for such operation under G.S. 160A-319, and such public utilities shall be subject to the provisions of this Chapter in the same manner as public utilities operating outside municipalities.

History. 1917, c. 136, subch. 3, s. 3; C.S., ss. 2783, 2784, 2785; 1933, c. 134, s. 8; 1941, c. 97; 1963, c. 1165, s. 1; 1989, c. 770, s. 11.

CASE NOTES

Power of Commission to Regulate Privately Owned Public Utilities Within Cities. —

The Utilities Commission has the same power and responsibility to regulate the operation of privately owned public utilities within cities as it does their operation outside of cities. Duke Power Co. v. City of High Point, 22 N.C. App. 91, 205 S.E.2d 774, 1974 N.C. App. LEXIS 2253, cert. denied, 285 N.C. 661, 207 S.E.2d 752, 1974 N.C. LEXIS 1084 (1974).

The power of a municipality to grant franchises to public utilities for the use of its streets, and to provide service to its citizens, must yield to the paramount right of the State to regulate, through the Utilities Commission, public utilities even when they are operated within the corporate boundaries of a municipality. Duke Power Co. v. City of High Point, 22 N.C. App. 91, 205 S.E.2d 774, 1974 N.C. App. LEXIS 2253, cert. denied, 285 N.C. 661, 207 S.E.2d 752, 1974 N.C. LEXIS 1084 (1974).

Municipal Charter Subject to State Powers. —

The power conferred by a city charter “to provide water and lights and to contract for same” is subject to the police power of the State with respect to rates to be charged by a public service corporation under such contract as the city may make under its charter. Corporation Comm'n v. Henderson Water Co., 190 N.C. 70, 128 S.E. 465, 1925 N.C. LEXIS 11 (1925).

Although the rate to be charged for water is stipulated by contract between city and water company, this may be changed by the Commission if it appears that the rate contracted for is too low, and the one fixed by the Commission is just. The burden of proof is on the one alleging that the rate fixed by the Commission is unreasonable. Corporation Comm'n v. Henderson Water Co., 190 N.C. 70, 128 S.E. 465, 1925 N.C. LEXIS 11 (1925).

Corporation Held Not Entitled to Injunction Against Commission. —

A public service corporation having a contract with a city, applying to the Commission for the increase of the rate contracted for with the city and obtaining partial relief, would not be granted an injunction by the federal court against the Commission on the grounds that the rate was confiscatory, for such increase as was allowed by the Commission was that much more than could have been received under the contract with the city had the Commission refused to act. Henderson Water Co. v. Corporation Comm'n, 269 U.S. 278, 46 S. Ct. 112, 70 L. Ed. 273, 1925 U.S. LEXIS 29 (1925).

Consent of Customer or Commission Necessary Before Service May Be Abandoned. —

Power company may not abandon service to any customer, subject to the customer’s paying his bill, without the consent of the customer or authorization of the Utilities Commission. Duke Power Co. v. City of High Point, 22 N.C. App. 91, 205 S.E.2d 774, 1974 N.C. App. LEXIS 2253, cert. denied, 285 N.C. 661, 207 S.E.2d 752, 1974 N.C. LEXIS 1084 (1974).

§ 62-39. To regulate crossings of telephone, telegraph, electric power lines and pipelines and rights-of-way of railroads and other utilities by another utility.

  1. The Commission, upon its own motion or upon petition of any public utility or upon petition of the North Carolina Rural Electrification Authority on behalf of any electric membership corporation, shall have the power and authority, after notice and hearing, to order that the lines and right-of-way of any public utility or electric membership corporation may be crossed by any other public utility or electric membership corporation. The Commission, in all such cases, may require any such crossings to be constructed and maintained in a safe manner and in accord with accepted and approved standards of safety and may prescribe the manner in which such construction shall be done.
  2. The Commission shall also have the power and authority to discontinue and prohibit such crossings where they are unnecessary and can reasonably be avoided and to order changes in existing crossings when deemed necessary.
  3. In all cases in which the Commission orders such crossings to be made or changed and when the parties affected cannot agree upon the cost of the construction of such crossings or the damages to be paid to one of the parties for the privilege of crossing the lines of such party, it shall be the duty of the Commission to apportion the cost of such construction and to fix the damage, if any, to be paid and to apportion the damages, if any, among the parties in such manner as may be just and equitable.
  4. This section shall not be construed to limit the right of eminent domain conferred upon public utilities and electric membership corporations by the laws of this State or to limit the right and duty conferred by law with respect to crossing of railroads and highways, but the duty imposed and the remedy given by this section shall be in addition to other duties and remedies now prescribed by law. Any party shall have the right of appeal from any final order or decision or determination of the Commission as provided by law for appeals from orders or decisions or final determinations of the Commission.

History. 1913, c. 130, s. 1; C.S., s. 1052; 1933, c. 134, s. 8; 1941, c. 97; 1949, c. 1029, s. 1; 1963, c. 1165, s. 1; 2021-23, s. 6.

Local Modification.

Ashe: 1929, c. 101.

Effect of Amendments.

Session Laws 2021-23, s. 6, effective May 17, 2021, substituted “highways” for “highways or railroads crossing railroads” in subsection (d).

Legal Periodicals.

For note, “The Modern-Day Case of the Lorax Within the Fourth Circuit,” see 13 Elon L. Rev. 291 (2020).

§ 62-40. To hear and determine controversies submitted.

When a public utility embraced in this Chapter has a controversy with another person and all the parties to such controversy agree in writing to submit such controversy to the Commission as arbitrator, the Commission shall act as such, and after due notice to all parties interested shall proceed to hear the same, and its award shall be final. Such award in cases where land or an interest in land is concerned shall immediately be certified to the clerk of the superior court of the county or counties in which said land, or any part thereof, is situated, and shall by such clerk be docketed in the judgment docket for such county, and from such docketing shall have the same effect as a judgment of the superior court for such county. Parties may appear in person or by attorney before such arbitrator.

History. 1899, c. 164, s. 25; Rev., s. 1073; C.S., s. 1059; 1933, c. 134, s. 8; 1941, c. 97; 1963, c. 1165, s. 1.

Cross References.

As to power of Utilities Commission to settle dispute between railroad and drainage district, see G.S. 156-91.

§ 62-41. To investigate accidents involving public utilities; to promote general safety program.

The Commission may conduct a program of accident prevention and public safety covering all public utilities with special emphasis on highway safety and transport safety and may investigate the causes of any accident on a highway involving a public utility. Any information obtained upon such investigation shall be reduced to writing and a report thereof filed in the office of the Commission, which shall be subject to public inspection but such report shall not be admissible in evidence in any civil or criminal proceeding arising from such accident. The Commission may adopt reasonable rules and regulations for the safety of the public as affected by public utilities and the safety of public utility employees. The Commission shall cooperate with and coordinate its activities for public utilities with similar programs of the Division of Motor Vehicles, the Insurance Department, the Industrial Commission and other organizations engaged in the promotion of highway safety and employee safety.

History. 1899, c. 164, s. 24; Rev., s. 1065; C.S., s. 1061; 1933, c. 134, s. 8; 1941, c. 97; 1963, c. 1165, s. 1; 1975, c. 716, s. 5; 1995 (Reg. Sess., 1996), c. 673, s. 2.

§ 62-42. Compelling efficient service, extensions of services and facilities, additions and improvements.

  1. Except as otherwise limited in this Chapter, whenever the Commission, after notice and hearing had upon its own motion or upon complaint, finds:
    1. That the service of any public utility is inadequate, insufficient or unreasonably discriminatory, or
    2. That persons are not served who may reasonably be served, or
    3. That additions, extensions, repairs or improvements to, or changes in, the existing plant, equipment, apparatus, facilities or other physical property of any public utility, of any two or more public utilities ought reasonably to be made, or
    4. That it is reasonable and proper that new structures should be erected to promote the security or convenience or safety of its patrons, employees and the public, or
    5. That any other act is necessary to secure reasonably adequate service or facilities and reasonably and adequately to serve the public convenience and necessity,
  2. If such order is directed to two or more public utilities, the utilities so designated shall be given such reasonable time as the Commission may grant within which to agree upon the portion or division of the cost of such additions, extensions, repairs, improvements or changes which each shall bear. If at the expiration of the time limited in the order of the Commission, the utility or utilities named in the order shall fail to file with the Commission a statement that an agreement has been made for division or apportionment of the cost or expense, the Commission shall have the authority, after further hearing in the same proceeding, to make an order fixing the portion of such cost or expense to be borne by each public utility affected and the manner in which the same shall be paid or secured.
  3. Repealed by Session Laws 2013-187, s. 1, effective July 1, 2013.

the Commission shall enter and serve an order directing that such additions, extensions, repairs, improvements, or additional services or changes shall be made or affected within a reasonable time prescribed in the order. This section shall not apply to terminal or terminal facilities of motor carriers of property.

History. 1933, c. 307, s. 10; 1949, c. 1029, s. 2; 1963, c. 1165, s. 1; 1965, c. 287, s. 6; 1985, c. 676, s. 7; 2013-187, s. 1.

Effect of Amendments.

Session Laws 2013-187, s. 1, effective July 1, 2013, deleted subsection (c) relating definition of public utility.

CASE NOTES

Purpose of Regulation. —

With public utilities the State has undertaken to protect the public from the customary consequences of monopoly, by making the rates and services of the certificate holder subject to regulation and control by the Utilities Commission. In re Aston Park Hosp., 282 N.C. 542, 193 S.E.2d 729, 1973 N.C. LEXIS 1106 (1973).

Power and Duties of Commission. —

This Chapter confers upon the Utilities Commission the power and the duty to compel a public utility to render adequate service, and it also confers upon the Commission the duty to fix reasonable rates for the rendering of adequate service. State ex rel. Utils. Comm'n v. General Tel. Co., 21 N.C. App. 408, 204 S.E.2d 529, 1974 N.C. App. LEXIS 1817, rev'd, 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

Under G.S. 62-32 and this section, the Utilities Commission is given the power and the duty to compel utility companies to render adequate service and to set reasonable rates for such service. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Under subdivision (a)(5) of this section the Commission has the authority to order the utility to take action necessary to secure reasonably adequate service for the public’s need and convenience. Undoubtedly yellow pages could fall within this provision. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

As to the jurisdiction of the Utilities Commission to require rail carrier to open drainage ditches along its tracks and to keep its drainage ditches open, see State ex rel. Utils. Comm'n v. Seaboard C.L.R.R., 62 N.C. App. 631, 303 S.E.2d 549, 1983 N.C. App. LEXIS 2988 (1983).

North Carolina Utilities Commission’s conclusion that it had jurisdiction to review, prior to execution, proposed wholesale electric energy contracts granting native load priority supplied from a utility to retail ratepayers and to take appropriate action to protect reliable service to retail customers in North Carolina by obtaining written notice prior to the execution of any wholesale electric energy contracts in interstate commerce for its consent was vacated as the matter was preempted by the Federal Power Act, 16 U.S.C.S. § 791 et seq. State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 161 N.C. App. 199, 588 S.E.2d 77, 2003 N.C. App. LEXIS 2052 (2003), rev'd, 359 N.C. 516, 614 S.E.2d 281, 2005 N.C. LEXIS 648 (2005).

There was no conflict between G.S. 62-106 and G.S. 62-42 because they served different purposes and were reconcilable; the provisions of G.S. 62-100 through G.S. 62-107 dealt with the siting of certain large transmission lines and were not applicable to the case, and G.S. 62-42 was much broader in scope, dealing with compelling any type of needed improvement to a public utility system. The siting of lines of at least 161 kV was often controversial and the legislature’s decision to require specialized procedures for the siting of these lines was logical. State ex rel. Utils. Comm'n v. Town of Kill Devil Hills, 194 N.C. App. 561, 670 S.E.2d 341, 2009 N.C. App. LEXIS 4, aff'd, 363 N.C. 739, 686 S.E.2d 151, 2009 N.C. LEXIS 1289 (2009).

Town’s ordinances, as applied to a power company’s proposed transmission line, were invalid given the North Carolina Utilities Commission’s G.S. 62-42 authority and duty to compel a power company to complete certain improvements in accordance with the purposes of the Public Utilities Act. The Commission appropriately placed the burden of proof as to the validity of the ordinances on the power company; once the Commission became aware of hazardous conditions affecting a public utility or its service to the public, the Commission was obligated to remedy the situation. State ex rel. Utils. Comm'n v. Town of Kill Devil Hills, 194 N.C. App. 561, 670 S.E.2d 341, 2009 N.C. App. LEXIS 4, aff'd, 363 N.C. 739, 686 S.E.2d 151, 2009 N.C. LEXIS 1289 (2009).

Because G.S. 62-32 and G.S. 62-42 authorized the North Carolina Utilities Commission to compel utility companies to render adequate service and to set reasonable rates, the Commission was the proper body to hear a dispute between a power company and the town. Although the town could have granted a variance to its ordinance that would have allowed the company to build the proposed new line, the ordinance was not consistent with state law, and the town cited no statutory authority or precedent that required the company to seek such a variance where an administrative agency specifically designed to handle such disputes had jurisdiction. State ex rel. Utils. Comm'n v. Town of Kill Devil Hills, 194 N.C. App. 561, 670 S.E.2d 341, 2009 N.C. App. LEXIS 4, aff'd, 363 N.C. 739, 686 S.E.2d 151, 2009 N.C. LEXIS 1289 (2009).

The Commission, not the courts, is authorized by the legislature to determine what is a fair rate of return. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

In reviewing the Commission’s determination of fair rate of return, the court will only review the record and evidence to determine if the Commission’s order is supported by competent evidence. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

This section must be construed in connection with G.S. 62-110, which requires the issuance of a certificate of public convenience and necessity to construct new facilities except where such construction is into territory contiguous to that already occupied and not receiving similar service from another public utility. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 21 N.C. App. 182, 204 S.E.2d 27, 1974 N.C. App. LEXIS 1752, cert. denied, 285 N.C. 596, 206 S.E.2d 866, 1974 N.C. LEXIS 1058 (1974).

Thus, Commission Is Without Authority to Compel Duplicate Telephone Service. —

A reading of this section in pari materia with G.S. 62-110 results in the determination that the Commission does not have the authority to compel a public utility to provide local exchange service to an area which is already receiving such service from another public utility. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 21 N.C. App. 182, 204 S.E.2d 27, 1974 N.C. App. LEXIS 1752, cert. denied, 285 N.C. 596, 206 S.E.2d 866, 1974 N.C. LEXIS 1058 (1974).

To order a telephone company to render service to an area already occupied by another telephone company would foster duplication, wastefulness, and unwarranted competition, all of which are repugnant to the avowed policy of the public utility law. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 21 N.C. App. 182, 204 S.E.2d 27, 1974 N.C. App. LEXIS 1752, cert. denied, 285 N.C. 596, 206 S.E.2d 866, 1974 N.C. LEXIS 1058 (1974).

Proposed Siting of Electrical Transmission Line. —

North Carolina Utilities Commission had jurisdiction to hear and resolve dispute arising from the proposed siting of an electrical transmission line against electric membership corporations. State ex rel. Utils. Comm’n v. Mountain Elec. Coop., 108 N.C. App. 283, 423 S.E.2d 516 (1992), aff’d per curiam, 334 N.C. 681, 435 S.E.2d 71 (1993). Decided prior to effective date of § 62-100, et seq.

Duty of Utility to Render Reasonably Adequate Service. —

Having been granted a monopoly in its franchise area, the utility is under a duty to render reasonably adequate service. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Utility Must Accept Responsibility. —

A public utility which has been allowed to charge rates sufficient to enable it to maintain its properties, in addition to the earning of a fair return thereon, and which nevertheless permits its properties to fall into such a poor state of maintenance as to impair the quality of its service, must accept responsibility for its resulting inability to render adequate service to its patrons. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Providing a correct telephone listing is part of providing “reasonably adequate service” as required by subdivision (a)(5) of this section. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Providing a correct telephone listing in the yellow pages as well as in the white pages of the directory is a utility function, and the Commission properly has jurisdiction over complaints which arise from this function. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Incorrect Telephone Number Listings. —

The Utilities Commission had jurisdiction over complaints concerning incorrect telephone number listings in the telephone directory even when the regulated utility had delegated to another company the public utility function of publishing its directory which also included paid advertising. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Proper Listings in Advertisements in Yellow Pages. —

If a utility elects to include yellow pages advertising in the directory which it is required to publish, then clearly proper listings in the advertisements in the yellow pages become a part of the utility’s “function of providing adequate service” to the public. The public is not well served by listings in the yellow pages or the white pages of the directory which are incorrect or confusing to the consuming public. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

As to reduction of fair value of utilities’ property where service is inadequate, see State ex rel. Utils. Comm'n v. General Tel. Co., 21 N.C. App. 408, 204 S.E.2d 529, 1974 N.C. App. LEXIS 1817, rev'd, 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

Recovery of Reasonable Cost of Approved Gas Exploration Projects. —

The Commission, in ordering that the reasonable costs of approved exploration projects were to be recoverable through tracking rate increases, acted within its acknowledged duty and authority to compel adequate and efficient utility service to the citizens of this State, where it was clear from the Commission’s findings that, without additional gas supplies, the gas utilities would be unable to render adequate service to their customers, that exploration programs were the most feasible means for obtaining these additional supplies, and that the utilities were unable, through traditional methods of financing, to fund sufficient exploration projects to obtain these supplies. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Protest by City Not Notice. —

A protest filed by a city in a proceeding by a power company for an increased cash fare on its city buses was not sufficient to constitute such notice as is required by this section so as to authorize the Commission to consider whether or not the service rendered by the power company was adequate or inadequate. State ex rel. Utils. Comm'n v. City of Greensboro, 244 N.C. 247, 93 S.E.2d 151, 1956 N.C. LEXIS 397 (1956).

§ 62-43. Fixing standards, classifications, etc.; testing service.

  1. The Commission may, after notice and hearing, had upon its own motion or upon complaint, ascertain and fix just and reasonable standards, classifications, regulations, practices, or service to be furnished, imposed, observed or followed by any or all public utilities; ascertain and fix adequate and reasonable standards for the measurement of quantity, quality, pressure, initial voltage or other condition pertaining to the supply of the product, commodity or service furnished or rendered by any and all public utilities; prescribe reasonable regulations for the examination and testing of such product, commodity or service and for the measurement thereof; establish or approve reasonable rules, regulations, specifications and standards to secure the accuracy of all meters and appliances for measurement; and provide for the examination and testing of any and all appliances used for the measurement of any product, commodity or service of any public utility.
  2. The Commission shall fix, establish and promulgate standards of quality and safety for gas furnished by a public utility and prescribe rules and regulations for the enforcement of and obedience to the same.

History. 1919, c. 32; C.S., s. 1055; 1933, c. 134, s. 8; c. 307, s. 11; 1941, c. 97; 1963, c. 1165, s. 1.

CASE NOTES

For case holding notice adequate under this section, see State ex rel. Utilities Comm'n v. Associated Petro. Carriers, 13 N.C. App. 554, 186 S.E.2d 612, 1972 N.C. App. LEXIS 2279, cert. denied, 281 N.C. 158, 188 S.E.2d 364, 1972 N.C. LEXIS 1040 (1972).

§ 62-44. Commission may require continuous telephone lines.

The Commission may, upon its own motion or upon written complaint by any person, after notice and hearing, require any two or more telephone or telegraph utilities to establish and maintain through lines within the State between two or more localities, which cannot be communicated with or reached by the lines of either utility alone, where the lines or wires of such utilities form a continuous line of communication, or could be made to do so by the construction and maintenance of suitable connections or the joint use of equipment, or the transfer of messages at common points. The rate for such service shall be just and reasonable and the Commission shall have power to establish the same, and declare the portion thereof to which each utility affected thereby is entitled and the manner in which the same must be secured and paid. All necessary construction, maintenance and equipment in order to establish such service shall be constructed and maintained in such manner and under such rules, with such divisions of expense and labor, as may be required by the Commission.

History. 1933, c. 307, s. 9; 1963, c. 1165, s. 1.

CASE NOTES

Statutes Requiring Interconnection with Competitor Should Not Be Extended Beyond Plain Meaning. —

The power to require the proprietor of a business to interconnect its facilities with those of a competitor is a drastic power. Statutes conferring it should not be extended beyond their plain meaning. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

When Interconnection of Lines May Be Required. —

This section authorizes the Commission to require a connection of the lines of two telephone companies, but only when they serve localities which cannot be communicated with by the lines of one of them alone. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

There is no provision in this Chapter which requires, or authorizes the Commission to require, a utility, with large investments in its own plant and facilities, to permit interconnection with such plant and facilities by a competitor in order to increase the competitor’s opportunity to take away its customers or prospective customers. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Section Does Not Authorize Commission to Compel Telephone Company to Interconnect with Radio Company Serving Same Area. —

This section may not reasonably be extended by construction to authorize the Commission to compel a telephone company to interconnect its system with the system of a radio company serving the identical area which the telephone company, itself, serves or desires to serve. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Mobile Radio Service Company Is Not “Telephone or Telegraph Utility”. —

Even if the record is sufficient to support an order granting an applicant a certificate of public convenience and necessity to act as a common carrier of communications providing mobile radio service, the Commission has no statutory authority to require a telephone utility to interconnect applicant’s radio communications system with the utility’s land telephone system. If permitted to render such service, the applicant would not be a “telephone or telegraph utility.” State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

§ 62-45. Determination of cost and value of utility property.

The Commission, after notice and hearing, may ascertain and fix the cost or value, or both, of the whole or any part of the property of any public utility insofar as the same is material to the exercise of the jurisdiction of the Commission, make revaluations from time to time, and ascertain the cost of all new construction, extensions and additions to the property of every public utility.

History. 1933, c. 307, s. 12; 1963, c. 1165, s. 1.

§ 62-46. Water gauging stations.

The Commission may require the location, establishment, maintenance and operation of any water gauging station which it finds is needed in the State over and above those required by federal agencies, and the Commission may cooperate with federal and other State agencies as to the location, construction and reports and the results of operation of such station.

History. 1933, c. 307, s. 33; 1963, c. 1165, s. 1.

§ 62-47. Reports from municipalities operating own utilities.

Every municipality furnishing gas, electricity or telephone service shall make an annual report to the Commission, verified by the oath of the general manager or superintendent thereof, on the same forms as provided for reports of public utilities, giving the same information as required of public utilities.

History. 1933, c. 307, s. 34; 1963, c. 1165, s. 1.

Cross References.

As to admissibility of records in utility rate hearing, see G.S. 62-65.

§ 62-48. Appearance before courts and agencies.

  1. The Commission is authorized and empowered to initiate or appear in such proceedings before federal and State courts and agencies as in its opinion may be necessary to secure for the users of public utility service in this State just and reasonable rates and service; provided, however, that the Commission shall not appear in any State appellate court in support of any order or decision of the Commission entered in a proceeding in which a public utility had the burden of proof.
  2. The Commission may, when appearing before federal courts and agencies on behalf of the using and consuming public in matters relating to the wholesale rates and supply of natural gas, employ, subject to the approval of the Governor, private legal counsel and be reimbursed for any resulting legal fees and costs from past and future refunds received by the North Carolina natural gas distribution companies, and may establish procedures for those natural gas distribution companies to set aside reasonable amounts of those refunds for this purpose. The Commission is also authorized to establish procedures whereby the State may be reimbursed from past and future refunds received by the North Carolina natural gas distribution companies for travel expenses incurred by staff members of the Commission and Public Staff designated to provide assistance to the Commission’s private legal counsel in natural gas matters before federal courts and agencies.

History. 1899, c. 164, s. 14; Rev., s. 1110; 1907, c. 469, s. 5; C.S., s. 1075; 1929, c. 235; 1933, c. 134, s. 8; 1941, c. 97; 1963, c. 1165, s. 1; 1977, c. 468, s. 11; 1985, c. 312, s. 1; 1985 (Reg. Sess., 1986), c. 1014, s. 233.

§ 62-49. Publication of utilities laws.

The Commission is authorized and directed to secure publication of all North Carolina laws affecting public utilities, together with the Commission rules and regulations, in an annotated edition, and the Commission may adopt rules for distribution of said publication and may republish said laws at such times as may be reasonable and necessary.

History. 1963, c. 1165, s. 1; 1967, c. 1133; 2021-23, s. 7.

Effect of Amendments.

Session Laws 2021-23, s. 7, effective May 17, 2021, substituted “publication” for “publication, and shall publish biennial supplements to said utilities laws containing all amendments and additions thereto.”

§ 62-50. Safety standards for gas pipeline facilities.

  1. The Commission may promulgate and adopt safety standards for the operation of natural gas pipeline facilities in North Carolina. These safety standards shall apply to the pipeline facilities of gas utilities and pipeline carriers under franchise from the Utilities Commission and to pipeline facilities of other gas operators, as defined in subsection (g) of this section. The Commission shall require that all gas operators file with the Commission reports of all accidents occurring in connection with the operation of their gas pipeline facilities located in North Carolina. The Commission may require that all gas operators file with the Commission copies of their construction, operation, and maintenance standards and procedures, and any amendments thereto, and such other information as may be necessary to show compliance with the safety standards promulgated by the Commission. Where the Commission has reason to believe that any gas operator is not in compliance with the Commission’s safety standards, the Commission may, after notice and hearing, order that gas operator to take such measures as may be necessary to comply with the standards. The Commission may require all gas operators to furnish engineering reports showing that their pipeline facilities are in safe operating condition and are being operated in conformity with the Commission’s safety standards.
  2. The Commission is hereby authorized to enter into agreements with the United States Department of Transportation and other federal agencies and with other states or public utilities commissions of other states for the regulation of natural gas pipelines located within the State of North Carolina and upon the execution of such cooperative agreements, the Commission is authorized to utilize Commission personnel for inspection, investigation, and regulation of safety standards for interstate and intrastate natural gas pipelines in North Carolina, and to share in the cost of such regulation with other agencies having duties with respect to the regulation of said natural gas pipelines, and to receive funds from the United States Department of Transportation for such regulation. The Commission may use Commission personnel to inspect and investigate all gas incidents, facilities, and records kept pursuant to the provisions of 49 Code of Federal Regulations, Parts 191, 192, and 193, and to cooperate with other state and federal agencies in determining the probable cause or causes of gas incidents. Any information obtained during an investigation of a gas incident shall be reduced to writing and a report containing that information shall be filed with the Chief Clerk of the Commission and the report shall be subject to public inspection but the report shall not be admissible in evidence in any civil or criminal proceeding arising from the incident.
  3. The Utilities Commission is hereby authorized to enter into cooperative agreements for inspection of all natural gas pipelines of North Carolina to the end that the Utilities Commission may enter into agreements with the United States Department of Transportation or other federal or state agencies to regulate and inspect the safety standards for all natural gas pipelines in the State of North Carolina, including interstate natural gas pipelines.
  4. Any person who violates any provision of this section, or any regulation of the Utilities Commission issued thereunder, shall be subject to a civil penalty for each violation for each day that the violation continues. The maximum penalty for each day of a violation and for all the days of a continuing violation may not exceed the maximum penalties that would apply if the penalties had been imposed under 49 U.S.C. Appx. § 1679a(a) by the Secretary of the United States Department of Transportation. Penalties assessed under this subsection shall be credited to the General Fund as nontax revenue.
  5. Any action for civil penalty or any claim for said penalty may be compromised by the Utilities Commission and settled for an agreed amount. In determining the amount of the penalty imposed in civil action, or the amount agreed upon in compromise, the amount of the penalty shall be considered in relation to the size of the business of the person charged, the gravity of the violation, and the good faith of the person charged in attempting to achieve compliance, after any prior notification of a violation. The amount of the penalty, when finally determined in a civil action, or the amount agreed upon in compromise, may be deducted from any sums owing by the State to the person charged, or may be collected as in the case of any judgment in a civil action in the State courts.
  6. The General Court of Justice of North Carolina is authorized to issue court orders, restraining orders, injunctions and other processes of the court in actions by the Utilities Commission to enforce the provisions of this Chapter relating to gas pipeline safety, and the Commission is authorized to bring actions in said court, including actions for mandatory injunctions, restraining orders, temporary restraining orders, penalties, damages and such other relief as may be necessary to secure compliance with the provisions of this section and regulations of the Commission duly enacted and adopted hereunder relating to gas pipeline safety. This provision is in addition to other powers of the Commission and the courts in relation to the enforcement of provisions of this Chapter in the courts, and shall not limit the present powers of the Commission in bringing actions in the courts for enforcement of other provisions of this Chapter.
  7. For the purpose of this section, “gas operators” include gas utilities and gas pipeline carriers operating under a franchise from the Utilities Commission, municipal corporations operating municipally owned gas distribution systems, regional natural gas districts organized and operated pursuant to Article 28 of Chapter 160A of the General Statutes, and public housing authorities and any person operating apartment complexes or mobile home parks that distribute or submeter natural gas to their tenants. This section does not confer any other jurisdiction over municipally owned gas distribution systems, regional natural gas districts, public housing authorities or persons operating apartment complexes or mobile home parks.

History. 1967, c. 1134, s. 1; 1969, c. 646; 1971, cc. 549, 1145; 1979, c. 269, s. 1; 1989, c. 481, ss. 1, 2; 1993, c. 189, s. 1; 1997-426, s. 9.

Legal Periodicals.

For note, “The Modern-Day Case of the Lorax Within the Fourth Circuit,” see 13 Elon L. Rev. 291 (2020).

§ 62-51. To inspect books and records of corporations affiliated with public utilities.

Members of the Commission, Commission staff, and Public Staff are hereby authorized to inspect the books and records of corporations affiliated with public utilities regulated by the Utilities Commission under the provisions of this Chapter, including parent corporations and subsidiaries of parent corporations. This authorization shall extend to all reasonably necessary inspection of all books and records of account and agreements and transactions between public utilities doing business in North Carolina and their affiliated corporations where such records relate either directly or indirectly to the provision of intrastate service by the utility. The right to inspect such books and records shall apply both to books and records in the State of North Carolina and such books and records located outside of the State of North Carolina. If any such affiliated corporation shall refuse to permit such inspection of its books and records and its transactions with public utilities doing business in North Carolina, the Utilities Commission is empowered to order the public utility regulated in North Carolina to show cause why it should not secure from its affiliated corporation such books and records for inspection in North Carolina or why their franchise to operate as a public utility in North Carolina should not be cancelled.

History. 1969, c. 764, s. 1; 1977, c. 468, s. 12; 2021-23, s. 24.

Editor’s Note.

Session Laws 2021-23, s. 24, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “Public Staff” for the term “public staff” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in this section.

CASE NOTES

Broad Authority to Inspect and Investigate. —

Within its proper rate-making authority, the Commission is expressly authorized to inspect the books and records of affiliated companies and to investigate contracts and practices between the petitioning utility and its affiliated companies, including parent corporations and subsidiaries of parent corporations. The authority of the Commission to inspect books and records and to make investigations into transactions between affiliates, as conferred by this section, is quite broad. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

This section cannot give the Utilities Commission jurisdiction over Bellsouth Advertising and Publishing Company. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 93 N.C. App. 260, 377 S.E.2d 772, 1989 N.C. App. LEXIS 173 (1989), rev'd, 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

§ 62-52. Interruption of service.

The Utilities Commission may adopt appropriate rules and regulations which would allow public utilities to temporarily interrupt service when a structure is moved by the owner of such structure (or by a licensed mover authorized and acting on behalf of the owner) over or along public roads or streets and there are public utility facilities in place which would impede the movement of such structure. Such rules and regulations shall require:

  1. The owner to demonstrate that the public health and safety of the utility’s customers and that of the general public will not be affected by the interruption of such service,
  2. That the inconvenience to said customers and the general public can be fully anticipated and reduced to a minimum,
  3. The utility cooperate with the owner in furnishing information relative to (1) and (2), and
  4. An initial application fee be paid the utility toward its cost to be incurred in investigating and planning.

Should the owner and the public utility be unable to agree on a practical procedure and/or the direction to follow in overcoming the impeding facilities in order that the public health and safety of the utility’s customers and that of the general public will not be affected, then and in such event the owner may petition the Utilities Commission to require the utility to temporarily interrupt its service to its customers by disconnecting the impeding facilities, provided the owner can demonstrate to the satisfaction of the Commission that the public health and safety of the utility’s customers and that of the general public will not be affected by such interruption of service and that the public utility was unreasonable in the procedure, direction and cost proposed to the owner to overcome the impeding facility.

In any event, the owner of said structure shall reimburse the utility its full cost involved in such disconnection and reconnection including but not limited to planning, engineering, notification and administrative costs, labor, material and equipment. Should the impeding facility be overcome other than by disconnection, the owner shall nevertheless reimburse the utility its full cost related thereto.

History. 1981 (Reg. Sess., 1982), c. 1186, s. 1.

§ 62-53. Electric membership corporation subsidiaries.

In addition to any other authority granted to the Commission in this Chapter, the Commission shall have the authority to regulate electric membership corporations as provided in G.S. 117-18.1.

History. 1999-180, s. 4.

§ 62-54. Notification of opportunity to object to telephone solicitation.

The Commission shall require each local exchange company and each competing local provider certified to do business in North Carolina to notify all telephone subscribers who subscribe to residential service from that company of the provisions of Article 4 of Chapter 75 of the General Statutes and of the federal laws and regulations allowing consumers to object to receiving telephone solicitations. The notification shall be drafted pursuant to G.S. 75-102(m), shall be distributed at least annually, and shall be distributed by one of the following methods: bill insert or bill message, direct mail, or e-mail when the subscriber has affirmatively selected e-mail as a means of notification. The Commission shall also ensure that this information is printed in a clear, conspicuous manner in the consumer information pages of each telephone directory distributed to residential customers.

History. 2000-161, s. 3; 2003-411, s. 5; 2009-122, s. 2.

Cross References.

As to increased consumer protections from unwanted telephone solicitations, see G.S. 75-100 et seq.

Editor’s Note.

Session Laws 2000-161, s. 3, enacted this section as G.S. 62-53. It was recodified as this section at the direction of the Revisor of Statutes.

Session Laws 2003-411, s. 6, provides: “Should one or more of the terms or provisions of this act or any application thereof be held or declared unenforceable or invalid to any extent, the remainder of this act, and the applications thereof that have not been held or declared unenforceable or invalid, shall remain in effect. In the specific event that the provisions of G.S. 75-102, 75-103, 75-104, or 75-105 as enacted in Section 3 of this act, are declared to be preempted or otherwise unenforceable in relation to interstate telephone calls, those provisions shall remain in force and effect with respect to intrastate telephone calls.” Session Laws 2003-411, s. 5, rewrote the section.

Session Laws 2003-411, s. 7, provides: “Consistent with protected speech rights of businesses that engage in telephone solicitations, the provisions of this act shall be given broad construction so as to protect telephone subscribers from unwanted telephone solicitations and from problematic sales techniques and payment procedures often associated with these solicitations.”

Effect of Amendments.

Session Laws 2009-122, s. 1, effective October 1, 2009, substituted “The notification shall be drafted pursuant to G.S. 75-102(m), shall be distributed at least annually, and shall be distributed by one of the following methods: bill insert or bill message, direct mail, or e-mail when the subscriber has affirmatively selected e-mail as a means of notification” for “by enclosing a bill insert, drafted pursuant to G.S. 75-102(m), at least annually, in at least one telephone bill mailed to every residential customer” near the middle.

§§ 62-55 through 62-59.

Reserved for future codification purposes.

Article 4. Procedure before the Commission.

§ 62-60. Commission acting in judicial capacity; administering oaths and hearing evidence; decisions; quorum.

For the purpose of conducting hearings, making decisions and issuing orders, and in formal investigations where a record is made of testimony under oath, the Commission shall be deemed to exercise functions judicial in nature and shall have all the powers and jurisdiction of a court of general jurisdiction as to all subjects over which the Commission has or may hereafter be given jurisdiction by law. The commissioners and members of the Commission’s staff designated and assigned as examiners shall have full power to administer oaths and to hear and take evidence. The Commission shall render its decisions upon questions of law and of fact in the same manner as a court of record. A majority of the commissioners shall constitute a quorum, and any order or decision of a majority of the commissioners shall constitute the order or decision of the Commission, except as otherwise provided in this Chapter.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

Legal Periodicals.

For article on administrative evidence rules, see 49 N.C.L. Rev. 635 (1971).

CASE NOTES

This section does not give the Commission the authority to determine the constitutionality of the legislation. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 336 N.C. 657, 446 S.E.2d 332, 1994 N.C. LEXIS 397 (1994).

Commission Is Administrative Agency with Powers of a Dual Nature. —

The Utilities Commission, a creature of the General Assembly, is an administrative agency of the State, with such powers and duties as are given it by this Chapter. These powers and duties are of a dual nature — supervisory or regulatory, and judicial. State ex rel. N.C. Utils. Comm'n v. Atlantic Greyhound Corp., 224 N.C. 293, 29 S.E.2d 909, 1944 N.C. LEXIS 354 (1944); Utilities Comm'n v. Atlantic Greyhound Corp., 224 N.C. 672, 32 S.E.2d 23, 1944 N.C. LEXIS 448 (1944).

The rate making activities of the Commission are a legislative function. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Rule Making Is a Legislative Function. —

Rule making is an exercise of the delegated legislative authority of the Commission, under G.S. 62-30 and G.S. 62-31, to supervise and control the public utilities of this State and to make reasonable rules and regulations to accomplish that end. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

When the Commission is conducting a hearing, it is acting in a judicial capacity and shall render its decision upon questions of law and of fact in the same manner as a court of record. State ex rel. Utils. Comm'n v. Town of Pineville, 13 N.C. App. 663, 187 S.E.2d 473, 1972 N.C. App. LEXIS 2308 (1972).

As to Commission’s having powers of court of general jurisdiction as to certain matters, see State ex rel. N.C. Utils. Comm'n v. Atlantic Greyhound Corp., 224 N.C. 293, 29 S.E.2d 909, 1944 N.C. LEXIS 354 (1944); Utilities Comm'n v. Atlantic Greyhound Corp., 224 N.C. 672, 32 S.E.2d 23, 1944 N.C. LEXIS 448 (1944).

Commission Is Without Inherent Powers of Appellate Court. —

The North Carolina Utilities Commission is a court of general jurisdiction only as to subjects embraced within this Chapter. It is a court of original jurisdiction and does not possess the inherent powers of an appellate court. State ex rel. N.C. Utils. Comm'n v. Norfolk S. Ry., 224 N.C. 762, 32 S.E.2d 346, 1944 N.C. LEXIS 253 (1944).

Liberality and informality are essential to the workings of the Commission. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

Ordinarily, the procedure before the Commission is more or less informal, and is not as strict as in superior court, nor is it confined by technical rules. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962); State ex rel. North Carolina Utils. Comm'n v. Western Carolina Tel. Co., 260 N.C. 369, 132 S.E.2d 873, 1963 N.C. LEXIS 719 (1963); State ex rel. Utils. Comm'n v. M.L. Hatcher Pickup & Delivery Servs., Inc., 48 N.C. App. 115, 268 S.E.2d 851, 1980 N.C. App. LEXIS 3184 (1980).

The Commission is required by G.S. 62-65 (a) in deciding on an application for a certificate of public convenience and necessity to apply the rules of evidence applicable in civil actions in the superior court “insofar as practicable.” This section provides that the Commission shall render its decision “in the same manner as a court of record.” The procedure before the Commission is, however, not as formal as that in litigation conducted in the superior court. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Since the regulation of public utilities is a continuing and continuous process as to each utility, procedure before the Commission must be more or less informal and not confined by technical rules, in order that regulation may be consistent with changing conditions. State ex rel. Utilities Comm'n v. Associated Petro. Carriers, 13 N.C. App. 554, 186 S.E.2d 612, 1972 N.C. App. LEXIS 2279, cert. denied, 281 N.C. 158, 188 S.E.2d 364, 1972 N.C. LEXIS 1040 (1972).

Great liberality is indulged in pleadings in proceedings before the Commission, and the technical and strict rules of pleading applicable in ordinary court proceedings do not apply. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

Substance and not form is controlling. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962); State ex rel. North Carolina Utils. Comm'n v. Western Carolina Tel. Co., 260 N.C. 369, 132 S.E.2d 873, 1963 N.C. LEXIS 719 (1963).

Commission may enlarge or restrict the inquiry before it unless a party is clearly prejudiced thereby. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962); State ex rel. Utilities Comm'n v. Associated Petro. Carriers, 13 N.C. App. 554, 186 S.E.2d 612, 1972 N.C. App. LEXIS 2279, cert. denied, 281 N.C. 158, 188 S.E.2d 364, 1972 N.C. LEXIS 1040 (1972).

Issues of Fact Not to Be Decided Before All Evidence Is Offered. —

It is erroneous if controverted questions of fact, or issues of fact, are decided by the Commission before all of the competent evidence of the parties is offered with respect thereto. State ex rel. Utils. Comm'n v. Town of Pineville, 13 N.C. App. 663, 187 S.E.2d 473, 1972 N.C. App. LEXIS 2308 (1972).

Findings Must Be Supported by Competent Evidence. —

Since the Commission is required to render its decisions upon questions of law and of fact in the same manner as a court of record, its findings must be, as a matter of law, supported by competent evidence. State ex rel. Utils. Comm'n v. Rail Common Carriers, 42 N.C. App. 314, 256 S.E.2d 508, 1979 N.C. App. LEXIS 2823 (1979).

Finding May Be Based on “Late” Exhibits. —

The statutes prescribing the procedure for hearings before the Commission do not forbid it to make a finding, as to the capacity and ability of an applicant for a certificate of public convenience and necessity to serve, upon the basis of facts arising between the conclusion of the hearing and the entry of the order, when those facts are shown by “late” exhibits, otherwise competent, and when the adverse party has had adequate notice that such exhibits have been filed with the Commission for inclusion in the record. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Findings of Fact Not Disagreed with in Other Opinions as Those of Commission. —

Where neither of the two concurring opinions nor the two dissenting opinions indicated any disagreement with any of the findings of fact stated in the opinion of another commissioner, and the opinion of no other commissioner suggested any other findings of fact, the findings of fact so stated in the opinion of the commissioner were, therefore, concurred in by a majority, if not all of the members of the Commission, and were, therefore, the findings of the Commission. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Different Reasons Given by Concurring Commissioners Are Not Grounds for Reversal. —

When this section and G.S. 62-79(a) are construed together, as they must be, it is apparent that the General Assembly did not intend that an order of the Commission concurred in by the majority of its members, based upon findings of fact concurred in by a majority of its members, might be reversed solely because the members of the concurring majority chose different rules, or supposed rules, of law as support for their decision and order. The diversity of the reasons given by the three commissioners who join in an ultimate decision and order are not a sufficient ground for its reversal. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Order in Opinion Concurred in by Majority Is Order of Commission. —

Where a majority of the commissioners concurred in the order set forth in the opinion by one of them, it was the order of the Commission. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

If three commissioners concur, the order entered by them constitutes the order of the Commission. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 21 N.C. App. 251, 204 S.E.2d 181, 1974 N.C. App. LEXIS 1772 (1974).

But all commissioners concurring must have heard evidence. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 21 N.C. App. 251, 204 S.E.2d 181, 1974 N.C. App. LEXIS 1772 (1974).

It seems inconceivable that the General Assembly intended that when a matter was heard by a hearing division, if “as many as three commissioners hearing the case approved the recommended order,” as provided by G.S. 62-76, the order should become a final order, but that the Commission, when a matter was heard before it, could issue a final order when only one of the commissioners who heard the case approved the order. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 21 N.C. App. 251, 204 S.E.2d 181, 1974 N.C. App. LEXIS 1772 (1974).

Order Approved by Only One Commissioner Not Final. —

An order was held to be a recommended order and not a final order where only one of the three commissioners who had heard the evidence in a hearing before the Commission participated in approving the order. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 21 N.C. App. 251, 204 S.E.2d 181, 1974 N.C. App. LEXIS 1772 (1974).

Res Judicata. —

Only specific questions actually heard and finally determined by the Commission in its judicial character are res judicata, and then only as to the parties to the hearing. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

Actions of an administrative agency which involve the exercise of a legislative rather than a judicial function are not res judicata. Exercises of the Commission’s rule making power, therefore, are not governed by the principles of res judicata and are reviewable by the Supreme Court in later appeals of closely related matters. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Deferring Use of Increased Rates Pending Investigation. —

After rates for certain intrastate shipments had been duly established by the Utilities Commission, defendant sought to increase such rates by filing tariff schedules to that effect. The Commission, in a proceeding to which defendant was a party, by order of postponement, which was not objected to, deferred use of the new increased rates pending investigation, and also directed that the rates previously fixed should not be changed by subsequent tariffs or schedules until this investigation and suspension proceeding had been disposed of, continuing the investigation from time to time at the request of defendant. It was held that such action of the Commission was binding on defendant. However, defendant was entitled to a reasonable time to comply with the order before penalties might be invoked. State ex rel. N.C. Utils. Comm'n v. Atlantic C.L.R.R., 224 N.C. 283, 29 S.E.2d 912, 1944 N.C. LEXIS 355 (1944).

For cases construing § 1023 of the Consolidated Statutes, containing similar provisions, see State ex rel. Caldwell v. Wilson, 121 N.C. 425, 28 S.E. 554, 1897 N.C. LEXIS 255 (1897), writ of error dismissed, 169 U.S. 586, 18 S. Ct. 435, 42 L. Ed. 865, 1898 U.S. LEXIS 1509 (1898); State ex rel. N.C. Corp. Comm'n v. Southern Ry., 151 N.C. 447, 66 S.E. 427, 1909 N.C. LEXIS 296 (1909); North Carolina Corp. Comm'n v. Winston-Salem Southbound Ry., 170 N.C. 560, 87 S.E. 785, 1916 N.C. LEXIS 196 (1916); State ex rel. Corp. Comm'n v. Southern Ry., 185 N.C. 435, 117 S.E. 563, 1923 N.C. LEXIS 99 (1923).

§ 62-60.1. Commission to sit in panels of three.

  1. The Utilities Commission shall sit in panels of three commissioners each unless the chairman by order shall set the proceeding for hearing by the full Commission.
  2. Any order or decision made unanimously by a panel of three commissioners shall constitute the order or decision of the Commission, except as otherwise provided in this Chapter; provided, however, that upon motion of any three commissioners not sitting on the panel, made within 10 days of issuance of such order or decision of the panel, with notice to parties of record, the order or decision of the panel shall thereby be stayed and the full Commission shall review the order or decision of the panel and shall within 30 days of said motion either affirm or modify the order or decision of the panel or remand the matter to the panel for further proceedings; provided that the foregoing shall not limit the right of parties to seek review of such order or decision under G.S. 62-90.
  3. In the event an order or decision of the panel of three is not made unanimously, such order or decision shall be a recommended order only, subject to review by the full Commission, with all commissioners eligible to participate in the final arguments and decision. Review shall take place in accordance with the provisions of G.S. 62-78 and the Commission shall decide the matter in controversy and make appropriate order or decision thereon within 60 days of the date of the recommended order. If within the filing period specified by the panel no exception has been filed by a party, or if the Commission within the same period has not advised the parties that it will conduct a review upon its own motion, the recommended order or decision shall become the final order or decision of the Commission. Nothing in this section shall amend or repeal the provisions of G.S. 62-134.
  4. This section shall become effective July 1, 1975, and shall not affect the utilization of or the procedures outlined for utilization of a hearing commissioner or a hearing examiner as provided for elsewhere in Chapter 62.

History. 1975, c. 243, s. 4; 1977, c. 468, s. 13.

§ 62-61. Witnesses; production of papers; contempt.

The Commission shall have the same power to compel the attendance of witnesses, require the examination of persons and parties, and compel the production of books and papers, and punish for contempt, as by law is conferred upon the superior courts.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

Cross References.

As to contempt, see G.S. 5A-11 et seq.

As to attendance of witnesses, see G.S. 8-59 et seq.

§ 62-62. Issuance and service of subpoenas.

All subpoenas for witnesses to appear before the Commission, a division of the Commission or a hearing commissioner or examiner and notice to persons or corporations, shall be issued by the Commission or its chief clerk or a deputy clerk and be directed to any sheriff or other officer authorized by law to serve process issued out of the superior courts, who shall execute the same and make due return thereof as directed therein, under the penalties prescribed by law for a failure to execute and return the process of any court. The Commission shall have the authority to require the applicant for a subpoena for persons and documents to make a reasonable showing that the evidence of such persons or documents will be material and relevant to the issue in the proceeding.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1995, c. 379, s. 14(c).

§ 62-63. Service of process and notices.

The chief clerk, a deputy clerk, or any authorized agent of the Commission may serve any notice issued by it and his return thereof shall be evidence of said service; and it shall be the duty of the sheriffs and all officers authorized by law to serve process issuing out of the superior courts, to serve any process, subpoenas and notices issued by the Commission, and such officers shall be entitled to the same fees as are prescribed by law for serving similar papers issuing from the superior court. Service of notice of all hearings, investigations and proceedings by the Commission may be made upon any person upon whom a summons may be served in accordance with the provisions governing civil actions in the superior courts of this State, and may be made personally by an authorized agent of the Commission or by mailing in a sealed envelope, registered, with postage prepaid, or by certified mail.

History. 1949, c. 989, s. 1; 1957, c. 1152, s. 2; 1963, c. 1165, s. 1.

Cross References.

As to penalty imposed upon sheriff for failing to execute and return process, see G.S. 162-14.

§ 62-64. Bonds.

All bonds or undertakings required to be given by any of the provisions of this Chapter shall be payable to the State of North Carolina, and may be sued on as are other undertakings which are payable to the State.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

§ 62-65. Rules of evidence; judicial notice.

  1. When acting as a court of record, the Commission shall apply the rules of evidence applicable in civil actions in the superior court, insofar as practicable, but no decision or order of the Commission shall be made or entered in any such proceeding unless the same is supported by competent material and substantial evidence upon consideration of the whole record. Oral evidence shall be taken on oath or affirmation. The rules of privilege shall be effective to the same extent that they are now or hereafter recognized in civil actions in the superior court. The Commission may exclude incompetent, irrelevant, immaterial and unduly repetitious or cumulative evidence. All evidence, including records and documents in the possession of the Commission of which it desires to avail itself, shall be made a part of the record in the case by definite reference thereto at the hearing. Any party introducing any document or record in evidence by reference shall bear the expense of all copies required for the record in the event of an appeal from the Commission’s order. Every party to a proceeding shall have the right to call and examine witnesses, to introduce exhibits, to cross-examine opposing witnesses on any matter relevant to the issues, to impeach any witness regardless of which party first called such witness to testify and to rebut the evidence against him. If a party does not testify in his own behalf, he may be called and examined as if under cross-examination.
  2. The Commission may take judicial notice of its decisions, the annual reports of public utilities on file with the Commission, published reports of federal regulatory agencies, the decisions of State and federal courts, State and federal statutes, public information and data published by official State and federal agencies and reputable financial reporting services, generally recognized technical and scientific facts within the Commission’s specialized knowledge, and such other facts and evidence as may be judicially noticed by justices and judges of the General Court of Justice. When any Commission decision relies upon such judicial notice of material facts not appearing in evidence, it shall be so stated with particularity in such decision and any party shall, upon petition filed within 10 days after service of the decision, be afforded an opportunity to contest the purported facts noticed or show to the contrary in a rehearing set with proper notice to all parties; but the Commission may notify the parties before or during the hearing of facts judicially noticed, and afford at the hearing a reasonable opportunity to contest the purported facts noticed, or show to the contrary.

History. 1949, c. 989, s. 1; 1959, c. 639, s. 2; 1963, c. 1165, s. 1; 1973, c. 108, s. 21.

Cross References.

As to rules of evidence generally, see G.S. 8C-1 et seq.

Legal Periodicals.

For article on administrative evidence rules, see 49 N.C.L. Rev. 635 (1971).

For article, “A New Paradigm for Understanding Judicial Notice and its Implications in the Modern Digital Age,” see 9 Elon L. Rev. 267 (2017).

CASE NOTES

Informality of Procedure. —

The Commission is required by subsection (a) in deciding on an application for a certificate of public convenience and necessity to apply the rules of evidence applicable in civil actions in the superior court “insofar as practicable.” G.S. 62-60 provides that the Commission shall render its decision “in the same manner as a court of record.” The procedure before the Commission is, however, not as formal as that in litigation conducted in the superior court. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Procedure before the Commission in the trial of utilities matters, and particularly in the admission of evidence, is not so formal as litigation conducted in the superior court. State ex rel. Utils. Comm'n v. Springdale Estates Ass'n, 46 N.C. App. 488, 265 S.E.2d 647, 1980 N.C. App. LEXIS 2863 (1980).

Admissibility of Annual Reports of Municipalities. —

In a proceeding by a utility for an increase in rates, wherein municipalities engaged in resale of electrical energy purchased from the utility protested against the proposed schedules of the utility, copies of annual reports of the municipality to the Commission pursuant to statute, which showed profits made by the municipalities from resale of electrical energy, were admissible in evidence on the question of whether the proposed schedules were fair and equitable as between groups or classifications to be served under such schedules. State ex rel. N.C. Utils. Comm'n v. Municipal Corps., 243 N.C. 193, 90 S.E.2d 519, 1955 N.C. LEXIS 586 (1955).

Admissibility of Evidence of Rates Charged by Another Utility. —

In a proceeding by a utility for a rate increase, the Commission properly excluded evidence of rates charged by another utility in the same area as that involved in the proceeding, in the absence of evidence as to the relative cost conditions of the two utilities. State ex rel. N.C. Utils. Comm'n v. Municipal Corps., 243 N.C. 193, 90 S.E.2d 519, 1955 N.C. LEXIS 586 (1955).

Evidence Held Sufficient. —

The Commission heard ample evidence to support its finding that the introduction of natural gas facilities into unserved areas would assist in the economic development of those areas. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 336 N.C. 657, 446 S.E.2d 332, 1994 N.C. LEXIS 397 (1994).

Admission of Expert-Opinion Evidence. —

In a rule making proceeding, the Utilities Commission did not err in admitting expert opinion evidence without a specific finding that the witness was an expert, since the admission of the evidence over objection and the denial of a motion to strike constituted the Commission’s ruling that the witness was qualified as an expert. State ex rel. Utilities Comm'n v. Associated Petro. Carriers, 13 N.C. App. 554, 186 S.E.2d 612, 1972 N.C. App. LEXIS 2279, cert. denied, 281 N.C. 158, 188 S.E.2d 364, 1972 N.C. LEXIS 1040 (1972).

Findings May Be Based on “Late” Exhibits. —

The statutes prescribing the procedure for hearings before the Commission do not forbid it to make a finding, as to the capacity and ability of an applicant for a certificate of public convenience and necessity to serve, upon the basis of facts arising between the conclusion of the hearing and the entry of the order, when those facts are shown by “late” exhibits, otherwise competent, and when the adverse party has had adequate notice that such exhibits have been filed with the Commission for inclusion in the record. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Judicial Notice of Financial Data. —

Although the record before the Commission did not include testimony or documentary evidence as to the earnings of the 24 electric utilities whose earnings were shown in Moody’s Investment Service, subsection (b) expressly authorizes the Commission to take judicial notice of data published by reputable financial reporting services, so that there was no error in the consideration of this data by the Commission in determining a fair rate of return to be allowed the utility. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 575, 232 S.E.2d 177, 1977 N.C. LEXIS 1222 (1977).

Judicial Notice of Industry Trend. —

The Utilities Commission did not act arbitrarily in judicially noticing the current restructuring trend in the electric utility industry, where the reality of this trend was not subject to reasonable dispute because it was generally known within the industry. State ex rel. Utils. Comm'n v. Carolina Indus. Group For Fair Util. Rates, 130 N.C. App. 636, 503 S.E.2d 697, 1998 N.C. App. LEXIS 1156 (1998).

Burden of Proof. —

In the hearing before the Utilities Commission, the burden was on the applicant to offer competent, material and substantial evidence in support of his application for modification of his existing franchise. State ex rel. Utilities Comm'n v. Great S. Trucking Co., 223 N.C. 687, 28 S.E.2d 201, 1943 N.C. LEXIS 179 (1943); State ex rel. Utils. Comm'n v. Ray, 236 N.C. 692, 73 S.E.2d 870, 1953 N.C. LEXIS 543 (1953).

The “whole record test” set forth in this section requires the Commission’s order to be affirmed if, upon consideration of the whole record as submitted, the facts found by the Commission are supported by competent, material and substantial evidence, taking into account any contradictory evidence or evidence from which conflicting inferences could be drawn. State ex rel. Utils. Comm'n v. Springdale Estates Ass'n, 46 N.C. App. 488, 265 S.E.2d 647, 1980 N.C. App. LEXIS 2863 (1980).

“Substantial evidence” is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. State ex rel. Utils. Comm'n v. Springdale Estates Ass'n, 46 N.C. App. 488, 265 S.E.2d 647, 1980 N.C. App. LEXIS 2863 (1980).

§ 62-66. Depositions.

The Commission or any party to a proceeding may take and use depositions of witnesses in the same manner as provided by law for the taking and use of depositions in civil actions in the superior court.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

§ 62-67. [Repealed]

Repealed by Session Laws 1981, c. 193, s. 1.

§ 62-68. Use of affidavits.

At any time, 10 or more days prior to a hearing or a continued hearing, any party or the Commission may send by registered or certified mail or deliver to the opposing parties a copy of any affidavit proposed to be used in evidence, together with the notice as herein provided. Unless an opposing party or the Commission at least five days prior to the hearing, if the affidavit and notice are received at least 20 days prior to such hearing, otherwise at any time prior to or during such hearing, sends by registered or certified mail or delivers to the proponent a request to cross-examine the affiant at the hearing, the right to cross-examine such affiant is waived and the affidavit, if introduced in evidence, shall be given the same effect as if the affiant had testified orally. If an opportunity to cross-examine an affiant at the hearing is not afforded after request therefor is made as herein provided, the affidavit shall not be received in evidence. The notice accompanying the affidavit shall set forth the name and address of the affiant and shall contain a statement that the affiant will not be called to testify orally and will not be subject to cross-examination unless the opposing parties or the Commission demand the right of cross-examination by notice mailed or delivered to the proponent at least five days prior to the hearing if the notice and affidavit are received at least 20 days prior to such hearing, otherwise at any time prior to or during such hearing.

History. 1949, c. 989, s. 1; 1957, c. 1152, s. 3; 1963, c. 1165, s. 1.

Legal Periodicals.

For article on administrative evidence rules, see 49 N.C.L. Rev. 635 (1971).

§ 62-69. Stipulations and agreements; prehearing conference.

  1. In all contested proceedings the Commission, by prehearing conferences and in such other manner as it may deem expedient and in the public interest, shall encourage the parties and their counsel to make and enter stipulations of record for the following purposes:
    1. Eliminating the necessity of proof of all facts which may be admitted and the authenticity of documentary evidence,
    2. Facilitating the use of exhibits, and
    3. Clarifying the issues of fact and law.The Commission may make informal disposition of any contested proceeding by stipulation, agreed settlement, consent order or default.
  2. Unless otherwise provided in the Commission’s rules of practice and procedure, such prehearing conferences may be ordered by the Commission or requested by any party to a proceeding in substantially the same manner, and with substantially the same subsequent procedure, as provided by law for the conduct of pretrial hearings in the superior court.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

CASE NOTES

Adoption of Nonunanimous Stipulation. —

The Utilities Commission may adopt the recommendations or provisions of a nonunanimous stipulation as long as the Commission sets forth its reasoning and makes its own independent conclusion supported by substantial evidence on the record that the proposal is just and reasonable to all parties in light of all the evidence presented. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 348 N.C. 452, 500 S.E.2d 693, 1998 N.C. LEXIS 316 (1998).

§ 62-70. Ex parte communications.

  1. In all matters and proceedings pending on the Commission’s formal docket, with adversary parties of record, all communications or contact of any nature whatsoever between any party and the Commission or any of its members, or any hearing examiner assigned to such docket, whether verbal or written, formal or informal, which pertains to the merits of such matter or proceeding, shall be made only with full knowledge of, or notice to, all other parties of record. All parties shall have an opportunity to be informed fully as to the nature of such communication and to be present and heard with respect thereto. In all matters and proceedings which are judicial in nature, it is the specific intent of this section that all members of the Commission shall conduct all trials, hearings and proceedings before them in the manner and in accordance with the judicial standards applicable to judges of the General Court of Justice, as provided in Chapter 7A of the General Statutes, and upon the initiation of any such proceedings, and particularly during the trial or hearing thereof, there shall be no communications or contacts of any nature, including telephone communications, written correspondence, or direct office conferences, between any party or such party’s attorney and any member of the Commission or any hearing examiner, without all other parties to such proceeding having full notice and opportunity to be present and heard with respect to any such contact or communication.Any commissioner who knowingly receives any such communication or contact during such proceeding and who fails promptly to report the same to the Attorney General, or who otherwise violates any of the provisions of this subsection shall be liable to impeachment. Any examiner who knowingly receives any such communication or contact during such proceeding and who fails promptly to report the same to the Attorney General or who otherwise violates any of the provisions of this subsection shall be subject to dismissal from employment for cause.
  2. In the event any such communication or contact shall be received by the Commission or any commissioner or any hearing examiner assigned to such docket without such knowledge or notice to all other parties, the Commission shall immediately cause a formal record of such violation to be made in its docket and thereafter no ruling or decision shall be made in favor of such violating party until the aggrieved party shall waive such violation or the Commission shall find as a fact that such party was not prejudiced thereby or that any such prejudice, if present, has been removed.
  3. Any contacts or communications made in violation of this section which are not recorded by the Commission may be recorded by notice to the Commission by any aggrieved party and, unless the Commission shall find that such violation did not in fact occur, such recording shall have the same effect as if done by the Commission.
  4. In matters not under this section, the Commission may secure information and receive communications ex parte, it being the purpose of this section to protect adversary interests where they exist but not otherwise to restrict unduly the administrative and legislative functions of the Commission.
  5. This section shall not modify any notice required in the case of pleadings and proceedings which are subject to other requirements of notice to parties of record, whether by statute or by rule of the Commission, and the Commission may adopt reasonable rules to coordinate this section with such other requirements.
  6. In addition to the foregoing provisions regarding contacts with members of the Commission and hearing examiners, if any party of record, including the assistant attorney general when he is a party, confers with or otherwise contacts any staff personnel employed by the Commission regarding the merits of a pending proceeding, the staff employee shall promptly forward by regular mail a memorandum of the date and general subject matter of such contact to all other parties of record to the proceeding.
  7. Notwithstanding the foregoing, no communication by a public utility or by the Public Staff regarding the level of rates specifically proposed to be charged by a public utility shall be made or directed to the Commission, a member of the Commission, or hearing examiner, except in the form of written tariff, petition, application, pleading, written response, written recommendation, recorded conference, intervention, answer, pleading, sworn testimony and related exhibits, oral argument on the record, or brief. Willful violations of the provisions of this section on the part of any public utility shall subject such public utility to the penalties provided in G.S. 62-310(a). Willful violations of the provisions of this section by a member of the Public Staff shall subject such person to dismissal for cause.

History. 1963, c. 1165, s. 1; 1977, c. 468, s. 14; 1979, c. 332, s. 2; 2021-23, s. 24.

Editor’s Note.

Session Laws 2021-23, s. 24, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “Public Staff” for the term “public staff” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in subsection (g).

§ 62-71. Hearings to be public; record of proceedings.

  1. All formal hearings before the Commission, a panel of three commissioners, a commissioner or an examiner shall be public, and shall be conducted in accordance with such rules as the Commission may prescribe. A full and complete record shall be kept of all proceedings on any formal hearing, and all testimony shall be taken by a reporter appointed by the Commission. Any party to a proceeding shall be entitled to a copy of the record or any part thereof upon the payment of the reasonable cost thereof as determined by the Commission.
  2. The Commission in its discretion may approve stenographic or mechanical methods of recording testimony, or a combination of such methods, and a transcript of any such record shall be valid for all purposes, subject to protest and settlement by the Commission.
  3. The Commission is authorized to provide daily transcripts of testimony in cases of substantial public interest and in other cases where time is an important factor to the parties involved.
  4. The Commission shall have authority to contract with or employ on a temporary basis, when deemed necessary by the chairman of the Commission, court reporters in addition to those employed on a full-time basis by the Commission, for the purpose of recording and transcribing testimony given at hearings before the Commission involving any Class A or B utility. The Commission is authorized to charge the cost of employing such court reporters directly to the involved utility or utilities.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1975, c. 243, s. 9; 1981, c. 1022.

CASE NOTES

Formal Hearing. —

An informal conference between members of the Commission and representatives of the utility involved in a rate proceeding, which was called at the suggestion of the Commission, and which involved only a single question as to whether the protesting municipalities having industrial users could secure an industrial rate, and at which conference no testimony and no record was taken, was not a formal hearing within the meaning of this section. State ex rel. N.C. Utils. Comm'n v. Municipal Corps., 243 N.C. 193, 90 S.E.2d 519, 1955 N.C. LEXIS 586 (1955).

§ 62-72. Commission may make rules of practice and procedure.

Except as otherwise provided in this Chapter, the Commission is authorized to make and promulgate rules of practice and procedure for the Commission hearings.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

Legal Periodicals.

For article on administrative evidence rules, see 49 N.C.L. Rev. 635 (1971).

CASE NOTES

In the absence of statutory inhibition, the Commission may regulate its own procedure within broad limits, and may prescribe and adopt reasonable rules and regulations with respect thereto, provided such rules are consistent with the statutes governing its actions. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962); State ex rel. North Carolina Utils. Comm'n v. Western Carolina Tel. Co., 260 N.C. 369, 132 S.E.2d 873, 1963 N.C. LEXIS 719 (1963).

Rules Must Not Be Contrary to Statutes. —

While the power of the legislature to delegate authority to an administrative agency of the State to prescribe rules and regulations for the due and orderly performance of its public functions is unquestioned, this does not authorize the formulation of rules contrary to the statute. State ex rel. N.C. Utils. Comm'n v. Atlantic C.L.R.R., 224 N.C. 283, 29 S.E.2d 912, 1944 N.C. LEXIS 355 (1944).

Waiver or Suspension of Rules. —

The Commission may adopt its own rules governing pleadings, and has the power to waive or suspend the rules. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

As to challenge to validity of rules by appeal under former law, see State ex rel. N.C. Utils. Comm'n v. Atlantic Greyhound Corp., 224 N.C. 293, 29 S.E.2d 909, 1944 N.C. LEXIS 354 (1944); Utilities Comm'n v. Atlantic Greyhound Corp., 224 N.C. 672, 32 S.E.2d 23, 1944 N.C. LEXIS 448 (1944).

Power to Grant Continuance or Extend Hearing. —

The Commission may regulate its own procedure within broad limits and that it may suspend or waive its rules. Thus, the commission has the power, within its discretion, to grant a continuance or extend a hearing. State ex rel. Utils. Comm'n v. Conservation Council, 64 N.C. App. 266, 307 S.E.2d 375, 1983 N.C. App. LEXIS 3256 (1983), modified, 66 N.C. App. 456, 311 S.E.2d 617, 1984 N.C. App. LEXIS 2897 (1984).

§ 62-73. Complaints against public utilities.

Complaints may be made by the Commission on its own motion or by any person having an interest, either direct or as a representative of any persons having a direct interest in the subject matter of such complaint by petition or complaint in writing setting forth any act or thing done or omitted to be done by any public utility, including any rule, regulation or rate heretofore established or fixed by or for any public utility in violation of any provision of law or of any order or rule of the Commission, or that any rate, service, classification, rule, regulation or practice is unjust and unreasonable. Upon good cause shown and in compliance with the rules of the Commission, the Commission shall also allow any such person authorized to file a complaint, to intervene in any pending proceeding. The Commission, by rule, may prescribe the form of complaints filed under this section, and may in its discretion order two or more complaints dealing with the same subject matter to be joined in one hearing. Unless the Commission shall determine, upon consideration of the complaint or otherwise, and after notice to the complainant and opportunity to be heard, that no reasonable ground exists for an investigation of such complaint, the Commission shall fix a time and place for hearing, after reasonable notice to the complainant and the utility complained of, which notice shall be not less than 10 days before the time set for such hearing.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

CASE NOTES

In determining the scope of the Commission’s authority, the emphasis should be placed on the public utility function rather than a literal reading of the statutory definition of “public utility,” and the statutory definition should not be read so narrowly as to preclude commission jurisdiction over a function which is required to provide adequate service to the subscribers. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

In a complaint case the field of inquiry is limited to the comparatively narrow question of fair treatment to a group or to a class. State ex rel. Utils. Comm'n v. County of Harnett, 30 N.C. App. 24, 226 S.E.2d 515, 1976 N.C. App. LEXIS 2137 (1976).

As to standing of manufacturer and distributor of plastic telephone directory covers to complain and appeal, see State ex rel. Utils. Comm'n v. National Merchandising Corp., 288 N.C. 715, 220 S.E.2d 304, 1975 N.C. LEXIS 1038 (1975).

Evidence of Actual Costs of Shipments by Protestant Not Required. —

In a complaint proceeding to determine the reasonableness of proposed increased intrastate rates for the shipment of crude earth by rail, respondent railroads were not required to present evidence of actual costs of shipments by protestant brick company between its mine and its manufacturing plant, since the appropriate group or class for the Utilities Commission’s consideration was not protestant as an individual shipper at a certain mileage level, but all present and future shippers of crude earth who would be affected by the scale of rates. State ex rel. Utils. Comm'n v. Boren Clay Prods. Co., 48 N.C. App. 263, 269 S.E.2d 234, 1980 N.C. App. LEXIS 3228 (1980).

The Utilities Commission was without jurisdiction to require VEPCO to comply with regulations of the Roanoke Voyages Corridor Commission, or to effect and encourage restoration, preservation, and enhancement of the appearance and aesthetic quality of the U.S. Highway 64 and 264 travel corridor through Roanoke Island, to bear the additional expense of supplying electrical service through underground facilities. The Corridor Commission did not argue or allege inadequate service or unreasonable rates, so the complaint was properly dismissed. State ex rel. Utils. Comm'n v. Roanoke Voyages Corridor Comm'n, 76 N.C. App. 324, 332 S.E.2d 753, 1985 N.C. App. LEXIS 3863 (1985).

Providing a correct telephone listing in the yellow pages as well as in the white pages of the directory is a utility function, and the Commission properly has jurisdiction over complaints which arise from this function. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Incorrect Telephone Number Listings. —

The Utilities Commission had jurisdiction over complaints concerning incorrect telephone number listings in the telephone directory even when the regulated utility had delegated to another company the public utility function of publishing its directory which also included paid advertising. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Proper Listings in Advertisements in Yellow Pages. —

If a utility elects to include yellow pages advertising in the directory which it is required to publish, then clearly proper listings in the advertisements in the yellow pages become a part of the utility’s “function of providing adequate service” to the public. The public is not well served by listings in the yellow pages or the white pages of the directory which are incorrect or confusing to the consuming public. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

Petition Properly Denied. —

The Utilities Commission did not improperly resolve issues of fact without benefit of a hearing by denying petition where the Commission found that no reasonable ground existed for investigating the utility’s rates. State ex rel. Utils. Comm'n v. Carolina Indus. Group For Fair Util. Rates, 130 N.C. App. 636, 503 S.E.2d 697, 1998 N.C. App. LEXIS 1156 (1998).

§ 62-73.1. Complaints against providers of telephone services.

  1. A local exchange company or competing local provider that is unable to resolve a customer complaint shall (i) provide notice to the consumer of the consumer’s right to contact the Public Staff of the Commission and (ii) provide to the consumer, in writing, contact information for the Public Staff, including both a toll-free telephone number and an electronic mail address.
  2. The Public Staff shall keep a record of all complaints received pertaining to the provider, including the nature of each complaint and the resolution thereof. If the Public Staff determines that it cannot reasonably resolve the matter, the matter shall be referred to the Commission. The standard for review by both the Public Staff and the Commission shall be whether the action or inaction of the provider is reasonable and appropriate.

History. 2009-238, s. 5.

Editor’s Note.

The preamble to Session Laws 2009-238, provides: “Whereas, the technology used to provide communications services has evolved and continues to evolve at an ever-increasing pace; and

“Whereas, the resulting competition between traditional telephone service providers, cable companies offering communications services, Voice-over Internet Protocol (VoIP) providers, wireless communications service providers, and other communications service providers promotes and continues to promote additional consumer choices for these services; and

“Whereas, traditional telephone service providers remain subject to certain antiquated statutory and regulatory restrictions that do not apply to other communications service providers; and

“Whereas, this disparity may deprive consumers of traditional telephone companies of the full range of timely and competitive options and offerings that otherwise would be available to them; and

“Whereas, the General Assembly finds that relaxing certain restrictions for traditional telephone companies will relieve consumers of unnecessary costs and burdens, encourage investment, and promote timely deployment of more innovative offerings at more competitive prices for customers; and

“Whereas, in order to make the full range of competitive options and offerings available to consumers of communications services while maintaining inflation-based price controls for those existing customers who currently receive and wish to continue receiving only stand-alone basic residential lines from traditional telephone companies, the General Assembly hereby enacts the ‘Consumer Choice and Investment Act of 2009’; Now, therefore,”

§ 62-74. Complaints by public utilities.

Any public utility shall have the right to file a complaint against any other public utility or any person on any of the grounds upon which complaints are allowed to be filed by other parties, and the same procedure shall be adopted and followed as in other cases, except that the complaint and notice of hearing shall be served by the Commission upon such interested persons as it may designate.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 2021-23, s. 8.

Effect of Amendments.

Session Laws 2021-23, s. 8, effective May 17, 2021, substituted “file a complaint against any other public utility or any person” for “complain.”

§ 62-75. Burden of proof.

Except as otherwise limited in this Chapter, in all proceedings instituted by the Commission for the purpose of investigating any rate, service, classification, rule, regulation or practice, the burden of proof shall be upon the public utility whose rate, service, classification, rule, regulation or practice is under investigation to show that the same is just and reasonable. In all other proceedings the burden of proof shall be upon the complainant.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1985, c. 676, s. 8.

CASE NOTES

Burden upon Party Seeking Rate Increase. —

The burden of proof is upon the utility seeking a rate increase to show the proposed rates are just and reasonable. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 24 N.C. App. 327, 210 S.E.2d 543, 1975 N.C. App. LEXIS 2385 (1975), vacated, 289 N.C. 286, 221 S.E.2d 322, 1976 N.C. LEXIS 1253 (1976).

The burden is upon carriers asking for an increase in rates to prove justification for the increase and that the proposed rate is just and reasonable. State ex rel. N.C. Utils. Comm'n v. Southern Ry., 267 N.C. 317, 148 S.E.2d 210, 1966 N.C. LEXIS 1039, modified, 268 N.C. 204, 150 S.E.2d 337, 1966 N.C. LEXIS 1161 (1966).

Burden Not upon Shippers or Customers. —

At a hearing on a proposed increase in charges for railroad services, the shippers and customers of the railroads have no burden of proving anything; the previous rates are presumed to be fair and reasonable and so are the orders of the Commission. State ex rel. N.C. Utils. Comm'n v. Southern Ry., 267 N.C. 317, 148 S.E.2d 210, 1966 N.C. LEXIS 1039, modified, 268 N.C. 204, 150 S.E.2d 337, 1966 N.C. LEXIS 1161 (1966).

The burden of proving that dedicated service rate is discriminatory and preferential lies with protestants, the complaining parties. State ex rel. Utils. Comm'n v. Bird Oil Co., 302 N.C. 14, 273 S.E.2d 232, 1981 N.C. LEXIS 1011 (1980).

The burden of proof is upon an applicant for a certificate of public convenience and necessity to show there is a public convenience and necessity for its proposed service. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Burden of Proof as to Counterclaim. —

Where the challenge to the rate of return arose from protestants’ counterclaim, the protestants were therefore complainants, and the burden was upon them. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

Legality of Rule Placing Burden upon All Carriers as to All Rates. —

This section uses the word “carrier” or “utility” in the singular. Therefore, when the Commission initiates an investigation of the entire rate structure of motor carriers, and places upon the carriers the burden of showing that the old rates, which have been in effect for a number of years with the approval of the Commission, are just and reasonable, a question arises as to whether the Commission has exceeded its legislative authority. See State ex rel. Utils. Comm'n v. North Carolina Motor Carriers Ass'n, 253 N.C. 432, 117 S.E.2d 271, 1960 N.C. LEXIS 668 (1960).

Plaintiff Must Prove Facts Essential to Relief. —

This section imposes upon plaintiff the burden of proving the facts essential to its right to relief from the relationship of which it complains. State ex rel. Utils. Comm'n v. Nello L. Teer Co., 266 N.C. 366, 146 S.E.2d 511, 1966 N.C. LEXIS 1355 (1966).

§ 62-76. Hearings by Commission, panel of three commissioners, single commissioner, or examiner.

  1. Except as otherwise provided in this Chapter, any matter requiring a hearing shall be heard and decided by the Commission or shall be referred to a panel of three commissioners or one of the commissioners or a qualified member of the Commission staff as examiner for hearing, report and recommendation of an appropriate order or decision thereon. Subject to the limitations prescribed in this Article, a panel of three commissioners, hearing commissioner or examiner to whom a hearing has been referred by order of the chairman shall have all the rights, duties, powers and jurisdiction conferred by this Chapter upon the Commission. The chairman, in his discretion, may direct any hearing by the Commission or any panel, commissioner or examiner to be held in such place or places within the State as he may determine to be in the public interest and as will best serve the convenience of interested parties. Before any member of the Commission staff enters upon the performance of duties as an examiner, he shall first take, subscribe to and file with the Commission an oath similar to the oath required of members of the Commission.
  2. Repealed by Session Laws 1975, c. 243, s. 5.
  3. In all cases in which a pending proceeding shall be assigned to a hearing commissioner, such commissioner shall hear and determine the proceedings and submit his recommended order, but, in the event of a petition to the full Commission to review such recommended order, the hearing commissioner shall take no part in such review, either in hearing oral argument or in consideration of the Commission’s decision, but his vote shall be counted in such decision to affirm his original order.

History. 1949, c. 989, s. 1; 1959, c. 639, s. 3; 1963, c. 1165, s. 1; 1975, c. 243, ss. 5, 9, 10.

CASE NOTES

This section supports the holding that three commissioners concurring in order of Commission must have heard evidence. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 21 N.C. App. 251, 204 S.E.2d 181, 1974 N.C. App. LEXIS 1772 (1974).

Resignation of Commissioner. —

The North Carolina Utilities Commission’s order requiring the carrier to pay for those calls at intrastate rates did not contravene G.S. 62-76 just because one of the members of a three-member panel that heard the complaint resigned before the panel issued its findings; the Commission’s order requiring the carrier to pay a telecommunications company $1,898,685 because it paid for intrastate calls using interstate rates was not an illegal award of damages and was supported by the record. State ex rel. Utils. Comm'n v. Thrifty Call, Inc., 154 N.C. App. 58, 571 S.E.2d 622, 2002 N.C. App. LEXIS 1412 (2002).

§ 62-77. Recommended decision of panel of three commissioners, single commissioner or examiner.

Any report, order or decision made or recommended by a panel of three commissioners, commissioner or examiner with respect to any matter referred for hearing shall be in writing and shall set forth separately findings of fact and conclusions of law and shall be filed with the Commission. A copy of such recommended order, report and findings shall be served upon the parties who have appeared in the proceeding.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1975, c. 243, s. 9.

§ 62-78. Proposed findings, briefs, exceptions, orders, expediting cases, and other procedure.

  1. Prior to each decision or order by the Commission in a proceeding initially heard by it and prior to any recommended decision or order of a panel of three commissioners, commissioner or examiner, the parties shall be afforded an opportunity to submit, within the time prescribed by order entered in the cause, unless further extended by order of the Commission, for the consideration of the Commission, panel, commissioner or examiner, as the case may be, proposed findings of fact and conclusions of law and briefs or, in its discretion, oral arguments in lieu thereof.
  2. Within the time prescribed by the panel of three commissioners, commissioner, or examiner, the parties shall be afforded an opportunity to file exceptions to the recommended decision or order and a brief in support thereof, provided the time so fixed shall be not less than 15 days from the date of such recommended decision or order. The record shall show the ruling upon each requested finding and conclusion or exception.
  3. In all proceedings in which a panel of three commissioners, commissioner or examiner has filed a report, recommended decision or order to which exceptions have been filed, the Commission, before making its final decision or order, shall afford the party or parties an opportunity for oral argument. When no exceptions are filed within the time specified to a recommended decision or order, such recommended decision or order shall become the order of the Commission and shall immediately become effective unless the order is stayed or postponed by the Commission; provided, the Commission may, on its own motion, review any such matter and take action thereon as if exceptions thereto had been filed.
  4. When exceptions are filed, as herein provided, it shall be the duty of the Commission to consider the same and if sufficient reason appears therefor, to grant such review or make such order or hold or authorize such further hearing or proceeding as may be necessary or proper to carry out the purposes of this Chapter. The Commission, after review, upon the whole record, or as supplemented by a further hearing, shall decide the matter in controversy and make appropriate order or decision thereon.
  5. The Commission may expedite the hearing and decision of any case if the public interest so requires by the use of pretrial conferences, daily transcripts of evidence, trial briefs, and prompt oral argument, and by granting priority to the hearing and decision of such case.

History. 1949, c. 989, s. 1; 1959, c. 639, s. 4; 1963, c. 1165, s. 1; 1975, c. 243, ss. 9, 10; c. 867, s. 5.

CASE NOTES

Ordinarily, the procedure before the Commission is more or less informal and is not as strict as in superior court, nor is it confined by technical rules; substance and not form is controlling. State ex rel. Utils. Comm'n v. Champion Papers, Inc., 259 N.C. 449, 130 S.E.2d 890, 1963 N.C. LEXIS 585 (1963).

This section requires the Commission to find all facts essential to a determination of the question at issue. Having found the facts, it may then make factual conclusions. State v. Haywood Elec. Membership Corp., 260 N.C. 59, 131 S.E.2d 865, 1963 N.C. LEXIS 637 (1963).

The reason for compelling adequate factual findings is to permit proper judicial review. State v. Haywood Elec. Membership Corp., 260 N.C. 59, 131 S.E.2d 865, 1963 N.C. LEXIS 637 (1963).

The duty imposed is similar to that duty imposed on a judge of the superior court by former G.S. 1-185 when a jury trial is waived, and on the Industrial Commission by G.S. 97-84 before it can award or deny compensation. State v. Haywood Elec. Membership Corp., 260 N.C. 59, 131 S.E.2d 865, 1963 N.C. LEXIS 637 (1963).

Power to Alter or Amend Orders. —

Whatever the effect of subsection (c) of this section on an order filed by a panel of three Commissioners, this does not affect the power of the Utilities Commission to act pursuant to G.S. 62-80. G.S. 62-80 provides the Utilities Commission may “alter or amend” an order after a hearing. By using the words “alter or amend” the legislature intended that the Commission may change an order in some respects without considering all factors that must be considered in a general rate case. The statute does not limit changes in orders to those that have not become final. State ex rel. Utils. Comm'n v. Public Serv. Co., 59 N.C. App. 448, 297 S.E.2d 119, 1982 N.C. App. LEXIS 3136 (1982).

Failure to Make Findings Necessitates Remand. —

A failure by the Commission to find facts essential to a determination of the rights of the parties necessitates a remand to the Commission to make necessary findings on which it may base its order. State v. Haywood Elec. Membership Corp., 260 N.C. 59, 131 S.E.2d 865, 1963 N.C. LEXIS 637 (1963).

Improper Appeal. —

To allow an appeal from a recommended order to which no exception has been taken and which has become the final order of the full Commission by operation of the statute would allow a party, in effect, to “bypass” the full Commission, usurping the administrative agency’s authority. State ex rel. Utils. Comm'n v. Carolina Water Serv., Inc., 335 N.C. 493, 439 S.E.2d 127, 1994 N.C. LEXIS 10 (1994).

§ 62-79. Final orders and decisions; findings; service; compliance.

  1. All final orders and decisions of the Commission shall be sufficient in detail to enable the court on appeal to determine the controverted questions presented in the proceedings and shall include:
    1. Findings and conclusions and the reasons or bases therefor upon all the material issues of fact, law, or discretion presented in the record, and
    2. The appropriate rule, order, sanction, relief or statement of denial thereof.
  2. A copy of every final order or decision under the seal of the Commission shall be served in the manner prescribed by the Commission upon the person against whom it runs or his attorney and notice thereof shall be given to the other parties to the proceeding or their attorney. Such order shall take effect and become operative when issued unless otherwise designated therein and shall continue in force either for a period which may be designated therein or until changed or revoked by the Commission. If an order cannot, in the judgment of the Commission, be complied with within the time designated therein, the Commission may grant and prescribe such additional time as in its judgment is reasonably necessary to comply with the order, and may, on application and for good cause shown, extend the time for compliance fixed in its order.

History. 1949, c. 989, s. 1; 1957, c. 1152, s. 4; 1959, c. 639, s. 4; 1961, c. 472, s. 1; 1963, c. 1165, s. 1; 1981, c. 193, s. 2; 2021-23, s. 9.

Effect of Amendments.

Session Laws 2021-23, s. 9, effective May 17, 2021, substituted “in the manner prescribed by the Commission” for “by registered or certified mail” in the first sentence of subsection (b).

CASE NOTES

The Commission is required by this section to find all facts essential to a determination of the question at issue. State ex rel. Utils. Comm'n v. Queen City Coach Co., 4 N.C. App. 116, 166 S.E.2d 441, 1969 N.C. App. LEXIS 1457 (1969).

Subsection (a) of this section requires the Commission to find all facts which are essential to a determination of the issues before it, in order that the reviewing court may have sufficient information to determine whether an adequate basis exists, in law and in fact, to support the Commission’s resolution of the controverted issues. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

This section requires the commission to find all facts essential to a determination of the question at issue. The commission, however, is not required to comment on every single fact or item of evidence presented by the parties. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

The purpose of the findings required by subsection (a) is to provide the reviewing court with sufficient information to allow it to determine the controverted questions presented in the proceedings. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

The purpose of the required detail as to findings, conclusions, and reasons as mandated by subsection (a) is to provide the appellate court with sufficient information with which to determine under the scope of review the questions at issue in the proceedings. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 348 N.C. 452, 500 S.E.2d 693, 1998 N.C. LEXIS 316 (1998).

Commission Need Not Comment on Every Fact Presented. —

Although the Utilities Commission must consider and determine controverted questions by making findings of fact and conclusions of law, and must set forth the reasons and bases therefor “upon all the material issues of fact, law, or discretion,” it need not comment upon every single fact or item of evidence presented by the parties. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

This section does not require that an order of the Commission contain a summary of the appellant’s argument if the order taken as a whole is sufficient in detail to enable the court on appeal to determine the controverted questions presented in the proceedings and contains the necessary findings of fact and conclusions of law. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 336 N.C. 657, 446 S.E.2d 332, 1994 N.C. LEXIS 397 (1994).

Commission’s mislabeling of its findings and conclusions will not be fatal to its order if certain procedural requirements are met. As long as each link in the chain of reasoning appears in the commission’s order, mislabeling is merely an inconvenience to the courts. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

The Commission has the duty to enter final orders that are sufficient in detail to enable the Supreme Court on appeal to determine the controverted issues. State ex rel. Utils. Comm'n v. AT&T Communications of S. States, Inc., 321 N.C. 586, 364 S.E.2d 386, 1988 N.C. LEXIS 15 (1988).

Findings Under G.S. 62-133(d). —

The “other material facts of record” considered by the Commission under G.S. 62-133(d) in fixing reasonable and just rates must be found and set forth in its order so that the reviewing court may see what these elements are. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

The Commission is required to set forth factors it considers in fixing reasonable and just rates which are not enumerated in G.S. 62-133. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

Questions of Original and Replacement Costs as “Material Issues of Fact”. —

When the record before the Commission presents questions of the original cost, less depreciation and the replacement cost, less depreciation, these are “material issues of fact,” upon each of which the Commission must make its finding. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

Determination of “Fair Value”. —

Having made properly supported findings, it is for the Commission, not the reviewing court, to determine, in its expert discretion and by the use of “balanced scales,” the relative weights to be given these several factors in ascertaining the ultimate fact of “fair value.” State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

While the Commission has the duty to weigh evidence of “fair value” fairly and in “balanced scales,” the reviewing court may not set aside the Commission’s determination of “fair value” merely because the court would have given the respective elements different weights and would, therefore, have arrived at a different “fair value.” State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

Failure to include all necessary findings of fact is an error of law and a basis for remand under G.S. 62-94(b)(4) because it frustrates appellate review. State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986); State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 322 N.C. 689, 370 S.E.2d 567, 1988 N.C. LEXIS 481 (1988).

The Commission’s order must be sufficient within itself to comply with the statute. Failure to include all necessary findings of fact and details is an error of law and a basis for remand under G.S. 62-94(b)(4) because it frustrates appellate review. State ex rel. Utils. Comm'n v. AT&T Communications of S. States, Inc., 321 N.C. 586, 364 S.E.2d 386, 1988 N.C. LEXIS 15 (1988).

The Commission was required to make specific findings showing what effect, if any, it gave to financing costs or down market protection, or both, in arriving at its common equity rate of return decision. Failure to do so constituted an error of law requiring a remand for further proceedings. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 322 N.C. 689, 370 S.E.2d 567, 1988 N.C. LEXIS 481 (1988).

Findings Must Be Supported by Competent Evidence. —

Since the Commission is required to render its decisions upon questions of law and of fact in the same manner as a court of record, its findings must, as a matter of law, be supported by competent evidence. State ex rel. Utils. Comm'n v. Rail Common Carriers, 42 N.C. App. 314, 256 S.E.2d 508, 1979 N.C. App. LEXIS 2823 (1979).

Findings Held Sufficient. —

Where its final order showed that the Commission arrayed factors suggesting a higher rate of return against those suggesting a lower rate, and appellant’s evidence was given substantial weight in the Commission’s ultimate conclusion, the Commission’s order was sufficiently detailed, and its findings in support of its conclusion were adequate to comply with this section. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 323 N.C. 481, 374 S.E.2d 361, 1988 N.C. LEXIS 703 (1988).

Utilities Commission’s decision to accept an expert’s recommendation of an 11.4% return on equity, based on the credibility and objectivity of his company-specific “discounted cash flow” analysis, was independently reached and supported by competent, material, and substantial evidence. State ex rel. Utilities Comm'n v. Carolina Util. Customers Ass'n, 351 N.C. 223, 524 S.E.2d 10, 2000 N.C. LEXIS 6 (2000).

Commission’s order was sufficient to allow the appellate court to determine the issues of jurisdiction, i.e., violation of the commerce clause, supremacy of federal law, and statutory authorization. State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 174 N.C. App. 681, 622 S.E.2d 169, 2005 N.C. App. LEXIS 2590 (2005).

Reversal and remand of that portion of a North Carolina Utilities Commission’s order in which it authorized a 10.2 percent return on equity for a utility company was appropriate because the order did not contain sufficient findings of fact regarding the impact of changing economic conditions on customers. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 430, 758 S.E.2d 635, 2014 N.C. LEXIS 396 (2014).

North Carolina Utilities Commission did not err by approving a utility company’s adjustments to a study of the costs of providing retail electric service to a large industrial customer because there was substantial evidence in the record, including the testimony of three expert witnesses, to support the Commission’s findings. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 430, 758 S.E.2d 635, 2014 N.C. LEXIS 396 (2014).

Order of the North Carolina Utilities Commission, authorizing a percentage of return on equity for a utility company, was appropriate because the order contained sufficient findings of fact to demonstrate that the order was supported by competent, material, and substantial evidence in view of the entire record. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 644, 766 S.E.2d 827, 2014 N.C. LEXIS 947 (2014).

North Carolina Utilities Commission’s findings of fact demonstrated that the Commission considered the impact of changing economic conditions upon customers and specified how this influenced the Commission’s decision to authorize a 10.2 percent return on equity; the findings were supported by the evidence, including public witness testimony, expert testimony, and the parties’ stipulation, and thus the Commission made sufficient findings regarding the impact of changing economic conditions upon customers and these findings were supported by substantial evidence. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 741, 767 S.E.2d 305, 2015 N.C. LEXIS 32 (2015).

North Carolina Utilities Commission properly concluded it was in the public interest to allow a public utility to utilize a rate adjustment mechanism because its determination was supported by substantial evidence; the Commission thoroughly explained how the utility’s use of a rate adjustment mechanism would benefit its customers and took meaningful steps to ensure that problems were addressed and that customers were charged after the utility made improvements to its service. State ex rel. Utils. Comm'n v. Cooper, 368 N.C. 216, 775 S.E.2d 809, 2015 N.C. LEXIS 683 (2015).

Reasons for Rejecting Uncontradicted Opinion Testimony. —

The Commission is not, as a matter of law, required to set forth in its order its reasons for rejecting uncontradicted opinion testimony; however, it is the better practice for the Commission to do so. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

In a complaint proceeding to determine the reasonableness of proposed increased intrastate rates for the shipment of crude earth by rail, the Utilities Commission was not required to make a specific finding that an emergency or change of circumstances not affecting the entire rate structure had occurred in order to allow a change in the rates. State ex rel. Utils. Comm'n v. Boren Clay Prods. Co., 48 N.C. App. 263, 269 S.E.2d 234, 1980 N.C. App. LEXIS 3228 (1980).

Different Reasons Given by Concurring Commissioners Not Grounds for Reversal. —

When G.S. 62-60 and subsection (a) of this section are construed together, as they must be, it is apparent that the General Assembly did not intend that an order of the Commission concurred in by the majority of its members, based upon findings of fact concurred in by a majority of its members, might be reversed solely because the members of the concurring majority chose different rules, or supposed rules, of law as support for their decision and order. The diversity of the reasons given by the three commissioners who join in an ultimate decision and order are not a sufficient ground for its reversal. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Order prescribing different Private Line Service rates for AT&T’s nonreseller (end user) customers and its reseller customers upon its face was discriminatory, and absent legally adequate reasons in the order why it was not unjustly discriminatory within the meaning of G.S. 62-2(4), the order would be vacated and the cause remanded to the Commission for further proceedings. State ex rel. Utils. Comm'n v. AT&T Communications of S. States, Inc., 321 N.C. 586, 364 S.E.2d 386, 1988 N.C. LEXIS 15 (1988).

Order Setting Return on Common Equity Improper. —

North Carolina Utilities Commission’s (Commission) order approving a 10.5 percent return on common equity was not supported by substantial evidence under G.S. 62-94(b) and did not comply with G.S. 62-79(a) where: (1) although the 10.5 percent return on common equity agreed to in a non-unanimous stipulation fell within the range of returns on common equity recommended by the witnesses, no witness specifically recommended an return on common equity of 10.5 percent; (2) the Commission did not weigh any testimony presented, but merely recited the witnesses’ testimony; (3) the Commission did not discuss why one witness’s testimony was more credible than another’s or which methodology was afforded the greatest weight; (4) the Commission adopted the stipulated return on common equity wholesale, as opposed to considering it as one piece of evidence to be weighed in making an otherwise independent determination based on the G.S. 62-133 factors; and (5) the Commission failed to make findings of fact regarding the impact of changing economic conditions on customers. State ex rel. Utils. Comm'n v. Cooper, 366 N.C. 484, 739 S.E.2d 541, 2013 N.C. LEXIS 343 (2013).

§ 62-80. Powers of Commission to rescind, alter or amend prior order or decision.

The Commission may at any time upon notice to the public utility and to the other parties of record affected, and after opportunity to be heard as provided in the case of complaints, rescind, alter or amend any order or decision made by it. Any order rescinding, altering or amending a prior order or decision shall, when served upon the public utility affected, have the same effect as is herein provided for original orders or decisions.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

CASE NOTES

Procedure to Be Informal. —

Since the regulation of public utilities is a continuing and continuous process as to each utility, procedure before the Commission must be more or less informal and not confined by technical rules, in order that regulation may be consistent with changing conditions. State ex rel. Utilities Comm'n v. Associated Petro. Carriers, 13 N.C. App. 554, 186 S.E.2d 612, 1972 N.C. App. LEXIS 2279, cert. denied, 281 N.C. 158, 188 S.E.2d 364, 1972 N.C. LEXIS 1040 (1972).

This section does not require a motion by the public utility, or other party, as a condition precedent to the authority of the Utilities Commission to amend a previously issued order. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 575, 232 S.E.2d 177, 1977 N.C. LEXIS 1222 (1977).

Reconsideration Does Not Require New and Independent Proceeding. —

The Utilities Commission has the authority, upon its own motion or upon motion by any party, to reconsider its previously issued order, upon proper notice and hearing, and upon the record already compiled, without requiring institution of a new and independent proceeding by complaint or otherwise. State ex rel. Utilities Comm'n v. MCI Telecommunications Corp., 132 N.C. App. 625, 514 S.E.2d 276, 1999 N.C. App. LEXIS 262 (1999).

Authority to Rescind, Alter or Amend Is Discretionary. —

The statutory authority of the Utilities Commission to rescind, alter or amend any order or decision made by it, upon proper notice to parties and after opportunity for hearing, is obviously discretionary. State ex rel. Utils. Comm'n v. Services Unlimited, Inc., 9 N.C. App. 590, 176 S.E.2d 870, 1970 N.C. App. LEXIS 1413 (1970).

General Rate Hearing Not Required for Amendment. —

This section requires that the procedures of complaint hearings shall be used before amending an order but it does not require a general rate hearing before an order may be amended. State ex rel. Utils. Comm'n v. Public Serv. Co., 59 N.C. App. 448, 297 S.E.2d 119, 1982 N.C. App. LEXIS 3136 (1982).

Effect of G.S. 62-78(c) on Power to Alter or Amend. —

Whatever the effect of G.S. 62-78(c) on an order filed by a panel of three Commissioners, this does not affect the power of the Utilities Commission to act pursuant to this section. This section provides that the Utilities Commission may “alter or amend” an order after a hearing. By using the words “alter or amend” the legislature intended that the Commission may change an order in some respects without considering all factors that must be considered in a general rate case. The statute does not limit changes in orders to those that have not become final. State ex rel. Utils. Comm'n v. Public Serv. Co., 59 N.C. App. 448, 297 S.E.2d 119, 1982 N.C. App. LEXIS 3136 (1982).

Reconsideration Until Order Is Final. —

At least until an order becomes final by expiration of the time allowed for appeal, this section authorizes the Commission, upon its own motion or upon the motion of any party, to reconsider a previously issued order, upon proper notice and hearing, upon the record already compiled, without requiring the institution of a new and independent proceeding by complaint or otherwise. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 575, 232 S.E.2d 177, 1977 N.C. LEXIS 1222 (1977).

Modification, etc., Based on Prior Misapprehension of Facts. —

This section is broad enough to permit the Commission to modify and amend its order, even substantially, where, upon further consideration of the record before it, the Commission comes to the opinion that its order was due to the Commission’s misapprehension of the facts, or disregard of facts, shown by the evidence received at the original hearing. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 575, 232 S.E.2d 177, 1977 N.C. LEXIS 1222 (1977).

The Commission may not arbitrarily or capriciously rescind its order approving a contract between utilities. It must appear that such rescission is made because of a change of circumstances requiring it in the public interest. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

In the absence of statutory authority, and in the absence of any additional evidence or a change in conditions, the Commission has no power to reopen a proceeding and modify or set aside an order theretofore made by it, where the order was made in pursuance of an agreement entered into by the parties to the proceeding. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

Circumstances Justifying Rescission of Prior Order Approving Agreement Between Carriers. —

The improvement and construction of highways between two municipalities making feasible a new and quicker bus route between them was a sufficient change of condition to empower the Utilities Commission to modify or rescind a prior order entered by it approving an agreement between two carriers in regard to their respective services to the public between the two municipalities along the older routes. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

Revocation of Prior Order Reversed. —

An order of the Utilities Commission revoking its prior order approving an agreement between carriers in regard to their respective services along the route in question and substituting in lieu thereof an order of the Commission having the same effect as the agreement, was reversed, there being no evidence to support the Commission’s conclusion that the new order would promote harmony among the carriers, and there being no showing of a change of condition requiring a revision of the prior order in the public interest. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

“Complaint Proceeding” Distinguished from General Rate Case. —

A hearing pursuant to the provisions of this section and G.S. 62-136 which involves a single rate or small part of a rate structure of a public utility is called a “complaint proceeding.” It differs from a general rate case in that it deals with an emergency or change of circumstances which does not affect the entire rate structure of a utility and may be resolved without involving the procedure outlined in G.S. 62-133. State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 250 N.C. 421, 109 S.E.2d 253, 1959 N.C. LEXIS 468 (1959).

An appeal does not lie from the denial of a petition to rehear. State ex rel. Utils. Comm'n v. Services Unlimited, Inc., 9 N.C. App. 590, 176 S.E.2d 870, 1970 N.C. App. LEXIS 1413 (1970).

Running of Appeal Time Tolled. —

The running of the time for appeal of an order of the Utilities Commission is tolled during the period between the filing of a petition for reconsideration and the order denying the motion. State ex rel. Utilities Comm'n v. MCI Telecommunications Corp., 132 N.C. App. 625, 514 S.E.2d 276, 1999 N.C. App. LEXIS 262 (1999).

§ 62-81. Special procedure in hearing and deciding rate cases.

  1. All cases or proceedings, declared to be or properly classified as general rate cases under G.S. 62-137, or any proceedings which will substantially affect any utility’s overall level of earnings or rate of return, shall be set for trial or hearing by the Commission, which trial or hearing shall be set to commence within 180 days of the institution or filing thereof. All such cases or proceedings shall be subject to the time frame established under G.S. 62-134(b). All such cases or proceedings shall be tried or heard and decided in accordance with the ratemaking procedure set forth in G.S. 62-133 and such cases shall be given priority over all other cases or proceedings pending before the Commission. In all such cases the Commission shall make a transcript of the evidence and testimony presented and received by it and shall furnish a copy thereof to any party so requesting by the third business day after the taking of such evidence and testimony.
  2. Any public utility filing or applying for an increase in rates for electric, telephone, natural gas, water, or sewer service shall notify its customers proposed to be affected by such increase of such filing by regular mail, by newspaper publications, or by electronic means, as directed by the Commission, within 30 days of such filing, which notice shall state that the Commission shall set and shall conduct a trial or hearing with respect to such filing or application within 180 days of said filing date. All other public utilities shall give such notice in such manner as shall be prescribed by the Commission.
  3. In cases or proceedings filed with and pending before the Commission, where either (i) the total annual revenue requested, or (ii) where the total annual revenue increase requested, is less than two million dollars ($2,000,000), even though all or a substantial portion of the rate structure is being initially established or is under review, the chairman of the Commission may refer the proceeding to a panel of three commissioners or to a hearing commissioner or to a hearing examiner for hearing.
  4. In all proceedings for an increase in rates and all other proceedings declared to be general rate cases under G.S. 62-137, the Commission shall conduct the hearing or portions of the hearing within the area of the State served by the public utility whose rates are under consideration, provided this subsection shall not apply to proceedings held pursuant to G.S. 62-133.2 and G.S. 62-133.4.
  5. Repealed by Session Laws 2021-23, s. 10, effective May 17, 2021.
  6. Notwithstanding the provisions of this section, or other provisions of this Chapter which would otherwise require a hearing, where there is no significant public protest received within 30 days of the publication of notice of a proposed rate change for a water or sewer utility, the Commission may decide the proceeding based on the record without a trial or hearing, provided said utility and all other parties of record have waived their right to any such hearing. Any decision made pursuant to this subsection shall be made in accordance with the provisions of G.S. 62-133 or 62-133.1.

History. 1963, c. 1165, s. 1; 1973, c. 1074; 1975, c. 45; c. 243, ss. 6, 9; c. 867, s. 6; 1977, c. 468, s. 15; 1981, c. 193, s. 3; c. 439; 2021-23, ss. 10, 25.

Editor’s Note.

G.S. 62-133(f), referred to in subsection (d) of this section, was repealed by Session Laws 1991, c. 598, s. 7.

G.S. 62-134(e), referred to in subsections (d) and (e) of this section, was repealed by Session Laws 1981 (Regular Session, 1982), c. 1197, s. 2.

Session Laws 2021-23, s. 25, effective May 17, 2021, provides: “The Revisor of Statutes is authorized to substitute the term “ratemaking” for the terms “rate-making” or “rate making” wherever the term appears in Chapter 62 of the General Statutes.” Pursuant to this authority, the substitution was made in subsection (a).

Effect of Amendments.

Session Laws 2021-23, s. 10, effective May 17, 2021, rewrote the section.

§ 62-82. Special procedure on application for certificate for generating facility; appeal from award order.

  1. Notice of Application for Certificate for Generating Facility; Hearing; Briefs and Oral Arguments. —  Whenever there is filed with the Commission an application for a certificate of public convenience and necessity for the construction of a facility for the generation of electricity under G.S. 62-110.1, the Commission shall require the applicant to publish a notice thereof once a week for four successive weeks in a newspaper of general circulation in the county where such facility is proposed to be constructed and thereafter the Commission upon complaint shall, or upon its own initiative may, upon reasonable notice, enter upon a hearing to determine whether such certificate shall be awarded. Any such hearing must be commenced by the Commission not later than three months after the filing of such application, and the procedure for rendering decisions therein shall be given priority over all other cases on the Commission’s calendar of hearings and decisions, except rate proceedings referred to in G.S. 62-81. Such applications shall be heard as provided in G.S. 62-60.1, and the Commission shall, upon request of the applicant, furnish a transcript of evidence and testimony submitted by the end of the second business day after the taking of each day of testimony. The Commission or panel shall require that briefs and oral arguments in such cases be submitted within 30 days after the conclusion of the hearing, and the Commission or panel shall render its decision in such cases within 60 days after submission of such briefs and arguments. If the Commission or panel does not, upon its own initiative, order a hearing and does not receive a complaint within 10 days after the last day of publication of the notice, the Commission or panel shall enter an order awarding the certificate.
  2. Compensation for Damages Sustained by Appeal from Award of Certificate under G.S. 62-110.1; Bond Prerequisite to Appeal. —  Any party or parties opposing, and appealing from, an order of the Commission which awards a certificate under G.S. 62-110.1 shall be obligated to recompense the party to whom the certificate is awarded, if such award is affirmed upon appeal, for the damages, if any, which such party sustains by reason of the delay in beginning the construction of the facility which is occasioned by the appeal, such damages to be measured by the increase in the cost of such generating facility (excluding legal fees, court costs, and other expenses incurred in connection with the appeal). No appeal from any order of the Commission which awards any such certificate may be taken by any party opposing such award unless, within the time limit for filing notice of appeal as provided for in G.S. 62-90, such party shall have filed with the Commission a bond with sureties approved by the Commission, or an undertaking approved by the Commission, in such amount as the Commission determines will be reasonably sufficient to discharge the obligation hereinabove imposed upon such appealing party. The Commission may, when there are two or more such appealing parties, permit them to file a joint bond or undertaking. If the award order of the Commission is affirmed on appeal, the Commission shall determine the amount, if any, of damages sustained by the party to whom the certificate was awarded, and shall issue appropriate orders to assure that such damages be paid and, if necessary, that the bond or undertaking be enforced.

History. 1965, c. 287, s. 3; 1975, c. 243, s. 7; 2004-199, s. 23; 2013-410, s. 29; 2021-23, s. 11.

Effect of Amendments.

Session Laws 2004-199, s. 23, effective August 17, 2004, added the last sentence in subsection (a).

Session Laws 2013-410, s. 29, effective August 23, 2013, deleted “daily” preceding “newspaper” in the first sentence of subsection (a).

Session Laws 2021-23, s. 11, effective May 17, 2021, in subsection (a), substituted “shall, upon request of the applicant” for “shall” in the third sentence and deleted the former last sentence, which read: “Notwithstanding this section, applicants for a certificate for solar photovoltaic facilities of 10 kilowatts or less are exempt from the requirement to publish public notice in newspapers.”

Local Modification.

Buncombe: 2015-110, s. 1 (as to construction of generating facility at site of Asheville Steam Electric Generating Plant).

CASE NOTES

Scope of Commission’s Authority and Jurisdiction. —

North Carolina Utilities Commission’s dismissal of petitioner independent power producer’s application and its establishment of minimum filing requirements did not constitute an impermissible deviation from the process specifically provided in this section and G.S. 62-110.1, and some deviation from these sections was not beyond the Commission’s authority and jurisdiction. State ex rel. Utils. Comm'n v. Empire Power Co., 112 N.C. App. 265, 435 S.E.2d 553, 1993 N.C. App. LEXIS 1092 (1993).

§§ 62-83 through 62-89.

Reserved for future codification purposes.

Article 5. Review and Enforcement of Orders.

§ 62-90. Right of appeal; filing of exceptions.

  1. Any party to a proceeding before the Commission may appeal from any final order or decision of the Commission within 30 days after the entry of such final order or decision, or within such time thereafter as may be fixed by the Commission, not to exceed 30 additional days, and by order made within 30 days, if the party aggrieved by such decision or order shall file with the Commission notice of appeal and exceptions which shall set forth specifically the ground or grounds on which the aggrieved party considers said decisions or order to be unlawful, unjust, unreasonable or unwarranted, and including errors alleged to have been committed by the Commission.All other parties may give notice of cross appeal and set out exceptions which shall set forth specifically the grounds on which the said party considers said decision or order to be unlawful, unjust, unreasonable or unwarranted, and including errors alleged to have been committed by the Commission. Such notice of cross appeal and exceptions shall be filed with the Commission within 20 days after the first notice of appeal and exceptions has been filed, or within such time thereafter as may be fixed by the Commission, not to exceed 20 additional days by order made within 20 days of the first filed notice of appeal and exceptions.
  2. Any party may appeal from all or any portion of any final order or decision of the Commission in the manner herein provided. Copy of the notice of appeal shall be mailed by the appealing party at the time of filing with the Commission, to each party to the proceeding to the addresses as they appear in the files of the Commission in the proceeding. The failure of any party, other than the Commission, to be served with or to receive a copy of the notice of appeal shall not affect the validity or regularity of the appeal.
  3. The Commission may on motion of any party to the proceeding or on its own motion set the exceptions to the final order upon which such appeal is based for further hearing before the Commission.
  4. The appeal shall lie to the appellate division of the General Court of Justice as provided in G.S. 7A-29. The procedure for the appeal shall be as provided by the rules of appellate procedure.
  5. , (f) Repealed by Session Laws 1975, c. 391, s. 12.
  6. Repealed by Session Laws 1983, c. 526, s. 5.

History. 1949, c. 989, s. 1; 1955, c. 1207, s. 1; 1959, c. 639, s. 1; 1963, c. 1165, s. 1; 1967, c. 1190, s. 1; 1975, c. 391, s. 12; 1983, c. 526, ss. 4, 5; c. 572.

Cross References.

As to jurisdiction of the Supreme Court to review, when authorized by law, direct appeals from a final order or decision of the North Carolina Utilities Commission, see N.C. Const., Art. IV, § 12(1).

CASE NOTES

Analysis

I.In General

Necessity for Timely Filing. —

An affected party must file exceptions to the determination or decision within 10 (now 30) days after notice of the determination or decision. In re Housing Auth., 233 N.C. 649, 65 S.E.2d 761, 1951 N.C. LEXIS 399 (1951).

The Court of Appeals is without jurisdiction to review an original order of the Utilities Commission where no appeal has been taken from the order and the time for giving notice and perfecting appeal has expired. State ex rel. Utils. Comm'n v. Services Unlimited, Inc., 9 N.C. App. 590, 176 S.E.2d 870, 1970 N.C. App. LEXIS 1413 (1970).

Who May Appeal. —

An appeal from the Utilities Commission is limited to parties to the proceeding; a party is not affected by a ruling of the Utilities Commission unless the decision affects or purports to affect some right or interest of a party to the controversy and is in some way determinative of some material question involved. In re Housing Auth., 233 N.C. 649, 65 S.E.2d 761, 1951 N.C. LEXIS 399 (1951).

In order to have standing to appeal under this section, a party must not only file notice of appeal within 30 days, but must also be aggrieved. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 104 N.C. App. 216, 408 S.E.2d 876, 1991 N.C. App. LEXIS 999 (1991).

City had no standing to appeal an order of the North Carolina Public Utilities Commission (Commission) approving a merger of electric utilities because, (1) despite having been allowed to intervene before the Commission, a different standard governed standing, and (2) the city was not “aggrieved,” under G.S. 62-90(a), since the city was not currently in the market to purchase power from the utilities. In re Duke Energy Corp., 232 N.C. App. 573, 755 S.E.2d 382, 2014 N.C. App. LEXIS 231 (2014).

G.S. 62-137 Inapplicable to Proceedings Under Subsection (c) of This Section. —

G.S. 62-137 is inapplicable to proceedings conducted under subsection (c) of this section, since their scope is limited by statute to the exceptions on which the particular appeal of a final order or decision is based, leaving the Commission without authority to declare the hearings a general rate case or complaint proceeding. The Commission may consider only the grounds upon which the applicant asserts that the Commission’s order or decision is unlawful, unjust, unreasonable or unwarranted, including alleged errors committed by the Commission. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Utility customers association was not an aggrieved party entitled to appeal an order of the Utilities Commission adopting a rate making formula which authorized a natural gas company to adjust its rates when it purchased gas from nontraditional sources. Contention that association was an aggrieved party because the order would allow gas company to increase its rates in the future to the extent necessary to offset previous reductions under the order was without merit. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 104 N.C. App. 216, 408 S.E.2d 876, 1991 N.C. App. LEXIS 999 (1991).

Because the Utilities Commission’s order regarding funding for a non-profit research organization did not impact rates and because any rate increases would have been effectuated at subsequent rate cases, intervenor-utility customers association was not an “aggrieved party” within the meaning of this section and, thus, lacked standing to appeal. State ex rel. Utilities Comm'n v. Carolina Util. Customers Ass'n, 142 N.C. App. 127, 542 S.E.2d 247, 2001 N.C. App. LEXIS 39 (2001).

Appellate Court Had No Jurisdiction to Review Commission’s Interlocutory Order. —

Water and sewer processing facilities part-owner’s appeal of interlocutory orders of the North Carolina Utilities Commission holding that the part-owner was a public utility under G.S. 62-3(23)a.2 and was subject to the Commission’s jurisdiction was dismissed as the absence of any exceptions to G.S. 62-90 or G.S. 7A-29, allowing review of interlocutory orders of the Commission, required the appellate court to conclude that it had no jurisdiction to consider appeals of interlocutory orders of the Commission; further, the appellate court did not have authority under G.S. 7A-32(c) to review the part-owner’s issues as there was no final order of the Commission. State ex rel. Utils. Comm'n v. Buck Island, Inc., 158 N.C. App. 536, 581 S.E.2d 122, 2003 N.C. App. LEXIS 1186 (2003).

Appeals from Final Orders of North Carolina Utilities Commission. —

G.S. 62-90(a) and (d) provide for appeals of final orders of the North Carolina Utilities Commission; G.S. 7A-29(a) and (b) provide for appeals of right from certain administrative agencies, and G.S. 7A-27(d) provides for appeals of right from certain interlocutory orders of the superior or district courts. State ex rel. Utils. Comm'n v. Buck Island, Inc., 158 N.C. App. 536, 581 S.E.2d 122, 2003 N.C. App. LEXIS 1186 (2003).

Because parties did not file a notice of appeal with the North Carolina Utilities Commission, the appellate court was without jurisdiction to consider their arguments. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 644, 766 S.E.2d 827, 2014 N.C. LEXIS 947 (2014).

Construing Notice of Appeal. —

Notices of appeal would be considered to be appeals from the original order of the Utilities Commission, even though joint appellants’ notices stated that they were appealing from denial of their petition for reconsideration, a non-appealable order, where it could be fairly inferred that they intended to appeal from the original orders and the appellee was not misled. State ex rel. Utilities Comm'n v. MCI Telecommunications Corp., 132 N.C. App. 625, 514 S.E.2d 276, 1999 N.C. App. LEXIS 262 (1999).

Federal Jurisdiction over Disputes Arising Under This Statute. —

The district court erred in asserting federal jurisdiction under 47 U.S.C. § 252(e)(6) over disputes involving contract administration, interpretation and enforcement; the interconnection agreements at the core of those disputes were submitted to the NCUC and approved by it, and no judicial review was sought from these State commission determinations pursuant to this section. BellSouth Telecomms. v. North Carolina Utils. Comm'n, 240 F.3d 270, 2001 U.S. App. LEXIS 2159 (4th Cir. 2001), vacated, 535 U.S. 1091, 122 S. Ct. 2287, 152 L. Ed. 2d 1047, 2002 U.S. LEXIS 3820 (2002).

Dismissal of Appeal. —

Utilities Commission’s order dismissing a proposed intervenor’s first appeal was void ab initio, and the appellate court treated the first appeal as properly before it. In re Investigation of Duke Energy Corp. & Progress Energy, Inc., 234 N.C. App. 20, 760 S.E.2d 740, 2014 N.C. App. LEXIS 496 (2014).

II.Cases Decided Prior to 1949 Revision of Procedural Sections

Editor’s Note. —

All of the cases below were decided before the 1949 revision of the statute relating to procedure before the Utilities Commission and appeals therefrom, and construe former G.S. 62-19 and G.S. 62-20, to which this section corresponds.

Powers and Jurisdiction of Commission. —

Under this Chapter as it stood prior to the revision of 1949, it was held that, for the purpose of making investigations and conducting hearings, the legislature had constituted the North Carolina Utilities Commission a court of record, with all the powers and jurisdiction of a court of general jurisdiction as to all subjects embraced within the purview of the statute, for which procedure was prescribed and authorized, with the right in “any party affected thereby” to appeal “from all decisions or determinations made by the Utilities Commission.” State ex rel. N.C. Utils. Comm'n v. Atlantic Greyhound Corp., 224 N.C. 293, 29 S.E.2d 909, 1944 N.C. LEXIS 354 (1944); Utilities Comm'n v. Atlantic Greyhound Corp., 224 N.C. 672, 32 S.E.2d 23, 1944 N.C. LEXIS 448 (1944).

Orders of Commission Need No Confirmation. —

The Utilities Commission is a State administrative agency of original and final jurisdiction, and its orders require no confirmation by any court to be effective. State ex rel. Utils. Comm'n v. Carolina Scenic Coach Co., 218 N.C. 233, 10 S.E.2d 824, 1940 N.C. LEXIS 129 (1940).

Injunctive Relief Against Exercise of Rights Granted by Commission Refused. —

Where plaintiffs instituted action against a competing carrier to restrain it from exercising rights given it by orders of the Utilities Commission amending its franchise, the orders having been entered in proceedings to which plaintiffs were parties, it was held that plaintiffs had an adequate remedy for the protection of their rights by appeal under former G.S. 62-19 and 62-20, and judgment sustaining defendant’s demurrer in the independent action was proper. Atlantic Greyhound Corp. v. North Carolina Utils. Comm'n, 229 N.C. 31, 47 S.E.2d 473, 1948 N.C. LEXIS 406 (1948).

Right of Appeal Confined to Parties. —

Former G.S. 62-20 distinctly confined the right of appeal to a party to the proceeding. North Carolina Corp. Comm'n v. Winston-Salem Southbound Ry., 170 N.C. 560, 87 S.E. 785, 1916 N.C. LEXIS 196 (1916).

Former statute, providing that “from all decisions or determinations made by the Corporation Commission any party affected thereby shall be entitled to an appeal,” necessarily meant from a decision which affected or purported to affect some right or interest of a party to the controversy and was in some way determinative of some material question involved. State ex rel. N.C. Corp. Comm'n v. Southern Ry., 147 N.C. 483, 61 S.E. 271, 1908 N.C. LEXIS 85 (1908).

Under the provisions of former G.S. 62-20, “any party affected” by the order of the Commission as to rates or charges for passengers by a street railway company, etc., was given the right of appeal to the court from such order. In re Southern Pub. Utils. Co., 179 N.C. 151, 101 S.E. 619, 1919 N.C. LEXIS 31 (1919).

The right of appeal conferred by former G.S. 62-20 was limited to a party to the proceeding. For purposes of appeal, those who had no property or proprietary rights which were or might be affected by orders of the Commission were not such parties. An appeal by persons who were not parties to the proceeding would be dismissed by the superior court for the reason that said court acquired no jurisdiction by such appeal. State ex rel. Corp. Comm'n v. Southern Ry., 196 N.C. 190, 145 S.E. 19, 1928 N.C. LEXIS 314 (1928); State ex rel. N.C. Utils. Comm'n v. City of Kinston, 221 N.C. 359, 20 S.E.2d 322, 1942 N.C. LEXIS 469 (1942).

Municipality Entitled to Appeal. —

It is the duty of a municipality granting a charter to a corporation to operate a streetcar system therein, which, by contract, has limited the fares to be charged passengers within a certain amount, to represent the public in proceedings upon a petition filed by the railway company before the Commission requesting that it be permitted to raise the fares beyond those limited in the contract, and thus the municipality might appeal through the courts as former G.S. 62-20 prescribed, when the order was adverse to it or the interest it represented, as a “party affected by the decision and determination of the Commission,” expressly provided for by the statute. In re Southern Pub. Utils. Co., 179 N.C. 151, 101 S.E. 619, 1919 N.C. LEXIS 31 (1919).

Citizens seeking to have a railway station moved could not appeal from the Commission’s decision, under former G.S. 62-20, because they were not parties. North Carolina Corp. Comm'n v. Winston-Salem Southbound Ry., 170 N.C. 560, 87 S.E. 785, 1916 N.C. LEXIS 196 (1916).

Notice Mandatory. —

Under former G.S. 62-20, the statutory notice of an appeal by a railroad company from an order of the Commission was mandatory, and could not be extended by the consent of the parties of record. State ex rel. Corp. Comm'n v. Southern Ry., 185 N.C. 435, 117 S.E. 563, 1923 N.C. LEXIS 99 (1923); State ex rel. N.C. Utils. Comm'n v. Norfolk S. Ry., 224 N.C. 762, 32 S.E.2d 346, 1944 N.C. LEXIS 253 (1944).

Notice to Complaining Party Under Former G.S. 62-20. —

When notice of appeal to the superior court was given to the Commission by a railroad company, and other requirements of former G.S. 62-20 relating thereto were met by the company, this was sufficient, without giving notice of the appeal to the complaining party in the proceedings had before the Commission, as upon this appeal the statute made the Commission the party plaintiff. State ex rel. N.C. Corp. Comm'n v. Southern Ry., 151 N.C. 447, 66 S.E. 427, 1909 N.C. LEXIS 296 (1909).

Removal to Federal Courts. —

Assuming that an order of the Commission made to compel a carrier to change the location and conditions of its depot to promote the convenience, security and accommodation of the public would be an invasion of interstate commerce, this would not transform the proceedings in which the order was made into “a suit at law or in equity,” and, as such, removable from the superior court of the State to an inferior federal tribunal, upon the ground of diverse citizenship. State ex rel. N.C. Corp. Comm'n v. Southern Ry., 151 N.C. 447, 66 S.E. 427, 1909 N.C. LEXIS 296 (1909).

In proceedings for the removal of a cause from the State to the federal courts upon the question of diversity of citizenship under the applicable federal statute, the State court is not bound to surrender its jurisdiction until a case has been made which, on the face of the petition, shows the petitioner has a right to the transfer of the cause to the federal courts. State ex rel. N.C. Corp. Comm'n v. Southern Ry., 151 N.C. 447, 66 S.E. 427, 1909 N.C. LEXIS 296 (1909).

Final Process. —

Under this Article as it stood before the 1949 revision, the Commission had no power to enforce its orders and decrees by final process issuing directly therefrom, and for such purpose resort had to be had to ordinary courts, either by independent proceedings or in proper instances by process issued in cases carried before such courts on appeal. State ex rel. N.C. Corp. Comm'n v. Southern Ry., 147 N.C. 483, 61 S.E. 271, 1908 N.C. LEXIS 85 (1908). See G.S. 62-97, 62-98 .

Removal of Franchise Restriction as to Carriage of Passengers by Motor Carrier. —

Former G.S. 62-20 authorized a petitioner to appeal to the superior court from an adverse ruling of the Utilities Commission on its petition for the removal from its franchise of a restriction in regard to the carriage of passengers, and the contention that no appeal would lie from such order because the right of appeal was governed by the motor carrier laws authorizing an appeal from an order affecting franchise only when entered for violation of law was untenable. State ex rel. Utils. Comm'n v. Carolina Scenic Coach Co., 216 N.C. 325, 4 S.E.2d 897, 1939 N.C. LEXIS 157 (1939).

Petitioner had the right to appeal to the superior court from the denial of its petition for the removal from its franchise of a restriction prohibiting it from transporting passengers between two cities along its route in purely local traffic between such cities. State ex rel. Utils. Comm'n v. Carolina Scenic Coach Co., 218 N.C. 233, 10 S.E.2d 824, 1940 N.C. LEXIS 129 (1940).

§ 62-91. Appeal docketed; title on appeal; priorities on appeal.

Unless otherwise provided by the rules of appellate procedure, the cause on appeal from the Utilities Commission shall be entitled “State of North Carolina ex rel. Utilities Commission (here add any additional parties in support of the Commission Order and their capacity before the Commission), Appellee(s) v. (here insert name of appellant and his capacity before the Commission), Appellant.” Appeals from the Utilities Commission pending in the superior courts on September 30, 1967, shall remain on the civil issue docket of such superior court and shall have priority over other civil actions.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1967, c. 1190, s. 6; 1975, c. 391, s. 13; 1983, c. 526, s. 6.

Cross References.

As to jurisdiction of the Supreme Court to review, when authorized by law, direct appeals from a final order or decision of the North Carolina Utilities Commission, see N.C. Const., Art. IV, § 12(1).

CASE NOTES

Utilities Commission as Party. —

When the Utilities Commission sits as a court of record to determine the rights of rival claimants to a valuable franchise, it is somewhat anomalous to find it appearing in the Supreme Court to uphold its order from which one or the other party has appealed. However, this procedure seems to have been authorized by the General Assembly. State ex rel. Utils. Comm'n v. City Coach Co., 234 N.C. 489, 67 S.E.2d 629, 1951 N.C. LEXIS 501 (1951).

§ 62-92. Parties on appeal.

In any appeal to the appellate division of the General Court of Justice, the complainant in the original complaint before the Commission shall be a party to the record and each of the parties to the proceeding before the Commission shall have a right to appear and participate in said appeal.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1967, c. 1190, s. 2; 1983, c. 526, s. 7.

Cross References.

As to jurisdiction of the Supreme Court to review, when authorized by law, direct appeals from a final order or decision of the North Carolina Utilities Commission, see N.C. Const., Art. IV, § 12(1).

CASE NOTES

The Utilities Commission is a party of record in a proceeding before it, and upon appeal the Commission becomes the party plaintiff. State ex rel. N.C. Utils. Comm'n v. Norfolk S. Ry., 224 N.C. 762, 32 S.E.2d 346, 1944 N.C. LEXIS 253 (1944).

As to standing of manufacturer and distributor of plastic telephone directory covers to complain and appeal, see State ex rel. Utils. Comm'n v. National Merchandising Corp., 288 N.C. 715, 220 S.E.2d 304, 1975 N.C. LEXIS 1038 (1975).

§ 62-93. No evidence admitted on appeal; remission for further evidence.

No evidence shall be received at the hearing on appeal but if any party shall satisfy the court that evidence has been discovered since the hearing before the Commission that could not have been obtained for use at that hearing by the exercise of reasonable diligence, and will materially affect the merits of the case, the court may, in its discretion, remand the record and proceedings to the Commission with directions to take such subsequently discovered evidence, and after consideration thereof, to make such order as the Commission may deem proper, from which order an appeal shall lie as in the case of any other final order from which an appeal may be taken as provided in G.S. 62-90.

History. 1949, c. 989, s. 1; 1955, c. 1207, s. 2; 1963, c. 1165, s. 1.

CASE NOTES

The validity of the Commission’s findings and conclusions must be determined in light of the evidence that was presented to it. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

No Basis for Remand. —

Where nothing in the record indicates that any party made a motion to remand, that any party desired to offer further evidence, or that newly discovered evidence was available, there is no basis for the court, in its discretion, to remand the cause. State ex rel. Utils. Comm'n v. Maybelle Transp. Co., 252 N.C. 776, 114 S.E.2d 768, 1960 N.C. LEXIS 432 (1960).

§ 62-94. Record on appeal; extent of review.

  1. On appeal the court shall review the record and the exceptions and assignments of error in accordance with the rules of appellate procedure, and any alleged irregularities in procedures before the Commission, not shown in the record, shall be considered under the rules of appellate procedure.
  2. So far as necessary to the decision and where presented, the court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning and applicability of the terms of any Commission action. The court may affirm or reverse the decision of the Commission, declare the same null and void, or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission’s findings, inferences, conclusions or decisions are:
    1. In violation of constitutional provisions, or
    2. In excess of statutory authority or jurisdiction of the Commission, or
    3. Made upon unlawful proceedings, or
    4. Affected by other errors of law, or
    5. Unsupported by competent, material and substantial evidence in view of the entire record as submitted, or
    6. Arbitrary or capricious.
  3. In making the foregoing determinations, the court shall review the whole record or such portions thereof as may be cited by any party and due account shall be taken of the rule of prejudicial error. The appellant shall not be permitted to rely upon any grounds for relief on appeal which were not set forth specifically in his notice of appeal filed with the Commission.
  4. The court shall also compel action of the Commission unlawfully withheld or unlawfully or unreasonably delayed.
  5. Upon any appeal, the rates fixed or any rule, regulation, finding, determination, or order made by the Commission under the provisions of this Chapter shall be prima facie just and reasonable.

History. 1949, c. 989, s. 1; 1955, c. 1207, s. 3; 1963, c. 1165, s. 1; 1969, c. 614; 1975, c. 391, s. 14.

Legal Periodicals.

For case law survey as to judicial review of decisions of administrative agencies, see 45 N.C.L. Rev. 816 (1967).

For article on administrative evidence rules, see 49 N.C.L. Rev. 635 (1971).

CASE NOTES

Analysis

I.In General

The Utilities Commission is a creature of the legislature and may exercise jurisdiction and regulatory authority only as defined by Chapter 62. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 93 N.C. App. 260, 377 S.E.2d 772, 1989 N.C. App. LEXIS 173 (1989), rev'd, 326 N.C. 522, 391 S.E.2d 487, 1990 N.C. LEXIS 242 (1990).

G.S. 62-133.6(e) simply allows the legislature to preempt the North Carolina Utilities Commission’s ability to compel a general rate case by freezing rates until 31 December 2007; the North Carolina Utilities Commission properly dismissed a complaint regarding rates and a petition to initiate a general rate proceeding filed against an energy corporation by a customers association. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 163 N.C. App. 46, 592 S.E.2d 221, 2004 N.C. App. LEXIS 253 (2004).

Discretion of Utilities Commission. —

In deciding complaints, the Utilities Commission is allowed discretion in fashioning a remedy; the Commission could transfer service of one cooperative to electric utility rather than all complainants, as long as its action was not capricious or arbitrary. Dennis v. Duke Power Co., 341 N.C. 91, 459 S.E.2d 707, 1995 N.C. LEXIS 395 (1995).

Subsection (b) States Authority of Court. —

The authority of the court to which an appeal is taken from an order of the Utilities Commission is stated in subsection (b) of this section. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Subsection (b) gives the Supreme Court ample basis for ordering refunds to ratepayers who have been charged unlawfully high rates. Therefore, the Supreme Court is authorized to order refunds when the Commission has made an error of law in its rate making procedures. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Appellate review of an order of the North Carolina Utilities Commission is governed by subsections (b) and (c). State ex rel. Utils. Comm'n v. Public Staff — North Carolina Utils. Comm'n, 123 N.C. App. 43, 472 S.E.2d 193, 1996 N.C. App. LEXIS 583 (1996).

Questions on appeal from the Commission must be determined from the record certified by it. State ex rel. N.C. Utils. Comm'n v. Carolina Coach Co., 261 N.C. 384, 134 S.E.2d 689, 1964 N.C. LEXIS 483 (1964).

The Commission has the duty to enter final orders that are sufficient in detail to enable the Supreme Court on appeal to determine the controverted issues. State ex rel. Utils. Comm'n v. AT&T Communications of S. States, Inc., 321 N.C. 586, 364 S.E.2d 386, 1988 N.C. LEXIS 15 (1988).

Unless Facts Are in Record, Commission’s Expert Knowledge Cannot Be Considered. —

The Commission’s knowledge, however expert, cannot be considered by the Supreme Court on appeal unless the facts embraced within that knowledge are in the record. State ex rel. N.C. Utils. Comm'n v. Carolina Coach Co., 261 N.C. 384, 134 S.E.2d 689, 1964 N.C. LEXIS 483 (1964).

Attorney General Not Prejudiced by Failure to Hold Hearing. —

The Attorney General was not prejudiced by the action of the Commission in allowing an exploration tracking rate increase to go into effect without a hearing, since a refund could be sought under this section. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Contents of Order Remanding Cause. —

If a cause is remanded under this section, the order should specify the ground on which it is based and thereby indicate to the Commission the nature of its further proceedings. State ex rel. Utils. Comm'n v. Maybelle Transp. Co., 252 N.C. 776, 114 S.E.2d 768, 1960 N.C. LEXIS 432 (1960).

Doctrine of Res Judicata. —

Where an administrative determination has been reviewed by the courts, the res judicata effect, if any, attaches to the court’s judgment rather than to the administrative decision. State ex rel. Utils. Comm'n v. Thornburg, 325 N.C. 463, 385 S.E.2d 451, 1989 N.C. LEXIS 545 (1989).

Adjustments to Cost Study. —

North Carolina Utilities Commission did not err by approving a utility company’s adjustments to a study of the costs of providing retail electric service to a large industrial customer because there was substantial evidence in the record, including the testimony of three expert witnesses, to support the Commission’s findings. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 430, 758 S.E.2d 635, 2014 N.C. LEXIS 396 (2014).

II.Standard of Review

Standard that governs appellate review of Commission orders is statutorily articulated by subsections (b) and (c) of this section. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Commission’s Decision Will Be Upheld Unless Assailable Under Subsection (b). —

The decision of the Commission with regard to rates for public utilities will be upheld by the Court of Appeals on appeal unless it is assailable on one of the grounds enumerated in subsection (b) of this section. State ex rel. Utils. Comm'n v. Mebane Home Tel. Co., 35 N.C. App. 588, 242 S.E.2d 165, 1978 N.C. App. LEXIS 3042 (1978), aff'd, 298 N.C. 162, 257 S.E.2d 623, 1979 N.C. LEXIS 1367 (1979).

Judicial reversal of an order of the Utilities Commission is a serious matter for the reviewing court which can be properly addressed only by strict application of the six criteria of this section which circumscribe judicial review. State ex rel. Utils. Comm'n v. Bird Oil Co., 302 N.C. 14, 273 S.E.2d 232, 1981 N.C. LEXIS 1011 (1980).

A decision of the Utilities Commission will be upheld on appeal unless the appellate court finds error based on one of the enumerated grounds of this section. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Absence of proper findings is an error of law and basis for remand under subdivision (b)(4) of this section because it frustrates appellate review. State ex rel. Utils. Comm'n v. Conservation Council, 66 N.C. App. 456, 311 S.E.2d 617, 1984 N.C. App. LEXIS 2897, aff'd in part and rev'd in part, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984); State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986).

Scope of Review. —

Grounds for relief not specifically set forth in the notice of appeal filed with the Commission may not be relied upon in the appellate courts; however, even when specific grounds are set forth, the applicable scope of review may be determined only from an examination of the issues brought forward by the appealing party and the nature of the supporting contentions. Dennis v. Duke Power Co., 114 N.C. App. 272, 442 S.E.2d 104, 1994 N.C. App. LEXIS 376 (1994), aff'd in part and rev'd in part, 341 N.C. 91, 459 S.E.2d 707, 1995 N.C. LEXIS 395 (1995).

In reviewing a decision of the Utilities Commission, the appellate court’s role is to determine whether the entire record supports the Commission’s decision, and where there are two reasonably conflicting views of the evidence, the appellate court may not substitute its judgment for that of the Commission. State ex rel. Utils. Comm'n v. Carolina Indus. Group For Fair Util. Rates, 130 N.C. App. 636, 503 S.E.2d 697, 1998 N.C. App. LEXIS 1156 (1998).

Test on Review. —

The test applied by a reviewing court involves a determination of whether, after viewing the entire record, the Utilities Commission’s findings and conclusions are supported by substantial, competent, and material evidence. State ex rel. Utils. Comm'n v. North Carolina Gas Serv., 128 N.C. App. 288, 494 S.E.2d 621, 1998 N.C. App. LEXIS 13 (1998).

The failure to include all the necessary findings of fact is an error of law and a basis for remand under subdivision (b)(4) of this section, because it frustrates appellate review. State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986); State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 322 N.C. 689, 370 S.E.2d 567, 1988 N.C. LEXIS 481 (1988).

The Commission’s order must be sufficient within itself to comply with the statute. Failure to include all necessary findings of fact and details is an error of law and a basis for remand under subdivision (b)(4) of this section, because it frustrates appellate review. State ex rel. Utils. Comm'n v. AT&T Communications of S. States, Inc., 321 N.C. 586, 364 S.E.2d 386, 1988 N.C. LEXIS 15 (1988).

The Commission was required to make specific finds showing what effect, if any, it gave to financing costs or down market protection, or both, in arriving at its common equity rate of return decision. Failure to do so constituted an error of law requiring a remand for further proceedings. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 322 N.C. 689, 370 S.E.2d 567, 1988 N.C. LEXIS 481 (1988).

Function of Court on Review. —

The Court of Appeals looks to the findings of fact and conclusions of the Commission and determines whether the Commission has considered the factors required by law and whether its findings are supported by competent, substantial and material evidence in view of the whole record. State ex rel. Utils. Comm'n v. Springdale Estates Ass'n, 46 N.C. App. 488, 265 S.E.2d 647, 1980 N.C. App. LEXIS 2863 (1980).

The test upon appeal from a determination of the Utilities Commission is whether the Commission’s findings of fact are supported by competent, material and substantial evidence in view of the entire record. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

The Supreme Court’s statutory function is not to determine whether there is evidence to support a position the Commission did not adopt. The court asks instead, whether there is substantial evidence, in view of the entire record, to support the position which the Commission adopted. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

Appellate court’s statutory function is to assess whether the North Carolina Utilities Commission’s order is affected by errors of law and to determine whether there is substantial evidence, in view of the entire record, to support the position adopted. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

The reviewing court should see if, in view of the entire record, the Utilities Commission’s findings and conclusions are supported by substantial, competent and material evidence. State ex rel. Utils. Comm'n v. Piedmont Natural Gas Co., 346 N.C. 558, 488 S.E.2d 591, 1997 N.C. LEXIS 487 (1997).

Utilities Commission order issuing a Certificate of Environmental Compatibility and Public Convenience and Necessity to a utility to construct a transmission line along a proposed route was affirmed because under G.S. 62-94 and the standard of review, the reviewing court could not weigh the credibility of the evidence and draw the ultimate conclusion; the Commission, after considering evidence from both the utility and the citizens who intervened to object to the proposed route, concluded that the utility demonstrated that the proposed transmission line was necessary for an adequate and reliable supply of electric energy. State ex rel. Utils. Comm'n v. Wardlaw, 179 N.C. App. 582, 634 S.E.2d 898, 2006 N.C. App. LEXIS 2041 (2006).

Substantial Evidence Defined. —

Substantial evidence is defined as “more than a scintilla or a permissible inference.” It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. State ex rel. Utils. Comm'n v. Southern Coach Co., 19 N.C. App. 597, 199 S.E.2d 731, 1973 N.C. App. LEXIS 1718 (1973), cert. denied, 284 N.C. 623, 201 S.E.2d 693, 1974 N.C. LEXIS 1333 (1974).

Commission may agree with single witness, if the evidence supports his position, no matter how many opposing witnesses might come forward. The court is then required to determine whether the Commission’s decision is supported by competent, material and substantial evidence in view of the entire record as submitted. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

Evidence of Reasonableness of Practice. —

Where the Commission’s order required the defendants to do no more than they did voluntarily and without objection for 30 years or more, preceding the last six or eight years, this would seem to be “strong evidence” of the reasonableness of the practice. State ex rel. Utils. Comm'n v. Southern Ry., 256 N.C. 359, 124 S.E.2d 510, 1962 N.C. LEXIS 480 (1962).

Findings, inferences, conclusions or decision of Utilities Commission which are arbitrary or capricious and which prejudice substantial rights of appellants are not binding on reviewing court. State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

Subsection (c) requires the reviewing court to take due note of the rule of prejudicial error. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

Due account shall be taken of the rule of prejudicial error in the consideration of an appeal. State ex rel. Utils. Comm'n v. Nello L. Teer Co., 266 N.C. 366, 146 S.E.2d 511, 1966 N.C. LEXIS 1355 (1966).

Standard Deemed Satisfied. —

Where witnesses testified according to a private agreement that was not unanimous, the Utilities Commission was not subjected to a heightened standard of review but satisfied the requirements of this chapter by independently considering and analyzing relevant evidence and facts presented by all the parties. State ex rel. Utilities Comm'n v. Carolina Util. Customers Ass'n, 351 N.C. 223, 524 S.E.2d 10, 2000 N.C. LEXIS 6 (2000).

Substantial evidence supported the North Carolina Utilities Commission’s approval of electric utilities’ merger because ratepayers’ benefits showed the merger met G.S. 62-111(a). In re Duke Energy Corp., 232 N.C. App. 573, 755 S.E.2d 382, 2014 N.C. App. LEXIS 231 (2014).

Substantial evidence showed public benefits would result from a merger of electric utilities approved by the North Carolina Utilities Commission because there were significant guaranteed fuel-cost savings and possible non-fuel-cost savings, as well as commitments to support the community, job development, and low income energy assistance. In re Duke Energy Corp., 232 N.C. App. 573, 755 S.E.2d 382, 2014 N.C. App. LEXIS 231 (2014).

Order of the North Carolina Utilities Commission, authorizing a percentage of return on equity for a utility company, was appropriate because the order contained sufficient findings of fact to demonstrate that the order was supported by competent, material, and substantial evidence in view of the entire record. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 644, 766 S.E.2d 827, 2014 N.C. LEXIS 947 (2014).

North Carolina Utilities Commission’s findings of fact demonstrated that the Commission considered the impact of changing economic conditions upon customers and specified how this influenced the Commission’s decision to authorize a 10.2 percent return on equity; the findings were supported by the evidence, including public witness testimony, expert testimony, and the parties’ stipulation, and thus the Commission made sufficient findings regarding the impact of changing economic conditions upon customers and these findings were supported by substantial evidence. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 741, 767 S.E.2d 305, 2015 N.C. LEXIS 32 (2015).

Record contained conflicting evidence concerning whether the use of the single coincident peak cost of service methodology was reasonable and fair to customers, and the Commission considered all the evidence presented, explained the weight given to the evidence, and found that the methodology was reasonable; there was substantial evidence in the record to support the Commission’s finding that the use of the methodology in question allocated costs equitably, and it was not shown that the use of the methodology here resulted in unreasonable or unjust discrimination. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 741, 767 S.E.2d 305, 2015 N.C. LEXIS 32 (2015).

Commission’s findings were supported by substantial evidence, including the testimony of witnesses acknowledging that errors occurred and explaining that corrective steps were taken to resolve the errors, and it was not shown that the Commission allowed the company to recover any improper costs from ratepayers. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 741, 767 S.E.2d 305, 2015 N.C. LEXIS 32 (2015).

North Carolina Utilities Commission properly concluded it was in the public interest to allow a public utility to utilize a rate adjustment mechanism because its determination was supported by substantial evidence; the Commission thoroughly explained how the utility’s use of a rate adjustment mechanism would benefit its customers and took meaningful steps to ensure that problems were addressed and that customers were charged after the utility made improvements to its service. State ex rel. Utils. Comm'n v. Cooper, 368 N.C. 216, 775 S.E.2d 809, 2015 N.C. LEXIS 683 (2015).

Decision Not Supported by Substantial Evidence. —

North Carolina Utilities Commission’s (Commission) order approving a 10.5 percent return on common equity was not supported by substantial evidence under G.S. 62-94(b) and did not comply with G.S. 62-79(a) where: (1) although the 10.5 percent return on common equity agreed to in a non-unanimous stipulation fell within the range of returns on common equity recommended by the witnesses, no witness specifically recommended an return on common equity of 10.5 percent; (2) the Commission did not weigh any testimony presented, but merely recited the witnesses’ testimony; (3) the Commission did not discuss why one witness’s testimony was more credible than another’s or which methodology was afforded the greatest weight; (4) the Commission adopted the stipulated return on common equity wholesale, as opposed to considering it as one piece of evidence to be weighed in making an otherwise independent determination based on the G.S. 62-133 factors; and (5) the Commission failed to make findings of fact regarding the impact of changing economic conditions on customers. State ex rel. Utils. Comm'n v. Cooper, 366 N.C. 484, 739 S.E.2d 541, 2013 N.C. LEXIS 343 (2013).

Abuse of Commission’s Discretion Found. —

Decision of the North Carolina Utilities Commission to recognize a utility customers association and a customer as interveners in a settlement proceeding resulting from an investigation that was conducted, pursuant to G.S. 62-37, of accounting irregularities in the way in which a utility reported its regulated income to the Commission was an abuse of the Commission’s discretion; the association and the customer were not parties affected by the Commission’s order approving the settlement, within the meaning of G.S. 62-37, and as such had no standing to appeal the Commission’s approval of the settlement agreement. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 163 N.C. App. 1, 592 S.E.2d 277, 2004 N.C. App. LEXIS 261 (2004).

III.Limitations on Review
A.In General

Justiciable Controversy Must Be Shown. —

While the Utilities Commission authorized itself to review a contract between water service and developers, there was no evidence of any justiciable controversy which would have warranted review of the contracts by the Commission; thus, the Commission did not have jurisdiction to review the contract provisions. State ex rel. Utils. Comm'n v. Carolina Water Serv., 149 N.C. App. 656, 562 S.E.2d 60, 2002 N.C. App. LEXIS 284 (2002).

Limitation on Authority to Review. —

The authority of the Court of Appeals and of the Supreme Court in reviewing an order of the Utilities Commission is limited to that conferred by this section. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Upon appeal, the authority of the reviewing court to reverse or modify the order of the Commission, or to remand the matter to the Commission for further proceedings, is limited to that specified in this section. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

Courts do not ordinarily review or reverse the exercise of discretionary power by an administrative agency such as the Utilities Commission, except on showing of capricious, unreasonable or arbitrary action or disregard of law. State ex rel. N.C. Utils. Comm'n v. Carolina Coach Co., 261 N.C. 384, 134 S.E.2d 689, 1964 N.C. LEXIS 483 (1964).

On review of orders from the Commission, the Court of Appeals’ action is guided by this section, and where the Commission’s actions do not violate the Constitution or exceed statutory authority, appellate review is limited to errors of law, arbitrary action, or decisions unsupported by competent, material and substantial evidence. State ex rel. Utils. Comm'n v. Springdale Estates Ass'n, 46 N.C. App. 488, 265 S.E.2d 647, 1980 N.C. App. LEXIS 2863 (1980).

The authority of an appellate court to reverse or modify an order of the Utilities Commission, or to remand the matter to the Commission for further proceedings, is limited to that specified in this section, which includes the authority to reverse or modify such order on the ground that it violates a constitutional provision. State ex rel. Utils. Comm'n v. Farmers Chem. Ass'n, 33 N.C. App. 433, 235 S.E.2d 396.

Under applicable standards of appellate review, the Court of Appeals is not at liberty to substitute its judgment for that of the Commission. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 57 N.C. App. 489, 291 S.E.2d 789, 1982 N.C. App. LEXIS 2656 (1982), modified, 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

Court’s Power to Reverse, Modify or Nullify Substantially Circumscribed. —

The court’s power to affirm or remand is not specifically circumscribed by this section. However, the power of the court to reverse or modify and, a fortiori, to declare null and void, is substantially circumscribed. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

Appellate review of Commission orders is limited to the record as certified. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Appeals Are Confined to Questions of Law Specifically Set Forth. —

Appeals from the Utilities Commission are confined to questions of law upon grounds specifically set forth in appellant’s petition for rehearing by the Commission. State ex rel. Utils. Comm'n v. Queen City Coach Co., 233 N.C. 119, 63 S.E.2d 113, 1951 N.C. LEXIS 546 (1951). See also State ex rel. Utils. Comm'n v. Mead Corp., 238 N.C. 451, 78 S.E.2d 290, 1953 N.C. LEXIS 563 (1953).

As to necessity for raising grounds for relief before Commission, see State ex rel. Utils. Comm'n v. State, 250 N.C. 410, 109 S.E.2d 368, 1959 N.C. LEXIS 471 (1959).

B.Weighing of Evidence

Weighing of Evidence and Exercise of Judgment Thereon Are Matters for Commission. —

The decisions of the Utilities Commission must be within the authority conferred by statute; however, the weighing of the evidence and the exercise of judgment thereon as to transportation problems within the scope of its powers are matters for the Commission. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

Commission Without Discretionary Power Where No Evidence to Weigh. —

The weighing of the evidence and the exercise of judgment thereon within the scope of its authority are matters for the Commission; even so, the Commission has no discretionary power, where its function is to weigh the evidence and make judgment thereon, if there is no evidence to weigh. State ex rel. N.C. Utils. Comm'n v. Carolina Coach Co., 261 N.C. 384, 134 S.E.2d 689, 1964 N.C. LEXIS 483 (1964).

Minimal Consideration of Competent Evidence Correctable on Appeal. —

Although it is not for an appellate court to dictate to the Commission what weight it should give to material facts before it, a summary disposition which indicates that the Commission accorded only minimal consideration to competent evidence constitutes error at law and is correctable on appeal. State ex rel. Utils. Comm'n v. Edmisten, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980); State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

Comments on Evidence. —

The Commission is not required to set forth comments regarding every single fact or item of evidence presented by the parties. Dennis v. Duke Power Co., 114 N.C. App. 272, 442 S.E.2d 104, 1994 N.C. App. LEXIS 376 (1994), aff'd in part and rev'd in part, 341 N.C. 91, 459 S.E.2d 707, 1995 N.C. LEXIS 395 (1995).

Presumption That Commission Considered All Competent Evidence. —

In the absence of an express statement by the Commission to the contrary, some record evidence to the contrary, or a summary disposition which indicates to the contrary, the court would presume that the Commission gave proper consideration to all competent evidence presented. State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 324 S.E.2d 28 (1986).

The credibility of testimony and the weight to be given it are for the Commission, not for the reviewing court. State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972); State ex rel. Utils. Comm'n v. Farmers Chem. Ass'n, 33 N.C. App. 433, 235 S.E.2d 398, 1977 N.C. App. LEXIS 2232 (1977).

The credibility of testimony was for the determination of the Commission. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

It is a well-established rule that it is for administrative body, in an adjudicatory proceeding, to determine weight and sufficiency of evidence and the credibility of the witnesses, to draw inferences from the facts, and to appraise conflicting and circumstantial evidence. State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

The credibility of testimony and the weight to be accorded it are matters to be determined by the Commission. However, a summary disposition which indicates that the Commission accorded only minimal consideration to competent evidence constitutes error at law and is correctable on appeal. State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

IV.Prima Facie Just and Reasonable
A.In General

Commission’s Decision Is Prima Facie Just and Reasonable. —

This section provides that on an appeal, the Commission’s decision is considered “prima facie just and reasonable,” and it should be affirmed if supported by substantial evidence. State ex rel. Utils. Comm'n v. Southern Coach Co., 19 N.C. App. 597, 199 S.E.2d 731, 1973 N.C. App. LEXIS 1718 (1973), cert. denied, 284 N.C. 623, 201 S.E.2d 693, 1974 N.C. LEXIS 1333 (1974).

On appeal, a rate decision, rule, regulation, finding, determination, or order made by the North Carolina Utilities Commission is deemed prima facie just and reasonable. State ex rel. Utils. Comm'n v. Public Staff — North Carolina Utils. Comm'n, 123 N.C. App. 43, 472 S.E.2d 193, 1996 N.C. App. LEXIS 583 (1996).

Burden Is on Appellant to Show Error of Law in Proceedings. —

The law imposes the duty upon the Utilities Commission and not the courts to fix rates, and the burden is upon appellant from an order of the Commission to show an error of law in the proceeding before the Commission. State ex rel. Utils. Comm'n v. Champion Papers, Inc., 259 N.C. 449, 130 S.E.2d 890, 1963 N.C. LEXIS 585 (1963).

The burden of showing the impropriety of rates established by the Commission lies with the party alleging such error. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982); State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983); State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

The party attacking rates established by the Commission bears the burden of proving their impropriety. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

But Appellant May Show That Order Was Unsupported by Evidence. —

Upon appeal the orders made by the Utilities Commission “shall be prima facie just and reasonable,” but this does not preclude the appellant from showing that the evidence offered rebuts the prima facie effect of the order, and that the order was unsupported by competent, material and substantial evidence in view of the entire record. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 235 N.C. 273, 69 S.E.2d 502, 1952 N.C. LEXIS 375 (1952); State ex rel. Utils. Comm'n v. Gulf-Atlantic Towing Corp., 251 N.C. 105, 110 S.E.2d 886, 1959 N.C. LEXIS 545 (1959).

An order of the Commission requiring a transportation company to maintain public service facilities must be considered prima facie reasonable and just, but this does not preclude the transportation company affected from showing that the order was unsupported by competent, material and substantial evidence. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 238 N.C. 701, 78 S.E.2d 780, 1953 N.C. LEXIS 614 (1953); State ex rel. N.C. Utils. Comm'n v. Carolina Coach Co., 261 N.C. 384, 134 S.E.2d 689, 1964 N.C. LEXIS 483 (1964).

While the determination of a petition by a carrier to be allowed to discontinue an established service rests in large measure in the sound judgment and discretion of the Utilities Commission, and its order in regard thereto is prima facie just and reasonable, such order is reviewable to ascertain whether it is arbitrary or capricious or if the essential findings of fact on which it is based are supported by competent, material and substantial evidence. State ex rel. Utils. Comm'n v. Southern Ry., 254 N.C. 73, 118 S.E.2d 21, 1961 N.C. LEXIS 364 (1961).

B.Rates

Rates Are Deemed Prima Facie Just and Reasonable. —

Upon appeal, rates fixed by the Commission shall be deemed prima facie just and reasonable. State ex rel. N.C. Utils. Comm'n v. Westco Tel. Co., 266 N.C. 450, 146 S.E.2d 487, 1966 N.C. LEXIS 1367 (1966); State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982); State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

Rates fixed by the Commission are deemed prima facie just and reasonable. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

Legitimate Justification for Industrial and City Rates of Return. —

The North Carolina Utilities Commission drew legitimate distinctions which justified its decision to maintain industrial and cities’ rates of return at a higher level than residential and commercial and small industrial rates. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Rates of Return Reasonable and Not Discriminatory. —

The North Carolina Utilities Commission’s order contained findings sufficient to justify its conclusion that the approved rates of return were just and reasonable and did not unreasonably discriminate among the various classes of North Carolina Natural Gas Corporation customers and were supported by substantial evidence in view of the whole record. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

North Carolina Utilities Commission’s order authorizing a 102 percent return on equity for an electric company was supported by competent, material, and substantial evidence since the order appropriately considered changing economic conditions upon customers, the Commission gave great weight to testimony concerning the state’s unemployment rate, and certain costs were excluded from the rate base for one year in order to serve customer interests. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 444, 761 S.E.2d 640, 2014 N.C. LEXIS 588 (2014).

Order prescribing different Private Line Service rates for AT&T’s nonreseller (end user) customers and its reseller customers upon its face was discriminatory, and absent legally adequate reasons in the order why the order was not unjustly discriminatory within the meaning of G.S. 62-2(4), the order was vacated and the cause is remanded to the Commission for further proceedings. State ex rel. Utils. Comm'n v. AT&T Communications of S. States, Inc., 321 N.C. 586, 364 S.E.2d 386, 1988 N.C. LEXIS 15 (1988).

Determining a Utility’s Capital Structure for Rate Making Purposes. —

The Commission is not required, as a matter of law, to reduce the common equity component of a utility’s capital structure by an amount equal to its investment in its nonregulated subsidiaries in determining the appropriate capital structure for rate making purposes. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 322 N.C. 689, 370 S.E.2d 567, 1988 N.C. LEXIS 481 (1988).

Distribution of Gain From Sale of Water and Sewage Facilities. —

North Carolina Utilities Commission’s assigning a portion of the gain on sale from a municipal utility’s purchase of the existing water and sewer facilities of a publicly franchised utility to the publicly franchised utility’s remaining ratepayers, instead of assigning all of the gain on sale to the publicly franchised utility’s shareholders, was approved on review pursuant to G.S. 62-94 because the Commission did not violate the Commission’s authority under G.S. 62-2 and G.S. 62-23 and did not violate N.C. Const. Art. I, § 19. State ex rel. Utils. Comm'n v. Carolina Water Serv., 225 N.C. App. 120, 738 S.E.2d 187, 2013 N.C. App. LEXIS 55 (2013).

C.Findings

Findings of fact made by the Commission are prima facie just and reasonable on appeal. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

Court May Not Find Facts or Regulate Utilities. —

Although in reviewing an order of the Commission, a court might, upon the same facts, have reached a different result, it is not for the court to find the facts or to regulate utilities. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

When an appeal to the superior court (now to the Court of Appeals) is taken from an order entered by the North Carolina Utilities Commission, the review is limited to the record as certified and to the questions of law presented therein. There is no provision for additional findings of fact by the judge for the purpose of determining the validity of the order entered by the Commission. State ex rel. Utils. Comm'n v. Fox, 236 N.C. 553, 73 S.E.2d 464, 1952 N.C. LEXIS 601 (1952); State ex rel. Utils. Comm'n v. Ray, 236 N.C. 692, 73 S.E.2d 870, 1953 N.C. LEXIS 543 (1953). See State ex rel. Utils. Comm'n v. Mead Corp., 238 N.C. 451, 78 S.E.2d 290, 1953 N.C. LEXIS 563 (1953).

Findings supported by competent, material and substantial evidence in view of the entire record are binding upon the reviewing court. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966); State ex rel. Utils. Comm'n v. Carolina Coach Co., 269 N.C. 717, 153 S.E.2d 461, 1967 N.C. LEXIS 1141 (1967); State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972); State ex rel. Utils. Comm'n v. M.L. Hatcher Pickup & Delivery Servs., Inc., 43 N.C. App. 662, 259 S.E.2d 791, 1979 N.C. App. LEXIS 3148 (1979); State ex rel. Utils. Comm'n v. M.L. Hatcher Pickup & Delivery Servs., Inc., 47 N.C. App. 418, 267 S.E.2d 488 (1980); State ex rel. Utils. Comm'n v. M.L. Hatcher Pickup & Delivery Servs., Inc., 48 N.C. App. 115, 268 S.E.2d 851, 1980 N.C. App. LEXIS 3184 (1980). See also, State ex rel. Utils. Comm'n v. Champion Papers, Inc., 259 N.C. 449, 130 S.E.2d 890, 1963 N.C. LEXIS 585 (1963); State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

All findings of fact made by the Commission, which are supported by competent, material and substantial evidence, are conclusive. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972); State ex rel. Utils. Comm'n v. Public Staff, 52 N.C. App. 275, 278 S.E.2d 599, 1981 N.C. App. LEXIS 2422 (1981); State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 313 N.C. 215, 328 S.E.2d 264, 1985 N.C. LEXIS 1529 (1985); State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986).

When the Commission’s findings are supported by competent, material and substantial evidence, they are binding upon the appellate court. State ex rel. Utils. Comm'n v. Farmers Chem. Ass'n, 33 N.C. App. 433, 235 S.E.2d 398, 1977 N.C. App. LEXIS 2232 (1977).

The Commission’s findings and conclusions, where supported by competent, material, and substantial evidence, considering the whole record, and taking into account any contradictory evidence or evidence from which conflicting inferences could be drawn, must be affirmed. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 57 N.C. App. 489, 291 S.E.2d 789, 1982 N.C. App. LEXIS 2656 (1982), modified, 307 N.C. 541, 299 S.E.2d 763, 1983 N.C. LEXIS 1108 (1983).

The Commission’s order will not be disturbed if upon consideration of the entire record the court finds that the decision is not affected by error of law and the facts found by the Commission are supported by competent, material and substantial evidence, taking into account any contradictory evidence or evidence from which conflicting inferences could be drawn. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 322 N.C. 689, 370 S.E.2d 567, 1988 N.C. LEXIS 481 (1988).

Even Though Reviewing Court Might Have Reached Different Conclusion. —

Neither findings of fact nor the Commission’s determination of what rates are reasonable may be reversed or modified by a reviewing court merely because the court would have reached a different finding or determination upon the evidence. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

If the rates are reasonable upon an application of the whole record test, the Court of Appeals is bound by the findings of fact establishing them and may not reach a different finding merely because it could have reached another determination upon the evidence. State ex rel. Utils. Comm'n v. Springdale Estates Ass'n, 46 N.C. App. 488, 265 S.E.2d 647, 1980 N.C. App. LEXIS 2863 (1980).

When the record, considered as a whole, contains substantial evidence supporting the subjective judgment of the Commission on any of the factors in the fixing of reasonable rates under G.S. 62-133, the conclusion reached by the Commission may not be disturbed by a reviewing court merely because the court’s subjective judgment is different from that of the Commission, nor is the Commission required to accept as conclusive the subjective judgment of a witness, even though the record contains no expression of a contrary opinion by another witness. State ex rel. Utils. Comm'n v. Edmisten, 29 N.C. App. 428, 225 S.E.2d 101, 1976 N.C. App. LEXIS 2536, aff'd, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

The authority to determine the adequacy of a utility’s service and the rates to be charged lies with the Commission, and a reviewing court may not modify or reverse its determination merely because the court would have reached a different finding based on the evidence. State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986); State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 91 N.C. 107, 370 S.E.2d 567 (1988).

Any finding of fact made by the Commission, if supported by competent, material and substantial evidence is conclusive, even if the reviewing court would have reached a different result on the same evidence. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Finding Held Error of Law. —

Finding of the Commission that legal fees which were incurred by utility in contesting the amount of an administrative penalty imposed as a result of its failure to provide adequate water service were recoverable as part of its operating expenses, in that they were “a reasonable and necessary expenditure” which was associated with its water service to its customers, constituted an error of law under subdivision (b)(4) of this section. State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986).

Where the individualized nature of a shuttle operation precluded performance by a common carrier, the Utilities Commission erred as a matter of law in finding that performance of the shuttle contract constituted common carriage. State ex rel. Utils. Comm'n v. Tar Heel Indus., Inc., 77 N.C. App. 75, 334 S.E.2d 396, 1985 N.C. App. LEXIS 4052 (1985).

Findings Concerning Company’s Debt Ratio. —

Conclusion of the Utilities Commission that a natural gas company’s capital structure should include a short-term debt ratio of 4.02%, based on a short-term debt equal to stored gas inventory rather than “the daily average balance amount of short-term debt for the most recent twelve month period,” was supported by substantial evidence. State ex rel. Utilities Comm'n v. Carolina Util. Customers Ass'n, 351 N.C. 223, 524 S.E.2d 10, 2000 N.C. LEXIS 6 (2000).

Formula Did Not Unreasonably Discriminate. —

The North Carolina Utilities Commission’s order contained findings sufficient to justify its conclusion that the Industrial Sales Tracker Formula did not unreasonably discriminate between North Carolina Natural Gas Corporation’s customer classes and these findings were supported by substantial evidence in light of the whole record. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

D.Determinations

Determination by Commission Is Prima Facie Just and Reasonable. —

A determination by the Commission is not simply prima facie evidence of its validity, but is prima facie just and reasonable. State ex rel. Utils. Comm'n v. Ray, 236 N.C. 692, 73 S.E.2d 870, 1953 N.C. LEXIS 543 (1953); State ex rel. N.C. Utils. Comm'n v. Municipal Corps., 243 N.C. 193, 90 S.E.2d 519, 1955 N.C. LEXIS 586 (1955); State ex rel. N.C. Utils. Comm'n v. Casey, 245 N.C. 297, 96 S.E.2d 8, 1957 N.C. LEXIS 574 (1957); State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

The Commission, not the reviewing court, is to make determination of fair value of the properties. State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972).

While the Commission has the duty to weigh evidences of “fair value” fairly and in “balanced scales,” the reviewing court may not set aside the Commission’s determination of “fair value” merely because the court would have given the respective elements different weights and would, therefore, have arrived at a different “fair value.” State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

The Supreme Court may not reverse an order of the Commission because of its weighting of the respective indicators of “fair value,” unless it finds such weighting to have been arbitrary and lacking support in the evidence, in view of the entire record, or otherwise affected by error of law. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

The question of whether a case “is to be a general rate case” under the terms of G.S. 62-137 is a mixed question of law and fact. As to such questions, courts should be hesitant to disturb the Commission’s expert determination with regard to the nature of the case presented, particularly when its determination is made prior to hearing and for the initial purpose of setting the scope of the hearing and the resulting amount of information which the public utility will be required to furnish. Even at that stage, however, the Commission’s determination must be supported by “competent, material and substantial evidence in view of the entire record as submitted.” State ex rel. Utils. Comm'n v. Rail Common Carriers, 42 N.C. App. 314, 256 S.E.2d 508, 1979 N.C. App. LEXIS 2823 (1979).

What constitutes public convenience and necessity is primarily an administrative question with a number of imponderables to be taken into consideration, e.g., whether there is a substantial public need for the service, whether the existing carriers can reasonably meet this need, and whether the service would endanger or impair the operations of existing carriers contrary to the public interest. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

E.Orders

Order of Commission Is Prima Facie Just and Reasonable. —

By this section an order of the Commission is prima facie just and reasonable. This applies to orders approving contracts of public utilities. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

When Order Will Be Affirmed. —

Where the order of the Utilities Commission granting petitioner an increase in rates in a general rate case is justified by the findings of fact which are supported by plenary evidence, the order of the Commission will be affirmed. State ex rel. Utils. Comm'n v. Tidewater Natural Gas Co., 259 N.C. 558, 131 S.E.2d 303, 1963 N.C. LEXIS 596 (1963).

The rate order of the Commission will be affirmed if upon consideration of the whole record the appellate court finds that the Commission’s decision is not affected by error of law and the facts found by the Commission are supported by competent, material and substantial evidence, taking into account any contradictory evidence or evidence from which conflicting inferences could be drawn. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982); State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

When Order Remanded to Commission for Further Hearing. —

An order of the Commission based on an erroneous interpretation of law should be remanded to the Commission for further hearing and not be terminated by the court where the Commission has the duty to make a positive determination, such as the fixing of rates, and because of some error of law the determination is in suspense, and the utility is entitled to have the determination made. State ex rel. N.C. Utils. Comm'n v. Carolina Coach Co., 261 N.C. 384, 134 S.E.2d 689, 1964 N.C. LEXIS 483 (1964).

Inadequate Order. —

Order which set forth specific complaints from some customers, but did not state what to do to make the service adequate, and did not indicate in what manner the company violated the Commission’s standards, nor what those standards were, was inadequate. State ex rel. Utils. Comm'n v. Carolina Water Serv., Inc., 335 N.C. 493, 439 S.E.2d 127, 1994 N.C. LEXIS 10 (1994).

V.Cases Decided Prior to 1949 Revision of Procedural Sections

Editor’s Note. —

All of the cases below were decided before the 1949 revision of the procedural provisions of this Chapter, and construe former G.S. 62-20 and G.S. 62-21, corresponding to G.S. 62-90 and this section. It should be noted that the 1949 revision made many changes in procedure, and especially in the extent of review.

Appeal to Superior Court Under Former Law Was Trial De Novo. —

Upon appeal under the former statute by a party to a proceeding before the Corporation Commission from an order made therein under former G.S. 62-42 and 62-43, the superior court had jurisdiction to try and determine both issues of law and issues of fact, duly presented by assignments of error based upon exceptions duly taken by the appellant during the hearing before the Commission. The trial of such issues by the superior court was de novo. State ex rel. Corp. Comm'n v. Southern Ry., 196 N.C. 190, 145 S.E. 19, 1928 N.C. LEXIS 314 (1928). See also State ex rel. Corp. Comm'n v. Seaboard Air Line Ry., 161 N.C. 270, 76 S.E. 554, 1912 N.C. LEXIS 412 (1912).

A provision of former G.S. 62-21 that on appeal the trial should be “under the same rules and regulations as are prescribed for the trial of other civil causes” meant that the trial should be de novo. State ex rel. Utilities Comm'n v. Great S. Trucking Co., 223 N.C. 687, 28 S.E.2d 201, 1943 N.C. LEXIS 179 (1943). See also North Carolina Corp. Comm'n v. Winston-Salem Southbound Ry., 170 N.C. 560, 87 S.E. 785, 1916 N.C. LEXIS 196 (1916).

Under this Chapter as it stood before the 1949 revision, the trial in the superior court was de novo, and from thence only would a further appeal lie to the Supreme Court, governed by the rule that such an appeal should not be fragmentary, but should be from a final judgment or one final in its nature. State ex rel. Corp. Comm'n v. Cannon Mfg. Co., 185 N.C. 17, 116 S.E. 178, 1923 N.C. LEXIS 6 (1923).

Rules Applicable on Appeal to Superior Court. —

Prior to the 1949 revision, on appeal to the superior court the trial was under the same rules and regulations applicable in other civil causes, save and except the prima facie effect to be given the decision or determination of the Commission. State ex rel. Utilities Comm'n v. Great S. Trucking Co., 223 N.C. 687, 28 S.E.2d 201, 1943 N.C. LEXIS 179 (1943).

Appeals from the Utilities Commissioner were analogous to appeals from a justice of the peace rather than appeals from a referee; hence, since the trial in the superior court was de novo upon issues of fact raised by the exceptions, the superior court properly refused to pass upon appellant’s exceptions to the findings of fact seriatim. State ex rel. Utils. Comm'n v. Carolina Scenic Coach Co., 218 N.C. 233, 10 S.E.2d 824, 1940 N.C. LEXIS 129 (1940).

Decision of Commission “Prima Facie Just and Reasonable”. —

While on appeal from the Utilities Commission to the superior court the provision of former G.S. 62-21 was interpreted to mean that the trial should be de novo, the section also provided that the decision or determination of the Commission “shall be prima facie just and reasonable.” State ex rel. Utilities Comm'n v. Great S. Trucking Co., 223 N.C. 687, 28 S.E.2d 201, 1943 N.C. LEXIS 179 (1943).

Findings of Fact Not Conclusive. —

Former G.S. 62-20 and G.S. 62-21 did not contain any provision that the findings of fact by the Utilities Commission should be conclusive on appeal. State ex rel. Unemployment Comp. Comm'n v. J.M. Willis Barber & Beauty Shop, 219 N.C. 709, 15 S.E.2d 4, 1941 N.C. LEXIS 128 (1941).

What Evidence Admissible. —

On appeal from an order of the Commission under former G.S. 62-21 the trial was de novo, tried under the same rules and regulations as are prescribed for the trial of other civil causes; and any relevant evidence could be there introduced, whether it had theretofore been introduced before the Commission or not. State ex rel. Corp. Comm'n v. Seaboard Air Line Ry., 161 N.C. 270, 76 S.E. 554, 1912 N.C. LEXIS 412 (1912).

Admission of Evidence Held Reversible Error. —

Where a union passenger depot had been ordered by the Commission, it was reversible error in the superior court, on appeal from the Commission, for the trial judge to admit evidence as to the effect the relocation would have on property values in a nearby town where the present station of one of the roads was located. State ex rel. Corp. Comm'n v. Seaboard Air Line Ry., 161 N.C. 270, 76 S.E. 554, 1912 N.C. LEXIS 412 (1912).

When Appellee Entitled to Affirmance of Decision. —

Under former G.S. 62-21, in the absence of a showing that the decision of the Utilities Commission was clearly unreasonable and unjust, appellee, on appeal to the superior court, was entitled to an affirmance of the decision of the Commission. State ex rel. Utils. Comm'n v. Carolina Coach Co., 224 N.C. 390, 30 S.E.2d 328, 1944 N.C. LEXIS 377 (1944).

In an application for a certificate of public convenience and necessity, the Utilities Commission must act within the authority conferred by the statute; however, the findings from the evidence and the exercise of judgment thereon within the scope of its powers are matters for the Commission, and its order will not be disturbed when sustained by the findings upon competent, material and substantial evidence. State ex rel. Utils. Comm'n v. Fredrickson Motor Express, 232 N.C. 180, 59 S.E.2d 582, 1950 N.C. LEXIS 420 (1950).

§ 62-95. Relief pending review on appeal.

Pending judicial review, the Commission is authorized, where it finds that justice so requires, to postpone the effective date of any action taken by it. Upon such conditions as may be required and to the extent necessary to prevent irreparable injury, a judge of the appellate court with jurisdiction over the case on appeal is authorized to issue all necessary and appropriate process to postpone the effective date of any action by the Commission or take such action as may be necessary to preserve status or rights of any of the parties pending conclusion of the proceedings on appeal. The court may require the applicant for such stay to post adequate bond as required by the court.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1967, c. 1190, s. 8; 1983, c. 526, s. 8.

Cross References.

As to jurisdiction of the Supreme Court to review, when authorized by law, direct appeals from a final order or decision of the North Carolina Utilities Commission, see N.C. Const., Art. IV, § 12(1).

§ 62-96. Appeal to Supreme Court.

Appeals of final orders of the Utilities Commission to the Supreme Court are governed by Article 5 of General Statutes Chapter 7A. In all appeals filed in the Court of Appeals, any party may file a motion for discretionary review in the Supreme Court pursuant to G.S. 7A-31. If the Commission is the appealing party, it is not required to give any undertaking or make any deposit to assure payment of the cost of the appeal, and the court may advance the cause on its docket.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1967, c. 1190, s. 3; 1983, c. 526, s. 9.

Cross References.

As to jurisdiction of the Supreme Court to review, when authorized by law, direct appeals from a final order or decision of the North Carolina Utilities Commission, see N.C. Const., Art. IV, § 12(1).

CASE NOTES

An appeal does not lie directly from the Commission to the Supreme Court. State ex rel. Bd. of R.R. Comm'rs v. Wilmington & W. R.R., 122 N.C. 877, 29 S.E. 334, 1898 N.C. LEXIS 365 (1898); North Carolina Corp. Comm'n v. Winston-Salem Southbound Ry., 170 N.C. 560, 87 S.E. 785, 1916 N.C. LEXIS 196 (1916).

Scope of Review. —

Where the evidence is sufficient to permit and sustain the Commission’s findings of fact, conclusions and the decision based thereon, the Supreme Court will consider the proceedings before the Commission only to the extent necessary to determine whether the Court of Appeals committed an error of law. State ex rel. Utils. Comm'n v. J.D. McCotter, Inc., 283 N.C. 104, 194 S.E.2d 859, 1973 N.C. LEXIS 905 (1973).

When Supreme Court May Affirm Judgment Reversing Commission. —

Upon an appeal to the Supreme Court from a judgment of the superior court (now the Court of Appeals) reversing a decision of the Commission and remanding the matter for further proceedings, the Supreme Court may affirm the judgment of the superior court if the record discloses one or more of the statutory grounds for such judgment and if such ground therefor is set forth specifically in the notice of appeal from the Commission to the superior court. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

In order to affirm a judgment of the superior court (now the Court of Appeals) reversing and remanding a decision of the Commission, it is not required that the Supreme Court concur in the ruling by the superior court upon every ground for relief set forth in the notice of appeal from the Commission to the superior court. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

As to standing of manufacturer and distributor of plastic telephone directory covers to complain and appeal, see State ex rel. Utils. Comm'n v. National Merchandising Corp., 288 N.C. 715, 220 S.E.2d 304, 1975 N.C. LEXIS 1038 (1975).

§ 62-97. Judgment on appeal enforced by mandamus.

In all cases in which, upon appeal, an order or decision of the Commission is affirmed, in whole or in part, the appellate court shall include in its decree a mandamus to the appropriate party to put said order in force, or so much thereof as shall be affirmed, or the appellate court may make such other order as it deems appropriate.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1.

CASE NOTES

Mandamus Under Former G.S. 62-25. —

Under former G.S. 62-25, the court could compel performance only by resort to the high prerogative writ of mandamus, and that by authority of the statute. State ex rel. N.C. Corp. Comm'n v. Southern Ry., 151 N.C. 447, 66 S.E. 427, 1909 N.C. LEXIS 296 (1909).

Under former G.S. 62-25, the right to a mandamus to enforce a valid order was given in causes which had been carried to the superior court by appeal. State ex rel. N.C. Corp. Comm'n v. Southern Ry., 147 N.C. 483, 61 S.E. 271, 1908 N.C. LEXIS 85 (1908).

§ 62-98. Peremptory mandamus to enforce order, when no appeal.

  1. If no appeal is taken from an order or decision of the Commission within the time prescribed by law and the person to which the order or decision is directed fails to put the same in operation, as therein required, the Commission may apply to a superior court judge who has jurisdiction pursuant to G.S. 7A-47.1 or G.S. 7A-48 in Wake County or in the district or set of districts as defined in G.S. 7A-41.1 in which the business is conducted, upon 10 days’ notice, for a peremptory mandamus upon said person for the putting in force of said order or decision; and if said judge shall find that the order of said Commission was valid and within the scope of its powers, he shall issue such peremptory mandamus.
  2. An appeal shall lie to the Court of Appeals in behalf of the Commission, or the defendant, from the refusal or the granting of such peremptory mandamus. The remedy prescribed in this section for enforcement of orders of the Commission is in addition to other remedies prescribed by law.

History. 1949, c. 989, s. 1; 1963, c. 1165, s. 1; 1967, c. 1190, s. 4; 1987 (Reg. Sess., 1988), c. 1037, s. 92.

CASE NOTES

As to enforcement of order by mandamus where no appeal was taken, under former law, see State ex rel. N.C. Corp. Comm'n v. Southern Ry., 147 N.C. 483, 61 S.E. 271, 1908 N.C. LEXIS 85 (1908).

Where the Commission had ordered two railroad companies to erect a union depot at a junction after a hearing upon the petition of the citizens of the town, and the railroads had lost or waived their statutory right to appeal, such order was regarded as a final judgment, and mandamus proceedings to compel the enforcement of the final order upon failure of the railroads to except and appeal therefrom was the remedy authorized by statute. State ex rel. Corp. Comm'n v. Southern Ry., 185 N.C. 435, 117 S.E. 563, 1923 N.C. LEXIS 99 (1923).

§ 62-99. [Repealed]

Repealed by Session Laws 1967, c. 1190, s. 5.

Article 5A. Siting of Transmission Lines.

§ 62-100. Definitions.

As used in this Article:

  1. The term “begin to construct” includes any clearing of land, excavation, or other action that would adversely affect the natural environment of the route of a transmission line; but that term does not include land surveys, boring to ascertain geological conditions, or similar preliminary work undertaken to determine the suitability of proposed routes for a transmission line that results in temporary changes to the land.
  2. The word “county” means any one of the counties listed in G.S. 153A-10.
  3. The word “land” means any real estate or any estate or interest in real estate, including water and riparian rights, regardless of the use to which it is devoted.
  4. The word “lines” means distribution lines and transmission lines collectively.
  5. The word “municipality” means any incorporated community, whether designated as a city, town, or village and any area over which it exercises any of the powers granted by Article 19 of Chapter 160A of the General Statutes.
  6. The term “public utility” means any of the following:
    1. A public utility, as defined in G.S. 62-3(23).
    2. An electric membership corporation.
    3. A joint municipal power agency.
    4. A city or county that is engaged in producing, generating, transmitting, delivering, or furnishing electricity for private or public use.
  7. The term “transmission line” means an electric line designed with a capacity of at least 161 kilovolts.

History. 1991, c. 189, s. 1; 2013-232, s. 1.

Editor’s Note.

Session Laws 1991, c. 189, s. 3, made this Article effective December 1, 1991, but provides that the Article shall not apply to any transmission line that the public utility or other person has begun to construct before that date.

Effect of Amendments.

Session Laws 2013-232, s. 1, effective July 3, 2013, added “any of the following” in subdivision (6); added sub-subdivisions (6)a. through (6)c.; redesignated former subdivision (6) as present subdivision (6) and sub-subdivision (6)d.; rewrote sub-subdivision (6)d., which formerly read “a person, whether organized under the laws of this State or under the laws of any other state or county; engaged in producing, generating, transmitting, delivering, or furnishing electricity for private or public use, including counties, municipalities, joint municipal power agencies, electric membership corporations, and public and private corporations; and”; and made minor punctuation changes throughout the section. For applicability, see editor’s note.

CASE NOTES

Relationship With Other Laws. —

There was no conflict between G.S. 62-106 and G.S. 62-42 because they served different purposes and were reconcilable; the provisions of G.S. 62-100 through G.S. 62-107 dealt with the siting of certain large transmission lines and were not applicable to the case, and G.S. 62-42 was much broader in scope, dealing with compelling any type of needed improvement to a public utility system. The siting of lines of at least 161 kV was often controversial and the legislature’s decision to require specialized procedures for the siting of these lines was logical. State ex rel. Utils. Comm'n v. Town of Kill Devil Hills, 194 N.C. App. 561, 670 S.E.2d 341, 2009 N.C. App. LEXIS 4, aff'd, 363 N.C. 739, 686 S.E.2d 151, 2009 N.C. LEXIS 1289 (2009).

Issuance of Certificate. —

Utilities Commission order issuing a Certificate of Environmental Compatibility and Public Convenience and Necessity to a utility to construct a transmission line along a proposed route was affirmed because, under G.S. 62-94 and the standard of review, the reviewing court could not weigh the credibility of the evidence and draw the ultimate conclusion; further, the Commission did not improperly shift the burden of proof to the citizens rather than to the utility under G.S. 62-105(a). State ex rel. Utils. Comm'n v. Wardlaw, 179 N.C. App. 582, 634 S.E.2d 898, 2006 N.C. App. LEXIS 2041 (2006).

§ 62-101. Certificate to construct transmission line.

  1. No public utility or any other person may begin to construct a new transmission line without first obtaining from the Commission a certificate of environmental compatibility and public convenience and necessity. Only a public utility as defined in this Article may obtain a certificate to construct a new transmission line, except an entity may obtain a certificate to construct a new transmission line solely for the purpose of providing interconnection of an electric generation facility.
  2. A transmission line for which a certificate is required shall be constructed, operated, and maintained in conformity with the certificate.  A certificate may be amended or transferred with the approval of the Commission.
  3. A certificate is not required for construction of the following lines:
    1. A line designed to carry less than 161 kilovolts;
    2. The replacement or expansion of an existing line with a similar line in substantially the same location, or the rebuilding, upgrading, modifying, modernizing, or reconstructing of an existing line for the purpose of increasing capacity or widening an existing right-of-way;
    3. A transmission line over which the Federal Energy Regulatory Commission has licensing jurisdiction, if the Commission determines that agency has conducted a proceeding substantially equivalent to the proceeding required by this Article;
    4. Any transmission line for which, before March 6, 1989, a public utility or other person has surveyed a proposed route and, based on that route, has acquired rights-of-way for it by voluntary conveyances or has filed condemnation proceedings for acquiring those rights-of-way which, together, involve twenty-five percent (25%) or more of the total length of the proposed route;
    5. An electric membership corporation owned transmission line for which the construction or upgrading has had a proceeding conducted which the Commission determines is substantially equivalent to the proceeding required by this Article;
    6. Any line owned by a municipality to be constructed wholly within the corporate limits of that municipality.
  4. The Commission may waive the notice and hearing requirements of this Article and issue a certificate or amend an existing certificate under either of the following circumstances:
    1. When the Commission finds that the owners of land to be crossed by the proposed transmission line segment do not object to such a waiver and either:
      1. The transmission line will be less than one mile long; or
      2. The transmission line is for the purpose of relocating an existing transmission line segment to resolve a highway or other public project conflict; to accommodate a commercial, industrial, or other private development conflict; or to connect an existing transmission line to a substation, to another public utility, or to a public utility customer when any of these is in proximity to the existing transmission line.
    2. If the urgency of providing electric service requires the immediate construction of the transmission line, provided that the Commission shall give notice to those parties listed in G.S. 62-102(b) before issuing a certificate or approving an amendment.
  5. When justified by the public convenience and necessity and a showing that circumstances require immediate action, the Commission may permit an applicant for a certificate to proceed with initial clearing, excavation, and construction before receiving the certificate required by this section.  In so proceeding, however, the applicant acts at its own risk, and by granting such permission, the Commission does not commit to ultimately grant a certificate for the transmission line.
  6. Nothing in this section restricts or impairs the Commission’s jurisdiction pursuant to G.S. 62-73 to hear or make complaints.

History. 1991, c. 189, s. 1; 2013-232, s. 2.

Effect of Amendments.

Session Laws 2013-232, s. 2, effective July 3, 2013, added the second sentence in subsection (a). For applicability, see Editor’s note.

§ 62-102. Application for certificate.

  1. An applicant for the certificate described in G.S. 62-101 shall file an application with the Commission containing the following information:
    1. The reasons the transmission line is needed;
    2. A description of the proposed location of the transmission line;
    3. A description of the proposed transmission line;
    4. An environmental report setting forth:
      1. The environmental impact of the proposed action;
      2. Any proposed mitigating measures that may minimize the environmental impact; and
      3. Alternatives to the proposed action.
    5. A list of all necessary approvals that the applicant must obtain before it may begin to construct the transmission line; and
    6. Any other information the Commission requires.
  2. Within 10 days of filing the application, the applicant shall serve a copy of it on each of the following in the manner provided in G.S. 1A-1, Rule 4:
    1. The Public Staff;
    2. The Attorney General;
    3. The Department of Environmental Quality;
    4. The Department of Commerce;
    5. The Department of Transportation;
    6. The Department of Agriculture and Consumer Services;
    7. The Department of Natural and Cultural Resources;
    8. Each county through which the applicant proposes to construct the transmission line;
    9. Each municipality through whose jurisdiction the applicant proposes to construct the transmission line; and
    10. Any other party that the Commission orders the applicant to serve.The copy of the application served on each shall be accompanied by a notice specifying the date on which the application was filed.
  3. Within 10 days of the filing of the application, the applicant shall give public notice to persons residing in each county and municipality in which the transmission line is to be located by publishing a summary of the application in newspapers of general circulation so as to substantially inform those persons of the filing of the application.  This notice shall thereafter be published in those newspapers a minimum of three additional times before the time for parties to intervene has expired.  The summary shall also be sent to the North Carolina State Clearinghouse.  The summary shall be subject to prior approval of the Commission and shall contain at a minimum the following:
    1. A summary of the proposed action;
    2. A description of the location of the proposed transmission line written in a readable style;
    3. The date on which the application was filed; and
    4. The date by which an interested person must intervene.
  4. Inadvertent failure of service on or notice to any municipality, county, governmental agency, or other person described in this section may be cured by an order of the Commission designed to give that person adequate notice to enable effective participation in the proceeding.
  5. An application for an amendment of a certificate shall be in a form approved by and shall contain any information required by the Commission.  Notice of such an application shall be in the same manner as for a certificate.

History. 1991, c. 189, s. 1; 1991 (Reg. Sess., 1992), c. 959, s. 18; 1997-261, s. 3; 1997-443, s. 11A.119(a); 2015-241, s. 14.30(s), (u).

Effect of Amendments.

Session Laws 2015-241, s. 14.30(s), effective July 1, 2015, substituted “Department of Natural and Cultural Resources” for “Department of Cultural Resources” in subdivision (b)(7).

Session Laws 2015-241, s. 14.30(u), effective July 1, 2015, substituted “Department of Environmental Quality” for “Department of Environment and Natural Resources” in subdivision (b)(3).

§ 62-103. Parties.

  1. The following persons shall be parties to a certification proceeding under this Article:
    1. The applicant;
    2. The Public Staff.
  2. The following persons may intervene in a certification proceeding under this Article if a petition to intervene is filed with the Commission within 100 days of the filing of the application and the petition is subsequently granted:
    1. Any State department, municipality, or county entitled to notice under G.S. 62-102(b);
    2. Any person whose land will be crossed by the proposed line;
    3. Any other person who can show a substantial interest in the certification proceeding.

History. 1991, c. 189, s. 1.

§ 62-104. Hearings.

  1. The Commission shall schedule a hearing upon each application filed under this Article not more than 120 days after the filing and shall conclude the proceeding as expeditiously as possible.  The Commission may, however, extend this time period for substantial cause.
  2. If, after proper notice of the application has been given, no significant protests are filed with the Commission, the Commission may cancel the hearing and decide the case on the basis of the filed record.
  3. The Commission shall issue an order on each application filed under this Article within 60 days of the conclusion of the hearing.  The Commission may extend this time period for substantial cause.

History. 1991, c. 189, s. 1.

§ 62-105. Burden of proof; decision.

  1. The burden of proof is on the applicant in all cases under this Article, except that any party proposing an alternative location for the proposed transmission line shall have the burden of proof in sustaining its position.  The Commission may consider any factors that it finds are relevant and material to its decision.  The Commission shall grant a certificate for the construction, operation, and maintenance of the proposed transmission line if it finds:
    1. That the proposed transmission line is necessary to satisfy the reasonable needs of the public for an adequate and reliable supply of electric energy;
    2. That, when compared with reasonable alternative courses of action, construction of the transmission line in the proposed location is reasonable, preferred, and in the public interest;
    3. That the costs associated with the proposed transmission line are reasonable;
    4. That the impact the proposed transmission line will have on the environment is justified considering the state of available technology, the nature and economics of the various alternatives, and other material considerations; and
    5. That the environmental compatibility, public convenience, and necessity require the transmission line.
  2. If the Commission determines that the location of the proposed transmission line should be modified, it may condition its certificate upon modifications it finds necessary to make the findings and determinations set forth in subsection (a) of this section.

History. 1991, c. 189, s. 1.

Legal Periodicals.

For article, “Wind Over North Carolina Waters: The State’s Preparedness to Address Offshore and Coastal Water-Based Wind Energy Projects,” see 87 N.C.L. Rev. 1819 (2009).

CASE NOTES

Burden of Proof. —

Utilities Commission order issuing a Certificate of Environmental Compatibility and Public Convenience and Necessity to a utility to construct a transmission line along a proposed route was affirmed because the Commission did not improperly shift the burden of proof to the citizens rather than to the utility under G.S. 62-105(a); the Commission properly assigned to the utility the initial burden of proving it had examined alternative routes and that its preferred route was reasonable and in the public interest. State ex rel. Utils. Comm'n v. Wardlaw, 179 N.C. App. 582, 634 S.E.2d 898, 2006 N.C. App. LEXIS 2041 (2006).

§ 62-106. Effect of local ordinances.

Within 30 days after receipt of notice of an application as provided by G.S. 62-102, a municipality or county shall file with the Commission and serve on the applicant the provisions of an ordinance that may affect the construction, operation, or maintenance of the proposed transmission line in the manner provided by the rules of the Commission. If the municipality or county does not serve notice as provided above of any such ordinance provisions, the provisions of such ordinance may not be enforced by the municipality or county. If the applicant proposes not to comply with any part of the ordinance, the applicant may move the Commission for an order preempting that part of the ordinance. Service of the motion on the municipality or county by the applicant shall make the municipality or county a party to the proceeding. If the Commission finds that the greater public interest requires it, the Commission may include in a certificate issued under this Article an order preempting any part of such county or municipal ordinance with respect to the construction, operation or maintenance of the proposed transmission line.

History. 1991, c. 189, s. 1.

CASE NOTES

Relationship With Other Laws. —

There was no conflict between G.S. 62-106 and G.S. 62-42 because they served different purposes and were reconcilable; the provisions of G.S. 62-100 through G.S. 62-107 dealt with the siting of certain large transmission lines and were not applicable to the case, and G.S. 62-42 was much broader in scope, dealing with compelling any type of needed improvement to a public utility system. The siting of lines of at least 161 kV was often controversial and the legislature’s decision to require specialized procedures for the siting of these lines was logical. State ex rel. Utils. Comm'n v. Town of Kill Devil Hills, 194 N.C. App. 561, 670 S.E.2d 341, 2009 N.C. App. LEXIS 4, aff'd, 363 N.C. 739, 686 S.E.2d 151, 2009 N.C. LEXIS 1289 (2009).

§ 62-107. Rules.

Pursuant to G.S. 62-31, the Commission may adopt rules to carry out the purposes of this Article. In addition, the Commission shall adopt rules requiring public utilities to file periodic reports stating their short-term and long-term plans for construction of transmission lines in this State.

History. 1991, c. 189, s. 1.

§§ 62-108, 62-109.

Reserved for future codification purposes.

Article 6. The Utility Franchise.

§ 62-110. Certificate of convenience and necessity.

  1. Except as provided for bus companies in Article 12 of this Chapter, no public utility shall hereafter begin the construction or operation of any public utility plant or system or acquire ownership or control thereof, either directly or indirectly, without first obtaining from the Commission a certificate that public convenience and necessity requires, or will require, such construction, acquisition, or operation: Provided, that this section shall not apply to construction into territory contiguous to that already occupied and not receiving similar service from another public utility, nor to construction in the ordinary conduct of business.
  2. The Commission shall be authorized to issue a certificate to any person applying to the Commission to offer long distance services as a public utility as defined in G.S. 62-3(23)a.6., provided that such person is found to be fit, capable, and financially able to render such service, and that such additional service is required to serve the public interest effectively and adequately; provided further, that in such cases the Commission shall consider the impact on the local exchange customers and only permit such additional service if the Commission finds that it will not jeopardize reasonably affordable local exchange service.Notwithstanding any other provision of law, the terms, conditions, rates, and interconnections for long distance services offered on a competitive basis shall be regulated by the Commission in accordance with the public interest. In promulgating rules necessary to implement this provision, the Commission shall consider whether uniform or nonuniform application of such rules is consistent with the public interest. Provided further that the Commission shall consider whether the charges for the provision of interconnections should be uniform.For purposes of this section, long distance services shall include the transmission of messages or other communications between two or more central offices wherein such central offices are not connected on July 1, 1983, by any extended area service, local measured service, or other local calling arrangement.
  3. The Commission shall be authorized, consistent with the public interest, to adopt procedures for the issuance of a special certificate to any person for the limited purpose of offering telephone service to the public by means of coin, coinless, or key-operated pay telephone instruments. This service may be in addition to or in competition with public telephone services offered by the certificated telephone company in the service area. The access line from the pay instrument to the network may be obtained from the local exchange telephone company in the service area where the pay instrument is located, from any certificated competitive local provider, or any other provider authorized by the Commission. The Commission shall promulgate rules to implement the service authorized by this section, recognizing the competitive nature of the offerings and, notwithstanding any other provision of law, the Commission shall determine the extent to which such services shall be regulated and to the extent necessary to protect the public interest regulate the terms, conditions, and rates for such service and the terms and conditions for interconnection to the local exchange network.
  4. The Commission shall be authorized, consistent with the public interest and notwithstanding any other provision of law, to adopt procedures for the purpose of allowing shared use and/or resale of any telephone service provided to persons who occupy the same contiguous premises (as such term shall be defined by the Commission); provided, however, that there shall be no “networking” of any services authorized under this subsection whereby two or more premises where such services are provided are connected, and provided further that any certificated local provider or any other provider authorized by the Commission may provide access lines or trunks connecting such authorized service to the telephone network, and that the local service rates permitted or approved by the Commission for local exchange lines or trunks being shared or resold shall be on a measured usage basis where facilities are available or on a message rate basis otherwise. Provided however, the Commission may permit or approve flat rates, measured rates, message rates, or some combination of those rates for shared or resold services whenever the service is offered to patrons of hotels or motels, occupants of timeshare or condominium complexes serving primarily transient occupants, to patrons of hospitals, nursing homes, rest homes, or licensed retirement centers, or to members of clubs or students living in quarters furnished by educational institutions, or to persons temporarily subleasing residential premises. The Commission shall issue rules to implement the service authorized by this subsection, considering the competitive nature of the offerings and, notwithstanding any other provision of law, the Commission shall determine the extent to which such services shall be regulated and, to the extent necessary to protect the public interest, regulate the terms, conditions, and rates charged for such services and the terms and conditions for interconnection to the local exchange network. The Commission shall require any person offering telephone service under this subsection by means of a Private Branch Exchange (“PBX”) or key system to secure adequate local exchange trunks from any certificated local provider or any other provider authorized by the Commission so as to assure a quality of service equal to the quality of service generally found acceptable by the Commission. Unless otherwise ordered by the Commission for good cause shown by the company, the right and obligation of the certificated local provider or any other provider authorized by the Commission to provide local service directly to any person located within its certificated service area shall continue to apply to premises where shared or resold telephone service is available, provided however, the Commission shall be authorized to establish the terms and conditions under which such services should be provided.
  5. Notwithstanding subsection (d) of this section, the Commission may authorize any telephone services provided to a nonprofit college or university, and its affiliated medical centers, which is qualified under Sections 501 and 170 of the United States Internal Revenue Code of 1986 or which is a State-owned institution, to be shared or resold by that institution on both contiguous campus premises owned or leased by the institution and noncontiguous premises owned or leased exclusively by the institution, provided these services are offered to students or guests housed in quarters furnished by the institution, patrons of hospitals or medical centers of the institution, or persons or businesses providing educational, research, professional, consulting, food, or other support services directly to or for the institution, its students, or guests. The services of a certificated local provider or any other provider authorized by the Commission, when provided to said colleges, universities, and affiliated medical centers shall be rated in the same way as those provided for shared service offered to patrons of hospitals, nursing homes, rest homes, licensed retirement centers, members of clubs or students living in quarters furnished by educational institutions as provided for in subsection (d) of this section. The institutions regulated pursuant to this subsection shall not be prohibited from electing optional services from the certificated local provider or any other provider authorized by the Commission which include measured or message rate services. There shall be no “networking” of any services authorized under this subsection whereby two or more different institutions where such services are provided are interconnected. Any certificated local provider or any other provider authorized by the Commission may provide access lines or trunks connecting such authorized services to the telephone network. The Commission shall require such institutions to secure adequate local exchange trunks from the certificated local provider or any other provider authorized by the Commission to assure a quality of service equal to the quality of service generally found acceptable by the Commission. Unless otherwise ordered by the Commission for good cause shown by the certificated local provider or any other provider authorized by the Commission, the right and obligation of that provider to provide local service directly to any person located within its certificated service area shall continue to apply to premises where shared or resold telephone service is available under this subsection, provided however, the Commission shall be authorized to establish the terms and conditions under which such service should be provided. The Commission shall issue rules to implement the services authorized by this subsection.
  6. Reserved.
  7. Except as provided in subsection (f2) of this section, the Commission is authorized, following notice and an opportunity for interested parties to be heard, to issue a certificate to any person applying to provide local exchange or exchange access services as a public utility as defined in G.S. 62-3(23)a.6., without regard to whether local telephone service is already being provided in the territory for which the certificate is sought, provided that the person seeking to provide the service makes a satisfactory showing to the Commission that (i) the person is fit, capable, and financially able to render such service; (ii) the service to be provided will reasonably meet the service standards that the Commission may adopt; (iii) the provision of the service will not adversely impact the availability of reasonably affordable local exchange service; (iv) the person, to the extent it may be required to do so by the Commission, will participate in the support of universally available telephone service at affordable rates; and (v) the provision of the service does not otherwise adversely impact the public interest. In its application for certification, the person seeking to provide the service shall set forth with particularity the proposed geographic territory to be served and the types of local exchange and exchange access services to be provided. Except as provided in G.S. 62-133.5(f), any person receiving a certificate under this section shall, until otherwise determined by the Commission, file and maintain with the Commission a complete list of the local exchange and exchange access services to be provided and the prices charged for those services, and shall be subject to such reporting requirements as the Commission may require.Any certificate issued by the Commission pursuant to this subsection shall not permit the provision of local exchange or exchange access service until July 1, 1996, unless the Commission shall have approved a price regulation plan pursuant to G.S. 62-133.5(a) for a local exchange company with an effective date prior to July 1, 1996. In the event a price regulation plan becomes effective prior to July 1, 1996, the Commission is authorized to permit the provision of local exchange or exchange access service by a competing local provider in the franchised area of such local exchange company.The Commission is authorized to adopt rules it finds necessary (i) to provide for the reasonable interconnection of facilities between all providers of telecommunications services; (ii) to determine when necessary the rates for such interconnection; (iii) to provide for the reasonable unbundling of essential facilities where technically and economically feasible; (iv) to provide for the transfer of telephone numbers between providers in a manner that is technically and economically reasonable; (v) to provide for the continued development and encouragement of universally available telephone service at reasonably affordable rates; and (vi) to carry out the provisions of this subsection in a manner consistent with the public interest, which will include a consideration of whether and to what extent resale should be permitted. In adopting rules to establish an appropriate definition of universal service, the Commission shall consider evolving trends in telecommunications services and the need for consumers to have access to high-speed communications networks, the Internet, and other services to the extent that those services provide social benefits to the public at a reasonable cost.Local exchange companies and competing local providers shall negotiate the rates for local interconnection. In the event that the parties are unable to agree within 90 days of a bona fide request for interconnection on appropriate rates for interconnection, either party may petition the Commission for determination of the appropriate rates for interconnection. The Commission shall determine the appropriate rates for interconnection within 180 days from the filing of the petition.Except as provided in subsections (f4) and (f5) of this section, each local exchange company shall be the universal service provider (carrier of last resort) in the area in which it is certificated to operate on July 1, 1995. Each local exchange company or telecommunications service provider with carrier of last resort responsibility may satisfy its carrier of last resort obligation by using any available technology. In continuing this State’s commitment to universal service, the Commission shall, by December 31, 1996, adopt interim rules that designate the person that should be the universal service provider and to determine whether universal service should be funded through interconnection rates or through some other funding mechanism. At a time determined by the Commission to be in the public interest, the Commission shall conduct an investigation for the purpose of adopting final rules concerning the provision of universal services, and whether universal service should be funded through interconnection rates or through some other funding mechanism, and, consistent with the provisions of subsections (f4) and (f5) of this section, the person that should be the universal service provider. A local exchange company that has elected to be subject to alternative regulation under G.S. 62-133.5(m) does not have any carrier of last resort obligations.The Commission shall make the determination required pursuant to this subsection in a manner that furthers this State’s policy favoring universally available telephone service at reasonable rates.
  8. The provisions of subsection (f1) of this section shall not be applicable to franchised areas within the State that are being served by local exchange companies with 200,000 access lines or less located within the State, and it is further provided that such local exchange company providing service to 200,000 access lines or less shall not be subject to the regulatory reform procedures outlined under the terms of G.S. 62-133.5(a) or permitted to compete in territory outside of its franchised area for local exchange and exchange access services until such time as the franchised area is opened to competing local providers as provided for in this subsection. Upon the filing of an application by a local exchange company with 200,000 access lines or less for regulation under the provisions of G.S. 62-133.5(a), the Commission shall apply the provisions of that section to such local exchange company, but only upon the condition that the provisions of subsection (f1) of this section are to be applicable to the franchised area and local exchange and exchange access services offered by such a local exchange company.
  9. The provisions of subsection (f1) of this section shall not be applicable to areas served by telephone membership corporations formed and existing under Article 4 of Chapter 117 of the General Statutes and exempt from regulation as public utilities, pursuant to G.S. 62-3(23)d. and G.S. 117-35. To the extent a telephone membership corporation has carrier of last resort obligations, it may fulfill those obligations using any available technology.
  10. When any telecommunications service provider: (i) enters into an agreement to provide local exchange service for a subdivision or other area where access to right-of-way for the provision of local exchange service by other telecommunications service providers has not been granted coincident with any other grant of access by the property owner; or (ii) enters into an agreement after July 1, 2008, to provide communications service that otherwise precludes the local exchange company from providing communications service for the subdivision or other area, the local exchange company is not obligated to provide basic local exchange telephone service or any other communications service to customers in the subdivision or other area. In each of the foregoing instances, the telecommunications service provider shall be the provider in the subdivision or other area under the terms of the agreement and applicable law. The local exchange company for the franchise area or territory in which the subdivision or other area is located shall be relieved of any universal service provider obligation for that subdivision or other area. In that case, the local exchange company and all other telecommunications service providers shall retain the option, but not the obligation, to serve customers in the subdivision or other area. The local exchange company shall provide written notification to the appropriate State agency that the local exchange company is no longer the universal service provider for the subdivision or other area. The appropriate State agency shall retain the right to redesignate a local exchange company or telecommunications service provider as the universal service provider in accordance with the provisions of subsection (f5) of this section. Any person that enters into an agreement with a telecommunications service provider to provide local exchange service for a subdivision or other area as described in this subsection shall notify a purchaser of real property within the subdivision or other area of the agreement.For any circumstance not described in this subsection, a local exchange company may be granted a waiver of its carrier of last resort obligation in a subdivision or other area by the appropriate State agency based upon a showing by the local exchange company of all of the following:
    1. Providing service in the subdivision or area would be inequitable or unduly burdensome.
    2. One or more alternative providers of local exchange service exist.
    3. Granting the waiver is in the public interest.
  11. If the appropriate State agency finds, upon hearing, that the telecommunications service provider serving the subdivision or other area pursuant to subsection (f4) of this section, or its successor in interest, is no longer willing or no longer able to provide adequate services to the subdivision or other area, the appropriate State agency may redesignate the local exchange company for the franchise area or territory in which the subdivision or other area is located, or another telecommunications service provider, to be the universal service provider for the subdivision or other area. If the redesignated local exchange company is subject to price regulation or other alternative regulation under G.S. 62-133.5, it may treat the costs incurred in extending its facilities into the subdivision or other area as exogenous to that form of regulation and may, subject to providing written notice to the Commission, adjust its rates to recover these costs on an equitable basis from its customers whose rates are subject to regulation under G.S. 62-133.5. Any such action shall be subject to review by the Commission in a complaint proceeding initiated by any interested party pursuant to G.S. 62-73. If the redesignated local exchange company is not subject to price regulation or other alternative regulation under G.S. 62-133.5, it may recover the costs incurred in extending its facilities into the subdivision or other area in the form of a surcharge, subject to Commission approval, spread equitably among all of its customers in a proceeding under G.S. 62-136(a), without having to file a general rate case proceeding. During the period that a telecommunications service provider is serving as a universal service provider and prior to the redesignation of a local exchange company as the universal service provider as provided for herein, for the purposes of the appropriate State agency’s periodic certification to the Federal Communications Commission in matters regarding eligible telecommunications carrier status, a local company’s status shall not be deemed to affect its eligibility to be an eligible telecommunications carrier, and the appropriate State agency shall so certify.
  12. For purposes of subsections (f4) and (f5) of this section, the following definitions are applicable:
    1. “Appropriate State agency” means the Commission for purposes of any subdivision or other area within the franchise area of a local exchange company, and the Rural Electrification Authority for the purposes of any subdivision or other area within the franchise area or territory of a telephone membership corporation.
    2. “Communications service” means either voice, video, or data service through any technology.
    3. “Local exchange company” means a local exchange company subject to price regulation, or other alternative regulation or rate base regulation by the Commission or a telephone membership corporation organized under G.S. 117-30.
    4. “Telecommunications service provider” means a competing local provider, or any other person providing local exchange service by means of voice-over-Internet protocol, wireless, power line, satellite, or other nontraditional means, whether or not regulated by the Commission, but the term shall not include local exchange companies or telephone membership corporations.
  13. In addition to the authority to issue a certificate of public convenience and necessity and establish rates otherwise granted in this Chapter, for the purpose of encouraging water conservation, the Commission may, consistent with the public interest, adopt procedures that allow a lessor to charge for the costs of providing water or sewer service to persons who occupy the leased premises. The following provisions shall apply:
    1. All charges for water or sewer service shall be based on the user’s metered consumption of water, which shall be determined by metered measurement of all water consumed. The rate charged by the lessor shall not exceed the unit consumption rate charged by the supplier of the service.
    2. If the leased premises are contiguous dwelling units built prior to 1989, and the lessor determines that the measurement of the lessee’s total water usage is impractical or not economical, the lessor may allocate the cost for water and sewer service to the lessee using equipment that measures the lessee’s hot water usage. In that case, each lessee shall be billed a percentage of the lessor’s water and sewer costs for water usage in the dwelling units based upon the hot water used in the lessee’s dwelling unit. The percentage of total water usage allocated for each dwelling unit shall be equal to that dwelling unit’s individually submetered hot water usage divided by all submetered hot water usage in all dwelling units. The following conditions apply to billing for water and sewer service under this subdivision:
      1. A lessor shall not utilize a ratio utility billing system or other allocation billing system that does not rely on individually submetered hot water usage to determine the allocation of water and sewer costs.
      2. The lessor shall not include in a lessee’s bill the cost of water and sewer service used in common areas or water loss due to leaks in the lessor’s water mains. A lessor shall not bill or attempt to collect for excess water usage resulting from a plumbing malfunction or other condition that is not known to the lessee or that has been reported to the lessor.
      3. All equipment used to measure water usage shall comply with guidelines promulgated by the American Water Works Association.
      4. The lessor shall maintain records for a minimum of 12 months that demonstrate how each lessee’s allocated costs were calculated for water and sewer service. Upon advanced written notice to the lessor, a lessee may inspect the records during reasonable business hours.
      5. Bills for water and sewer service sent by the lessor to the lessee shall contain all the following information:
        1. The amount of water and sewer services allocated to the lessee during the billing period.
        2. The method used to determine the amount of water and sewer services allocated to the lessee.
        3. Beginning and ending dates for the billing period.
        4. The past-due date, which shall not be less than 25 days after the bill is mailed.
        5. A local or toll-free telephone number and address that the lessee can use to obtain more information about the bill.
    3. Notwithstanding the provisions of subdivisions (1) and (1a) of this subsection, if the Commission approves a flat rate to be charged by a water or sewer utility for the provision of water or sewer services to contiguous dwelling units, the lessor may pass through and charge the tenants of the contiguous dwelling units the same flat rate for water or sewer services, rather than a rate based on metered consumption, and an administrative fee as authorized in subdivision (2) of this subsection. Bills for water and sewer service sent by the lessor to the lessee shall contain all the information required by sub-sub-subdivisions e.2. through e.5. of subdivision (1a) of this subsection.
    4. The lessor may charge a reasonable administrative fee for providing water or sewer service not to exceed the maximum administrative fee authorized by the Commission.
    5. The Commission shall adopt rules to implement this subsection.
    6. The Commission shall develop an application that lessors must submit for authority to charge for water or sewer service. The form shall include all of the following:
      1. A description of the applicant and the property to be served.
      2. A description of the proposed billing method and billing statements.
      3. The schedule of rates charged to the applicant by the supplier.
      4. The schedule of rates the applicant proposes to charge the applicant’s customers.
      5. The administrative fee proposed to be charged by the applicant.
      6. The name of and contact information for the applicant and its agents.
      7. The name of and contact information for the supplying water or sewer system.
      8. Any additional information that the Commission may require.
    7. The Commission shall develop an application that lessors must submit for authority to charge for water or sewer service at single-family dwellings that allows the applicant to serve multiple dwellings in the State, subject to an approval by the Commission. The form shall include all of the following:
      1. A description of the applicant and a listing of the address of all the properties to be served. An updated listing of addresses served by the applicant shall be provided to the Commission annually.
      2. A description of the proposed billing method and billing statements.
      3. The administrative fee proposed to be charged by the applicant.
      4. The name and contact information for the applicant and its agents.
      5. Any additional information the Commission may require.
    8. The Commission shall approve or disapprove an application within 30 days of the filing of a completed application with the Commission. If the Commission has not issued an order disapproving a completed application within 30 days, the application shall be deemed approved.
    9. A provider of water or sewer service under this subsection may increase the rate for service so long as the rate does not exceed the unit consumption rate charged by the supplier of the service. A provider of water or sewer service under this subsection may change the administrative fee so long as the administrative fee does not exceed the maximum administrative fee authorized by the Commission. In order to change the rate or administrative fee, the provider shall file a notice of revised schedule of rates and fees with the Commission. The Commission may prescribe the form by which the provider files a notice of a revised schedule of rates and fees under this subsection. The form shall include all of the following:
      1. The current schedule of the unit consumption rates charged by the provider.
      2. The schedule of rates charged by the supplier to the provider that the provider proposes to pass through to the provider’s customers.
      3. The schedule of the unit consumption rates proposed to be charged by the provider.
      4. The current administrative fee charged by the provider, if applicable.
      5. The administrative fee proposed to be charged by the provider.
    10. A notification of revised schedule of rates and fees shall be presumed valid and shall be allowed to become effective upon 14 days notice to the Commission, unless otherwise suspended or disapproved by order issued within 14 days after filing.
    11. Notwithstanding any other provision of this Chapter, the Commission shall determine the extent to which the services shall be regulated and, to the extent necessary to protect the public interest, regulate the terms, conditions, and rates that may be charged for the services. Nothing in this subsection shall be construed to alter the rights, obligations, or remedies of persons providing water or sewer services and their customers under any other provision of law.
    12. A provider of water or sewer service under this subsection shall not be required to file annual reports pursuant to G.S. 62-36 or to furnish a bond pursuant to G.S. 62-110.3.
  14. In addition to the authority to issue a certificate of public convenience and necessity and establish rates otherwise granted in this Chapter, the Commission may, consistent with the public interest, adopt procedures that allow a lessor of a single-family dwelling, residential building, or multiunit apartment complex that has individually metered units for electric service in the lessor’s name to charge for the actual costs of providing electric service to each lessee. The following provisions shall apply to the charges authorized under this subsection:
    1. The lessor shall equally divide the actual amount of the individual electric service bill for a unit among all the lessees in the unit and shall send one bill to each lessee. The amount charged shall be prorated when a lessee has not leased the unit for the same number of days as the other lessees in the unit during the billing period. Each bill may include an administrative fee up to the amount of the then-current administrative fee authorized by the Commission in Rule 18-6 for water service and, when applicable, a late fee in an amount determined by the Commission. The lessor shall not charge the cost of electricity from any other unit or common area in a lessee’s bill. The lessor may, at the lessor’s option, pay any portion of any bill sent to a lessee.
    2. A lessor who charges for electric service under this subsection is solely responsible for the prompt payment of all bills rendered by the electric utility providing service to the leased premises and is the customer of the electric utility subject to all rules, regulations, tariffs, riders, and service regulations associated with the provision of electric service to retail customers of the utility.
    3. The lessor shall maintain records for a minimum of 36 months that demonstrate how each lessee’s allocated costs were calculated for electric service. A lessee may inspect these records, including the actual per unit public utility billings, during reasonable business hours and may obtain copies of the records for a reasonable copying fee.
    4. Bills for electric service sent by the lessor to the lessee shall contain all of the following information:
      1. When the lessor of a residential building or multiunit apartment complex has a separate lease for each bedroom in the unit, the bill charged by the electric supplier for the unit as a whole and the amount of charges allocated to the lessee during the billing period.
      2. The name of the electric power supplier providing electric service to the leased premises.
      3. Beginning and ending dates for the usage period and, if provided by the electric supplier, the date the meter was read for that usage period.
      4. The past-due date, which shall not be less than 25 days after the bill is mailed to the lessee.
      5. A local or toll-free telephone number and address of the lessor that the lessee can use to obtain more information about the bill.
      6. The amount of any administrative fee and late fee approved by the Commission and included in the bill.
      7. A statement of the lessee’s right to address questions about the bill to the lessor and the lessee’s right to file a complaint with, or otherwise seek recourse from, the Commission if the lessee cannot resolve an electric service billing dispute with the lessor.
    5. The Commission shall develop an application that lessors must submit for Commission approval to charge for electric service as provided in this section. The form shall include all of the following:
      1. A description of the lessor and the property to be served.
      2. A description of the proposed billing method and billing statements.
      3. The administrative fee and late payment fee, if any, proposed to be charged by the lessor.
      4. The name of and contact information for the lessor and the lessor’s agents.
      5. The name of and contact information for the supplier of electric service to the lessor’s rental property.
      6. A copy of the lease forms used by the lessor for lessees who are billed for electric service pursuant to this subsection.
      7. Any additional information that the Commission may require.
    6. The Commission shall approve or disapprove an application within 60 days of the filing of a completed application with the Commission. If the Commission has not issued an order disapproving a completed application within 60 days, the application shall be deemed approved.
    7. A lessor who charges for electric service under this subsection shall not be required to file annual reports pursuant to G.S. 62-36.
    8. An applicant may submit for authority to charge for electric service for more than one property in a single application. Information relating to all properties covered by the application need only be provided once in the application.
    9. The Commission shall adopt rules to implement the provisions of this subsection.
  15. In addition to the authority to issue a certificate of public convenience and necessity and establish rates otherwise granted in this Chapter, the Commission may, consistent with the public interest, adopt procedures that allow a lessor of single-family dwelling, a residential building, or multiunit apartment complex that has individually metered units for natural gas service in the lessor’s name to charge for the actual costs of providing natural gas service to each lessee. The following provisions shall apply to the charges authorized under this subsection:
    1. The lessor shall equally divide the actual amount of the individual natural gas service bill for a unit among all the lessees in the unit and shall send one bill to each lessee. The amount charged shall be prorated when a lessee has not leased the unit for the same number of days as the other lessees in the unit during the billing period. Each bill may include an administrative fee up to the amount of the then-current administrative fee authorized by the Commission in Rule 18-6 for water service and, when applicable, a late fee in an amount determined by the Commission. The lessor shall not charge the cost of natural gas service from any other unit or common area in a lessee’s bill. The lessor may, at the lessor’s option, pay any portion of any bill sent to a lessee.
    2. A lessor who charges for natural gas service under this subsection is solely responsible for the prompt payment of all bills rendered by the natural gas utility providing service to the leased premises and is the customer of the natural gas utility subject to all rules, regulations, tariffs, riders, and service regulations associated with the provision of natural gas service to retail customers of the utility.
    3. The lessor shall maintain records for a minimum of 36 months that demonstrate how each lessee’s allocated costs were calculated for natural gas service. A lessee may inspect these records, including the actual per unit public utility billings, during reasonable business hours and may obtain copies of the records for a reasonable copying fee.
    4. Bills for natural gas service sent by the lessor to the lessee shall contain all of the following information:
      1. When the lessor of a residential building or multiunit apartment complex has a separate lease for each bedroom in the unit, the bill charged by the natural gas supplier for the unit as a whole and the amount of charges allocated to the lessee during the billing period.
      2. The name of the natural gas supplier providing natural gas service to the leased premises.
      3. Beginning and ending dates for the usage period and, if provided by the natural gas supplier, the date the meter was read for that usage period.
      4. The past-due date, which shall not be less than 25 days after the bill is mailed to the lessee.
      5. A local or toll-free telephone number and address that the lessee can use to obtain more information about the bill.
      6. The amount of any administrative fee and late fee approved by the Commission and included in the bill.
      7. A statement of the lessee’s right to address questions about the bill to the lessor and the lessee’s right to file a complaint with, or otherwise seek recourse from, the Commission if the lessee cannot resolve a natural gas service billing dispute with the lessor.
    5. The Commission shall develop an application that lessors must submit for Commission approval to charge for natural gas service as provided in this section. The form shall include all of the following:
      1. A description of the lessor and the property to be served.
      2. A description of the proposed billing method and billing statements.
      3. The administrative fee and late payment fee, if any, proposed to be charged by the lessor.
      4. The name of and contact information for the lessor and the lessor’s agents.
      5. The name of and contact information for the supplier of natural gas service to the lessor’s rental property.
      6. A copy of the lease forms used by the lessor for lessees who are billed for natural gas service pursuant to this subsection.
      7. Any additional information that the Commission may require.
    6. The Commission shall approve or disapprove an application within 60 days of the filing of a completed application with the Commission. If the Commission has not issued an order disapproving a completed application within 60 days, the application shall be deemed approved.
    7. A lessor who charges for natural gas service under this subsection shall not be required to file annual reports pursuant to G.S. 62-36.
    8. An applicant may submit for authority to charge for natural gas service for more than one property in a single application. Information relating to all properties covered by the application need only be provided once in the application.
    9. The Commission shall adopt rules to implement the provisions of this subsection.
  16. In addition to the authority to issue a certificate of public convenience and necessity and establish rates otherwise granted in this Chapter, the Commission may, consistent with the public interest, allow a lessor of a multiunit apartment building who has obtained the approval of the Commission for the use of a master meter pursuant to G.S. 143-151.42 to charge each tenant for the electricity or natural gas used by a central system based on each tenant’s metered or measured share of the electricity or natural gas used by the central system. In the case of electricity used by a central system, the provisions of subdivisions (2) through (8) of subsection (h) of this section shall apply. In the case of natural gas used by a central system, the provisions of subdivisions (2) through (8) of subsection (i) of this section shall apply.

History. 1931, c. 455; 1933, c. 134, s. 8; 1941, c. 97; 1963, c. 1165, s. 1; 1983 (Reg. Sess., 1984), c. 1043, s. 2; 1985, c. 676, s. 9; c. 680; 1987, c. 445, s. 1; 1989, c. 451, ss. 1, 2; 1995, c. 27, s. 4; 1995 (Reg. Sess., 1996), c. 753, s. 1; 1997-207, s. 1; 1998-180, ss. 1, 2; 1998-212, s. 15.8B; 1999-112, s. 1; 2001-252, s. 1; 2001-502, s. 1; 2002-14, s. 1; 2003-99, s. 1; 2003-173, s. 1; 2004-143, s. 7; 2005-385, ss. 1, 2; 2009-202, s. 1; 2009-279, s. 1; 2011-52, s. 1; 2011-252, s. 4; 2017-10, s. 2.2(b); 2017-172, s. 2; 2019-56, s. 1; 2021-23, s. 27(b).

Cross References.

As to necessity for certificate of convenience and necessity for housing projects, see G.S. 157-28.

Editor’s Note.

This section, as amended by Session Laws 1995, c. 27, s. 4, which added subsections (f1), (f2), and (f3), does not contain a subsection (f).

Session Laws 2003-173, which, in s. 1, inserted the fourth sentence in subsection (g), in s. 2 provides: “In enacting Section 1 of this act, it is the intent of the General Assembly to promote water conservation while protecting public health, safety, welfare, and the environment and avoiding unduly burdensome requirements on consecutive water systems. Section 1 of this act shall not be construed to impose any requirement on a supplying water system other than the requirements that apply to the water system on the date this act becomes effective and that would apply to the supplying water system if a consecutive water system had not been authorized.”

The definition for “Communications service” as enacted by Session Laws 2009-202, s. 1, was originally designated as subdivision (f6)(4), and was redesignated as subdivision (f6)(1a) at the direction of the Revisor of Statutes to maintain alphabetical order.

Effect of Amendments.

Session Laws 2004-143, s. 7, effective August 1, 2004, rewrote subsection (g).

Session Laws 2005-385, ss. 1 and 2, effective September 13, 2005, in the last paragraph of subsection (f1), substituted “Except as provided . . . July 1, 1995.” for “Each local exchange company shall be the universal service provider in the area in which it is certificated to operate on July 1, 1995, until otherwise determined by the Commission.” in the first sentence, deleted “the person that should be the universal service provider” following “provision of universal” in the third sentence, and added “and, consistent with . . . service provider.” at the end of the last sentence; added subsections (f4) through (f6); and made minor punctuation changes. For applicability, see the Editor’s Notes.

Session Laws 2009-202, s. 1, effective June 26, 2009, rewrote subsection (f1); added the last sentence in subsection (f3); rewrote subsection (f4); in subsection (f5), substituted “serving the subdivision or other area pursuant to subsection (f4) of this section” for “that entered into the agreement”’ in the first sentence; and in subsection (f6), added the definition of “Communications service.”

Session Laws 2011-52, s. 1, effective April 26, 2011, added the last sentence in the next-to-last paragraph of subsection (f1).

Session Laws 2011-252, s. 4, effective October 1, 2011, and applicable to leases entered into on or after that date, added subsection (h).

Session Laws 2017-10, s. 2.2(b), effective May 4, 2017, substituted “leased premises” for “same contiguous premises” in subsection (g); substituted “leased premises are contiguous dwelling units built” for “contiguous premises were built” in subdivision (g)(1a); rewrote subsection (g)(3), which read: “The Commission shall issue rules to define contiguous premises and to implement this subsection. In issuing the rule to define contiguous premises, the Commission shall consider contiguous premises where manufactured homes, as defined in G.S. 143-145(7), or spaces for manufactured homes are rented”; added subsection (g)(4a); and made punctuation changes.

Session Laws 2017-172, s. 2, effective July 21, 2017, substituted “lessee” or variants for “tenant” or variants throughout subsection (g); substituted “lessor’s” for “landlord’s” in the second sentence of subdivision (g)(1a); in subdivision (g)(4a) substituted “dwellings” for “homes” twice, made a minor punctuation change, and substituted “an approval by the Commission” for “single Commission approval.”; in subdivision (g)(4a)a, substituted “served.” for “served, which shall be updated annually with the Commission.”, and added the second sentence; in subsection (h), substituted “single-family dwelling, residential building, or multiunit apartment” for “residential building” and substituted “providing electric service to each lessee.” for “providing electric service to each tenant when the lessor has a separate lease for each bedroom in the unit.”; substituted “leased premises” for “residential building or complex” in subdivision (h)(2); inserted “When the lessor of a residential building or multiunit apartment complex has a separate lease for each bedroom in the unit,” at the beginning of subdivision (h)(4)a; substituted “leased premises” for “unit” in subdivision (h)(4)b; added subdivision (h)(7a); and added subsection (i).

Session Laws 2019-56, s. 1, effective June 26, 2019, added subdivision (g)(1b).

Session Laws 2021-23, s. 27(b), effective October 1, 2021, added subsection (j).

Legal Periodicals.

See legislative survey, 21 Campbell L. Rev. 323 (1999).

For article, “Franchise Territories; A Community Standard,” see 45 Wake Forest L. Rev. 779 (2010).

CASE NOTES

Analysis

I.In General

The basis for the requirement of a certificate of public convenience and necessity, as a prerequisite to the right to serve, is the adoption, by the General Assembly, of the policy that, nothing else appearing, the public is better served by a regulated monopoly than by competing suppliers of the service. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966); State ex rel. Utils. Comm'n v. Two Way Radio Serv., Inc., 272 N.C. 591, 158 S.E.2d 855, 1968 N.C. LEXIS 703 (1968).

Requirement Curtails Competition. —

Regarding public utilities, competition, deemed unnecessary, is curtailed by the requirement that one desiring to engage in such business procure from the Utilities Commission a certificate of public convenience and necessity. In re Aston Park Hosp., 282 N.C. 542, 193 S.E.2d 729, 1973 N.C. LEXIS 1106 (1973).

By this section the State has granted to the utility company a legal monopoly upon a service vital to the economic well-being and the domestic life of the people of a large territory. This franchise is a property right of great value. Normally, when the grantee sells its business to another company, the monopolistic franchise command a substantial price, over and above the exchange value of the physical properties transferred with it. Thus, the value of the franchise enters into and affects the market price of the utility’s stock. It does not, however, enter into the computation of the utility’s rate base. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

This State has adopted the policy of granting a telephone company a monopoly upon the rendering of telephone service within its service area. State ex rel. Utils. Comm'n v. National Merchandising Corp., 288 N.C. 715, 220 S.E.2d 304, 1975 N.C. LEXIS 1038 (1975).

But nothing in this Chapter confers upon a telephone company a monopoly upon advertising by its business subscribers. State ex rel. Utils. Comm'n v. National Merchandising Corp., 288 N.C. 715, 220 S.E.2d 304, 1975 N.C. LEXIS 1038 (1975).

Standing to Contest Application for Certificate. —

Plaintiff utilities which, by virtue of their contiguity to subdivision were in a superior position to any other utility in the area to provide service to the development since no other competitor would be able to provide for subdivision without first obtaining a certificate, and in the event that another company sought a certificate, plaintiffs would be afforded the opportunity to contest the application, had a legitimate expectation of entitlement sufficient to give them a protectible interest so as to challenge city’s provision of water to the subdivision. Quality Water Supply, Inc. v. City of Wilmington, 97 N.C. App. 400, 388 S.E.2d 608, 1990 N.C. App. LEXIS 127 (1990).

Access Charge Tariff Within Authority of Commission. —

Considering the evidence supporting the view that access charge tariff was calculated to reimburse local exchange companies (LECs) for having to provide additional connection facilities to local networks, payments could not be viewed as mere increased revenues for the LECs, but to provide funds to set off those expenditures that the LECs were required to make to provide additional facilities to handle additional carrier access. The imposition of the access charge tariff was within the authority granted to the Commission by the 1984 amendments to this section. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Plan for Compensation to Local Exchange Companies for Lost Revenues During Transition — Not Invalid. —

Plan requiring compensation to local exchange companies for lost revenues during transition period did not violate the equal protection clause or the commerce clause, nor conflict with federal antitrust and communications objectives. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Same — Not a Penalty or Damages. —

Plan requiring compensation to local exchange companies for lost revenues during transition period did not impose a “penalty” or constitute money damages, and could more appropriately be considered as a prerequisite to receiving a certificate. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Same — Statutorily Authorized. —

Plan requiring compensation to local exchange companies for lost revenues during transition period was reasonably calculated to provide protection for the local exchange customers, and was a proper “term” or “condition” of certification which was consistent with the public interest. The plan was therefore statutorily authorized. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

Water Company “Occupies” Through Presence of Water Lines. —

Subsection (a) of this section requires only that a company “occupy” an area not being served by another utility. A water company “occupies” through the presence of its water lines in the territory. Quality Water Supply, Inc. v. City of Wilmington, 97 N.C. App. 400, 388 S.E.2d 608, 1990 N.C. App. LEXIS 127 (1990).

Order for Cellular Carriers to Pay Access Charges Held Proper. —

The Utilities Commission did not err by ordering cellular carriers to pay access charges to local exchange companies when providing wide area call reception to their cellular customers. State ex rel. Utilities Comm'n v. Centel Cellular Co., 103 N.C. App. 731, 407 S.E.2d 257, 1991 N.C. App. LEXIS 940 (1991).

In adjudication between two competing certificate applicants, it is for the Utilities Commission to weigh and balance a myriad of factors in an effort to protect the interests and welfare of the general public. State ex rel. Utils. Comm'n v. Piedmont Natural Gas Co., 346 N.C. 558, 488 S.E.2d 591, 1997 N.C. LEXIS 487 (1997).

II.Applicability

This section does not apply to municipal corporations. Town of Grimesland v. City of Wash., 234 N.C. 117, 66 S.E.2d 794, 1951 N.C. LEXIS 434 (1951).

A municipal corporation in the operation of a municipally owned electric power plant with transmission lines extended to supply consumers beyond its corporate limits is not required under this section to obtain from the Utilities Commission a certificate of public convenience and necessity before it can lawfully operate. Town of Grimesland v. City of Wash., 234 N.C. 117, 66 S.E.2d 794, 1951 N.C. LEXIS 434 (1951); Pee Dee Elec. Membership Corp. v. Carolina Power & Light Co., 253 N.C. 610, 117 S.E.2d 764, 1961 N.C. LEXIS 444 (1961).

This section is not applicable to an electric membership corporation organized under the provisions of G.S. 117-6 to 117-26. Carolina Power & Light Co. v. Johnston County Elec. Membership Corp., 211 N.C. 717, 192 S.E. 105, 1937 N.C. LEXIS 190 (1937); Pitt & Greene Elec. Membership Corp. v. Carolina Power & Light Co., 255 N.C. 258, 120 S.E.2d 749, 1961 N.C. LEXIS 575 (1961).

Certificate Not Required for Business Other Than Public Utility. —

One does not need a certificate of public convenience and necessity in order to engage in a business which is not that of a “public utility” as defined in G.S. 62-3(23). State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966); State ex rel. Utils. Comm'n v. Edmisten, 40 N.C. App. 109, 252 S.E.2d 516, 1979 N.C. App. LEXIS 2599 (1979), aff'd in part and rev'd in part, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980).

Nor Before City Issues Franchise. —

Even if a television cable company is a “public utility” as defined in G.S. 62-3, it is not required to obtain from the Utilities Commission a certificate of public convenience and necessity before a franchise is issued by a city to it. Shaw v. City of Asheville, 269 N.C. 90, 152 S.E.2d 139, 1967 N.C. LEXIS 1029 (1967).

But Certificate Is Required Before Utility Commences Construction or Operation. —

A certificate of public convenience and necessity from the Utilities Commission is required by this section before a public utility may commence construction of its plant or operation of its business. Shaw v. City of Asheville, 269 N.C. 90, 152 S.E.2d 139, 1967 N.C. LEXIS 1029 (1967).

III.Public Utility

The status of an entity as a public utility, entitled to the rights conferred by statute and subject to the jurisdiction of the Commission, does not depend upon whether it has secured a certificate of public convenience and necessity, pursuant to this section, but is determined instead according to whether it is, in fact, operating a business defined by the legislature as a public utility. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

If an entity is, in fact, operating as a public utility, it is subject to the regulatory powers of the Commission, notwithstanding the fact that it has failed to comply with this section before beginning its operation. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

Issuance of Certificate a Nullity If Applicant Is Not Public Utility. —

If an applicant’s proposed service is not within the definition of “public utility” contained in G.S. 62-3(23), the issuance of a certificate of public convenience and necessity by the Commission to the applicant would be a nullity. It would not supply a basis for a further order conferring upon the applicant a right which may be granted only to a public utility. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

And in Excess of Commission Authority. —

To grant a certificate of public convenience and necessity to conduct a business which is not a public utility, within the definition of the statute, would be both arbitrary and in excess of the statutory authority of the Commission. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

And Would Not Transform Ordinary Business into Public Utility. —

The issuance of a certificate of public convenience and necessity by the Commission does not transform an ordinary business into a public utility, so as to entitle its operator to the rights of a public utility, or so as to impose upon him the duties and limitations of a public utility. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Definition of Public Utility Cannot Be Extended. —

Neither the Commission nor the Supreme Court has authority to add to the types of business defined by the legislature as public utilities. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Neither a telephone answering nor a message relaying service is a public utility within the purview of G.S. 62-3(23). State ex rel. Utils. Comm'n v. Two Way Radio Serv., Inc., 272 N.C. 591, 158 S.E.2d 855, 1968 N.C. LEXIS 703 (1968).

IV.Certificate of Public Convenience and Necessity

Finding of Both Convenience and Public Need Is Required. —

A finding by the Commission that the rendering of the proposed service by an applicant would be a convenience to the public, even if supported by competent and substantial evidence, is not an adequate basis for an order granting the applicant a certificate of public convenience and necessity. To entitle the applicant to such a certificate it is, of course, not necessary for him to show, and the Commission to find, that the proposed service is necessary in the sense of being indispensable. Nevertheless, a mere showing of convenience is not sufficient. There must be an element of public need for the proposed service by the applicant in the area. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Public Convenience and Necessity Must Require Proposed Operation. —

The Commission is authorized to issue a certificate of public convenience and necessity if, but only if, the Commission has made findings of fact, supported by competent, material, and substantial evidence, which findings, in turn, support the conclusion that public convenience and necessity “require or will require” the proposed operation by the applicant. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966).

Evidence Held to Show Convenience and Necessity of Services. —

Evidence before the Commission indicating that a number of the residences served by applicant’s water and sewer systems were situated on quarter-acre lots, which were of insufficient size to support both a well and septic system, and that the occupants of these residences, who were currently among appellant’s customers, had no alternative means of water supply or sewage disposal other than the service provided by appellant, clearly supported the conclusion not only that appellant’s services constituted a convenience to that segment of the public who used them, but also that such services were necessary to the safety and health of the public. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

Commission’s order that appellant apply for a certificate of public convenience and necessity was unnecessary where the Commission had already concluded that appellant’s application to abandon service should be denied. Instead, in such a case, the Commission should proceed to establish the territory to be served by appellant, issue the certificate (franchise), establish the rates to be charged for the services, and, if necessary, exercise its statutory powers and authority to compel compliance with its lawful orders. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

The power of eminent domain is inherent in the certificate of public convenience and necessity. State ex rel. Utils. Comm'n v. Edmisten, 40 N.C. App. 109, 252 S.E.2d 516, 1979 N.C. App. LEXIS 2599 (1979), aff'd in part and rev'd in part, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980).

A certificate of public convenience and necessity to render telephone service grants the right to adopt new methods of telephonic communications, including a mobile radio telephone service. State ex rel. Utils. Comm'n v. Two Way Radio Serv., Inc., 272 N.C. 591, 158 S.E.2d 855, 1968 N.C. LEXIS 703 (1968).

A certificate of public convenience and necessity, which authorizes its holder to render “telephone service” does not limit the holder to the practice of the art of telephony as it was known and practiced on the date the certificate was issued, nor to the use therein of devices, equipment and methods then in use. Obviously, it is the intent of such a certificate to authorize the holder to improve its service by adopting and using new and improved devices and methods for telephonic communication. State ex rel. Utils. Comm'n v. Two Way Radio Serv., Inc., 272 N.C. 591, 158 S.E.2d 855, 1968 N.C. LEXIS 703 (1968).

Order Held Not to Create a Vested Property Right to Provide Service. —

The order of the Commission relating to the provision of intraLATA service by MCI via its own facilities after January 1, 1987, did not give MCI a vested property right of which it was unconstitutionally deprived by the Commission’s failure to allow facilities-based intraLATA competition on January 1, 1987. Before MCI could have the right to provide intraLATA service via its own facilities, the Commission would have to issue a certificate of authority to MCI, and the Commission could not issue this certificate without making the requisite findings of fact pursuant to subsection (b) of this section. State ex rel. Utils. Comm'n v. Public Staff, 89 N.C. App. 319, 365 S.E.2d 638, 1988 N.C. App. LEXIS 276 (1988).

V.Duplicate Services

Services Need Not Be Identical to Give Utility Serving Area Prior Right. —

Two services need not be identical in every respect in order to give the utility already serving the area the prior right. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 367 N.C. 257, 148 S.E.2d 100 (1966); State ex rel. Utils. Comm'n v. Two Way Radio Serv., Inc., 272 N.C. 591, 158 S.E.2d 855, 1968 N.C. LEXIS 703 (1968).

G.S. 62-42 must be construed in connection with this section, which requires the issuance of a certificate of public convenience and necessity to construct new facilities except where such construction is into territory contiguous to that already occupied and not receiving similar service from another public utility. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 21 N.C. App. 182, 204 S.E.2d 27, 1974 N.C. App. LEXIS 1752, cert. denied, 285 N.C. 596, 206 S.E.2d 866, 1974 N.C. LEXIS 1058 (1974).

Commission Is Without Authority to Compel Duplicate Telephone Service. —

A reading of G.S. 62-42 in pari materia with this section results in the determination that the Commission does not have the authority to compel a public utility to provide local exchange service to an area which is already receiving such service from another public utility. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 21 N.C. App. 182, 204 S.E.2d 27, 1974 N.C. App. LEXIS 1752, cert. denied, 285 N.C. 596, 206 S.E.2d 866, 1974 N.C. LEXIS 1058 (1974).

To order a telephone company to render service to an area already occupied by another telephone company would foster duplication, wastefulness, and unwarranted competition, all of which are repugnant to the avowed policy of the public utility law. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 21 N.C. App. 182, 204 S.E.2d 27, 1974 N.C. App. LEXIS 1752, cert. denied, 285 N.C. 596, 206 S.E.2d 866, 1974 N.C. LEXIS 1058 (1974).

Finding Necessary for Granting Certificate to Competitor. —

The requirement of a certificate of public convenience and necessity is not an absolute prohibition of competition between public utilities rendering the same service. There is, however, inherent in this requirement the concept that, once a certificate is granted which authorizes the holder to render the proposed service within the geographic area in question, a certificate will not be granted to a competitor in the absence of a showing that the utility already in the field is not rendering and cannot or will not render the specific service in question. State ex rel. Utils. Comm'n v. Carolina Tel. & Tel. Co., 267 N.C. 257, 148 S.E.2d 100, 1966 N.C. LEXIS 1026 (1966); State ex rel. Utils. Comm'n v. Two Way Radio Serv., Inc., 272 N.C. 591, 158 S.E.2d 855, 1968 N.C. LEXIS 703 (1968).

Commission Should Have Denied Application Where Proposal to Render Substantially Same Service. —

Where a public utility had a certificate of convenience and necessity for telephone service in a certain area and was ready and able to provide such area a mobile radio service, the Utilities Commission should have denied an application for a certificate of public convenience and necessity to an applicant who proposed to render substantially the same mobile radio service in the area; the fact that the applicant proposed to offer an electronic personal paging service as an auxiliary to its mobile radio service was not a sufficient difference to justify the issuance of the certificate, when it appeared that the Commission could compel the established utility to install such a service when the public convenience so required. State ex rel. Utils. Comm'n v. Two Way Radio Serv., Inc., 272 N.C. 591, 158 S.E.2d 855, 1968 N.C. LEXIS 703 (1968).

§ 62-110.1. Certificate for construction of generating facility; analysis of long-range needs for expansion of facilities; ongoing review of construction costs; inclusion of approved construction costs in rates.

  1. Notwithstanding the proviso in G.S. 62-110, no public utility or other person shall begin the construction of any steam, water, or other facility for the generation of electricity to be directly or indirectly used for the furnishing of public utility service, even though the facility be for furnishing the service already being rendered, without first obtaining from the Commission a certificate that public convenience and necessity requires, or will require, such construction.
  2. For the purpose of subsections (a) and (d) of this section, “public utility” shall include any electric membership corporation operating within this State, and the term “public utility service” shall include the service rendered by any such electric membership corporation.
  3. The Commission shall develop, publicize, and keep current an analysis of the long-range needs for expansion of facilities for the generation of electricity in North Carolina, including its estimate of the probable future growth of the use of electricity, the probable needed generating reserves, the extent, size, mix and general location of generating plants and arrangements for pooling power to the extent not regulated by the Federal Energy Regulatory Commission and other arrangements with other utilities and energy suppliers to achieve maximum efficiencies for the benefit of the people of North Carolina, and shall consider such analysis in acting upon any petition by any utility for construction. In developing such analysis, the Commission shall, as it deems necessary, confer and consult with the public utilities in North Carolina, the utilities commissions or comparable agencies of neighboring states, the Federal Energy Regulatory Commission and other agencies having relevant information and may participate as it deems useful in any joint boards investigating generating plant sites or the probable need for future generating facilities. In addition to such reports as public utilities may be required by statute or rule of the Commission to file with the Commission, any such utility in North Carolina may submit to the Commission its proposals as to the future needs for electricity to serve the people of the State or the area served by such utility, and insofar as practicable, each such utility, the Public Staff, intervenors, and the Attorney General may attend or be represented at any formal conference conducted by the Commission in developing a plan for the future requirements of electricity for North Carolina or this region. In the course of making the analysis and developing the plan, the Commission shall conduct a public hearing on such plan in the year a biennial integrated resource plan is filed and may hold a public hearing on such plan in a year that an annual update of an integrated resource plan is filed. Each year, the Commission shall submit to the Governor and to the appropriate committees of the Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources, the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, and the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources a report of its analysis and plan, the progress to date in carrying out such plan, and the program of the Commission for the ensuing year in connection with such plan.
  4. In acting upon any petition for the construction of any facility for the generation of electricity, the Commission shall take into account the applicant’s arrangements with other electric utilities for interchange of power, pooling of plant, purchase of power and other methods for providing reliable, efficient, and economical electric service.
  5. As a condition for receiving a certificate, the applicant shall file an estimate of construction costs in such detail as the Commission may require. The Commission shall hold a public hearing on each application and no certificate shall be granted unless the Commission has approved the estimated construction costs and made a finding that construction will be consistent with the Commission’s plan for expansion of electric generating capacity. A certificate for the construction of a coal or nuclear facility shall be granted only if the applicant demonstrates and the Commission finds that energy efficiency measures; demand-side management; renewable energy resource generation; combined heat and power generation; or any combination thereof, would not establish or maintain a more cost-effective and reliable generation system and that the construction and operation of the facility is in the public interest. In making its determination, the Commission shall consider resource and fuel diversity and reasonably anticipated future operating costs. Once the Commission grants a certificate, no public utility shall cancel construction of a generating unit or facility without approval from the Commission based upon a finding that the construction is no longer in the public interest.
  6. Upon the request of the public utility or upon its own motion, the Commission may review the certificate to determine whether changes in the probable future growth of the use of electricity indicate that the public convenience and necessity require modification or revocation of the certificate. If the Commission finds that completion of the generating facility is no longer in the public interest, the Commission may modify or revoke the certificate.
  7. The public utility shall submit a progress report and any revision in the cost estimate for the construction approved under subsection (e) of this section during each year of construction. Upon the request of the public utility or upon its own motion, the Commission may conduct an ongoing review of construction of the facility as the construction proceeds. If the Commission approves any revised construction cost estimate and finds that incurrence of the cost of that portion of the construction of the facility under review was reasonable and prudent, the certificate shall remain in effect. If the Commission disapproves any part of the revised cost estimate or finds that the incurrence of the cost of that portion of the construction of the facility then under review was unreasonable or imprudent, the Commission may modify or revoke the certificate.
  8. The public utility shall recover through rates in a general rate case conducted pursuant to G.S. 62-133 the actual costs it has incurred in constructing a generating facility in reliance on a certificate issued under this section as provided in this subsection, unless new evidence is discovered (i) that could not have been discovered by due diligence at an earlier time and (ii) that reasonably tends to show that a previous determination by the Commission that a material item of cost was just and reasonable and prudently incurred was erroneous. If the Commission determines that evidence has been submitted that meets the requirements of this subsection, the public utility shall have the burden of proof to demonstrate that the material item of cost was in fact just and reasonable and prudently incurred.
    1. When a facility has been completed, and the construction of the facility has been subject to ongoing review under subsection (f) of this section, the reasonable and prudent costs of construction approved by the Commission during the ongoing review shall be included in the public utility’s rate base without further review by the Commission.
    2. If a facility has not been completed, and the construction of the facility has been subject to ongoing review under subsection (f) of this section, the reasonable and prudent costs of construction approved by the Commission during the ongoing review shall be included in the public utility’s rate base without further review by the Commission.
    3. If a facility is under construction or has been completed and the construction of the facility has not been subject to ongoing review under subsection (f) of this section, the costs of construction shall be included in the public utility’s rate base if the Commission finds that the incurrence of these costs is reasonable and prudent.
  9. If the construction of a facility is cancelled, including cancellation as a result of modification or revocation of the certificate under subsection (e1) of this section, and the construction of the facility has been subject to ongoing review under subsection (f), absent newly discovered evidence (i) that could not have been discovered by due diligence at an earlier time and (ii) that reasonably tends to show that a previous determination by the Commission that a material item of cost was just and reasonable and prudently incurred was erroneous, the public utility shall recover through rates in a general rate case conducted pursuant to G.S. 62-133 the costs of construction approved by the Commission during the ongoing review that were actually incurred prior to cancellation, amortized over a reasonable time as determined by the Commission. In the general rate case, the Commission shall make any adjustment that may be required because costs of construction previously added to the utility’s rate base pursuant to subsection (f1) of this section are removed from the rate base and recovered in accordance with this subsection. Any costs of construction actually incurred, but not previously approved by the Commission, shall be recovered only if they are found by the Commission to be reasonable and prudent. If the Commission determines that evidence has been submitted that meets the requirements of this subsection, the public utility shall have the burden of proof to demonstrate that the material item of cost was just and reasonable and prudently incurred.
  10. If the construction of a facility is cancelled, including cancellation as a result of the modification or revocation of the certificate under subsection (e1) of this section, and the construction of the facility has not been subject to ongoing review under subsection (f) of this section, the public utility shall recover through rates in a general rate case conducted pursuant to G.S. 62-133 the costs of construction that were actually incurred prior to the cancellation and are found by the Commission to be reasonable and prudent, amortized over a reasonable time as determined by the Commission. In the general rate case, the Commission shall make any adjustment that may be required because costs of construction previously added to the utility’s rate base pursuant to subsection (f1) of this section are removed from the rate base and recovered in accordance with this subsection.
  11. The certification requirements of this section shall not apply to (i) a nonutility-owned generating facility fueled by renewable energy resources under two megawatts in capacity; (ii) to persons who construct an electric generating facility primarily for that person’s own use and not for the primary purpose of producing electricity, heat, or steam for sale to or for the public for compensation; or (iii) a solar energy facility or a community solar energy facility, as provided by and subject to the limitations of Article 6B of this Chapter. However, such persons shall be required to report the proposed construction of the facility and the completion of the facility to the Commission and the interconnecting public utility. Such reports shall be for informational purposes only and shall not require action by the Commission or the Public Staff.
  12. Expired pursuant to its own terms, effective January 1, 2011.

History. 1965, c. 287, s. 2; 1975, c. 780, s. 1; 1979, c. 652, s. 2; 2007-397, s. 6; 2009-390, s. 1(b); 2013-187, s. 2; 2015-241, s. 14.30(u); 2015-264, s. 11; 2017-57, s. 14.1(o); 2017-192, s. 6(c); 2021-23, s. 12.

Local Modification.

Buncombe: 2015-110, s. 1 (as to construction of generating facility at site of Asheville Steam Electric Generating Plant).

Editor’s Note.

Session Laws 2009-390, s. 1(a), provides: “The General Assembly makes the following findings:

“(1) In 2002, North Carolina enacted S.L. 2002-4, the Clean Smokestacks Act, with the goal of improving air quality in the State.

“(2) With the enactment of the Clean Smokestacks Act, North Carolina became a national leader in multipollutant air emissions reduction strategies and has experienced significant reductions in oxides of nitrogen (NOx) and sulfur dioxide (SO2), and, as a co-benefit, mercury.

“(3) Duke Energy and Progress Energy, the investor-owned public utilities governed by the Clean Smokestacks Act, actively participated in the negotiations that led to the enactment of the Clean Smokestacks Act and recommended substantial emissions reductions requirements and an aggressive timeline for achieving compliance with those requirements.

“(4) Both Duke Energy and Progress Energy have produced emissions reductions greater than and sooner than required by the Clean Smokestacks Act.

“(5) The retirement of coal-fired generating units and installation of generating units that use natural gas as the primary fuel will reduce emissions of oxides of nitrogen (NOx) and sulfur dioxide (SO2) more than would the installation of sulfur dioxide (SO2) emissions controls on the coal-fired generating units.

“(6) The retirement of coal-fired generating units and installation of generating units that use natural gas as the primary fuel will reduce emissions of carbon dioxide (CO2) and mercury (Hg) significantly more than would the installation of sulfur dioxide (SO2) emissions controls on the coal-fired generating units.

“(7) The retirement of coal-fired generating units that are owned and operated by Progress Energy and located in eastern North Carolina and the installation of generating units that use natural gas as their primary fuel to replace them will reduce emissions of oxides of nitrogen (NOx), sulfur dioxide (SO2), carbon dioxide (CO2), and mercury (Hg) more than would the installation of sulfur dioxide (SO2) emissions controls on the older coal-fired generating units.”

Effect of Amendments.

Session Laws 2007-397, s. 6, effective January 1, 2008, substituted “facilities; ongoing review of construction costs; inclusion of approved construction costs in rates” for “facilities” in the section catchline; inserted “of subsections (a), (c), and (d)” at the beginning of subsection (b); substituted “Federal Energy Reulatory Commission” for “Federal Power Commission” throughout subsection (c); in subsection (e), substituted “a certificate” for “such certificate” in the first sentence, deleted “such” twice in the second sentence, and added the last three sentences; added subsection (e1); substituted the present provisions of subsection (f) for the former provisions which read: “The Commission shall maintain an ongoing review of such construction as it proceeds and the applicant shall submit each year during construction a progress report and any revisions in the cost estimates for the construction.”; added subsections (f1) through (f3); inserted “to a nonutility-owned generating facility fueled by renewable energy resources under two megawatts in capacity or” in the first sentence of subsection (g); and made minor stylistic changes.

Session Laws 2009-390, s. 1(b), effective July 31, 2009, added subsection (h).

Session Laws 2013-187, s. 2, effective July 1, 2013, in subsection (b), deleted “(c)” and made a minor punctuation change.

Session Laws 2015-264, s. 11, effective October 1, 2015, deleted “the Southern Growth Policies Board” following “the Federal Energy Regulatory Commission” in the second sentence of subsection (c).

Session Laws 2017-57, s. 14.1(o), effective July 1, 2017, substituted “Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources, the chairs of the Senate Appropriations Committee on Agriculture, Natural, and Economic Resources, and the chairs of the House of Representatives Appropriations Committee on Agriculture and Natural and Economic Resources” for “General Assembly” in subsection (c).

Session Laws 2017-192, s. 6(c), effective July 27, 2017, in subsection (g), inserted “(i)”, substituted “capacity; (ii)” for “capacity or”, and substituted “or (iii) a solar energy facility or a community solar energy facility, as provided by and subject to the limitations of Article 6B of this Chapter. However, such persons shall be required to report the proposed construction of the facility and the completion of the facility to the Commission and the interconnecting public utility. Such reports shall be for informational purposes only and shall not require action by the Commission or the Public Staff.” for “provided, however, that such persons shall, nevertheless, be required to report to the Utilities Commission the proposed construction of such a facility before beginning construction thereof.”

Session Laws 2021-23, s. 12, effective May 17, 2021, in subsection (c), inserted “as it deems necessary” near the beginning of the second sentence, and, in the third sentence, inserted “the Public Staff, intervenors” near the middle and substituted “conduct a public hearing on such plan in the year a biennial integrated resource plan is filed and may hold a public hearing on such plan in a year that an annual update of an integrated resource plan is filed” for “conduct one or more public hearings” at the end.

Legal Periodicals.

For article, “Seeing Green: North Carolina’s Clean Energy Plan, the Social Cost of Carbon, and a Way Forward Under a Least-Cost Framework,” see 99 N.C. L. Rev. Addendum 59 (2020).

CASE NOTES

This section was enacted to help curb overexpansion of generating facilities beyond the needs of the service area. To this end, the General Assembly used the term “public convenience and necessity” to define the standard to be applied by the Utilities Commission to proposed facilities. State ex rel. Utils. Comm'n v. High Rock Lake Ass'n, 37 N.C. App. 138, 245 S.E.2d 787, 1978 N.C. App. LEXIS 2670, cert. denied, 248 S.E.2d 257, 1978 N.C. LEXIS 1324 (1978).

The purpose of requiring a certificate of public convenience and necessity before a generating facility can be built is to prevent costly overbuilding. Environmental concerns were generally left to other regulatory agencies, except as they affect the cost and efficiency of the proposed generating facility. State ex rel. Utils. Comm'n v. High Rock Lake Ass'n, 37 N.C. App. 138, 245 S.E.2d 787, 1978 N.C. App. LEXIS 2670, cert. denied, 248 S.E.2d 257, 1978 N.C. LEXIS 1324 (1978).

Advance Certification of Facilities in Other States Not Contemplated. —

This section does not appear to contemplate advance certification by the North Carolina Utils. Commission of facilities built in other states. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

Public convenience and necessity is based on an element of public need for the proposed service. State ex rel. Utils. Comm'n v. High Rock Lake Ass'n, 37 N.C. App. 138, 245 S.E.2d 787, 1978 N.C. App. LEXIS 2670, cert. denied, 248 S.E.2d 257, 1978 N.C. LEXIS 1324 (1978).

Subdivision (b)(1) of G.S. 62-133 does not require the Commission to make new findings on the need for the construction. Before any public utility begins the construction of a facility for generating electricity for use by the public it must first obtain from the Commission a certificate stating that public convenience and necessity requires, or will require such construction. Before such a certificate can be granted the applicant must file an estimate of construction costs and the Commission must hold public hearings. This procedure satisfies the argument that the construction must be necessary. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Subsection (c) of this section makes it clear that the only purpose of a least-cost planning proceeding is to assist the Utilities Commission in developing, publicizing, and keeping current an analysis of the long-range needs for expansion of facilities for the generation of electricity in North Carolina. Nowhere is it suggested in subsection (c) that the purpose of the proceeding is to issue directives which fundamentally alter a given utility’s operations. State ex rel. Utils. Comm'n v. North Carolina Elec. Membership Corp., 105 N.C. App. 136, 412 S.E.2d 166, 1992 N.C. App. LEXIS 28 (1992).

Scope of Commission’s Authority and Jurisdiction. —

North Carolina Utilities Commission’s dismissal of petitioner independent power producer’s application and its establishment of minimum filing requirements did not constitute an impermissible deviation from the process specifically provided in this section and G.S. 62-82, and some deviation from these sections was not beyond the Commission’s authority and jurisdiction. State ex rel. Utils. Comm'n v. Empire Power Co., 112 N.C. App. 265, 435 S.E.2d 553, 1993 N.C. App. LEXIS 1092 (1993).

Because the North Carolina Utilities Commission had authority to conduct a pre-sale review of proposed contracts involving sales of electricity by a utility to wholesale customers in interstate commerce under G.S. 62-110.1(a), (c), (d), its actions were not preempted by 16 U.S.C.S. §§ 824(a), (b)(1), 824e(a), (d), 824d(a), (c). State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 359 N.C. 516, 614 S.E.2d 281, 2005 N.C. LEXIS 648 (2005).

N.C. Utilities Commission properly denied an energy company’s certificate of public convenience and necessity application as Commission had sole authority to determine new energy generation needs under the statute, which was not preempted by the Federal Power Act, and ruling that facility and infrastructure upgrade costs compared to output was too burdensome on ratepayers was not an abuse of discretion. State ex rel. Utils. Comm'n v. Friesian Holdings, LLC, 869 S.E.2d 327, 2022- NCCOA-32, 2022 N.C. App. LEXIS 37 (Ct. App. 2022).

Inclusion of Facility in Another State Absent North Carolina Certificate of Necessity. —

The Commission acted within the limits of its authority when it included Catawba Unit 1, located in South Carolina, in power company’s rate base, even though no North Carolina certificate of necessity had been obtained prior to beginning construction thereof. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

The furnishing of electric service to an area subsequently annexed must be carried out pursuant to the 1965 Electric Act. State ex rel. Utils. Comm'n v. VEPCO, 310 N.C. 302, 311 S.E.2d 586, 1984 N.C. LEXIS 1571 (1984).

The 1965 Electric Act, G.S. 160A-331 to 160A-338 and 62-110.1 to 62-110.2, does not empower or restrict municipalities in the operation of their electric systems outside their corporate limits. State ex rel. Utils. Comm'n v. VEPCO, 310 N.C. 302, 311 S.E.2d 586, 1984 N.C. LEXIS 1571 (1984).

Review of Grant of Certificate. —

On appeal from a decision of the Commission granting a certificate under this section, the court must look to the findings of fact and conclusions of the Commission and determine if the Commission has considered the factors required by law and if the findings of fact necessary to support granting of the certificate are supported by substantial evidence in view of the whole record. State ex rel. Utils. Comm'n v. High Rock Lake Ass'n, 37 N.C. App. 138, 245 S.E.2d 787, 1978 N.C. App. LEXIS 2670, cert. denied, 248 S.E.2d 257, 1978 N.C. LEXIS 1324 (1978).

OPINIONS OF ATTORNEY GENERAL

Municipalities and counties are subject to the provisions of this section which require public utilities and other persons to obtain a certificate of public convenience and necessity prior to construction of any facility for generation of electricity. See opinion of Attorney General to Mr. Robert H. Bennink, Jr., General Counsel and Hearing Examiner, North Carolina Utilities Commission, 55 N.C. Op. Att'y Gen. 18 (1985).

§ 62-110.2. Electric service areas outside of municipalities.

  1. As used in this section, unless the context otherwise requires, the term:
    1. “Premises” means the building, structure, or facility to which electricity is being or is to be furnished; provided, that two or more buildings, structures, or facilities which are located on one tract or contiguous tracts of land and are utilized 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; and
    2. “Line” means any conductor for the distribution or transmission of electricity, other than
      1. In the case of overhead construction, a conductor from the pole nearest the premises of a consumer to such premises, or a conductor from a line tap to such premises, and
      2. In the case of underground construction, a conductor from the transformer (or junction point, if there be one) nearest the premises of a consumer to such premises.
    3. “Electric supplier” means any public utility furnishing electric service or any electric membership corporation.
  2. In areas outside of municipalities, electric suppliers shall have rights and be subject to restrictions as follows:
    1. Every electric supplier shall have the right to serve all premises being served by it, or to which any of its facilities for service are attached, on April 20, 1965.
    2. Every electric supplier shall have the right, subject to subdivision (4) of this subsection, to serve all premises initially requiring electric service after April 20, 1965, which are located wholly within 300 feet of such electric supplier’s lines as such lines exist on April 20, 1965, except premises which, on said date, are being served by another electric supplier or to which any of another electric supplier’s facilities for service are attached.
    3. Every electric supplier shall have the right, subject to subdivision (4) of this subsection, to serve all premises initially requiring electric service after April 20, 1965, which are located wholly within 300 feet of lines that such electric supplier constructs after April 20, 1965, to serve consumers that it has the right to serve, except premises located wholly within a service area assigned to another electric supplier pursuant to subsection (c) hereof.
    4. Any premises initially requiring electric service after April 20, 1965, which are located wholly or partially within 300 feet of the lines of one electric supplier and also wholly or partially within 300 feet of the lines of another electric supplier, as each of such supplier’s lines exist on April 20, 1965, or as extended to serve consumers that the supplier has the right to serve, may be served by such one of said electric suppliers which the consumer chooses, and any electric supplier not so chosen by the consumer shall not thereafter furnish service to such premises.
    5. Any premises initially requiring electric service after April 20, 1965, which are not located wholly within 300 feet of the lines of any electric supplier and are not located partially within 300 feet of the lines of two or more electric suppliers may be served by any electric supplier which the consumer chooses, unless such premises are located wholly or partially within an area assigned to an electric supplier pursuant to subsection (c) hereof, and any electric supplier not so chosen by the consumer shall not thereafter furnish service to such premises.
    6. Any premises initially requiring electric service after April 20, 1965, which are located partially within a service area assigned to one electric supplier and partially within a service area assigned to another electric supplier pursuant to subsection (c) hereof, or are located partially within a service area assigned to one electric supplier pursuant to subsection (c) hereof and partially within 300 feet of the lines of another electric supplier, as such lines exist on April 20, 1965, or as extended to serve consumers it has the right to serve, may be served by such one of said electric suppliers which the consumer chooses, and the electric supplier not so chosen shall not thereafter furnish service to such premises.
    7. Any premises initially requiring electric service after April 20, 1965, which are located only partially within a service area assigned to one electric supplier pursuant to subsection (c) hereof and are located wholly outside the service areas assigned to other electric suppliers and are located wholly more than 300 feet from other electric suppliers’ lines, may be served by any electric supplier which the consumer chooses, and any electric supplier not so chosen by the consumer shall not thereafter furnish service to such premises.
    8. Every electric supplier shall have the right to serve all premises located wholly within the service area assigned to it pursuant to subsection (c) hereof.
    9. No electric supplier shall furnish temporary electric service for the construction of premises which it would not have the right to serve under this subsection if such premises were already constructed. The construction of lines for, and the furnishing of, temporary service for the construction of premises which any other electric supplier, if chosen by the consumer, would have the right to serve if such premises were already constructed, shall not impair the right of such other electric supplier to furnish service to such premises after the construction thereof, if then chosen by the consumer; nor, unless the consumer chooses to have such premises served by the supplier which furnished the temporary service, shall the furnishing of such temporary service or the construction of a line therefor impair the right of any other electric supplier to furnish service to any other premises which, without regard to the construction of such temporary service line, it has the right to serve.
    10. No electric supplier shall furnish electric service to any premises in this State outside the limits of any incorporated city or town except as permitted by this section; provided, that nothing in this section shall restrict the right of an electric supplier to furnish electric service to itself or to exchange or interchange electric energy with, purchase electric energy from or sell electric energy to any other electric supplier.
    1. In order to avoid unnecessary duplication of electric facilities, the Commission is authorized and directed to assign, as soon as practicable after January 1, 1966, to electric suppliers all areas, by adequately defined boundaries, that are outside the corporate limits of municipalities and that are more than 300 feet from the lines of all electric suppliers as such lines exist on the dates of the assignments; provided, that the Commission may leave unassigned any area in which the Commission, in its discretion, determines that the existing lines of two or more electric suppliers are in such close proximity that no substantial avoidance of duplication of facilities would be accomplished by assignment of such area. The Commission shall make assignments of areas in accordance with public convenience and necessity, considering, among other things, the location of existing lines and facilities of electric suppliers and the adequacy and dependability of the service of electric suppliers, but not considering rate differentials among electric suppliers. (c) (1) In order to avoid unnecessary duplication of electric facilities, the Commission is authorized and directed to assign, as soon as practicable after January 1, 1966, to electric suppliers all areas, by adequately defined boundaries, that are outside the corporate limits of municipalities and that are more than 300 feet from the lines of all electric suppliers as such lines exist on the dates of the assignments; provided, that the Commission may leave unassigned any area in which the Commission, in its discretion, determines that the existing lines of two or more electric suppliers are in such close proximity that no substantial avoidance of duplication of facilities would be accomplished by assignment of such area. The Commission shall make assignments of areas in accordance with public convenience and necessity, considering, among other things, the location of existing lines and facilities of electric suppliers and the adequacy and dependability of the service of electric suppliers, but not considering rate differentials among electric suppliers.
    2. The Commission, upon agreement of the affected electric suppliers, is authorized to reassign to one electric supplier any area or portion thereof theretofore assigned to another; and the Commission, notwithstanding the lack of such agreement, is authorized to reassign to one electric supplier any area or portion thereof theretofore assigned to another, except premises being served by the other electric supplier or to which any of its facilities for service are attached and except such portions of such area as are within 300 feet of the other electric supplier’s lines, upon finding that such reassignment is required by public convenience and necessity. In determining whether public convenience and necessity requires such reassignment, the Commission shall consider, among other things, the adequacy and dependability of the service of the affected electric suppliers, but shall not consider rate differentials between such electric suppliers.
  3. Notwithstanding the provisions of subsections (b) and (c) of this section:
    1. Any electric supplier may furnish electric service to any consumer who desires service from such electric supplier at any premises being served by another electric supplier, or at premises which another electric supplier has the right to serve pursuant to other provisions of this section, upon agreement of the affected electric suppliers; and
    2. The Commission shall have the authority and jurisdiction, after notice to all affected electric suppliers and after hearing, if a hearing is requested by any affected electric supplier or any other interested party, to order any electric supplier which may reasonably do so to furnish electric service to any consumer who desires service from such electric supplier at any premises being served by another electric supplier, or at premises which another electric supplier has the right to serve pursuant to other provisions of this section, and to order such other electric supplier to cease and desist from furnishing electric service to such premises, upon finding that service to such consumer by the electric supplier which is then furnishing service, or which has the right to furnish service, to such premises, is or will be inadequate or undependable, or that the rates, conditions of service or service regulations, applied to such consumer, are unreasonably discriminatory.
  4. The furnishing of electric service in any area which becomes a part of any municipality after April 20, 1965, either by annexation or incorporation, (whether or not such area, or any portion thereof, shall have been assigned pursuant to subsection (c) of this section) shall be subject to the provisions of Part 2, Article 16 of Chapter 160A of the General Statutes, and any provisions of this section inconsistent with said Article shall not be applicable within such area after the effective date of such annexation or incorporation.

History. 1965, c. 287, s. 5; 1989 (Reg. Sess., 1990), c. 1024, s. 14.

Legal Periodicals.

For 1984 survey of commercial law, “Utilities — Extension of Electric Service: The Municipalities’ Power Play,” see 63 N.C.L. Rev. 1095 (1985).

CASE NOTES

Analysis

I.In General

Purpose. —

One of the purposes of this Chapter is to vest the Utilities Commission with authority and responsibility to assign territory to electric suppliers. State ex rel Utils. Comm'n v. Union Elec. Membership Corp., 3 N.C. App. 309, 164 S.E.2d 889, 1968 N.C. App. LEXIS 854 (1968).

Another purpose of this Chapter, and particularly subsection (b) of this section, is to declare certain rights of electric suppliers in areas outside of municipalities pending the assignment of territory. State ex rel Utils. Comm'n v. Union Elec. Membership Corp., 3 N.C. App. 309, 164 S.E.2d 889, 1968 N.C. App. LEXIS 854 (1968).

A principal purpose of this section is to provide an orderly method for allocation of service areas as among competing suppliers of electricity and thereby to eliminate unnecessary duplication of electric line facilities. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 3 N.C. App. 318, 164 S.E.2d 895, 1968 N.C. App. LEXIS 855 (1968), aff'd, 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

The overriding purpose of this section is to promote the public interest, not the business of the electric membership cooperative or that of the investor-owned utility. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

The former absence of statutory provisions restricting competition between electric membership corporations and public utility suppliers of electric power gave rise to many contracts between these two types of suppliers designed to fix their respective territorial rights, which contracts, in turn, gave rise to much litigation. In the hope of putting an end to or reducing this turmoil, the 1965 legislature enacted this section, the language of which was the result of collaboration and agreement between the two types of suppliers. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

The clear purpose of Session Laws 1965, c. 287, is to prevent wasteful duplication of competing facilities, and thereby serve the public interest. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 20 N.C. App. 347, 201 S.E.2d 508, 1974 N.C. App. LEXIS 2437, aff'd, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

The Territorial Assignment Act of 1965, as codified at this section and G.S. 160A-331 through 160A-338, represents an attempt to eliminate the uneconomic duplication of transmission and distribution systems bred of unbridled competition between public utilities, electric membership corporations and municipalities by designating the various competitors’ rights. Morgan v. Town of Hertford, 70 N.C. App. 725, 321 S.E.2d 170, 1984 N.C. App. LEXIS 4022 (1984).

Discretion of Utilities Commission. —

In deciding complaints, the Utilities Commission is allowed discretion in fashioning a remedy; the Commission could transfer only service of one cooperative to electric utility rather than all complainants, as long as its action was not capricious or arbitrary. Dennis v. Duke Power Co., 341 N.C. 91, 459 S.E.2d 707, 1995 N.C. LEXIS 395 (1995).

Prior to the enactment of this section in 1965, there was no restraint upon competition in rural areas between electric membership corporations and public utility suppliers of electric power, except as established by contract. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

Prior to enactment of this section, electric membership cooperatives and investor-owned public utility companies were free to compete in the rural portions of this State, in the absence of contractual restrictions upon such right, irrespective of the fact that such competition resulted in substantial duplication of power lines and facilities. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

The common-law doctrine of abandonment does not apply to the 1965 Electric Act. Duke Power Co. v. City of Morganton, 90 N.C. App. 755, 370 S.E.2d 54, 1988 N.C. App. LEXIS 598 (1988).

Section Passed Together with G.S. 160A-331 Through 160A-338. —

This section applying to rural areas, and G.S. 160A-331 through 160A-338, applying to municipalities, were part of the same act, and both sought to eliminate the wasteful duplication of power lines by assigning territories to specific suppliers of electricity. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 20 N.C. App. 347, 201 S.E.2d 508, 1974 N.C. App. LEXIS 2437, aff'd, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

Considered together, the sections cover the entire State and reflect interests of municipalities, utility companies and cooperatives. They form a unified plan for eliminating duplication of electric facilities by assigning territories to particular suppliers. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 20 N.C. App. 347, 201 S.E.2d 508, 1974 N.C. App. LEXIS 2437, aff'd, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

This section controls over G.S. 160A-312 in case of a dispute regarding electrical services. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 20 N.C. App. 347, 201 S.E.2d 508, 1974 N.C. App. LEXIS 2437, aff'd, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

Legislature Determines What Policy Is in Public Interest. —

It is for the legislature, not for the Supreme Court or the Utilities Commission, to determine whether the policy of free competition between the suppliers of electric power, or the policy of territorial monopoly, or an intermediate policy is in the public interest. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

Neither Supreme Court Nor Utilities Commission May Forbid Service Permitted by Legislature. —

If 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 the Supreme 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. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

The Commission cannot arbitrarily attach conditions to a franchise, for it must exercise its discretion in good faith in the light of existing facts and circumstances. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 5 N.C. App. 663, 169 S.E.2d 214, 1969 N.C. App. LEXIS 1423 (1969), rev'd, 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

Authority of Utilities Commission to Restrict Competition. —

The Utilities Commission is a creature of the legislature and has no authority to restrict competition between suppliers of electricity, except insofar as that authority has been conferred upon it by statute. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

Competitive Rights as to Areas Outside City Limits Not Altered. —

Session Laws 1965, c. 287, including this section, did not, without more, alter the competitive rights of municipalities, investor-owned utilities and electric membership corporations to compete for patronage in areas outside the corporate limits of municipalities. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

An electric membership corporation and a public utility corporation are free to compete in rural areas unless forbidden by some provision of this section. State ex rel Utils. Comm'n v. Union Elec. Membership Corp., 3 N.C. App. 309, 164 S.E.2d 889, 1968 N.C. App. LEXIS 854 (1968).

Except as restricted by contract, electric membership corporations and public utility companies supplying electricity are free to compete in the rural areas of this State, notwithstanding the fact that such competition may result in substantial duplication of electric power lines and other facilities. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

No Territorial Monopoly. —

In the absence of a valid grant of such right by statute, or by an administrative order issued pursuant to statutory authority, and in the absence of a valid contract with its competitor or with the person to be served, a supplier of electric power or other public utility service has no territorial monopoly or other right to prevent its competitor from serving anyone who desires the competitor to do so. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

Manufacturing Plant But Not Tract as “Premises”. —

“Premises,” as that word is defined in subsection (a)(1), embraces the manufacturing plant of an electric consumer and not the tract upon which it is located; consequently, public membership corporation had no right under subsection (b)(1) to provide electric service to a plant on the ground that it had served a residence and electric signs previously located on the tract. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

Power to Transfer Discretionary. —

Under subsection (d)(2), once the Utilities Commission has made appropriate findings which would justify a transfer, the power of the Commission to order a transfer is discretionary. Dennis v. Duke Power Co., 114 N.C. App. 272, 442 S.E.2d 104, 1994 N.C. App. LEXIS 376 (1994), aff'd in part and rev'd in part, 341 N.C. 91, 459 S.E.2d 707, 1995 N.C. LEXIS 395 (1995).

II.Municipality

A municipality is not an “electric supplier,” as that term is used in this section. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974); State ex rel. Utils. Comm'n v. VEPCO, 62 N.C. App. 262, 302 S.E.2d 642, 1983 N.C. App. LEXIS 2849 (1983), rev'd, 310 N.C. 302, 311 S.E.2d 586, 1984 N.C. LEXIS 1571 (1984).

Nor Is a Municipally Owned System. —

Electric power companies and electric membership corporations are defined by statute as “electric suppliers”; municipally owned systems are not so defined. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 5 N.C. App. 663, 169 S.E.2d 214, 1969 N.C. App. LEXIS 1423 (1969), rev'd, 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

Designation of Municipality as “Electrical Supplier” Is Legislative Function. —

It is for the Legislature, and not the court, to define “electric supplier” further than presently set out in subdivision (a)(3) of this section, if it intends that municipalities be so designated. State ex rel. Utils. Comm'n v. VEPCO, 62 N.C. App. 262, 302 S.E.2d 642, 1983 N.C. App. LEXIS 2849 (1983), rev'd, 310 N.C. 302, 311 S.E.2d 586, 1984 N.C. LEXIS 1571 (1984).

Municipality Not Prohibited from Serving Customers Outside City. —

Since a city is neither a “public utility” nor an electric membership corporation and therefore is not an “electric supplier,” it is not prohibited from serving customers outside the city. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

Authority for Furnishing Service Outside Corporate Limits. —

The 1965 Electric Act, appearing in G.S. 160A-331 through 160A-338 and this section, does not empower or authorize municipalities to operate electric systems outside corporate limits, nor does it restrict such service. Insofar as the General Statutes are concerned, the sole authority for, and the only restriction upon municipalities furnishing electric service outside corporate limits is found in G.S. 160A-312. Lumbee River Elec. Membership Corp. v. City of Fayetteville, 309 N.C. 726, 309 S.E.2d 209, 1983 N.C. LEXIS 1460 (1983); State ex rel. Utils. Comm'n v. VEPCO, 310 N.C. 302, 311 S.E.2d 586, 1984 N.C. LEXIS 1571 (1984).

Concerns of Municipal Electrical System and Utility Company or Cooperative Distinguished. —

The primary purpose of a municipal electrical system is to serve customers within the boundaries of the municipality, while a utility company or cooperative is chiefly concerned with customers outside the city limits. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 20 N.C. App. 347, 201 S.E.2d 508, 1974 N.C. App. LEXIS 2437, aff'd, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

Only Limit on City as Supplier of Electric Service Is “Reasonable Limits” in G.S. 160A-312. —

Since a municipality is not an “electric supplier” as that term is used in this section its public works commission is not prohibited from supplying electric service to a customer outside city’s limits, so long as its extension of service is within “reasonable limitations,” as provided for in G.S. 160A-312. South River Elec. Membership Corp. v. City of Fayetteville, 113 N.C. App. 401, 438 S.E.2d 464, 1994 N.C. App. LEXIS 21 (1994).

For case holding extension of city’s electric system across its city limits beyond its authority, see Domestic Elec. Serv., Inc. v. City of Rocky Mount, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

III.Rights and Restrictions

Rights Conferred on Electric Suppliers by Subsection (b). —

Subsection (b) of this section confers upon each electric supplier in the State the right, in territories outside of municipalities, to serve all “premises” being served by it on April 20, 1965, and the right to serve “premises” initially requiring service after that date, located within 300 feet of a line of such supplier and not in a territory assigned by the Utilities Commission to a different supplier pursuant to subsection (c) of this section. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

Any “premises” in territories lying outside of a municipality and more than 300 feet from the line of any electric supplier can be served, prior to an assignment of such territory by the Utilities Commission, by any electric supplier chosen by the user, and service of such premises by any other supplier is prohibited. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

The language of subsection (b)(5) is clear and unambiguous and presents no problem of construction. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 3 N.C. App. 318, 164 S.E.2d 895, 1968 N.C. App. LEXIS 855 (1968), aff'd, 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

One seeking electric service should not be denied the right to choose between vendors unless compelled by some cogent reason. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

Right of Electric Supplier Chosen Under Subsection (b) to Deny Service. —

Conclusion of the Utilities Commission that a consumer has the unrestricted choice of an electric supplier under subsection (b) of this section is subject to the right of the chosen electric supplier to deny the service unless required otherwise by the utilities Commission. State ex rel Utils. Comm'n v. Union Elec. Membership Corp., 3 N.C. App. 309, 164 S.E.2d 889, 1968 N.C. App. LEXIS 854 (1968).

Validity of Requiring Certificate of Convenience and Necessity for Extension of Facilities. —

The police power of the State is broad enough to include a statute providing that a public utility company, desiring to serve a new area, must obtain from the Utilities Commission a certificate that public convenience and necessity requires the proposed extension of its distribution facilities. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

Choice of Electric Supplier. —

Utility department had a statutory right under this section to choose its electric supplier where the buildings and structures of the utility department facility were located on one tract or contiguous tracts of land and thus constituted one premises under subdivision (a)(1). Crescent Elec. Membership Corp. v. Duke Power Co., 126 N.C. App. 344, 485 S.E.2d 312, 1997 N.C. App. LEXIS 353 (1997).

IV.Assignment

Construction. —

Where provisions of this section relating to assignment of electric service territory in rural areas are clear and understandable on their face, the Supreme Court is not required to construe this statute in connection with other provisions of this Chapter relating to powers of the Utilities Commission to regulate public utilities. State ex rel. Utils. Comm'n v. Lumbee River Elec. Membership Corp., 275 N.C. 250, 166 S.E.2d 663, 1969 N.C. LEXIS 380 (1969).

Subsection (c) contemplates the assignment of a territory to a single supplier for all classes of users of electric power, nothing else appearing. However, the statutory direction that the Commission assign service areas “by adequately defined boundaries” does not compel the conclusions that the intent of the legislature was to require the Commission to choose between (1) jeopardizing the industrial development of a geographic area by assigning it exclusively to an electric membership cooperative, or (2) boxing the cooperative into the narrow strips bordering its existing lines by assigning the territory outside those strips to an investor-owned utility for all types of electric service. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

One Area May Be Assigned Jointly to Two Electric Suppliers. —

The Utilities Commission did not exceed its authority under this section in assigning the same areas jointly to two electric suppliers, subject to consumers reasonable choice of supplier, since under appropriate circumstances and appropriate findings by the Commission, public convenience and necessity may require such an assignment. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 5 N.C. App. 663, 169 S.E.2d 214, 1969 N.C. App. LEXIS 1423 (1969), rev'd, 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

Under appropriate circumstances and appropriate findings by the Commission, public convenience and necessity may determine that some areas be assigned to two or more electric suppliers with later determination of the circumstances under which a particular electric supplier may properly extend service to a particular consumer. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 5 N.C. App. 663, 169 S.E.2d 214, 1969 N.C. App. LEXIS 1423 (1969), rev'd, 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

The Commission did not exceed its statutory authority in making an assignment of an area jointly to two electric suppliers. State ex rel. Utils. Comm'n v. Edgecombe-Martin County Elec. Membership Corp., 5 N.C. App. 680, 169 S.E.2d 225, 1969 N.C. App. LEXIS 1424 (1969).

Division May Be Made on Basis of Users’ Demand Level. —

It is within the statutory authority of the Commission, when the public convenience and necessity so requires, to assign a territory to one supplier of electricity for service below a specified level of demand and to another supplier for service above that level of demand. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

Reassignment to Serve User Whose Demand Is Above Division Line. —

Subsection (c) of this section authorizes the Commission, having determined, upon sufficient and competent evidence, that the public convenience and necessity would best be promoted by dividing the geographic area into two service areas on the basis of the users’ demand levels, to permit, on the basis of public convenience and necessity, an electric membership cooperative, to which the area of the smaller demands has been assigned, to serve a user whose demand is above the division line, if that user desires to become a member of the cooperative and thus to use its service. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

Considerations in Assigning Areas to Electric Suppliers. —

Subsection (c) of this section declares the purpose for which the authority to assign “areas” is conferred upon the Commission. That purpose is “to avoid unnecessary duplication of electric facilities.” To accomplish this objective, the statute directs the Commission to make assignments “in accordance with public convenience and necessity.” In determining whether an assignment is in accord with “public convenience and necessity,” the Commission is directed to consider the “adequacy and dependability of the service of electric suppliers.” It is also directed to consider “other things.” State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

In assigning rural service areas to electric suppliers pursuant to this section, the Utilities Commission may consider, in addition to development of natural resources and employment opportunities, (1) the past history of service to residential, agricultural, and small commercial users in adjacent territories, (2) the capital required for supplying electric power to large users in the territory and the past experience of a supplier in serving such users, and (3) the demonstrated preference of a substantial class of potential users for one supplier over another. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

The attraction of industry to a sparsely settled rural territory, which will develop its natural resources and provide opportunity of employment to its residents, is one of the “other things” to be considered by the Commission in determining what assignment of territory to electrical suppliers will be in accord with public convenience and necessity. State ex rel. Utils. Comm'n v. Woodstock Elec. Membership Corp., 276 N.C. 108, 171 S.E.2d 406, 1970 N.C. LEXIS 644 (1970).

Right to Serve Not Exclusive. —

While an electric supplier has the right to serve all premises in its assigned area, the mere grant of a right to serve is not the grant of an exclusive right to do so. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

The assignment of an area to an electric supplier by the Utilities Commission does not automatically preclude a city from extending its service lines into the area. Domestic Elec. Serv., Inc. v. City of Rocky Mount, 285 N.C. 135, 203 S.E.2d 838, 1974 N.C. LEXIS 928 (1974).

§ 62-110.3. Bond required for water and sewer companies.

  1. No franchise may be granted to any water or sewer utility company until the applicant furnishes a bond, secured with sufficient surety as approved by the Commission, in an amount not less than ten thousand dollars ($10,000). The bond shall be conditioned upon providing adequate and sufficient service within all the applicant’s service areas, including those for which franchises have previously been granted, shall be payable to the Commission, and shall be in a form acceptable to the Commission. In setting the amount of a bond, the Commission shall consider and make appropriate findings as to the following:
    1. Whether the applicant holds other water or sewer franchises in this State, and if so its record of operation,
    2. The number of customers the applicant now serves and proposes to serve,
    3. The likelihood of future expansion needs of the service,
    4. If the applicant is acquiring an existing company, the age, condition, and type of the equipment, and
    5. Any other relevant factors, including the design of the system.
  2. Notwithstanding the provisions of G.S. 62-110(a) and subsection (a) of this section, no water or sewer utility shall extend service into territory contiguous to that already occupied without first having advised the Commission of such proposed extension. Upon notification, the Commission shall require the utility to furnish an appropriate bond, taking into consideration both the original service area and the proposed extension. This subsection shall apply to all service areas of water and sewer utilities without regard to the date of the issuance of the franchise.
  3. The utility, the Public Staff, the Attorney General, and any other party may, at any time after the amount of a bond is set, apply to the Commission to raise or lower the amount based on changed circumstances.
  4. The appointment of an emergency operator, either by the superior court in accordance with G.S. 62-118(b) or by the Commission with the consent of the owner or operator, operates to forfeit the bond required by this section. The court or Commission, as appropriate, shall determine the amount of money needed to alleviate the emergency and shall order that amount of the bond to be paid to the Commission as trustee for the water or sewer system.
  5. If the person who operated the system before the emergency was declared desires to resume operation of the system upon a finding that the emergency no longer exists, the Commission shall require him to post a new bond, the amount of which may be different from the previous bond.

Any interest earned on a bond shall be payable to the water or sewer company that posted the bond.

History. 1987, c. 490, s. 2; 1995, c. 28, s. 1.

§ 62-110.4. Alternative operator services.

The Commission shall not issue a certificate of public convenience and necessity pursuant to G.S. 62-110(b) to any interexchange carrier which the Commission has determined to have the characteristics of an alternative operator service unless the Commission shall have determined that class of interexchange carriers to be in the public interest and shall have promulgated rules to protect the public interest and to require, at a minimum, that any such interexchange carrier assure appropriate disclosure to end-users of its identity, services, rates, charges, and fees. In order to effectuate notice to end-users, the Commission may, notwithstanding any other provision of law, require that any person owning or operating a facility for the use of the travelling or transient public which has contracted with such an interexchange carrier prominently display an end-user notice provided for in the Commission’s rules.

History. 1989, c. 366, s. 1.

§ 62-110.5. Commission may exempt certain nonprofit and consumer-owned water or sewer utilities.

The Commission may exempt any water or sewer utilities owned by nonprofit membership or consumer-owned corporations from regulation under this Chapter, subject to those conditions the Commission deems appropriate, if:

  1. The members or consumer-owners of the corporation elect the governing board of the corporation pursuant to the corporation’s articles of incorporation and bylaws; and
  2. The Commission finds that the organization and the quality of service of the utility are adequate to protect the public interest to the extent that additional regulation is not required by the public convenience and necessity.

History. 1997-437, s. 2.

§ 62-110.6. Rate recovery for construction costs of out-of-state electric generating facilities.

  1. The Commission shall, upon petition of a public utility, determine the need for and, if need is established, approve an estimate of the construction costs and construction schedule for an electric generating facility in another state that is intended to serve retail customers in this State.
  2. The petition may be filed at any time after an application for a certificate or license for the construction of the facility has been filed in the state in which the facility will be sited. The petition shall contain a showing of need for the facility, an estimate of the construction costs, and the proposed construction schedule for the facility.
  3. The Commission shall conduct a public hearing to consider and determine the need for the facility and the reasonableness of the construction cost estimate and proposed construction schedule. If the Commission finds that the construction will be needed to assure the provision of adequate public utility service within North Carolina, the Commission shall approve a construction cost estimate and a construction schedule for the facility. In making its determinations under this section, the Commission may consider whether the state in which the facility will be sited has issued a certificate or license for construction of the facility and approved a construction cost estimate and construction schedule for the facility. The Commission shall issue its order not later than 180 days after the public utility files its petition.
  4. G.S. 62-110.1(f) shall apply to the construction cost estimate determined by the Commission to be appropriate, and the actual costs the public utility incurs in constructing the facility shall be recoverable through rates in a general rate case pursuant to G.S. 62-133 as provided in G.S. 62-110.1(f1).
  5. If the construction of a facility is cancelled, the public utility shall recover through rates in a general rate case conducted pursuant to G.S. 62-133 the costs of construction that were actually incurred prior to the cancellation and are found by the Commission to be reasonable and prudent, as provided in subsections (f2) and (f3) of G.S. 62-110.1.

History. 2007-397, s. 7.

§ 62-110.7. Project development cost review for a nuclear facility.

  1. For purposes of this section, “project development costs” mean all capital costs associated with a potential nuclear electric generating facility incurred before (i) issuance of a certificate under G.S. 62-110.1 for a facility located in North Carolina or (ii) issuance of a certificate by the host state for an out-of-state facility to serve North Carolina retail customers, including, without limitation, the costs of evaluation, design, engineering, environmental analysis and permitting, early site permitting, combined operating license permitting, initial site preparation costs, and allowance for funds used during construction associated with such costs.
  2. At any time prior to the filing of an application for a certificate to construct a potential nuclear electric generating facility, either under G.S. 62-110.1 or in another state for a facility to serve North Carolina retail customers, a public utility may request that the Commission review the public utility’s decision to incur project development costs. The public utility shall include with its request such information and documentation as is necessary to support approval of the decision to incur proposed project development costs. The Commission shall hold a hearing regarding the request. The Commission shall issue an order within 180 days after the public utility files its request. The Commission shall approve the public utility’s decision to incur project development costs if the public utility demonstrates by a preponderance of evidence that the decision to incur project development costs is reasonable and prudent; provided, however, the Commission shall not rule on the reasonableness or prudence of specific project development activities or recoverability of specific items of cost.
  3. All reasonable and prudent project development costs, as determined by the Commission, incurred for the potential nuclear electric generating facility shall be included in the public utility’s rate base and shall be fully recoverable through rates in a general rate case proceeding pursuant to G.S. 62-133.
  4. If the public utility is allowed to cancel the project, the Commission shall permit the public utility to recover all reasonable and prudently incurred project development costs in a general rate case proceeding pursuant to G.S. 62-133 amortized over a period equal to the period during which the costs were incurred, or five years, whichever is greater.

History. 2007-397, s. 7.

§ 62-110.8. Competitive procurement of renewable energy.

  1. Each electric public utility shall file for Commission approval a program for the competitive procurement of energy and capacity from renewable energy facilities with the purpose of adding renewable energy to the State’s generation portfolio in a manner that allows the State’s electric public utilities to continue to reliably and cost-effectively serve customers’ future energy needs. Renewable energy facilities eligible to participate in the competitive procurement shall include those facilities that use renewable energy resources identified in G.S. 62-133.8(a)(8) but shall be limited to facilities with a nameplate capacity rating of 80 megawatts (MW) or less that are placed in service after the date of the electric public utility’s initial competitive procurement. Subject to the limitations set forth in subsections (b) and (c) of this section, the electric public utilities shall issue requests for proposals to procure and shall procure, energy and capacity from renewable energy facilities in the aggregate amount of 2,660 megawatts (MW), and the total amount shall be reasonably allocated over a term of 45 months beginning when the Commission approves the program. The Commission shall require the additional competitive procurement of renewable energy capacity by the electric public utilities in an amount that includes all of the following: (i) any unawarded portion of the initial competitive procurement required by this subsection; (ii) any deficit in renewable energy capacity identified pursuant to subdivision (1) of subsection (b) of this section; and (iii) any capacity reallocated pursuant to G.S. 62-159.2.
  2. Electric public utilities may jointly or individually implement the aggregate competitive procurement requirements set forth in subsection (a) of this section and may satisfy such requirements for the procurement of renewable energy capacity to be supplied by renewable energy facilities through any of the following: (i) renewable energy facilities to be acquired from third parties and subsequently owned and operated by the soliciting public utility or utilities; (ii) renewable energy facilities to be constructed, owned, and operated by the soliciting public utility or utilities subject to the limitations of subdivision (4) of this subsection; or (iii) the purchase of renewable energy, capacity, and environmental and renewable attributes from renewable energy facilities owned and operated by third parties that commit to allow the procuring public utility rights to dispatch, operate, and control the solicited renewable energy facilities in the same manner as the utility’s own generating resources. Procured renewable energy capacity, as provided for in this section, shall be subject to the following limitations:
    1. If prior to the end of the initial 45-month competitive procurement period the public utilities subject to this section have executed power purchase agreements and interconnection agreements for renewable energy capacity within their balancing authority areas that are not subject to economic dispatch or curtailment and were not procured pursuant to G.S. 62-159.2 having an aggregate capacity in excess of 3,500 megawatts (MW), the Commission shall reduce the competitive procurement aggregate amount by the amount of such exceedance. If the aggregate capacity of such renewable energy facilities is less than 3,500 megawatts (MW) at the end of the initial 45-month competitive procurement period, the Commission shall require the electric public utilities to conduct an additional competitive procurement in the amount of such deficit.
    2. To ensure the cost-effectiveness of procured new renewable energy resources, each public utility’s procurement obligation shall be capped by the public utility’s current forecast of its avoided cost calculated over the term of the power purchase agreement. The public utility’s current forecast of its avoided cost shall be consistent with the Commission-approved avoided cost methodology.
    3. Each public utility shall submit to the Commission for approval and make publicly available at 30 days prior to each competitive procurement solicitation a pro forma contract to be utilized for the purpose of informing market participants of terms and conditions of the competitive procurement. Each pro forma contract shall define limits and compensation for resource dispatch and curtailments. The pro forma contract shall be for a term of 20 years; provided, however, the Commission may approve a contract term of a different duration if the Commission determines that it is in the public interest to do so.
    4. No more than thirty percent (30%) of an electric public utility’s competitive procurement requirement may be satisfied through the utility’s own development of renewable energy facilities offered by the electric public utility or any subsidiary of the electric public utility that is located within the electric public utility’s service territory. This limitation shall not apply to any renewable energy facilities acquired by an electric public utility that are selected through the competitive procurement and are located within the electric public utility’s service territory.
  3. Subject to the aggregate competitive procurement requirements established by this section, the electric public utilities shall have the authority to determine the location and allocated amount of the competitive procurement within their respective balancing authority areas, whether located inside or outside the geographic boundaries of the State, taking into consideration (i) the State’s desire to foster diversification of siting of renewable energy resources throughout the State; (ii) the efficiency and reliability impacts of siting of additional renewable energy facilities in each public utility’s service territory; and (iii) the potential for increased delivered cost to a public utility’s customers as a result of siting additional renewable energy facilities in a public utility’s service territory, including additional costs of ancillary services that may be imposed due to the operational or locational characteristics of a specific renewable energy resource technology, such as nondispatchability, unreliability of availability, and creation or exacerbation of system congestion that may increase redispatch costs.
  4. The competitive procurement of renewable energy capacity established pursuant to this section shall be independently administered by a third-party entity to be approved by the Commission. The third-party entity shall develop and publish the methodology used to evaluate responses received pursuant to a competitive procurement solicitation and to ensure that all responses are treated equitably. All reasonable and prudent administrative and related expenses incurred to implement this subsection shall be recovered from market participants through administrative fees levied upon those that participate in the competitive bidding process, as approved by the Commission.
  5. An electric public utility may participate in any competitive procurement process, but shall only participate within its own assigned service territory. If the public utility uses nonpublicly available information concerning its own distribution or transmission system in preparing a proposal to a competitive procurement, the public utility shall make such information available to third parties that have notified the public utility of their intention to submit a proposal to the same request for proposals.
  6. For purposes of this section, the term “balancing authority” means the entity that integrates resource plans ahead of time, maintains load-interchange-generation balance within a balancing authority area, and supports interconnection frequency in real time, and the term “balancing authority area” means the collection of generation, transmission, and loads within the metered boundaries of the balancing authority, and the balancing authority maintains load-resource balance within this area.
  7. An electric public utility shall be authorized to recover the costs of all purchases of energy, capacity, and environmental and renewable attributes from third-party renewable energy facilities and to recover the authorized revenue of any utility-owned assets that are procured pursuant to this section through an annual rider approved by the Commission and reviewed annually. Provided it is in the public interest, the authorized revenue for any renewable energy facilities owned by an electric public utility may be calculated on a market basis in lieu of cost-of-service based recovery, using data from the applicable competitive procurement to determine the market price in accordance with the methodology established by the Commission pursuant to subsection (h) of this section. The annual increase in the aggregate amount of these costs that are recoverable by an electric public utility pursuant to this subsection shall not exceed one percent (1%) of the electric public utility’s total North Carolina retail jurisdictional gross revenues for the preceding calendar year.
  8. The Commission shall adopt rules to implement the requirements of this section, as follows:
    1. Oversight of the competitive procurement program.
    2. To provide for a waiver of regulatory conditions or code of conduct requirements that would unreasonably restrict a public utility or its affiliates from participating in the competitive procurement process, unless the Commission finds that such a waiver would not hold the public utility’s customers harmless.
    3. Establishment of a procedure for expedited review and approval of certificates of public convenience and necessity, or the transfer thereof, for renewable energy facilities owned by the public utility and procured pursuant to this section. The Commission shall issue an order not later than 30 days after a petition for a certificate is filed by the public utility.
    4. Establishment of a methodology to allow an electric public utility to recover its costs pursuant to subsection (g) of this section.
    5. Repealed by Session Laws 2021-165, s. 2(b), effective October 13, 2021.
  9. The requirements of this section shall not apply to an electric public utility serving fewer than 150,000 North Carolina retail jurisdictional customers as of January 1, 2017.

History. 2017-192, s. 2(a); 2021-165, s. 2(a), (b).

Editor’s Note.

Session Laws 2017-192, s. 2(c) made this section effective July 27, 2017, and further provides: “The program required to be filed with the Utilities Commission pursuant to G.S. 62-110.8(a), as enacted by subsection (a) of this section, shall be filed by the electric public utility no later than 120 days after the effective date of this section, and the Commission shall issue an order to approve, modify, or deny the program no later than 90 days after the submission of the program by the electric public utility.”

Session Laws 2017-192, s. 14(a), contains a severability clause.

Session Laws 2021-165, s. 2(c), provides: “The Commission is authorized to direct the procurement of solar energy facilities in 2022 by the electric public utilities if, after stakeholder participation and review of preliminary analysis developed in preparation of the initial Carbon Plan, the Commission finds that such solar energy facilities will be needed in accordance with the criteria and requirements set forth in Section 1 of this act to achieve the authorized carbon reduction goals.” Section 1 of Session Laws 2021-165 is codified as G.S. 62-110.9 at the direction of the Revisor of Statutes.

Session Laws 2021-165, s. 3, provides: “No later than March 1, 2022, the Department of Environmental Quality shall develop a plan to ensure adequate financial resources for the decommissioning of utility-scale solar projects to be submitted to the General Assembly forlegislative action. For purposes of this section, “utility-scale solar project” means a ground-mounted photovoltaic (PV), concentrating photovoltaic (CPV), or concentrating solar power (CSP or solar thermal) project capable of generating 1 megawatt (MW) or more directly connected to the electrical grid for sale to wholesale customers. A utility-scale solar project includes the solar arrays, accessory buildings, transmission facilities, and any other infrastructure necessary for the operation of the project.”

Session Laws 2021-165, s. 7, is a severability clause.

Session Laws 2021-180, s. 11.19(f1), provides: “With respect to an ‘eligible customer,’ which for purposes of this section means any customer of an electric public utility that locates a new manufacturing facility at a project site that is subject to an agreement with the Department of Commerce pursuant to subsection (d) of this section, the following modifications shall be made to the renewable energy procurement program for major military installations, public universities, and large customers established under G.S. 62-159.2 as follows:

“(1) Notwithstanding the requirements established under G.S. 62-110.8(b) that at least 100 MW of new renewable energy facility capacity offered under the program shall be reserved for participation by major military installations, and at least 250 MW of new renewable energy facility capacity offered under the program shall be reserved for participation by The University of North Carolina, comprising a total reserved amount of 350 MW, this reserved amount shall be made available to an eligible customer; provided, however, that the total amount of reserved capacity available to an eligible customer shall be reduced by any amount subscribed to by major military installations or The University of North Carolina in accordance with the time lines set forth in G.S. 62-159.2(d). Upon any subscription by an eligible customer, such portion of the reserved capacity shall no longer be available to the major military installations or The University of North Carolina or to any other customer. Notwithstanding G.S. 62-159.2(d), the reserved capacity shall not be made available to any other eligible program participants or included in a competitive procurement in accordance with G.S. 62-110.8(a), but instead shall continue to be available to an eligible customer in accordance with this subsection until January 1, 2028.

“(2) Notwithstanding G.S. 62-159.2(c), an eligible customer shall be entitled to subscribe to a capacity amount sufficient to produce on an annual basis one hundred percent (100%) of the eligible customer's actual annual electricity usage or reasonably projected annual electricity usage over the immediately subsequent annual period, in either case, at the project site, but in no event shall the capacity amount to which the eligible customer is entitled exceed 350 MW, as may be reduced in the event of any subscriptions by a major military installation or The University of North Carolina. The amount of capacity that is available to an eligible customer pursuant to this subsection shall be revaluated on an annual basis as the eligible customer expands operations at the project site.

“In addition to the foregoing, an eligible customer shall also be entitled to participate in any future customer programs approved by the Commission.”

Session Laws 2021-180, s. 1.1, provides: “This act shall be known as the ‘Current Operations Appropriations Act of 2021.’”

Session Laws 2021-180, s. 43.5, provides: “Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2021-2023 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2021-2023 fiscal biennium.”

Session Laws 2021-180, s. 43.7, is a severability clause.

Effect of Amendments.

Session Laws 2021-165, s. 2(a), (b), effective October 13, 2021, in subsection (a), deleted the former last sentence, which read: “In addition, at the termination of the initial competitive procurement period of 45 months, the offering of a new renewable energy resources competitive procurement and the amount to be procured shall be determined by the Commission, based on a showing of need evidenced by the electric public utility's most recent biennial integrated resource plan or annual update approved by the Commission pursuant to G.S. 62 110.1(c).” and deleted former subdivision (h)(5), which read: “Establishment of a procedure for the Commission to modify or delay implementation of the provisions of this section in whole or in part if the Commission determines that it is in the public interest to do so.”

Legal Periodicals.

For article, “Seeing Green: North Carolina’s Clean Energy Plan, the Social Cost of Carbon, and a Way Forward Under a Least-Cost Framework,” see 99 N.C. L. Rev. Addendum 59 (2020).

§ 62-110.9. Requirements concerning reductions in emissions of carbon dioxide from electric public utilities.

The Utilities Commission shall take all reasonable steps to achieve a seventy percent (70%) reduction in emissions of carbon dioxide (CO UNHANDLEDCHAR ) emitted in the State from electric generating facilities owned or operated by electric public utilities from 2005 levels by the year 2030 and carbon neutrality by the year 2050. For purposes of this section, (i) “electric public utility” means any electric public utility as defined in G.S. 62-3(23) serving at least 150,000 North Carolina retail jurisdictional customers as of January 1, 2021, and (ii) “carbon neutrality” means for every ton of CO UNHANDLEDCHAR emitted in the State from electric generating facilities owned or operated by or on behalf of electric public utilities, an equivalent amount of CO UNHANDLEDCHAR is reduced, removed, prevented, or offset, provided that the offsets are verifiable and do not exceed five percent (5%) of the authorized reduction goal. In achieving the authorized carbon reduction goals, the Utilities Commission shall:

  1. Develop a plan, no later than December 31, 2022, with the electric public utilities, including stakeholder input, for the utilities to achieve the authorized reduction goals, which may, at a minimum, consider power generation, transmission and distribution, grid modernization, storage, energy efficiency measures, demand-side management, and the latest technological breakthroughs to achieve the least cost path consistent with this section to achieve compliance with the authorized carbon reduction goals (the “Carbon Plan”). The Carbon Plan shall be reviewed every two years and may be adjusted as necessary in the determination of the Commission and the electric public utilities.
  2. Comply with current law and practice with respect to the least cost planning for generation, pursuant to G.S. 62-2(a)(3a), in achieving the authorized carbon reduction goals and determining generation and resource mix for the future. Any new generation facilities or other resources selected by the Commission in order to achieve the authorized reduction goals for electric public utilities shall be owned and recovered on a cost of service basis by the applicable electric public utility except that:
    1. Existing law shall apply with respect to energy efficiency measures and demand-side management.
  3. Ensure any generation and resource changes maintain or improve upon the adequacy and reliability of the existing grid.
  4. Retain discretion to determine optimal timing and generation and resource-mix to achieve the least cost path to compliance with the authorized carbon reduction goals, including discretion in achieving the authorized carbon reduction goals by the dates specified in order to allow for implementation of solutions that would have a more significant and material impact on carbon reduction; provided, however, the Commission shall not exceed the dates specified to achieve the authorized carbon reduction goals by more than two years, except in the event the Commission authorizes construction of a nuclear facility or wind energy facility that would require additional time for completion due to technical, legal, logistical, or other factors beyond the control of the electric public utility, or in the event necessary to maintain the adequacy and reliability of the existing grid. In making such determinations, the Utilities Commission shall receive and consider stakeholder input.

b To the extent that new solar generation is selected by the Commission, in adherence with least cost requirements, the solar generation selected shall be subject to the following: (i) forty-five percent (45%) of the total megawatts alternating current (MW AC) of any solar energy facilities established pursuant to this section shall be supplied through the execution of power purchase agreements with third parties pursuant to which the electric public utility purchases solar energy, capacity, and environmental and renewable attributes from solar energy facilities owned and operated by third parties that are 80 MW AC or less that commit to allow the procuring electric public utility rights to dispatch, operate, and control the solicited solar energy facilities in the same manner as the utility's own generating resources and (ii) fifty-five percent (55%) of the total MW AC of any solar energy facilities established pursuant to this section shall be supplied from solar energy facilities that are utility-built or purchased by the utility from third parties and owned and operated and recovered on a cost of service basis by the soliciting electric public utility. These ownership requirements shall be applicable to solar energy facilities (i) paired with energy storage and (ii) procured in connection with any voluntary customer program.

History. 2021-165, s. 1.

Editor’s Note.

Session Laws 2021-165, s. 1, effective October 13, 2021, has been codified as this section at the direction of the Revisor of Statutes.

Session Laws 2021-165, s. 2(c), provides: “The Commission is authorized to direct the procurement of solar energy facilities in 2022 by the electric public utilities if, after stakeholder participation and review of preliminary analysis developed in preparation of the initial Carbon Plan, the Commission finds that such solar energy facilities will be needed in accordance with the criteria and requirements set forth in Section 1 of this act to achieve the authorized carbon reduction goals.” Section 1 of Session Laws 2021-165 is codified as G.S. 62-110.9 at the direction of the Revisor of Statutes.

Session Laws 2021-165, s. 3, provides: “No later than March 1, 2022, the Department of Environmental Quality shall develop a plan to ensure adequate financial resources for the decommissioning of utility-scale solar projects to be submitted to the General Assembly for legislative action. For purposes of this section, “utility-scale solar project” means a ground-mounted photovoltaic (PV), concentrating photovoltaic (CPV), or concentrating solar power (CSP or solar thermal) project capable of generating 1 megawatt (MW) or more directly connected to the electrical grid for sale to wholesale customers. A utility-scale solar project includes the solar arrays, accessory buildings, transmission facilities, and any other infrastructure necessary for the operation of the project.”

Session Laws 2021-165, s. 7, is a severability clause.

§ 62-111. Transfers of franchises; mergers, consolidations and combinations of public utilities.

  1. No franchise now existing or hereafter issued under the provisions of this Chapter other than a franchise for motor carriers of passengers shall be sold, assigned, pledged or transferred, nor shall control thereof be changed through stock transfer or otherwise, or any rights thereunder leased, nor shall any merger or combination affecting any public utility be made through acquisition of control by stock purchase or otherwise, except after application to and written approval by the Commission, which approval shall be given if justified by the public convenience and necessity. Provided, that the above provisions shall not apply to regular trading in listed securities on recognized markets.
  2. No certificates issued under the provisions of this Chapter for motor carriers of passengers shall be sold, assigned, pledged, transferred, or control changed through stock transfer or otherwise, or any rights thereunder leased, nor shall any merger or combination affecting any motor carrier of passengers be made through acquisition of control by stock purchases or otherwise, except after application to and written approval by the Commission as in this section provided, provided that the above provisions shall not apply to regular trading in listing securities on recognized markets. The applicant shall give not less than 10 days’ written notice of such application by registered mail or by certified mail to all connecting and competing carriers. When the Commission is of the opinion that the transaction is consistent with the purposes of this Chapter the Commission may, in the exercise of its discretion, grant its approval, provided, however, that when such transaction will result in a substantial change in the service and operations of any motor carrier of passengers party to the transaction, or will substantially affect the operations and services of any other motor carrier, the Commission shall not grant its approval except upon notice and hearing as required in G.S. 62-262.1 for bus companies upon an application for an original certificate. In all cases arising under the subsection it shall be the duty of the Commission to require the successor carrier to satisfy the Commission that the operating debts and obligations of the seller, assignor, pledgor, lessor or transferor, including taxes due the State of North Carolina or any political subdivision thereof are paid or the payment thereof is adequately secured. The Commission may attach to its approval of any transaction arising under the section such other conditions as the Commission may determine are necessary to effectuate the purposes of this Article.
  3. No sale of a franchise for a motor carrier of household goods shall be approved by the Commission until the seller shall have filed with the Commission a statement under oath of all debts and claims against the seller, of which such seller has any knowledge or notice, (i) for gross receipts, use or privilege taxes due or to become due the State, as provided in the Revenue Act, (ii) for wages due employees of the seller, other than salaries of officers and in the case of motor carriers, (iii) for unremitted C.O.D. collections due shippers, (iv) for loss of or damage to goods transported, or received for transportation, (v) for overcharges on property transported, and, (vi) for interline accounts due other carriers, together with a bond, if required by the Commission, payable to the State, executed by a surety company authorized to do business in the State, in an amount double the aggregate of all such debts and claims conditioned upon the payment of the same within the amount of such bond as the amounts and validity of such debts and claims are established by agreement of the parties, or by judgment. This subsection shall not be applicable to sales by personal representatives of deceased or incompetent persons, receivers or trustees in bankruptcy under court order.
  4. No person shall obtain a franchise or certificate for the purpose of transferring the same to another, and an offer of such transfer within one year after the same was obtained shall be prima facie evidence that such franchise or certificate was obtained for the purpose of sale.
  5. The Commission shall approve applications for transfer of motor carrier franchises made under this section upon finding that said sale, assignment, pledge, transfer, change of control, lease, merger, or combination is in the public interest, will not adversely affect the service to the public under said franchise, will not unlawfully affect the service to the public by other public utilities, that the person acquiring said franchise or control thereof is fit, willing and able to perform such service to the public under said franchise, and that service under said franchise has been continuously offered to the public up to the time of filing said application or in lieu thereof that any suspension of service exceeding 30 days has been approved by the Commission as provided in G.S. 62-112(b)(5). Provided, however, the Commission shall approve, without imposing conditions or limitations, applications for the transfer of a bus company franchise made under this section upon finding that the person acquiring the franchise or control of the franchise is fit, willing and able to perform services to the public under that franchise.

History. 1947, c. 1008, s. 22; 1949, c. 1132, s. 20; 1953, c. 1140, s. 3; 1957, c. 1152, s. 10; 1961, c. 472, ss. 6, 7; 1963, c. 1165, s. 1; 1967, c. 1202; 1985, c. 676, ss. 10, 11; 1995, c. 523, s. 2; 2021-23, s. 13.

Effect of Amendments.

Session Laws 2021-23, s. 13, effective May 17, 2021, inserted “or certificate” prior to “for the purpose” and “franchise or” prior to “certificate was obtained” in subsection (d).

CASE NOTES

Showing of Public Need Not Required. —

The showing of public need which G.S. 62-262(e)(1) requires of an application for a new authority is not applicable in a transfer proceeding under this section and was not written into it by subsection (a) of this section. State ex rel. Utils. Comm'n v. Associated Petro. Carriers, 7 N.C. App. 408, 173 S.E.2d 25, 1970 N.C. App. LEXIS 1704 (1970).

Subsection (e) of this section does not indicate a policy change toward protecting existing certificate holders from lawful competition. Moreover, like the test of “public convenience and necessity” in subsection (a), the requirement that the Commission find the transfer “in the public interest” does not write into the transfer approval procedure the new certificate test of public need required by G.S. 62-262(e)(1). State ex rel. Utils. Comm'n v. Associated Petro. Carriers, 7 N.C. App. 408, 173 S.E.2d 25, 1970 N.C. App. LEXIS 1704 (1970).

Where the issue of dormancy under G.S. 62-112(c) has been raised, if the Commission finds that the franchise is not dormant, it must then determine if the criteria required by this section for approval of the transfer have been met. If the Commission finds that the franchise is dormant under G.S. 62-112(c), the application for transfer must be denied, because approval would in effect constitute the granting of a new franchise without satisfying the new authority test and other requirements of G.S. 62-262(e). State ex rel. Utils. Comm'n v. Estes Express Lines, 33 N.C. App. 174, 234 S.E.2d 624, 1977 N.C. App. LEXIS 2121 (1977).

Test for “Public Convenience and Necessity”. —

The requirement of “public convenience and necessity” referred to in subsection (a) of this section is satisfied by a showing that the authority has been and is being actively applied in satisfaction of the public need which was shown to exist when the authority was originally acquired. State ex rel. Utils. Comm'n v. Associated Petro. Carriers, 7 N.C. App. 408, 173 S.E.2d 25, 1970 N.C. App. LEXIS 1704 (1970).

The criteria “if justified by the public convenience and necessity” in subsection (a) of this section has been interpreted as a statutory basis for the test of dormancy. Where the authority has been abandoned or “dormant,” the Commission has denied applications for transfer because approval would in effect be the granting of a new authority without satisfying the new authority test of public need set out in G.S. 62-262(e). Where the authority has been actively operated, the applicants for sale and transfer of motor freight carrier rights are under no burden to show through shipper witnesses that a demand and need exist. The rationale is that public convenience and necessity was shown to exist when the authority was granted or acquired, and the rebuttable presumption of law is that it continues. State ex rel. Utils. Comm'n v. Associated Petro. Carriers, 7 N.C. App. 408, 173 S.E.2d 25, 1970 N.C. App. LEXIS 1704 (1970).

Merger of electric utilities approved by the North Carolina Utilities Commission (Commission) was not contrary to public convenience and necessity because (1) testimony and G.S 62-133.8(b) and G.S. 62-133.9(b) supported the Commission’s monopsony analysis, (2) the Commission considered job losses, and (3) low-income families were not harmed. In re Duke Energy Corp., 232 N.C. App. 573, 755 S.E.2d 382, 2014 N.C. App. LEXIS 231 (2014).

Public Convenience and Necessity for Proposed Transfers of Water and Sewer Franchises. —

When the commission is adjudging public convenience and necessity in the context of proposed transfers of water and sewer franchises under subsection (a) of this section, it must inquire into all aspects of anticipated service and rates occasioned and engendered by the proposed transfer, and then determine whether the transfer will serve the public convenience and necessity. State ex rel. Utils. Comm'n v. Village of Pinehurst, 99 N.C. App. 224, 393 S.E.2d 111, 1990 N.C. App. LEXIS 510 (1990), aff'd, 331 N.C. 278, 415 S.E.2d 199, 1992 N.C. LEXIS 202 (1992).

Utility commission did not err in approving acquisition of utility’s certificate of public convenience and necessity, denying inclusion of acquired utility’s purchase price in the base rate, and reducing connection fees. In re Petition of Utils., Inc., 147 N.C. App. 182, 555 S.E.2d 333, 2001 N.C. App. LEXIS 1141 (2001).

State Policy Favors Transfers of Actively Operated Motor Freight Carrier Certificates. —

The policy of the State, as declared in the Public Utilities Act of 1963, clearly favors transfers of actively operated motor freight carrier certificates without unreasonable restraint. State ex rel. Utils. Comm'n v. Associated Petro. Carriers, 7 N.C. App. 408, 173 S.E.2d 25, 1970 N.C. App. LEXIS 1704 (1970); State ex rel. Utils. Comm'n v. Estes Express Lines, 33 N.C. App. 99, 234 S.E.2d 628, 1977 N.C. App. LEXIS 2110 (1977).

Transfer to a More Competitive Carrier Not Prohibited. —

The possibility that a transfer of authority to a more competitive carrier will adversely affect existing carriers does not make such a transfer contrary to the public interest as a matter of law. State ex rel. Utils. Comm'n v. Associated Petro. Carriers, 7 N.C. App. 408, 173 S.E.2d 25, 1970 N.C. App. LEXIS 1704 (1970); State ex rel. Utils. Comm'n v. Estes Express Lines, 33 N.C. App. 99, 234 S.E.2d 628, 1977 N.C. App. LEXIS 2110 (1977).

Requirement of subsection (e) of this section that the Commission find that the proposed transfer “will not adversely affect the service to the public under said franchise” is satisfied by a determination that the proposed transferee of the franchise is capable of rendering service equal to that of the proposed transferor, and does not prohibit approval where transfer of the franchise to a more competitive hauler would have an adverse effect on existing carriers. State ex rel. Utils. Comm'n v. Associated Petro. Carriers, 7 N.C. App. 408, 173 S.E.2d 25, 1970 N.C. App. LEXIS 1704 (1970).

Bond as Condition Precedent to Commission’s Approval. —

This section requires as a condition precedent to the Commission’s approval of the sale of a motor carrier’s franchise a bond from the seller conditioned for the payment of (1) taxes, (2) wages due employees of the seller, (3) unremitted C.O.D. collections due seller, (4) “for loss or damage of goods transported or received for transportation,” (5) overcharge on property transported, and (6) for interline accounts to other carriers. American Nat'l Fire Ins. Co. v. Gibbs, 260 N.C. 681, 133 S.E.2d 669, 1963 N.C. LEXIS 802 (1963) (decided under this section as it stood prior to the 1963 amendment).

Question of Whether Purchaser of Water or Sewer Franchise Can Provide Better Service. —

The question of whether another potential purchaser of a water or sewer franchise can provide better service is plainly relevant under the broad public convenience and necessity test of subsection (a) of this section. But such a showing would not of itself be dispositive of the issue of whether approval should be granted. When weighing the broad aspects and implications of public convenience and necessity, the Commission is cloaked with wide discretion and is not required to reject an application for transfer merely because another potential purchaser produces evidence that it might be able to do a better job. State ex rel. Utils. Comm'n v. Village of Pinehurst, 99 N.C. App. 224, 393 S.E.2d 111, 1990 N.C. App. LEXIS 510 (1990), aff'd, 331 N.C. 278, 415 S.E.2d 199, 1992 N.C. LEXIS 202 (1992).

Transfers of Utility Franchises Cannot Be Made Contingent upon Commission Approval. —

Lawful transfers of ownership and control of utility franchises cannot be made contingent upon or subject to commission approval; however, in emergency situations, the Commission can issue temporary or interim orders giving conditional or temporary approval of operational control. State ex rel. Utils. Comm'n v. Village of Pinehurst, 99 N.C. App. 224, 393 S.E.2d 111, 1990 N.C. App. LEXIS 510 (1990), aff'd, 331 N.C. 278, 415 S.E.2d 199, 1992 N.C. LEXIS 202 (1992).

This section does not permit the completion of transfers contingent upon or subject to Commission approval; the legislature, by the unambiguous terms of the statute, clearly intended to prohibit de facto transfers of franchises before the Commission has had the opportunity to pass upon the merits of the transfer under the public convenience and necessity test. State ex rel. Utils. Comm'n v. Village of Pinehurst, 99 N.C. App. 224, 393 S.E.2d 111, 1990 N.C. App. LEXIS 510 (1990), aff'd, 331 N.C. 278, 415 S.E.2d 199, 1992 N.C. LEXIS 202 (1992).

Certificate Holder Not Released from Liability for Nonperformance of Duties. —

This section does not confer upon the Utilities Commission the power to release the holder of a certificate of convenience and necessity from liability for the nonperformance of public duties incident to the certificate, and the Commission possesses no such power in the absence of a delegation thereof by the legislature. Hough-Wylie Co. v. Lucas, 236 N.C. 90, 72 S.E.2d 11, 1952 N.C. LEXIS 490 (1952).

A lease of intrastate motor vehicle common carrier operating rights, approved by the Utilities Commission, does not release lessor, the holder of the certificate of convenience and necessity, from liability for nonperformance of franchise duties or torts incident to operation, and a shipper may hold lessor liable for lessee’s failure to make prompt remittance of C.O.D. collections as required by G.S. 62-273. Hough-Wylie Co. v. Lucas, 236 N.C. 90, 72 S.E.2d 11, 1952 N.C. LEXIS 490 (1952).

Duty of Transferee to Render Services Called for. —

Approval by the Commission of the transfer of a carrier’s certificate of authority implies a duty on the part of the transferee to render the service called for in the certificate, which it must perform in a substantial manner. State ex rel. Utils. Comm'n v. Colter, 259 N.C. 269, 130 S.E.2d 385, 1963 N.C. LEXIS 540 (1963).

Right to Combine Purchased Route Authority and Original Route Authority of Purchasing Carrier. —

Where an irregular carrier acquired the certificate of another irregular carrier with the authority of the Utilities Commission, the purchasing carrier had the legal right to combine or “tack” the irregular route authority purchased by it and its original irregular route authority, as there were no conditions or restrictions imposed by statute or any rule or regulation of the Commission in effect at the time of the purchase. State ex rel. Utils. Comm'n v. Forbes Transf. Co., 259 N.C. 688, 131 S.E.2d 452, 1963 N.C. LEXIS 622 (1963).

“Fit, Willing, and Able” Condition of Approval Is Relevant Under Subsection (a). —

The “fit, willing, and able” condition of approval set forth in subsection (e) pertaining to transfers of motor carrier franchises is also a relevant question under the separate public convenience and necessity test of subsection (a). State ex rel. Utils. Comm'n v. Village of Pinehurst, 99 N.C. App. 224, 393 S.E.2d 111, 1990 N.C. App. LEXIS 510 (1990), aff'd, 331 N.C. 278, 415 S.E.2d 199, 1992 N.C. LEXIS 202 (1992).

Findings Held to Obviate Application of Subsection (d). —

In a proceeding to obtain approval of the Utilities Commission for the transfer of all the capital stock of a franchise carrier from one holding corporation to another, findings of the Commission, supported by substantial evidence, to the effect that the franchise carrier did not in fact obtain its franchise for the purpose of transferring it to another obviated the application of subsection (d) of this section. State ex rel. Utils. Comm'n v. Carolina Coach Co., 269 N.C. 717, 153 S.E.2d 461, 1967 N.C. LEXIS 1141 (1967).

Subsection (e) Operates as Separate Test. —

The plain language of subsection (e) of this section unambiguously indicates the intent of the legislature for that section to operate as a separate and distinct test, applying only to transfers of motor carrier franchises; that the broader public convenience and necessity test necessarily subsumes under it some of the same elements does not alter this fact. State ex rel. Utils. Comm'n v. Village of Pinehurst, 99 N.C. App. 224, 393 S.E.2d 111, 1990 N.C. App. LEXIS 510 (1990), aff'd, 331 N.C. 278, 415 S.E.2d 199, 1992 N.C. LEXIS 202 (1992).

Subsection (e) is inapplicable to transfer approval proceedings involving water and sewer franchises. State ex rel. Utils. Comm'n v. Village of Pinehurst, 99 N.C. App. 224, 393 S.E.2d 111, 1990 N.C. App. LEXIS 510 (1990), aff'd, 331 N.C. 278, 415 S.E.2d 199, 1992 N.C. LEXIS 202 (1992).

Findings Held to Support Conclusion That Transfer of Stock Was Justified. —

In a proceeding to obtain approval of the Utilities Commission for the transfer of all the capital stock of a franchise carrier from one holding corporation to another, findings, supported by evidence, that the franchise carrier was conducting active operations under the franchise and that its ability to render service to the public within the limits of its franchise rights would not be adversely affected by the proposed transfer of its stock supported conclusion that the proposed sale of its stock was justified by the public convenience and necessity within the meaning of this section. State ex rel. Utils. Comm'n v. Carolina Coach Co., 269 N.C. 717, 153 S.E.2d 461, 1967 N.C. LEXIS 1141 (1967).

Contract to Pay Claims Under Section as Surety Contract. —

That portion of a contract under which a company obligates itself to pay any shipper or consignee claims for which the assured would be liable by the provision of this section, with stipulation that the assured should reimburse the company for any such payment, is a surety contract. American Nat'l Fire Ins. Co. v. Gibbs, 260 N.C. 681, 133 S.E.2d 669, 1963 N.C. LEXIS 802 (1963).

Electric Utility Merger Approved. —

Substantial evidence supported the North Carolina Utilities Commission’s approval of electric utilities’ merger because ratepayers’ benefits showed the merger met G.S. 62-111(a). In re Duke Energy Corp., 232 N.C. App. 573, 755 S.E.2d 382, 2014 N.C. App. LEXIS 231 (2014).

Substantial evidence showed public benefits would result from a merger of electric utilities approved by the North Carolina Utilities Commission because there were significant guaranteed fuel-cost savings and possible non-fuel-cost savings, as well as commitments to support the community, job development, and low income energy assistance. In re Duke Energy Corp., 232 N.C. App. 573, 755 S.E.2d 382, 2014 N.C. App. LEXIS 231 (2014).

§ 62-112. Effective date, suspension and revocation of franchises; dormant motor carrier franchises.

  1. Franchises shall be effective from the date issued unless otherwise specified therein, and shall remain in effect until terminated under the terms thereof, or until suspended or revoked as herein provided.
  2. Any franchise may be suspended or revoked, in whole or in part, in the discretion of the Commission, upon application of the holder thereof; or, after notice and hearing, may be suspended or revoked, in whole or in part, upon complaint, or upon the Commission’s own initiative, for wilful failure to comply with any provision of this Chapter, or with any lawful order, rule, or regulation of the Commission promulgated thereunder, or with any term, condition or limitation of such franchise; provided, however, that any such franchise may be suspended by the Commission upon notice to the holder or lessee thereof without a hearing for any one or more of the following causes:
    1. For failure to provide and keep in force at all times security, bond, insurance or self-insurance for the protection of the public as required in G.S. 62-268 of this Chapter.
    2. For failure to file and keep on file with the Commission applicable tariffs or schedules of rates as required in this Chapter.
    3. For failure to pay any gross receipts, use or privilege taxes due the State of North Carolina within 30 days after demand in writing from the agency of the State authorized by law to collect the same; provided, that this subdivision shall not apply to instances in which there is a bona fide controversy as to tax liability.
    4. For failure for a period of 60 days after execution to pay any final judgment rendered by a court of competent jurisdiction against any holder or lessee of a franchise for any debt or claim specified in G.S. 62-111(b) and (c).
    5. For failure to begin operations as authorized by the Commission within the time specified by order of the Commission, or for suspension of authorized operations for a period of 30 days without the written consent of the Commission, save in the case of involuntary failure or suspension brought about by compulsion upon the franchise holder or lessee.
  3. The failure of a common carrier of passengers or household goods by motor vehicles to perform any transportation for compensation under the authority of its certificate for a period of 30 consecutive days shall be prima facie evidence that said franchise is dormant and the public convenience and necessity is no longer served by such common carrier certificate. Upon finding after notice and hearing that no such service has been performed for a period of 30 days the Commission is authorized to find that the franchise is dormant and to cancel the certificate of such common carrier. The Commission in its discretion may give consideration in such finding to other factors affecting the performance of such service, including seasonal requirements of the passengers or commodities authorized to be transported, the efforts of the carrier to make its services known to the public, the equipment and other facilities maintained by the carrier for performance of such service, and the means by which such carrier holds itself out to perform such service. A proceeding may be brought under this section by the Commission on its own motion or upon the complaint of any shipper or any other carrier. The franchise of a motor carrier may be canceled under the provisions of this section in any proceeding to sell or transfer or otherwise change control of said franchise brought under the provisions of G.S. 62-111, upon finding of dormancy as provided in this section. Any motor carrier who has obtained authority to suspend operations under the provisions of G.S. 62-112(b)(5) and the rules of the Utilities Commission issued thereunder shall not be subject to cancellation of its franchise under this section during the time such suspension of operations is authorized. In determining whether such carrier has made reasonable efforts to perform service under said franchise the Commission may in its discretion give consideration to disabilities of the carrier including death of the owner and physical disabilities.
  4. This section shall be applicable to bus companies.

History. 1947, c. 1008, s. 23; 1949, c. 1132, s. 21; 1963, c. 1165, s. 1; 1967, c. 1201; 1985, c. 676, s. 12; 1995, c. 523, s. 3.

Legal Periodicals.

For survey of 1977 law on common carriers, see 56 N.C.L. Rev. 853 (1978).

CASE NOTES

Evidence Justifying a Finding of Dormancy. —

Under subsection (c) the failure to perform any transportation for compensation under the authority of the franchise for a period of 30 days is prima facie evidence that the franchise is dormant. Such evidence is sufficient to justify but not to compel a finding that the franchise is dormant. State ex rel. Utils. Comm'n v. Estes Express Lines, 33 N.C. App. 174, 234 S.E.2d 624, 1977 N.C. App. LEXIS 2121 (1977).

Upon a prima facie showing of dormancy under subsection (c) the Commission in its discretion may then consider other factors affecting the performance of such services, the subsection listing factors which may be considered. If the Commission in its discretion considers other factors, it may find that the evidence relating to one or more of these factors rebuts the prima facie evidence of dormancy and that the franchise is not dormant. And if the evidence relating to one or more of these factors, as found by the Commission, is competent, material and substantial, the finding will not be disturbed on appeal under G.S. 62-94(b)(5). State ex rel. Utils. Comm'n v. Estes Express Lines, 33 N.C. App. 174, 234 S.E.2d 624, 1977 N.C. App. LEXIS 2121 (1977).

Evidence Sufficient to Rebut Dormancy Case. —

Evidence that transferor continuously advertised its services, that it was ready, willing and able to haul both exempt and nonexempt commodities under its franchise, and that it charged published tariff rates in hauling both exempt and nonexempt commodities, was competent, material and substantial, and was sufficient to rebut the prima facie evidence of dormancy and to support the consideration by the Commission of one or more of the “other factors” listed in subsection (c). State ex rel. Utils. Comm'n v. Estes Express Lines, 33 N.C. App. 174, 234 S.E.2d 624, 1977 N.C. App. LEXIS 2121 (1977).

Effect on Transfer of Dormancy Finding. —

Where the issue of dormancy under subsection (c) has been raised, if the Commission finds that the franchise is not dormant, it must then determine if the criteria required by G.S. 62-111 for approval of the transfer have been met. If the Commission finds that the franchise is dormant under subsection (c), the application for transfer must be denied, because approval would in effect constitute the granting of a new franchise without satisfying the new authority test and other requirements of G.S. 62-262(e). State ex rel. Utils. Comm'n v. Estes Express Lines, 33 N.C. App. 174, 234 S.E.2d 624, 1977 N.C. App. LEXIS 2121 (1977).

When the irregular route operating authority portion of applicant’s franchise certificate was suspended, any service provided under this part of the certificate naturally was suspended, so that the Commission did not err in concluding that the portion of the franchise certificate providing for irregular route authority was suspended. State ex rel. Utils. Comm'n v. Estes Express Lines, 33 N.C. App. 99, 234 S.E.2d 628, 1977 N.C. App. LEXIS 2110 (1977).

§ 62-113. Terms and conditions of franchises.

  1. Each franchise shall specify the service to be rendered and the routes over which, the fixed termini, if any, between which, and the intermediate and off-route points, if any, at which, and in case of operations not over specified routes or between fixed termini, the territory within which, a motor carrier or other public utility is authorized to operate: and there shall, at the time of issuance and from time to time thereafter, be attached to the privileges granted by the franchise such reasonable terms, conditions, and limitations as the public convenience and necessity may from time to time require, including terms, conditions, and limitations as to the extension of the route or routes of a carrier, and such terms and conditions as are necessary to carry out, with respect to the operations of a carrier or other public utility, the requirements established by the Commission under this Chapter; provided, however, that no terms, conditions, or limitations shall restrict the right of a motor carrier of household goods only to add to its equipment and facilities over the routes, between the termini, or within the territory specified in the franchises, as the development of the business and the demands of the public shall require. This subsection shall not be applicable to bus companies or their franchises.
  2. Each bus company franchise shall specify the fixed routes over which, and the fixed termini, if any, between which the bus company may operate. A franchise for bus companies engaged in charter operations may provide for fixed routes or statewide operating authority.
  3. Any broadband service provider that provides voice grade communication services within a defined service territory or franchise area, and elects to provide broadband service in areas contiguous to its service territory or franchise area, may provide such voice grade service as an incident to such broadband service to a customer when the incumbent telecommunications or cable provider is not currently providing broadband service to the customer, without violating its service territory restrictions or franchise agreement.

History. 1947, c. 1008, s. 12; 1949, c. 1132, s. 11; 1963, c. 1165, s. 1; 1985, c. 676, s. 13; 1995, c. 523, s. 4; 2009-80, s. 1.

Effect of Amendments.

Session Laws 2009-80, s. 1, effective June 11, 2009, added subsection (c).

CASE NOTES

The Commission need not approve or reject an application as submitted. It may attach to the certificate granted such reasonable terms, conditions and limitations as the public convenience and necessity may require. State ex rel. Utils. Comm'n v. Carolina Coach Co., 260 N.C. 43, 132 S.E.2d 249, 1963 N.C. LEXIS 645 (1963).

Obligations Inherent in Acceptance of Certificate. —

Inherent in the acceptance of a certificate and the exercise of the rights and privileges evidenced thereby is the correlative obligation to serve the shipping public faithfully, in accordance with reasonable rules and regulations prescribed by the Utilities Commission and in conformity with the requirements of the statute prescribing duties to be performed by the carrier for the protection of the shipping public. Hough-Wylie Co. v. Lucas, 236 N.C. 90, 72 S.E.2d 11, 1952 N.C. LEXIS 490 (1952).

§ 62-114. [Repealed]

Repealed by Session Laws 1995, c. 523, s. 5.

§ 62-115. Issuance of partnership franchises.

No franchise shall be issued under this Article to two or more persons until the persons have executed a partnership agreement, filed a copy of the agreement with the Commission, and indicated to the Commission, in writing, that they have complied with Article 14A of Chapter 66 of the General Statutes relating to engaging in business under an assumed business name.

History. 1947, c. 1008, s. 14; 1949, c. 1132, s. 14; 1961, c. 472, s. 5; 1963, c. 1165, s. 1; 2016-100, s. 8.

Editor’s Note.

Session Laws 2016-100, s. 12 provides, in part: “Sections 1 through 9 of this act become effective July 1, 2017, and do not affect a civil action or proceeding commenced or a right accrued before July 1, 2017. Sections 1 through 9 of this act become effective only if funds are appropriated by the 2015 General Assembly, 2016 Regular Session, to implement the provisions of G.S. 66-71.9, as enacted by Section 2 of this act.” The appropriation was made.

Effect of Amendments.

Session Laws 2016-100, s. 8, effective July 1, 2017, in the section, substituted “Article 14A” for “Article 14,” added “of the General Statutes” following “of Chapter 66,” added “business” preceding “name” at the end and made stylistic changes. For contingent effective date, see Editor’s note.

§ 62-116. Issuance of temporary or emergency authority.

  1. Upon the filing of an application in good faith for a franchise, the Commission may in its discretion, after notice by regular mail to all persons holding franchises authorizing similar services within the same territory and upon a finding that no other adequate existing service is available, pending its final decision on the application, issue to the applicant appropriate temporary authority to operate under such just and reasonable conditions and limitations as the Commission deems necessary or desirable to impose in the public interest; provided, however, that pending such final decision on the application, the applicant shall comply with all the provisions of this Chapter, and with the lawful orders, rules and regulations of the Commission promulgated thereunder, applicable to holders of franchises, and upon failure of an applicant so to do, after reasonable notice from the Commission requiring compliance therewith in the particulars set out in the notice, and after hearing, the application may be dismissed by the Commission without further proceedings, and temporary authority issued to such applicant may be revoked. The authority granted under this section shall not create any presumption nor be considered in the action on the permanent authority application.
  2. Upon its own initiative, or upon written request by any customer or by any representative of a local or State government agency, and after issuance of notice to the owner and operator and after hearing in accordance with G.S. 1A-1, Rule 65(b), the Commission may grant emergency operating authority to any person to furnish water or sewer utility service to meet an emergency to the extent necessary to relieve the emergency; provided, that the Commission shall find from such request, or from its own knowledge, that a real emergency exists and that the relief authorized is immediate, pressing and necessary in the public interest, and that the person so authorized has the necessary ability and is willing to perform the prescribed emergency service. Upon termination of the emergency, the emergency operating authority so granted shall expire upon order of the Commission. An emergency is defined herein as the imminent danger of losing adequate water or sewer utility service or the actual loss thereof.

History. 1947, c. 1008, s. 10; 1949, c. 1132, s. 9; 1963, c. 1165, s. 1; 1973, c. 1108.

§ 62-117. Same or similar names prohibited.

No public utility holding or operating under a franchise issued under this Chapter shall adopt or use a name used by any other public utility, or any name so similar to a name of another public utility as to mislead or confuse the public, and the Commission may, upon complaint, or upon its own initiative, in any such case require the public utility to discontinue the use of such name, preference being given to the public utility first adopting and using such name.

History. 1947, c. 1008, s. 15; 1949, c. 1132, s. 15; 1963, c. 1165, s. 1.

§ 62-118. Abandonment and reduction of service.

  1. Upon finding that public convenience and necessity are no longer served, or that there is no reasonable probability of a public utility realizing sufficient revenue from a service to meet its expenses, the Commission shall have power, after petition and notice, to authorize by order any public utility to abandon or reduce such service. Upon request from any party having an interest in said utility service, the Commission shall hold a public hearing on such petition, and may on its own motion hold a public hearing on such petition. Provided, however, that abandonment or reduction of service of motor carriers shall not be subject to this section, but shall be authorized only under the provisions of G.S. 62-262(k) and G.S. 62-262.2.
  2. If any person or corporation furnishing water or sewer utility service under this Chapter shall abandon such service without the prior consent of the Commission, and the Commission subsequently finds that such abandonment of service causes an emergency to exist, the Commission may, unless the owner or operator of the affected system consents, apply in accordance with G.S. 1A-1, Rule 65, to a superior court judge who has jurisdiction pursuant to G.S. 7A-47.1 or 7A-48 in the district or set of districts as defined in G.S. 7A-41.1 in which the person or corporation so operates, for an order restricting the lands, facilities and rights-of-way used in furnishing said water or sewer utility service to continued use in furnishing said service during the period of the emergency. An emergency is defined herein as the imminent danger of losing adequate water or sewer utility service or the actual loss thereof. The court shall have jurisdiction to restrict the lands, facilities, and rights-of-way to continued use in furnishing said water or sewer utility service by appropriate order restraining their being placed to other use, or restraining their being prevented from continued use in furnishing said water or sewer utility service, by any person, corporation, or their representatives. The court may, in its discretion, appoint an emergency operator to assure the continued operation of such water or sewer utility service. The court shall have jurisdiction to require that reasonable compensation be paid to the owner, operator or other party entitled thereto for the use of any lands, facilities, and rights-of-way which are so restricted to continued use for furnishing water or sewer utility service during the period of the emergency, and it may require the emergency operator of said lands, facilities, and rights-of-way to post bond in an amount required by the court. In no event shall such compensation, for each month awarded, exceed the net average monthly income of the utility for the 12-month period immediately preceding the order restricting use.
  3. Whenever the Commission, upon complaint or investigation upon its own motion, finds that the facilities being used to furnish water or sewer utility service are inadequate to such an extent that an emergency (as defined in G.S. 62-118(b) above) exists, and further finds that there is no reasonable probability of the owner or operator of such utility obtaining the capital necessary to improve or replace the facilities from sources other than the customers, the Commission shall have the power, after notice and hearing, to authorize by order that such service be abandoned or reduced to those customers who are unwilling or unable to advance their fair share of the capital necessary for such improvements. The amount of capital to be advanced by each customer shall be subject to approval by the Commission, and shall be advanced under such conditions as will enable each customer to retain a proprietary interest in the system to the extent of the capital so advanced. The remedy prescribed in this subsection is in addition to other remedies prescribed by law.

History. 1933, c. 307, s. 32; 1963, c. 1165, s. 1; 1971, c. 552, s. 1; 1973, c. 1393; 1985, c. 676, s. 14; 1987 (Reg. Sess., 1988), c. 1037, s. 93; 1989 (Reg. Sess., 1990), c. 1024, s. 15.

CASE NOTES

Paramount Right of State to Regulate Public Utilities. —

The power of a municipality to grant franchises to public utilities for the use of its streets and to provide service to its citizens must yield to the paramount right of the State to regulate public utilities through the Utilities Commission, even when they are operated within the corporate boundaries of a municipality. Duke Power Co. v. City of High Point, 22 N.C. App. 91, 205 S.E.2d 774, 1974 N.C. App. LEXIS 2253, cert. denied, 285 N.C. 661, 207 S.E.2d 752, 1974 N.C. LEXIS 1084 (1974).

Utility Owes Duty of Continuous Operation. —

While a public utility retains its franchise, it owes to the State and the public the duty of continuous operation. State v. Haywood Elec. Membership Corp., 260 N.C. 59, 131 S.E.2d 865, 1963 N.C. LEXIS 637 (1963).

Consent of Customer or Commission Necessary Before Abandonment of Service. —

A power company may not abandon service to any customer, subject to the customer’s paying his bill, without the consent of the customer or authorization of the Utilities Commission. Duke Power Co. v. City of High Point, 22 N.C. App. 91, 205 S.E.2d 774, 1974 N.C. App. LEXIS 2253, cert. denied, 285 N.C. 661, 207 S.E.2d 752, 1974 N.C. LEXIS 1084 (1974).

Customer Entitled to Restoration of Service Absent Contrary Order. —

Where a power company discontinued its service for nonpayment of charges, the customer, upon payment of the charges, was entitled to restoration of the service where the company did not obtain an order from the Commission. Sweetheart Lake, Inc. v. Carolina Power & Light Co., 211 N.C. 269, 189 S.E. 785, 1937 N.C. LEXIS 57 (1937).

Discretionary Power of Commission to Authorize Discontinuance. —

The General Assembly intended that the Utilities Commission exercise the power conferred upon it to authorize a discontinuance of an established service in large measure according to its judgment and discretion. State ex rel. Utils. Comm'n v. Southern Ry., 254 N.C. 73, 118 S.E.2d 21, 1961 N.C. LEXIS 364 (1961).

The power of the Commission to authorize an abandonment of service is, in large measure, discretionary. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

The Commission’s power to require a utility to continue a service is not unlimited. To require a utility, particularly a small operation, to continue an unprofitable operation would violate constitutional guarantees against the taking of property without just compensation. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

Propriety of Order Requiring Continued Operation. —

An order of the Commission, based upon proper findings and conclusions, requiring appellant to continue operation of her utilities would not violate constitutional prohibitions against involuntary servitude. Appellant voluntarily put her land and equipment to a public use and collected compensation for the services which she provided, and having done so, the Commission may require that she continue to use it in the service to which she voluntarily dedicated it so long as she is justly compensated for such service. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

Showing Required for Abandonment. —

When a public utility seeks to abandon service, it must establish that the public no longer needs the service which it was created to render, or that there is no reasonable probability of its being able to realize sufficient revenue by the rendition of such service to meet its expenses. State v. Haywood Elec. Membership Corp., 260 N.C. 59, 131 S.E.2d 865, 1963 N.C. LEXIS 637 (1963).

Where a utility seeks authorization to abandon service, the ultimate issue for resolution is whether the operation of the system can produce sufficient revenues to meet the expenses of operation. To resolve this issue, there must be findings of fact as to the reasonable expenses of operation and the revenues which the system may be reasonably expected to produce. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

The burden is on the utility seeking authorization to abandon service to establish that there is no reasonable probability of its being able to realize sufficient revenue by the rendition of such service to meet its expenses. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

The doctrine of convenience and necessity is a relative or elastic theory rather than an abstract or absolute rule. The facts in each case must be separately considered, and from those facts it must be determined whether or not public convenience and necessity require a given service to be performed or dispensed with. The convenience and necessity required are those of the public and not of an individual or individuals. State ex rel. Utils. Comm'n v. Southern Ry., 254 N.C. 73, 118 S.E.2d 21, 1961 N.C. LEXIS 364 (1961).

Waste of a utility’s manpower or other resources, with no substantial resulting benefit to the public, is not in the public interest and is not required. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 268 N.C. 242, 150 S.E.2d 386, 1966 N.C. LEXIS 1171 (1966).

A railroad may not be denied the right to curtail or abandon a service for which there is no substantial public need, even though, upon its entire business, the company is earning a fair rate of return. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 268 N.C. 242, 150 S.E.2d 386, 1966 N.C. LEXIS 1171 (1966).

Though prosperous, a railroad or other utility company may not be denied the right to effect economies in its operation, so as to increase its earnings, unless it may reasonably be found, upon the evidence before the Commission, that the public convenience and necessity requires the continuation of the service in question. An occasional inconvenience to a shipper, which is trivial in comparison with the saving to the railroad from the elimination of the service, will not suffice to show such public convenience and necessity. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 268 N.C. 242, 150 S.E.2d 386, 1966 N.C. LEXIS 1171 (1966).

Railroad May Be Required to Retain Station Required by Public Convenience and Necessity. —

A railroad may be required to keep a station open, with an agent in attendance, if the public convenience and necessity requires such service, even though this can be done only at a loss to the railroad, provided such loss is not so great as to be unreasonable in comparison with the public’s benefit from the service. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 268 N.C. 242, 150 S.E.2d 386, 1966 N.C. LEXIS 1171 (1966).

Railroad May Not Substantially Reduce Hours Station Is Open Without Commission’s Order. —

A liberal construction of G.S. 62-2, 62-32, 62-131 and 62-247 and this section, so as to effectuate the policy of the State as therein declared, compels the conclusion that when a railroad corporation has established and maintained a freight depot or passenger station pursuant to the order of the Commission, or has established and maintained for a year or more such depot or station on its own initiative, it may not, without first obtaining an order from the Commission authorizing it to do so, substantially reduce the number of hours per day during which such station shall be kept open and attended by an agent of the railroad for the service of the public. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 268 N.C. 242, 150 S.E.2d 386, 1966 N.C. LEXIS 1171 (1966).

But Commission May Not Withhold Approval of Reduction Unreasonably. —

When a railroad company applies for an order authorizing it to substantially reduce the number of hours per day during which a depot or station shall be kept open and attended by an agent, the Commission may not withhold its approval unreasonably and arbitrarily. It may deny such permission only after a hearing and only if it finds and concludes, upon competent, material and substantial evidence, in view of the entire record, both that the public convenience and necessity requires the station or depot to be so kept open for a greater portion of the day, and that the railroad, by so doing, will not incur costs out of proportion to any benefit to the public. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 268 N.C. 242, 150 S.E.2d 386, 1966 N.C. LEXIS 1171 (1966).

As to power of Commission under former G.S. 62-39 to require transportation and transmission companies to maintain facilities, see State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 233 N.C. 365, 64 S.E.2d 272, 1951 N.C. LEXIS 304 (1951); State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 235 N.C. 273, 69 S.E.2d 502, 1952 N.C. LEXIS 375 (1952); State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 238 N.C. 701, 78 S.E.2d 780, 1953 N.C. LEXIS 614 (1953).

Evidence Held to Show Convenience and Necessity. —

Evidence before the Commission indicating that a number of the residences served by applicant’s water and sewer systems were situated on quarter-acre lots, which were of insufficient size to support both a well and septic system, and that the occupants of these residences, who were currently among appellant’s customers, had no alternative means of water supply or sewage disposal other than the service provided by appellant, clearly supported the conclusion not only that appellant’s services constituted a convenience to that segment of the public who used them, but also that such services were necessary to the safety and health of the public. State ex rel. Utils. Comm'n v. Mackie, 79 N.C. App. 19, 338 S.E.2d 888, 1986 N.C. App. LEXIS 2022 (1986), modified, 318 N.C. 686, 351 S.E.2d 289, 1987 N.C. LEXIS 1742 (1987).

Article 6A. Radio Common Carriers. [Repealed]

§§ 62-119 through 62-125. [Repealed]

Repealed by Session Laws 1995, c. 523, s. 31.

§ 62-126.

Reserved for future codification purposes.

Article 6B. Distributed Resources Access Act.

§ 62-126.1. Title.

This Article may be cited as the “Distributed Resources Access Act.”

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 6(d) made this Article effective July 27, 2017.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§ 62-126.2. Declaration of policy.

The General Assembly of North Carolina finds that as a matter of public policy it is in the interest of the State to encourage the leasing of solar energy facilities for retail customers and subscription to shared community solar energy facilities. The General Assembly further finds and declares that in encouraging the leasing of and subscription to solar energy facilities pursuant to this act, cross-subsidization should be avoided by holding harmless electric public utilities’ customers that do not participate in such arrangements.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§ 62-126.3. Definitions.

For purposes of this Article, the following definitions apply:

  1. Affiliate. — Any entity directly or indirectly controlling or controlled by or under direct or indirect common control with an electric power supplier.
  2. Commission. — The North Carolina Utilities Commission.
  3. Community solar energy facility. — A solar energy facility whose output is shared through subscriptions.
  4. Customer generator lessee. — A lessee of a solar energy facility.
  5. Electric generator lessor. — The owner of solar energy facility that leases the facility to a customer generator lessee, including any agents who act on behalf of the electric generator lessor. For purposes of this Article, an electric generator lessor shall not be considered a public utility under G.S. 62-3(23).
  6. Electric power supplier. — A public utility, an electric membership corporation, or a municipality that sells electric power to retail electric customers in the State.
  7. Electric public utility. — A public utility as defined by G.S. 62-3(23) that sells electric power to retail electric customers in the State.
  8. Maximum annual peak demand. — The maximum single hour of electric demand actually occurring or estimated to occur at a premises.
  9. Net metering. — To use electrical metering equipment to measure the difference between the electrical energy supplied to a retail electric customer by an electric power supplier and the electrical energy supplied by the retail electric customer to the electric power supplier over the applicable billing period.
  10. Offering utility. — Any electric public utility as defined in G.S. 62-3(23) serving at least 150,000 North Carolina retail jurisdictional customers as of January 1, 2017. The term shall not include any other electric public utility, electric membership corporation, or municipal electric supplier authorized to provide retail electric service within the State. An offering utility’s participation in this Article as an electric generator lessor shall not otherwise alter its status as a public utility with respect to any other provision of this Chapter. An offering utility’s participation in this Article shall be regulated pursuant to the provisions of this Article.
  11. Person. — The same meaning as provided by G.S. 62-3(21).
  12. Premises. — The building, structure, farm, or facility to which electricity is being or is to be furnished. Two or more buildings, structures, farms, or facilities that are located on one tract or contiguous tracts of land and that are utilized by one electric customer for commercial, industrial, institutional, or governmental purposes shall constitute one “premises,” unless the electric service to the building, structures, farms, or facilities are separately metered and charged.
  13. Property. — The tract of land on which the premises is located, together with all the adjacent contiguous tracts of land utilized by the same retail electric customer.
  14. Solar energy facility. — A electric generating facility leased to a customer generator lessee that meets the following requirements:
    1. Generates electricity from a solar photovoltaic system and related equipment that uses solar energy to generate electricity.
    2. Is limited to a capacity of (i) not more than the lesser of 1,000 kilowatts (kW) or one hundred percent (100%) of contract demand if a nonresidential customer or (ii) not more than 20 kilowatts (kW) or one hundred percent (100%) of estimated electrical demand if a residential customer.
    3. Is located on a premises owned, operated, leased, or otherwise controlled by the customer generator lessee that is also the premises served by the solar energy facility.
    4. Is interconnected and operates in parallel phase and synchronization with an offering utility authorized by the Commission to provide retail electric service to the premises and has been approved for interconnection and parallel operation by that public utility.
    5. Is intended only to offset no more than one hundred percent (100%) of the customer generator lessee’s own retail electrical energy consumption at the premises.
    6. Meets all applicable safety, performance, interconnection, and reliability standards established by the Commission, the public utility, the National Electrical Code, the National Electrical Safety Code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, the Federal Energy Regulatory Commission, and any local governing authorities.
  15. Subscription. — A contract between a subscriber and the owner of a community solar energy facility that allows a subscriber to receive a bill credit for the electricity generated by a community solar energy facility in proportion to the electricity generated.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§ 62-126.4. Commission to establish net metering rates.

  1. Each electric public utility shall file for Commission approval revised net metering rates for electric customers that (i) own a renewable energy facility for that person’s own primary use or (ii) are customer generator lessees.
  2. The rates shall be nondiscriminatory and established only after an investigation of the costs and benefits of customer-sited generation. The Commission shall establish net metering rates under all tariff designs that ensure that the net metering retail customer pays its full fixed cost of service. Such rates may include fixed monthly energy and demand charges.
  3. Until the rates have been approved by the Commission as required by this section, the rate shall be the applicable net metering rate in place at the time the facility interconnects. Retail customers that own and install an on-site renewable energy facility and interconnect to the grid prior to the date the Commission approves new metering rates may elect to continue net metering under the net metering rate in effect at the time of interconnection until January 1, 2027.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§ 62-126.5. Scope of leasing program in offering utilities’ service areas.

  1. An offering utility and its affiliates may be deemed to be electric generator lessors and may offer leases to solar energy facilities only within the offering utility’s own assigned service area or, in the case of an affiliate, the service area assigned to an affiliated offering utility. The costs an offering public utility incurs in marketing, installing, owning, or maintaining leases through its own leasing programs as a lessor shall not be recovered from other nonparticipating utility customers through rates, and the Commission shall not have any jurisdiction over the financial terms of such leases. An offering utility, and the customer generator lessees that lease facilities from it, may participate on an equal basis with other lessors and lessees and in any approved incentive program offered by the utility to its customers.
  2. An electric generator lessor that owns a solar energy facility within the assigned service area of an offering utility and that is located on a premises owned or leased by a customer generator lessee shall be permitted to lease such facility exclusively to a customer generator lessee under a lease, provided that the electric generator lessor complies with the terms, conditions, and restrictions set forth within this section and holds a valid certificate issued by the Commission pursuant to G.S. 62-126.7. An electric generator lessor shall not be considered a “public utility” under G.S. 62-3(23) if the solar energy facility is only made available to a customer generator lessee under a lease that conforms to the requirements of G.S. 62-126.6 for the customer generator lessee’s use on its premises where the solar energy facility is located to serve the electric energy requirements of that particular premises, including to enable the customer generator lessee to obtain a credit for the electricity generated under an applicable net metering tariff or to engage in the sale of excess energy from the solar energy facility to an offering utility.
  3. Any lease of a solar energy facility not entered into pursuant to this section is prohibited and any electric generator lessor that enters into a lease outside of an offering utility’s program implemented pursuant to this section or otherwise enters into a contract or agreement where payments are based upon the electric output of a solar energy facility shall be considered a “public utility” under G.S. 62-3(23) and be in violation of the franchised service rights of the offering utility or any other electric power supplier authorized to provide retail electric service in the State. This section does not authorize the sale of electricity from solar energy facilities directly to any customer of an offering utility or other electric power supplier by the owner of a solar energy facility. The electrical output from any solar energy facility leased pursuant to this program shall be the sole and exclusive property of the customer generator lessee.
  4. The total installed capacity of all solar energy facilities on an offering utility’s system that are leased pursuant to this section shall not exceed one percent (1%) of the previous five-year average of the North Carolina retail contribution to the offering utility’s coincident retail peak demand. The offering utility may refuse to interconnect customers that would result in this limitation being exceeded. Each offering utility shall establish a program for new installations of leased equipment to permit the reservation of capacity by customer generator lessees, whether participating in a public utility or nonutility lessor’s leasing program, on its system, including provisions to prevent or discourage abuse of such programs. Such programs must provide that only prospective individual customer generator lessees may apply for, receive, and hold reservations to participate in the offering utility’s leasing program. Each reservation shall be for a single customer premises only and may not be sold, exchanged, traded, or assigned except as part of the sale of the underlying premises.
  5. To comply with the terms of this section, each customer generator lessor’s solar energy facility shall serve only one premises and shall not serve multiple customer generator lessees or multiple premises. The customer generator lessee must enroll in the applicable rate schedule made available by the interconnecting offering utility, subject to the participation limitations set forth in subsection (a) of this section.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§ 62-126.6. Electric customer generator leasing requirements; disclosures; records.

  1. A lease agreement offered by an electric generator lessor must meet the following requirements:
    1. Be signed and dated by the retail electric customer. Any agreement that contains blank spaces when signed by the retail electric customer is voidable at the option of the retail electric customer until the solar energy facility is installed.
    2. Be in at least 12-point type.
    3. Include a provision granting the retail electric customer the right to rescind the agreement for a period of not less than three business days after the agreement is signed by the retail electric customer.
    4. Provide a description of the solar energy facility, including the make and model of the solar energy facility’s major components, and a guarantee concerning energy production output that the solar energy facility will provide over the expected life of the agreement.
    5. Separately set forth the following items, as applicable:
      1. The total cost to the retail electric customer under the lease agreement for the solar energy facility over the life of the agreement.
      2. Any interest, installation fees, document preparation fees, service fees, or other costs to be paid by the retail electric customer.
      3. The total number of payments, including the interest, the payment frequency, the estimated amount of the payment expressed in dollars, and the payment due date over the leased term.
    6. Identify any State or federal tax incentives that are included in the calculation of lease payments.
    7. Disclose whether the warranty or maintenance obligations related to the solar energy facility may be sold or transferred to a third party.
    8. Include a disclosure, the receipt of which shall be separately acknowledged by the retail electric customer, if a transfer of the lease agreement is subject to any restrictions pursuant to the agreement on the retail electric customer’s ability to modify or transfer ownership of a solar energy facility, including whether any modification or transfer is subject to review or approval by a third party. If the modification or transfer of the solar energy facility is subject to review or approval by a third party, the agreement must identify the name, address, and telephone number of, and provide for updating any change in, the entity responsible for approving the modification or transfer.
    9. Include a disclosure, the receipt of which shall be separately acknowledged by the retail electric customer, if a modification or transfer of ownership of the real property to which the solar energy facility is or will be affixed is subject to any restrictions pursuant to the agreement on the retail electric customer’s ability to modify or transfer ownership of the real property to which the solar energy facility is installed or affixed, including whether any modification or transfer is subject to review or approval by a third party. If the modification or transfer of the real property to which the solar energy facility is affixed or installed is subject to review or approval by a third party, the agreement must identify the name, address, and telephone number of, and provide for updating any change in, the entity responsible for approving the modification or transfer.
    10. Provide a full and accurate summary of the total costs under the agreement for maintaining and operating the solar energy facility over the life of the solar energy facility, including financing, maintenance, and construction costs related to the solar energy facility.
    11. If the agreement contains an estimate of the retail electric customer’s future utility charges based on projected utility rates after the installation of a solar energy facility, provide an estimate of the retail electric customer’s estimated utility charges during the same period as impacted by potential utility rate changes ranging from at least a five percent (5%) annual decrease to at least a five percent (5%) annual increase from current utility costs. The comparative estimates must be calculated based on the same utility rates.
    12. Include a disclosure, the receipt of which shall be separately acknowledged by the retail electric customer that states: “Utility rates and utility rate structures are subject to change. These changes cannot be accurately predicted and projected savings from your solar energy facility are therefore subject to change. Tax incentives are subject to change or termination by executive, legislative, or regulatory action.”
  2. Before the maintenance or warranty obligations of a solar energy facility under an existing lease agreement are transferred, the person who is currently obligated to maintain or warrant the solar energy facility must disclose the name, address, and telephone number of the person who will be assuming the maintenance or warranty of the solar energy facility.
  3. If the electric generator lessor’s marketing materials contain an estimate of the retail electric customer’s future utility charges based on projected utility rates after the installation of a solar energy facility, the marketing materials must contain an estimate of the retail electric customer’s estimated utility charges during the same period as impacted by potential utility rate changes ranging from at least a five percent (5%) annual decrease to at least a five percent (5%) annual increase from current utility costs.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§ 62-126.7. Commission authority over electric generator lessors.

  1. No person shall engage in the leasing of a solar energy facility without having applied for and obtained a certificate authorizing those operations from the Commission. The application for a certificate of authority to engage in business as an electric generator lessor shall be made in a form prescribed by the Commission and accompanied by the fee required pursuant to G.S. 62-300(a)(16).
  2. In acting upon the application for a certificate of authority to engage in business as an electric generator lessor, the Commission shall take into account the State’s interest in encouraging the leasing of solar electric generation facilities and avoidance of cross-subsidization as declared by the policy objectives of this Article as provided in G.S. 62-126.2, as well as the policy of the State, as provided in G.S. 62-2(a). The Commission shall issue a certificate of authority to engage in business as an electric generator lessor if the Commission finds that the applicant is fit, willing, and able to conduct that business in accordance with the provisions of this Article. The certificate shall be effective from the date issued unless otherwise specified therein and shall remain in effect until terminated under the terms thereof, or until suspended or revoked as herein provided.
  3. As a condition for issuance and continuation of a certificate of authority for an electric generator lessor, the applicant shall certify to the Commission all of the following:
    1. The applicant will register with the Commission each solar energy facility that the applicant leases to a customer generator lessee.
    2. That each lease of a solar energy facility that the applicant offers or accepts will comply with the provisions of this Article.
    3. The applicant will consent to the auditing of its books and records by the Public Staff insofar as those records relate to transactions with an offering utility or a customer generator lessee that is located in the State.
    4. That the applicant will conduct its business in substantial compliance with all federal and State laws, regulations, and rules for the protection of the environment and conservation of natural resources, the provision of electric service, and the protection of consumers.
  4. Upon the request of an electric public utility, an electric membership corporation, the Public Staff, a customer generator lessee, or person having an interest in the electric generator lessor’s conduct of its business, the Commission may review the certificate to determine whether the electric generator lessor is conducting business in compliance with this Article. After notice to the electric generator lessor, the Commission may suspend the certificate and enter upon a hearing to determine whether the certificate should be revoked. After the hearing, and for good cause shown, the Commission may, in its discretion, reinstate a suspended certificate, continue a suspension of a certificate, or revoke a certificate.
  5. It shall be a violation of law punishable by a civil penalty of not more than ten thousand dollars ($10,000) per occurrence for any person to either directly or indirectly do any of the following:
    1. Solicit business as a lessor of solar energy facilities without a valid certificate issued under this section or otherwise in violation of the terms of this Article.
    2. Engage in any unfair or deceptive practice in the leasing of solar energy facilities or otherwise violate the requirements of G.S. 62-126.6.
    3. Operate in violation of the terms of the certificate issued by this Article.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§ 62-126.8. Community solar energy facilities.

  1. Each offering utility shall file a plan with the Commission to offer a community solar energy facility program for participation by its retail customers. The community solar energy facility program shall be designed so that each community solar energy facility offsets the energy use of not less than five subscribers and no single subscriber has more than a forty percent (40%) interest. The offering utility shall make its community solar energy facility program available on a first-come, first-served basis until the total nameplate generating capacity of those facilities equals 20 megawatts (MW).
  2. A community solar energy facility shall have a nameplate capacity of no more than five megawatts (MW). Each subscription shall be sized to represent at least 200 watts (W) of the community solar energy facility’s generating capacity and to supply no more than one hundred percent (100%) of the maximum annual peak demand of electricity of each subscriber at the subscriber’s premises.
  3. A community solar energy facility must be located in the service territory of the offering utility filing the plan. Subscribers shall be located in the State of North Carolina and the same county or a county contiguous to where the facility is located. The electric public utility may file a request for Commission approval for an exemption from the location requirement of this subsection and the Commission may approve the request for a facility located up to 75 miles from the county of the subscribers, if the Commission deems the exemption to be in the public interest.
  4. The offering utility shall credit the subscribers to its community solar energy facility for all subscribed shares of energy generated by the facility at the avoided cost rate.
  5. The Commission may approve, disapprove, or modify a community solar energy facility program. The program shall meet all of the following requirements:
    1. Establish uniform standards and processes for the community solar energy facilities that allow the electric public utility to recover reasonable interconnection costs, administrative costs, fixed costs, and variable costs associated with each community solar energy facility, including purchase expenses if a power purchase agreement is elected as the method of energy procurement by the offering utility.
    2. Be consistent with the public interest.
    3. Identify the information that must be provided to potential subscribers to ensure fair disclosure of future costs and benefits of subscriptions.
    4. Include a program implementation schedule.
    5. Identify all proposed rules and charges.
    6. Describe how the program will be promoted.
    7. Hold harmless customers of the electric public utility who do not subscribe to a community solar energy facility.
    8. Allow subscribers to have the option to own the renewable energy certificates produced by the community solar energy facility.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 6(d) made this section effective July 27, 2017, and further provides: “The plan required to be filed with the Utilities Commission pursuant to G.S. 62-126.8(a), as enacted by subsection (a) of this section, shall be filed by the electric public utility no later than 180 days after the effective date of this section.”

Session Laws 2017-192, s. 14(a), contains a severability clause.

Legal Periodicals.

For article, “Solar Energy for the People of North Carolina: Net Metering After the competitive Energy Solutions Act of 2017,” see 12 Elon L. Rev. 175 (2020).

§ 62-126.9. Scope of leasing program by municipalities.

  1. A municipality that sells electric power to retail customers in the State may elect, by action of its governing council or commission, to be deemed to be an electric generator lessor and may offer leases to solar energy facilities located within the municipality’s service territory. The costs a municipality incurs in marketing, installing, owning, or maintaining leases through its own leasing programs as a lessor shall not be recovered from other nonparticipating municipality retail customers through rates.
  2. Provided the municipality has elected to offer a leasing program, an electric generator lessor that owns a solar energy facility within a municipality’s service territory and that is located on a premises owned or leased by a customer generator lessee shall be permitted to lease such facility exclusively to a customer generator lessee pursuant to a lease under terms and conditions approved by the municipality and holds a valid certificate issued by the Commission pursuant to G.S. 62-126.7. Notwithstanding this subsection, a municipality acting as an electric generator lessor shall not be required to comply with G.S. 62-126.7.
  3. An electric generator lessor, including a municipality acting as an electric generator lessor, shall not be considered a “public utility” under G.S. 62-3(23) if the solar energy facilities are only made available to a customer generator lessee under a lease that conforms to the requirements of G.S. 62-126.6 for the customer generator lessee’s use of the customer generator lessee’s premises where the solar energy facility is located to serve the electric energy requirements of that particular premises, including to enable the customer generator lessee to obtain a credit under an applicable net metering tariff or to engage in the sale of excess energy from the solar energy facility to the municipality; provided, however, that the provisions of G.S. 62-126.4 shall not apply to a municipality or other electric generator lessor that offers leases to solar energy facilities located within the municipality’s service territory pursuant to this section. Any net metering tariffs adopted by such municipality shall be adopted by its governing council or commission in accordance with the rate-setting procedures set forth in Article 16 of Chapter 160A of the General Statutes.
  4. Any lease of a solar energy facility in a municipal electric service area not entered into pursuant to this section is prohibited. This section does not authorize the sale of electricity from solar energy facilities directly to any customer of a municipality by the owner of a solar energy facility. The electrical output from any eligible renewable electric generation facility leased pursuant to this section shall be the sole and exclusive property of the customer generator lessee.
  5. Each eligible solar energy facility shall serve only one premises and shall not serve multiple customer generator lessees or multiple premises. The customer generator lessee must enroll in the applicable rate schedule made available by the municipality, subject to the participation limitations set forth in subsection (a) of this section.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§ 62-126.10. Rules.

The Commission shall adopt rules to implement the provisions of this Article.

History. 2017-192, s. 6(a).

Editor’s Note.

Session Laws 2017-192, s. 14(a), contains a severability clause.

§§ 62-127 through 62-129.

Reserved for future codification purposes.

Article 7. Rates of Public Utilities.

§ 62-130. Commission to make rates for public utilities.

  1. The Commission shall make, fix, establish or allow just and reasonable rates for all public utilities subject to its jurisdiction. A rate is made, fixed, established or allowed when it becomes effective pursuant to the provisions of this Chapter.
  2. Repealed by Session Laws 1985, c. 676, s. 15.
  3. Repealed by Session Laws 2021-23, s. 14, effective May 17, 2021.
  4. The Commission shall from time to time as often as circumstances may require, change and revise or cause to be changed or revised any rates fixed by the Commission, or allowed to be charged by any public utility.
  5. In all cases where the Commission requires or orders a public utility to refund moneys to its customers which were advanced by or overcollected from its customers, the Commission shall require or order the utility to add to said refund an amount of interest at such rate as the Commission may determine to be just and reasonable; provided, however, that such rate of interest applicable to said refund shall not exceed ten percent (10%) per annum.

History. 1899, c. 164, ss. 2, 7, 14; 1903, c. 683; Rev., ss. 1096, 1099, 1106; 1907, c. 469, s. 4; Ex. Sess. 1908, c. 144, s. 1; 1913, c. 127, s. 2; 1917, c. 194; C.S., ss. 1066, 1071, 3489; Ex. Sess. 1920, c. 51, s. 1; 1925, c. 37; 1929, cc. 82, 91; 1933, c. 134, s. 8; 1941, c. 97; 1953, c. 170; 1963, c. 1165, s. 1; 1981, c. 461, s. 1; 1985, c. 676, s. 15(1); 2021-23, s. 14.

Effect of Amendments.

Session Laws 2021-23, s. 14, effective May 17, 2021, deleted subsection (c).

Legal Periodicals.

For article on electric rates, see 12 N.C.L. Rev. 289 (1934).

CASE NOTES

Purpose of Regulation. —

With public utilities the State has undertaken to protect the public from the customary consequences of monopoly, by making the rates and services of the certificate holder subject to regulation and control by the Utilities Commission. In re Aston Park Hosp., 282 N.C. 542, 193 S.E.2d 729, 1973 N.C. LEXIS 1106 (1973).

An uncontrolled legal monopoly in an essential service leads, normally and naturally, to poor service and exorbitant charges. To prevent such result, the legislature has conferred upon the Utilities Commission the power to police the operations of the utility company, so as to require it to render service of good quality at charges which are reasonable. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Article Not in Conflict with Chapter 75. —

The provisions of this Article as to rate regulation are not in conflict with Chapter 75, Monopolies and Trusts. Bennett v. Southern Ry., 211 N.C. 474, 191 S.E. 240, 1937 N.C. LEXIS 133 (1937).

The rates of public utilities under the jurisdiction of the Utilities Commission are not subject to attack on the basis that they violate the antitrust laws. Challenges to rates are limited by the legal theories provided by the Public Utilities Act. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 313 N.C. 215, 328 S.E.2d 264, 1985 N.C. LEXIS 1529 (1985).

Rate Making Within Police Power of State. —

The authority conferred upon the Commission to establish reasonable and just rates for charges by a public service corporation for furnishing electrical power to its customers comes within the police powers of the State, and contracts previously made are subordinate to the public interest that such rates be reasonable and just, and afford the corporation supplying the service a safe return upon its investments, having proper regard to the public interest that plants of this character should be properly run and maintained. State ex rel. Corp. Comm'n v. Cannon Mfg. Co., 185 N.C. 17, 116 S.E. 178, 1923 N.C. LEXIS 6 (1923).

The Commission is given general supervision over railways, street railways, and like companies of the State, and is empowered to fix such notes, charges and tariffs as may be reasonable and just, having in view the value of the property, the cost of improvements and maintenance, the probable earning capacity under the proposed rates, the sums required to meet operating expenses, and other specific matters pertinent to such an inquiry; these are police powers, delegated to the Commission, and governmental so far as they extend. In re Southern Pub. Utils. Co., 179 N.C. 151, 101 S.E. 619, 1919 N.C. LEXIS 31 (1919).

Power to Establish Rates Delegated to Commission. —

The General Assembly has delegated to the Commission, and not to the courts, the duty and power to establish rates for public utilities. State ex rel. N.C. Utils. Comm'n v. Westco Tel. Co., 266 N.C. 450, 146 S.E.2d 487, 1966 N.C. LEXIS 1367 (1966).

This section, in general terms, directs the Commission to establish just and reasonable rates for all utilities. Southern Bell Tel. & Tel. Co. v. Clayton, 266 N.C. 687, 147 S.E.2d 195, 1966 N.C. LEXIS 1421 (1966).

Commission is given broad and general powers to make rates for freight and passenger service. Tilley v. Norfolk & W. Ry., 162 N.C. 37, 77 S.E. 994, 1913 N.C. LEXIS 307 (1913).

Authority of the Utilities Commission to set different rates is not unbridled. 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. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

Duty to Fix Just and Reasonable Rates. —

When the Commission is called upon by either a corporation or those to whom the services are rendered under its franchise to exercise its rate fixing power and authority, it is its duty to fix and establish just and reasonable rates to be charged for such services. Corporation Comm'n v. Henderson Water Co., 190 N.C. 70, 128 S.E. 465, 1925 N.C. LEXIS 11 (1925).

Classification Must Not Be Arbitrary. —

The mere fact of classification in rate regulating is not sufficient to relieve a statute from the reach of the equality clause of the Fourteenth Amendment, and in all cases it must appear, not merely that a classification has been made, but also that it is based upon some reasonable ground, something which bears a just and proper relation to the attempted classification and is not a mere arbitrary selection. Gulf, C. & S.F. Ry. v. Ellis, 165 U.S. 150, 17 S. Ct. 255, 41 L. Ed. 666, 1897 U.S. LEXIS 1957 (1897); Efland v. Southern Ry., 146 N.C. 135, 59 S.E. 355, 1907 N.C. LEXIS 13 (1907).

Unreasonable Application of Same Rates May Be Discriminatory. —

Where substantial differences in services or conditions exist, unreasonable application of the same rates may be discriminatory and thus improper. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

The burden of showing the impropriety of rates established by the Commission lies with the party alleging such discrimination. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

Rates Set by Commission Supersede Contrary Private Contract Provisions. —

Rates for public utility service fixed by an order of the Commission, otherwise lawful, supersede contrary provisions in private contracts concerning rates for such service. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

The rates of transportation allowed carriers of freight are established by the Interstate Commerce Commission and the State Corporation Commission (now the Utilities Commission), and may not be affected by any agreement to the contrary between the carriers or their agents or employees and the shipper; notwithstanding any such agreement, the carrier may demand and enforce the rates established by law. Southern Ry. v. Latham, 176 N.C. 417, 97 S.E. 234, 1918 N.C. LEXIS 262 (1918).

A public service railway corporation operating in various localities may not by contract fix its passenger fares and thus prevent the Commission, under the authority conferred by statute, from determining what rates are, under the circumstances, just and reasonable, for such would authorize such companies to discriminate, unlawfully, among its patrons. In re Southern Pub. Utils. Co., 179 N.C. 151, 101 S.E. 619, 1919 N.C. LEXIS 31 (1919); City of Winston-Salem v. Winston-Salem City Coach Lines, 245 N.C. 179, 95 S.E.2d 510, 1956 N.C. LEXIS 550 (1956).

Enforcement of Such Rates Does Not Impair Obligations of Contract. —

The enforcement of an order of the Commission superseding rates set by contract does not constitute an impairment of the obligation of such contract, since contracts of public utilities, fixing rates for service, are subject to the police power of the State. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

The consumer has no vested right in existing rates and the Commission may change the rates as circumstances dictate. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

The Commission has plenary authority to modify an application by a utility when its modification is based on competent evidence, findings and conclusions showing it to be just and reasonable. The Commission is not limited by the utility’s application in the entry of its final order based on evidence adduced at the hearings. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 361, 230 S.E.2d 671, 1976 N.C. LEXIS 996 (1976).

And to Correct Rate Schedules. —

In the unlikely event that other costs of the utility should decline, the Commission, either on its own motion or that of another interested party, has plenary authority to intervene and make corrections in the utility’s rate schedules including, if circumstances should require it, the abrogation of the fuel clause. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

North Carolina rates may not be structured by external system usage. Such action is outside the intended scope of the Commission’s authority under G.S. 62-2. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

Rates Must Be Fixed Prospectively. —

The Utilities Commission exceeded its statutory authority in requiring a manufacturer to pay a surcharge for emergency natural gas used by the manufacturer prior to the date that the tariff including the surcharge became effective, even though the supplier did not bill the manufacturer for such gas until after the tariff became effective. A rate is fixed or allowed when it becomes effective pursuant to subsection (a) of this section, and rates must be fixed prospectively from their effective date. G.S. 62-136(a) provides that the Commission shall determine rates to be thereafter observed and in force. The Commission may not fix rates retroactively so as to make them collectible for past services. State ex rel. Utils. Comm'n v. Farmers Chem. Ass'n, 42 N.C. App. 606, 257 S.E.2d 439, 1979 N.C. App. LEXIS 3193 (1979), cert. denied, 299 N.C. 124, 261 S.E.2d 926, 1980 N.C. LEXIS 977 (1980).

“Tariff” and “Rates” Synonymous. —

The word “tariff,” used in connection with the rates of a common carrier, did not have any special legal significance that would differentiate it in effect from the word “rates,” used in former G.S. 62-148 in connection with a contract carrier. State ex rel. Utils. Comm'n v. Fleming, 235 N.C. 660, 71 S.E.2d 41, 1952 N.C. LEXIS 465 (1952).

An annual “true up” of the curtailment tracking rate of a natural gas company was not a change in the general fixed rate, since the curtailment tracking rate merely creates an estimated rate based on projected gas availability. Therefore, the “true up” of the CTR is a correction of an estimated rate, and does not constitute retroactive general rate making. State ex rel. Utils. Comm'n v. CF Indus., Inc., 299 N.C. 504, 263 S.E.2d 559, 1980 N.C. LEXIS 935 (1980).

Fuel adjustment clause formula used by power company qualified as a valid part of a rate or rate schedule within the meaning of this section. State ex rel. Utils. Comm'n v. Edmisten, 26 N.C. App. 662, 217 S.E.2d 201, 1975 N.C. App. LEXIS 2132 (1975), aff'd, 291 N.C. 361, 230 S.E.2d 671, 1976 N.C. LEXIS 996 (1976).

Testing Reasonableness of Affiliated Company Expenses. —

The Commission has the authority and the right at all times to test the reasonableness of expenses paid to affiliated companies (or allocated by them) and to cause the petitioning utility to offer affirmative evidence of their reasonableness or risk their disapproval. The Commission has the obligation to test the reasonableness of such expenses whenever they are properly challenged. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

The Commission must always determine that expenses paid to affiliated companies are reasonable, and the burden of persuasion on that issue always rests with the utility. The Commission, of course, has the right to test the reasonableness of such expenses. If there is an absence of data and information from which either the propriety of incurring the expense or the reasonableness of the cost can readily be determined, the Commission may require the utility to prove their propriety and reasonableness by affirmative evidence. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

Although it always has the authority to do so, in the absence of contradiction or challenge by affirmative evidence offered by any party to the proceeding, the Commission has no affirmative duty to make further inquiry or investigation into the reasonableness of charges or fees paid to affiliated companies. While affiliation calls for close scrutiny, affiliation alone does not impose an additional burden of proof or require the presentation of additional evidence of reasonableness. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 707 (1982).

Reasonableness of affiliated company expenses may be tested on the basis of (1) the cost of the same services on the open market, (2) the cost similar utilities pay to their service companies, or (3) the reasonableness of the expenses incurred by the affiliated company in generating the service. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

Rates of Return Reasonable and Did Not Discriminate. —

The North Carolina Utilities Commission’s order contained findings sufficient to justify its conclusion that the approved rates of return were just and reasonable and did not unreasonably discriminate among the various classes of North Carolina Natural Gas Corporation customers and were supported by substantial evidence in view of the whole record. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Formula Not Unreasonably Discriminatory. —

The North Carolina Utilities Commission’s order contained findings sufficient to justify its conclusion that the Industrial Sales Tracker Formula did not unreasonably discriminate between North Carolina Natural Gas Corporation’s customer classes and these findings were supported by substantial evidence in light of the whole record. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Evidence Not Sufficient for Proceeding. —

The Utilities Commission’s failure to initiate a ratemaking or complaint proceeding concerning a utility’s rate of return was not arbitrary and capricious where the Commission found that the rate exceeded that authorized in only three of the preceding 32 quarters. State ex rel. Utils. Comm'n v. Carolina Indus. Group For Fair Util. Rates, 130 N.C. App. 636, 503 S.E.2d 697, 1998 N.C. App. LEXIS 1156 (1998).

Legitimate Justification to Maintain Industrial and City Rates of Returns. —

The North Carolina Utilities Commission drew legitimate distinctions which justified its decision to maintain industrial and city rates of return at a higher level than residential and commercial and small industrial rates. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Power to Ascertain Corporation in Control. —

The Commission has the incidental power (subject to the right of appeal) to ascertain what particular corporation is in the control of or operates any telegraph line in this State, in order that it may exercise its authority to fix rates, as well as to know against whom to proceed for a violation of its regulations. State ex rel. R.R. Comm'rs v. Western Union Tel. Co., 113 N.C. 213, 18 S.E. 389, 1893 N.C. LEXIS 45 (1893), writ of error dismissed, 17 S. Ct. 1002, 41 L. Ed. 1187 (1897).

Fees and Charges Made by Municipality for Sewerage Connections. —

The Utilities Commission has no jurisdiction to fix or supervise the fees and charges to be made by a municipality for connections with a city sewerage system, either within or without its corporate limits. Atlantic Constr. Co. v. City of Raleigh, 230 N.C. 365, 53 S.E.2d 165, 1949 N.C. LEXIS 633 (1949).

Commission has authority to fix city bus fares. State ex rel. Utils. Comm'n v. City of Greensboro, 244 N.C. 247, 93 S.E.2d 151, 1956 N.C. LEXIS 397 (1956). See G.S. 62-260 .

An intracity carrier, holding a certificate of exemption issued by the Commission and a franchise from the city or town in which it operates, is exempt from control of the Commission except as to rates and controversies with respect to extensions and services. State ex rel. N.C. Utils. Comm'n v. McKinnon, 254 N.C. 1, 118 S.E.2d 134, 1961 N.C. LEXIS 371 (1961).

When Fares of Street Railway May Be Raised. —

A public service street railway company, operating under a city charter and under a contract with the city restricting the passenger fare authorized to be charged its patrons, may be authorized by the Commission to raise charges to its passengers when, in the opinion of the Commission, such is necessary for it to properly maintain its system, allowing a reasonable profit, to meet the requirements of the public for adequate, safe, and convenient service. In re Southern Pub. Utils. Co., 179 N.C. 151, 101 S.E. 619, 1919 N.C. LEXIS 31 (1919).

Joint Rate Between Lumber Railroad and Connecting Carrier. —

When a lumber railroad is of standard gauge and of sufficient equipment and extensiveness to affect the interest of the public, the Commission may make a valid order establishing a joint rate of transportation in the same cars between it and a connecting common carrier by rail to points beyond the initial road. Corporation Comm'n ex rel. Raleigh Granite Co. v. Atlantic C.L.R.R., 187 N.C. 424, 121 S.E. 767, 1924 N.C. LEXIS 305 (1924).

Electric Power Rates Coextensive with State’s Jurisdiction. —

When the Commission has finally established, under the provisions of the statute, rates to be charged by a public service corporation for furnishing electrical power, the rates are coextensive with the State’s jurisdiction and territory, and conclusively bind all corporations, companies, or persons who are parties to the suit and have been afforded an opportunity to be heard. State ex rel. Corp. Comm'n v. Cannon Mfg. Co., 185 N.C. 17, 116 S.E. 178, 1923 N.C. LEXIS 6 (1923).

Sale of Electricity Generated in Another State. —

While the generation of electricity in another state, when transported to purchasers in this State, may be regarded as interstate commerce, its distribution and sale here is local to the State, permitting the Commission to establish a just and reasonable rate of charge in conformity with the statutory powers, there being no interfering act of Congress relating to the subject. State ex rel. Corp. Comm'n v. Cannon Mfg. Co., 185 N.C. 17, 116 S.E. 178, 1923 N.C. LEXIS 6 (1923).

Telephone Company Must Not Discriminate. —

A telephone company is subject to public regulation and reasonable control, and is required to afford its service at uniform and reasonable rates and without discrimination among its subscribers and patrons for like service under the same or substantially similar conditions. Clinton-Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 159 N.C. 9, 74 S.E. 636, 1912 N.C. LEXIS 217 (1912). See also Godwin v. Telephone Co., 136 N.C. 258, 48 S.E. 636, 1904 N.C. LEXIS 255 (1904); Walls v. Strickland, 174 N.C. 298, 93 S.E. 857, 1917 N.C. LEXIS 79 (1917).

Telegram Transmitted over Lines of Another Company. —

Where a telegraph company had a continuous line between two points in this State, the fact that, in transmitting a message, it sent the message over the lines of another company, did not excuse its violation of the rate prescribed by the Railroad Commission (now Utilities Commission). Leavell v. Western Union Tel. Co., 116 N.C. 211, 21 S.E. 391, 1895 N.C. LEXIS 205 (1895), writ of error dismissed, 17 S. Ct. 1002, 41 L. Ed. 1187 (1897).

Telegraphic Messages Traversing Another State. —

Telegraphic messages transmitted by a company from and to points in this State, although traversing another state in the route, are subject to the tariff regulations of the Railroad Commission (now Utilities Commission). State ex rel. R.R. Comm'rs v. Western Union Tel. Co., 113 N.C. 213, 18 S.E. 389, 1893 N.C. LEXIS 45 (1893), writ of error dismissed, 17 S. Ct. 1002, 41 L. Ed. 1187 (1897).

When the Utilities Commission found that natural gas corporation had received payments in lieu of what it would have received under a service contract and that the customers of the company were bearing the company’s contract costs, it was within the power of the Commission under G.S. 62-32(b) and subsections (a) and (d) of this section to take these payments into account in setting a reasonable rate. State ex rel. Utils. Comm'n v. North Carolina Natural Gas Corp., 76 N.C. App. 330, 332 S.E.2d 755, 1985 N.C. App. LEXIS 3864 (1985).

Authority to Allow Use of Availability Charge in Rate Schedule for Recreational Subdivision. —

The Utilities Commission has jurisdiction and authority to allow the use of an availability charge in a rate schedule for a recreational subdivision, should any be deserved. State ex rel. Utils. Comm'n v. Carolina Forest Util., Inc., 21 N.C. App. 146, 203 S.E.2d 410, 1974 N.C. App. LEXIS 1741 (1974).

Landowners in a recreational subdivision who pay availability charges are “consumers” or stand in a consumer-like relationship to the utility providing water service. State ex rel. Utils. Comm'n v. Carolina Forest Util., Inc., 21 N.C. App. 146, 203 S.E.2d 410, 1974 N.C. App. LEXIS 1741 (1974).

Mandamus to Remedy Discrimination. —

Where a public service corporation has discriminated among its patrons in its charges for electricity, mandamus will lie to compel it to charge a uniform or undiscriminating rate, for the question does not require the courts to fix a rate or pass upon its reasonableness. North Carolina Pub. Serv. Co. v. Southern Power Co., 179 N.C. 18, 101 S.E. 593, 1919 N.C. LEXIS 7 (1919).

§ 62-131. Rates must be just and reasonable; service efficient.

  1. Every rate made, demanded or received by any public utility, or by any two or more public utilities jointly, shall be just and reasonable.
  2. Every public utility shall furnish adequate, efficient and reasonable service.

History. 1933, c. 307, ss. 2, 3; 1963, c. 1165, s. 1.

CASE NOTES

Purpose of Chapter. —

The clear purpose of this Chapter is to confer upon the Utilities Commission the power and the duty to compel a public utility company to render adequate service and to fix therefor reasonable rates pursuant to the procedure prescribed in G.S. 62-133. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

The word “rate” used in the Public Utilities Act refers not only to the monetary amount which each customer must ultimately pay, but also to the published method or schedule by which that amount is figured. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

The term “public utility” in subsection (b) includes a railroad corporation. State ex rel. Utils. Comm'n v. Atlantic C.L.R.R., 268 N.C. 242, 150 S.E.2d 386, 1966 N.C. LEXIS 1171 (1966).

Duty and Authority of Commission. —

The statutes confer upon the Commission, not upon the Supreme Court, the duty and authority to determine adequacy of service and reasonable rates therefor. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

There is nothing in the applicable provisions of the Public Utilities Act which prohibits the use of a fossil fuel adjustment clause in the context of the factual circumstances which the utility and the Commission face in a given case. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

Investor Risk and Rate of Return — Factors for Consideration. —

The law permits the Commission to consider both size and management in assessing investor risk insofar as such risk may bear on an appropriate return on equity capital; a utility’s small size may increase investor risk and justify a higher return. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 323 N.C. 481, 374 S.E.2d 361, 1988 N.C. LEXIS 703 (1988).

While efficient management should not justify a higher common equity rate of return, it is appropriate for the Commission to consider good management as a factor which reduces investor risk and militates in favor of a lower return on equity capital. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 323 N.C. 481, 374 S.E.2d 361, 1988 N.C. LEXIS 703 (1988).

Formula Did Not Unreasonably Discriminate. —

The North Carolina Utilities Commission’s order contained findings sufficient to justify its conclusion that the Industrial Sales Tracker Formula did not unreasonably discriminate between North Carolina Natural Gas Corporation’s customer classes and these findings were supported by substantial evidence in light of the whole record. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Rates of Return Reasonable and Not Discriminatory. —

The North Carolina Utilities Commission’s order contained findings sufficient to justify its conclusion that the approved rates of return were just and reasonable and did not unreasonably discriminate among the various classes of North Carolina Natural Gas Corporation customers and were supported by substantial evidence in view of the whole record. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Legitimate Justification for Industrial and City Rates of Return. —

The North Carolina Utilities Commission drew legitimate distinctions which justified its decision to maintain industrial and city rates of return at a higher level than residential and commercial and small industrial rates. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Testing Reasonableness of Affiliated Company Expenses. —

The Commission has the authority and the right at all times to test the reasonableness of expenses paid to affiliated companies (or allocated by them) and to cause the petitioning utility to offer affirmative evidence of their reasonableness or risk their disapproval. The Commission has the obligation to test the reasonableness of such expenses whenever they are properly challenged. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

The Commission must always determine that expenses paid to affiliated companies are reasonable and the burden of persuasion on that issue always rests with the utility. The Commission, of course, has the right to test the reasonableness of such expenses. If there is an absence of data and information from which either the propriety of incurring the expense or the reasonableness of the cost can readily be determined, the Commission may require the utility to prove their propriety and reasonableness by affirmative evidence. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

Although it always has the authority to do so, in the absence of contradiction or challenge by affirmative evidence offered by any party to the proceeding, the Commission has no affirmative duty to make further inquiry or investigation into the reasonableness of charges or fees paid to affiliated companies. While affiliation calls for close scrutiny, affiliation alone does not impose an additional burden of proof or require the presentation of additional evidence of reasonableness. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

Reasonableness of affiliated company expenses may be tested on the basis of (1) the cost of the same services on the open market, (2) the cost similar utilities pay to their service companies, or (3) the reasonableness of the expenses incurred by the affiliated company in generating the service. State ex rel. Utils. Comm'n v. Intervenor Residents, 305 N.C. 62, 286 S.E.2d 770, 1982 N.C. LEXIS 1245 (1982).

Duty of Utility to Render Adequate Service. —

Having been granted a monopoly in its franchise area, the utility is under a duty to render reasonably adequate service. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Utility Must Accept Responsibility. —

A public utility, which has been allowed to charge rates sufficient to enable it to maintain its properties, in addition to the earning of a fair return thereon, and which nevertheless permits its properties to fall into such a poor state of maintenance as to impair the quality of its service, must accept the responsibility for its resulting inability to render adequate service to its patrons. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Quality of Service to Be Considered in Fixing Rates. —

It was not the intent of the legislature to require the Commission to fix rates without any regard to the quality of the service rendered by the utility and thus to assure a “complacent monopoly” a fair return upon the fair value of its properties while it persists in rendering mediocre service and turns a deaf ear both to customer complaints and to Commission orders for improvement. On the contrary, the quality of the service rendered is, necessarily, a factor to be considered in fixing the “just and reasonable” rate therefor. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

Increase May Be Granted Notwithstanding Service Inadequacy. —

It is not unlawful for the Commission, in the exercise of its discretion, to grant an increase in rates, notwithstanding existing service inadequacy, as an appropriate step in the improvement of the service. State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986).

Findings Showing Effect of Inadequacy of Service on Decision Fixing Rates. —

If the Commission found the quality of a utility’s service to fall short of the requirement in this section that it be adequate, efficient and reasonable, then the Commission should make specific findings showing the effect of any such inadequacy upon its decision under G.S. 62-133 fixing rates which are fair both to the public utility and to the consumer. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Deduction of Profit from Rate Increase Upheld. —

Based on the evidence of utility’s inadequate service record, the Commission’s determination to penalize it by deleting its profit from rate increase was clearly proper. State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986).

§ 62-132. Rates established under this Chapter deemed just and reasonable; remedy for collection of unjust or unreasonable rates.

The rates established under this Chapter by the Commission shall be deemed just and reasonable, and any rate charged by any public utility different from those so established shall be deemed unjust and unreasonable. Provided, however, that upon petition filed by any interested person, and a hearing thereon, if the Commission shall find the rates or charges collected to be other than the rates established by the Commission, and to be unjust, unreasonable, discriminatory or preferential, the Commission may enter an order awarding such petitioner and all other persons in the same class a sum equal to the difference between such unjust, unreasonable, discriminatory or preferential rates or charges and the rates or charges found by the Commission to be just and reasonable, nondiscriminatory and nonpreferential, to the extent that such rates or charges were collected within two years prior to the filing of such petition.

History. 1913, c. 127, s. 3; C.S., s. 1067; 1929, cc. 241, 342; 1933, c. 134, s. 8; 1941, c. 97; 1963, c. 1165, s. 1.

Legal Periodicals.

For survey of 1976 case law dealing with administrative law, see 55 N.C.L. Rev. 898 (1977).

For survey of 1978 administrative law, see 57 N.C.L. Rev. 831 (1979).

CASE NOTES

There is in this Article a clear statutory dichotomy between rates which are made, fixed or established by the Commission on the one hand and those which are simply permitted or allowed to go into effect at the instance of the utility on the other. Rates which are established by the Commission, that is after a full hearing, findings, conclusion and a formal order, “shall be deemed just and reasonable, and any rate charged by any public utility different from those so established shall be deemed unjust and unreasonable.” Rates which the Commission simply allows to go into effect by any of the methods described in G.S. 62-134 and G.S. 62-135 are subject to being challenged by interested parties or the Commission itself and after a “hearing thereon, if the Commission shall find the rates or charges collected to be other than the rates established by the Commission, and to be unjust, unreasonable, discriminatory or preferential, the Commission may” order refund pursuant to the provisions of this section. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

Rates Fixed by Commission Are Prima Facie Valid, Just and Reasonable. —

The rates fixed by the Commission are not only prima facie evidence of their validity, but also prima facie evidence that they are just and reasonable. State ex rel. N.C. Utils. Comm'n v. Municipal Corps., 243 N.C. 193, 90 S.E.2d 519, 1955 N.C. LEXIS 586 (1955).

Until Modified on Appeal or by Commission. —

Rates or charges fixed by an order of the Commission are to be considered just and reasonable unless and until they shall be changed or modified on appeal or by the further action of the Commission itself. In re Southern Pub. Utils. Co., 179 N.C. 151, 101 S.E. 619, 1919 N.C. LEXIS 31 (1919). See also State ex rel. N.C. Corp. Comm'n v. Seaboard Air Line Ry., 173 N.C. 413, 92 S.E. 150, 1917 N.C. LEXIS 313 (1917).

Rates Other Than Those Fixed Deemed Unjust. —

The rates approved by the Commission shall be deemed to be just and reasonable, and any different rate shall be deemed unjust and unreasonable. State ex rel. N.C. Utils. Comm'n v. Norfolk Southern Ry., 249 N.C. 477, 106 S.E.2d 681, 1959 N.C. LEXIS 365 (1959).

The Commission is authorized by statute to fix just and reasonable rates or charges, and when they are so fixed, other or lower rates are to be deemed as unjust and unreasonable. State ex rel. Corp. Comm'n v. Cannon Mfg. Co., 185 N.C. 17, 116 S.E. 178, 1923 N.C. LEXIS 6 (1923).

“Established” rates, unlike “permitted” or “allowed” rates, are determined by the Commission after a full hearing, findings, conclusions and a formal order. Blue Ridge Textile Printers, Inc. v. Public Serv. Co., 99 N.C. App. 193, 392 S.E.2d 401, 1990 N.C. App. LEXIS 489 (1990).

One claiming that rates or charges established by the Commission are unreasonable or excessive has the burden of proving his contention. Corporation Comm'n v. Henderson Water Co., 190 N.C. 70, 128 S.E. 465, 1925 N.C. LEXIS 11 (1925); State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 250 N.C. 421, 109 S.E.2d 253, 1959 N.C. LEXIS 468 (1959).

The burden of showing the impropriety of rates established by the Commission lies with the party alleging such error. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983).

Appropriate Claims for Relief May Exist Under G.S. 62-139 and G.S. 62-140. —

An appropriate claim for relief where the disputed rates are “established” by the Commission may exist under G.S. 62-140 which prohibits unreasonable discrimination by public utilities, or under G.S. 62-139 which prohibits a utility from receiving more compensation for services than the amount prescribed by the Commission. Blue Ridge Textile Printers, Inc. v. Public Serv. Co., 99 N.C. App. 193, 392 S.E.2d 401, 1990 N.C. App. LEXIS 489 (1990).

A refund pursuant to this section may be ordered even absent a utility’s agreement to provide one. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Attorney General Not Prejudiced Where Refund Could Be Sought. —

The Attorney General was not prejudiced by the action of the Commission in allowing an exploration tracking rate increase to go into effect without a hearing since a refund could be sought under this section. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Notice of Possible Liability for Refund. —

Where a corporation was held to be a public utility and made a party to a general rate case this was adequate notice that it might be held liable for a refund. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 65 N.C. App. 198, 309 S.E.2d 473, 1983 N.C. App. LEXIS 3460 (1983), aff'd, 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985).

Where Utilities Commission after due notice and hearing established, rates for intrastate shipments of pulpwood which it found to be just and reasonable, and thereafter upon petition of defendant and other carriers for reconsideration, the rate so established was ordered “to remain in full force and effect,” these rates so established would be deemed the only just and reasonable rates for this commodity over defendant’s lines, rendering it unlawful for defendant to charge a greater amount. State ex rel. N.C. Utils. Comm'n v. Atlantic C.L.R.R., 224 N.C. 283, 29 S.E.2d 912, 1944 N.C. LEXIS 355 (1944).

In a proceeding to recover excessive freight charges collected because of an error in the tariff distance table filed with the Utilities Commission, the charges being in conformity with the tariff schedule for a greater distance than the correct distance between the termini, evidence offered by the carriers as to whether the higher rate was fair and reasonable for the shorter distance was properly excluded, since the carriers should not be permitted to change the rate by reason of a mistake in their tariff distance table, and petitioners were entitled to recover that part of the excess charged which was not barred by the limitation contained in the statute. State ex rel. N.C. Utils. Comm'n v. Norfolk Southern Ry., 249 N.C. 477, 106 S.E.2d 681, 1959 N.C. LEXIS 365 (1959).

§ 62-133. How rates fixed.

  1. In fixing the rates for any public utility subject to the provisions of this Chapter, other than bus companies, motor carriers and certain water and sewer utilities, the Commission shall fix such rates as shall be fair both to the public utilities and to the consumer.
  2. In fixing such rates, the Commission shall:
    1. Ascertain the reasonable original cost or the fair value under G.S. 62-133.1A of the public utility’s property used and useful, or to be used and useful within a reasonable time after the test period, in providing the service rendered to the public within the State, less that portion of the cost that has been consumed by previous use recovered by depreciation expense. In addition, construction work in progress may be included in the cost of the public utility’s property under any of the following circumstances:
      1. To the extent the Commission considers inclusion in the public interest and necessary to the financial stability of the utility in question, reasonable and prudent expenditures for construction work in progress may be included, subject to the provisions of subdivision (4a) of this subsection.
      2. For baseload electric generating facilities, reasonable and prudent expenditures shall be included pursuant to subdivisions (2) or (3) of G.S. 62-110.1(f1), whichever applies, subject to the provisions of subdivision (4a) of this subsection.
    2. Apply the rate of return established under subdivision (4) of this subsection to rights-of-way acquired through agreements with the Department of Transportation pursuant to G.S. 136-19.5(a) if acquisition is consistent with a definite plan to provide service within five years of the date of the agreement and if such right-of-way acquisition will result in benefits to the ratepayers. If a right-of-way is not used within a reasonable time after the expiration of the five-year period, it may be removed from the rate base by the Commission when rates for the public utility are next established under this section.
    3. Estimate such public utility’s revenue under the present and proposed rates.
    4. Ascertain such public utility’s reasonable operating expenses, including actual investment currently consumed through reasonable actual depreciation.
    5. Fix such rate of return on the cost of the property ascertained pursuant to subdivision (1) of this subsection as will enable the public utility by sound management to produce a fair return for its shareholders, considering changing economic conditions and other factors, including, but not limited to, the inclusion of construction work in progress in the utility’s property under sub-subdivision b. of subdivision (1) of this subsection, as they then exist, to maintain its facilities and services in accordance with the reasonable requirements of its customers in the territory covered by its franchise, and to compete in the market for capital funds on terms that are reasonable and that are fair to its customers and to its existing investors.
    6. Require each public utility to discontinue capitalization of the composite carrying cost of capital funds used to finance construction (allowance for funds) on the construction work in progress included in its rate based upon the effective date of the first and each subsequent general rate order issued with respect to it after the effective date of this subsection; allowance for funds may be capitalized with respect to expenditures for construction work in progress not included in the utility’s property upon which the rates were fixed. In determining net operating income for return, the Commission shall not include any capitalized allowance for funds used during construction on the construction work in progress included in the utility’s rate base.
    7. Fix such rates to be charged by the public utility as will earn in addition to reasonable operating expenses ascertained pursuant to subdivision (3) of this subsection the rate of return fixed pursuant to subdivisions (4) and (4a) on the cost of the public utility’s property ascertained pursuant to subdivisions (1) and (1a) of this subsection.
  3. The original cost of the public utility’s property, including its construction work in progress, shall be determined as of the end of the test period used in the hearing and the probable future revenues and expenses shall be based on the plant and equipment in operation at that time. If the public utility elects to establish rate base using fair value, the fair value determination of the public utility’s property shall be made as provided in G.S. 62-133.1A, and the probable future revenues and expenses shall be based on the plant and equipment in operation at the end of the test period. The test period shall consist of 12 months’ historical operating experience prior to the date the rates are proposed to become effective, but the Commission shall consider such relevant, material and competent evidence as may be offered by any party to the proceeding tending to show actual changes in costs, revenues or the cost of the public utility’s property used and useful, or to be used and useful within a reasonable time after the test period, in providing the service rendered to the public within this State, including its construction work in progress, which is based upon circumstances and events occurring up to the time the hearing is closed.
  4. The Commission shall consider all other material facts of record that will enable it to determine what are reasonable and just rates.
  5. The fixing of a rate of return shall not bar the fixing of a different rate of return in a subsequent proceeding.
  6. Repealed by Session Laws 1991, c. 598, s. 7.
  7. Reserved.
  8. Repealed by Session Laws 1998-128, s. 4, effective September 4, 1998.

History. 1899, c. 164, s. 2, subsec. 1; Rev., s. 1104; C.S., s. 1068; 1933, c. 134, s. 8; 1941, c. 97; 1963, c. 1165, s. 1; 1971, c. 1092; 1973, c. 956, s. 1; c. 1041, s. 1; 1975, c. 184, s. 2; 1977, c. 691, ss. 2, 3; 1981, c. 476; 1981 (Reg. Sess., 1982), c. 1197, s. 6; 1985, c. 676, s. 15(2); 1989 (Reg. Sess., 1990), c. 962, s. 4; 1991, c. 598, s. 7; 1998-128, s. 4; 2007-397, s. 8; 2018-51, s. 1.

Cross References.

As to small water and sewer utility rates, see G.S. 62-133.1.

Editor’s Note.

Session Laws 2007-397, s. 3, provides: “If the federal government imposes requirements similar to those set out in G.S. 62-133.8 on electric power suppliers in the State, the Utilities Commission shall determine the applicability of federal and State requirements so as to apply the more stringent requirements except to the extent that State requirements may be specifically preempted by federal law. The Commission shall adopt rules to establish a procedure as an alternative to the procedure set out in G.S. 62-133 to annually adjust the rates of electric public utilities to allow timely recovery of all reasonable costs of compliance with the federal and State requirements pursuant to G.S. 62-133.8(h), as enacted by Section 2 of this act. In adopting rules to establish the procedure, the Commission shall incorporate the provisions of this act in accordance with this section and the public interest.”

Session Laws 2007-397, s. 15 contains a severability clause.

Effect of Amendments.

Session Laws 2007-397, s. 8, effective January 1, 2008, rewrote subdivision (b)(1); added subdivisions (b)(1)a. and b.; in subdivision (b)(4), inserted “of this subsection” following “pursuant to subdivision (1)”, inserted language beginning “including, but not limited to, the inclusion of construction work” and ending “subdivision (1) of this subsection”, and substituted “that” for “which” twice.

Session Laws 2018-51, s. 1, effective June 25, 2018, added “or the fair value under G.S. 62-133.1A” following “the reasonable original cost” in subdivision (b)(1); and added the second sentence in subsection (c).

Legal Periodicals.

For survey of 1972 case law on public utility rate regulation, see 51 N.C.L. Rev. 1140 (1973).

For survey of 1974 case law on public utilities, see 53 N.C.L. Rev. 1083 (1975).

For survey of 1976 case law dealing with administrative law, see 55 N.C.L. Rev. 898 (1977).

For survey of 1977 law on public utility rate regulation, see 56 N.C.L. Rev. 847 (1978).

For survey of 1978 administrative law, see 57 N.C.L. Rev. 831 (1979).

For survey of 1979 administrative law, see 58 N.C.L. Rev. 1185 (1980).

CASE NOTES

Analysis

I.In General

Constitutionality. —

The power to grant franchises to public service corporations and to fix their rates rests in the General Assembly, which power the General Assembly may delegate to an administrative agency, provided the General Assembly prescribes rules and standards to guide such agency in the exercise of the delegated authority. The statute delegating to the Utilities Commission this authority is constitutional in fixing adequate rules and standards. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Stimulation of the economy is an essential public and governmental purpose and the manner in which this purpose is to be accomplished is, within constitutional limits, exclusively a legislative decision. The authority to set rates to be charged by a public utility for its services rests in the legislature and is delegated by it to the Utilities Commission under sufficient rules and standards to guide the Commission in exercising this power. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983).

Commerce Clause Not Violated. —

The North Carolina Utilities Commission is authorized by Congress to act with regard to arrangements between cogenerators and power company, so that the commission’s disallowance of the amount by which contracts exceeded the company’s avoided costs was consistent with federal laws and regulations and constituted lawful retail ratemaking. The commission’s actions did not violate the Commerce Clause. State ex rel. Utils. Comm'n v. North Carolina Power Comm'n, 338 N.C. 412, 450 S.E.2d 896, 1994 N.C. LEXIS 705 (1994), cert. denied, 516 U.S. 1092, 116 S. Ct. 813, 133 L. Ed. 2d 758, 1996 U.S. LEXIS 758 (1996).

Requirement That Utility Prefile Testimony Prior to That of Intervenors Is Constitutional. —

A utility’s due process rights were not violated by requiring it to prefile its testimony prior to the prefiling of the intervenors’ testimony and requiring it to file its brief concurrently with the intervenors, where it should have been forewarned of what the intervenors intended to show. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 65 N.C. App. 198, 309 S.E.2d 473, 1983 N.C. App. LEXIS 3460 (1983), aff'd, 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985).

This section merely codified the former statute as interpreted by Supreme Court. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965).

Purpose of Chapter. —

The clear purpose of this Chapter is to confer upon the Utilities Commission the power and duty to compel a public utility company to render adequate service and to fix therefor reasonable rates pursuant to the procedure prescribed in this section. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970); State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

The primary purpose of this Chapter is not to guarantee to the stockholders of a public utility constant growth in the value of and in the dividend yield from their investment, but is to assure the public of adequate service at a reasonable charge. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

The provisions of this Chapter designed to assure the utility of adequate revenues are in the nature of corollaries to the basic proposition that the public is entitled to adequate service at reasonable rates and safeguards against administrative action which would violate constitutional protections by confiscation of the utility’s property. Without such assurance, the owners of capital would not invest in the utility’s bonds or stock and the utility could not provide the plant necessary for the rendering of adequate service. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

By adopting this section, the legislature intended to establish an overall scheme for fixing rates, and this section must be interpreted in its entirety in order to comply with the legislative intent. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

Purpose of Former Subsection (f). —

The purpose of former subsection (f) of this section was to allow the retailer to automatically pass on to the consumer changes in the wholesale cost of natural gas, over which neither the retailer nor the Utilities Commission had control, whenever the natural gas suppliers’ price was revised upward or downward, thus avoiding costly and protracted rate proceedings. State ex rel. Utils. Comm'n v. CF Indus., Inc., 39 N.C. App. 477, 250 S.E.2d 716, 1979 N.C. App. LEXIS 2524, cert. denied, 297 N.C. 180, 254 S.E.2d 39, 1979 N.C. LEXIS 1353 (1979).

Former subsection (f) was a mechanism whereby a natural gas utility could pass on to its customers supplier increases or decreases without going through the costly and protracted procedures of a general rate case. State ex rel. Utils. Comm'n v. Public Serv. Co., 307 N.C. 474, 299 S.E.2d 425, 1983 N.C. LEXIS 1099 (1983).

Former subsection (f) dealt only with rate changes while G.S. 62-136(c) specifically sets forth the criteria pursuant to which refunds should be distributed. State ex rel. Utils. Comm'n v. Public Serv. Co., 307 N.C. 474, 299 S.E.2d 425, 1983 N.C. LEXIS 1099 (1983).

G.S. 62-136(c) more specifically applies to supplier refunds received by natural gas distributing utilities than did former subsection (f) and is the proper statute to be applied in determining the appropriate distribution of these supplier refunds. State ex rel. Utils. Comm'n v. Public Serv. Co., 307 N.C. 474, 299 S.E.2d 425, 1983 N.C. LEXIS 1099 (1983).

Proceeding Is General Rate Case Where Question Is Fair Return on Investment. —

The Commission was correct in conducting the proceeding as a general rate case, where the primary question was what is a fair rate of return on the utility’s investment so as to enable it by sound management to pay a fair profit to its stockholders and to maintain and expand its facilities and services in accordance with the reasonable requirement of its creditors. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 65 N.C. App. 198, 309 S.E.2d 473, 1983 N.C. App. LEXIS 3460 (1983), aff'd, 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985).

Subdivision (b)(3) shall be read in conjunction with subsection (c) of this section, as must subdivision (b)(1). State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

It is a well-established rule that it is for the administrative body, in an adjudicatory proceeding, to determine the weight and sufficiency of the evidence and the credibility of the witnesses, to draw inferences from the facts, and to appraise conflicting and circumstantial evidence. State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

Sales Agreements Held Reasonable As Means of Financing Nuclear Station. —

The Commission properly found that nuclear power plant sales agreements, as a whole, were reasonably and prudently entered into by power company as means of financing completion of the nuclear station. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

Access Charge Tariff. —

Considering the evidence supporting the view that access charge tariff was calculated to reimburse local exchange companies (LECs) for having to provide additional connection facilities to local networks, payments could not be viewed as mere increased revenues for the LECs, but to provide funds to set off those expenditures that the LECs were required to make to provide additional facilities to handle additional carrier access. The imposition of the access charge tariff was within the authority granted to the Commission by the 1984 amendments to G.S. 62-110. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 88 N.C. App. 153, 363 S.E.2d 73, 1987 N.C. App. LEXIS 3469 (1987).

An order which indicates that the Utilities Commission accorded only minimal consideration to competent evidence constitutes error at law and is correctable on appeal. State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

II.Powers and Duties of Utilities Commission, Generally

Commission Exercises Function of Legislative Branch of Government. —

In fixing rates to be charged by a public utility, the Commission is exercising a function of the legislative branch of the government. It may not, therefore, exceed the limitations imposed upon the legislature by the State and federal Constitutions. The Commission, however, does not have the full power of the legislature, but only that portion conferred upon it in this Chapter. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Commission Must Comply with Requirements of This Chapter. —

In fixing the rates to be charged by a public utility for its service, the Commission must comply with the requirements of this Chapter. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

The Utilities Commission acted in excess of its statutory authority when it permitted the North Carolina Natural Gas Corporation to pass on additional costs resulting solely from an increase in storage capacity without complying with the statutory procedures required for a general rate case. State ex rel. Utils. Comm'n v. CF Indus., Inc., 39 N.C. App. 477, 250 S.E.2d 716, 1979 N.C. App. LEXIS 2524, cert. denied, 297 N.C. 180, 254 S.E.2d 39, 1979 N.C. LEXIS 1353 (1979).

This section is a part of the rate-making power of the Commission. State ex rel. Utils. Comm'n v. North Carolina Consumers Council, Inc., 18 N.C. App. 717, 198 S.E.2d 98, 1973 N.C. App. LEXIS 1990, cert. denied, 284 N.C. 124, 199 S.E.2d 663, 1973 N.C. LEXIS 806 (1973).

Statute Controls Commission in Establishing Rates. —

In establishing rates, the Commission is governed and controlled by the provisions of this section. Southern Ry. v. McNeill, 155 F. 756, 1907 U.S. App. LEXIS 5298 (C.C.D.N.C. 1907).

The legislative mandate is that the Commission shall fix rates which will enable a well managed utility to earn a “fair rate of return” on the “fair value” if its properties are “used and useful” in rendering its service. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

The responsibility for fixing rates rests with the Utilities Commission and not the Supreme Court. However, there is nothing in the statutes that requires the Commission to accept the rate or rates proposed, or to reject them altogether. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965).

It is the prerogative of the Commission, and not the Court of Appeals, to decide the question as to what constitutes fair and reasonable rates that may be charged by a utility, as the Commission is an agency composed of men of special knowledge, observation, and experience in their field, and has at hand a staff trained for this type of work, and the law imposes upon it, not the Court of Appeals, the duty to fix the rates. State ex rel. Utils. Comm'n v. Morgan, 7 N.C. App. 576, 173 S.E.2d 479, 1970 N.C. App. LEXIS 1744, rev'd, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

The statutes confer upon the Commission, not upon the Supreme Court, the duty and authority to determine adequacy of service and reasonable rates therefor. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

It is the Commission’s duty to sift through the evidence and draw a conclusion therefrom as to a fair and reasonable rate of return. State ex rel. Utils. Comm'n v. Mebane Home Tel. Co., 35 N.C. App. 588, 242 S.E.2d 165, 1978 N.C. App. LEXIS 3042 (1978), aff'd, 298 N.C. 162, 257 S.E.2d 623, 1979 N.C. LEXIS 1367 (1979).

Neither the Supreme Court nor the Court of Appeals is authorized to fix rates for a public utility. State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972).

Court may not substitute its judgment, either with respect to factual disputes or policy disagreements, for that of the Commission. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983).

Power and Duty to Compel Adequate Service and Fix Rates. —

This Chapter confers upon the Utilities Commission the power and duty to compel a public utility to render adequate service, and also confers upon the Commission the duty to fix reasonable rates for the rendering of adequate service. State ex rel. Utils. Comm'n v. General Tel. Co., 21 N.C. App. 408, 204 S.E.2d 529, 1974 N.C. App. LEXIS 1817, rev'd, 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974); State ex rel. Utils. Comm'n v. Edmisten, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980).

Commission’s Rate Making Powers Not Governed by Principles of Res Judicata. —

Since the exercise of the Commission’s rate making power is a legislative rather than a judicial function, such orders are not governed by the principles of res judicata, and are reviewable in later appeals of closely related matters. State ex rel. Utils. Comm'n v. Thornburg, 325 N.C. 463, 385 S.E.2d 451, 1989 N.C. LEXIS 545 (1989).

Attorney General’s appeal from Utilities Commission order was not barred by the doctrine of res judicata, where the prior Commission rulings relied on by appellee power company as a bar to appellant’s position were all designated by the Commission as “general rate cases” in which appellee sought Commission authority to increase its electric rates and charges, and where in fixing the rates to be charged by the utility, the Commission was exercising a function delegated to it by the legislative branch of the government. State ex rel. Utils. Comm'n v. Thornburg, 325 N.C. 463, 385 S.E.2d 451, 1989 N.C. LEXIS 545 (1989).

Tax Reform Benefits Passed on to Ratepayers by Rulemaking Rather Than Ratemaking Procedure. —

Utilities Commission may pass on to the ratepayers the benefits of the Tax Reform Act of 1986 (TRA-86) through a rule making procedure rather than a rate making procedure. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 326 N.C. 190, 388 S.E.2d 118, 1990 N.C. LEXIS 12 (1990).

Nowhere in subdivision (b)(1) is there a requirement that the Commission make findings as to the cost of each project and when it will be needed. To require such extensive evidence would put an undue burden on the utility and cause the rate-making process to be more time consuming and difficult of administration. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Subdivision (b)(1) does not require the Commission to make new findings on the need for construction. Before any public utility begins the construction of a facility for generating electricity for use by the public it must first obtain from the Commission a certificate stating that public convenience and necessity requires, or will require such construction. Before such a certificate can be granted the applicant must file an estimate of construction costs and the Commission must hold public hearings. This procedure satisfies the argument that the construction must be necessary. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Commission to Fix Rates as Low as Constitutionally Possible. —

The origin of this section supports the inference that the legislature intended for the Commission to fix rates as low as may be reasonably consistent with the requirements of the due process clause of U.S. Const., Amend. XIV, those of N.C. Const., Art. I, § 19, being the same in this respect. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974); State ex rel. Utils. Comm'n v. Edmisten, 299 N.C. 432, 263 S.E.2d 583, 1980 N.C. LEXIS 943 (1980); State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

Specific and unambiguous factual findings by the Commission are necessary to enable a reviewing court to determine whether the duty imposed by G.S. 62-131 has been performed. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Findings as to Original and Replacement Cost Less Depreciation. —

Where evidence of original cost, less depreciation, and of replacement cost, less depreciation, is introduced, the Commission must make, and set forth in its order, its findings as to both of these evidential facts, along with any “other facts” considered by it. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972). See also State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

Exercise of Subjective Judgment by Commission. —

Under this section the weight to be given the respective indications of fair value, the determination of the total amount reasonably necessary for working capital and the determination of what constitutes a fair rate of return requires exercise of a subjective judgment by the Commission. State ex rel. Utils. Comm'n v. Edmisten, 29 N.C. App. 428, 225 S.E.2d 101, 1976 N.C. App. LEXIS 2536, aff'd, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

The Commission is not required to accept as conclusive the subjective judgment of a witness, even though the record contains no expression of a contrary opinion by another witness. State ex rel. Utils. Comm'n v. Edmisten, 29 N.C. App. 428, 225 S.E.2d 101, 1976 N.C. App. LEXIS 2536, aff'd, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

The findings of the Commission, when supported by competent evidence, are conclusive. State ex rel. Utils. Comm'n v. Duke Power Co., 21 N.C. App. 89, 203 S.E.2d 404, 1974 N.C. App. LEXIS 1721, rev'd, 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

If there is competent evidence to support the findings and conclusions of the Commission, they will be upheld by the reviewing court. State ex rel. Utils. Comm'n v. Mebane Home Tel. Co., 35 N.C. App. 588, 242 S.E.2d 165, 1978 N.C. App. LEXIS 3042 (1978), aff'd, 298 N.C. 162, 257 S.E.2d 623, 1979 N.C. LEXIS 1367 (1979).

The Commission as factfinder, determines the credibility of the evidence, and its findings of fact which are supported by competent, material and substantial evidence, are conclusive, and the court is bound by them. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983); State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

Determination of Credibility and Weight of Evidence. —

As a general rule, it is for the Commission, not the reviewing court, to determine the credibility of and the weight to be given to all competent evidence. The rule is fully applicable when there is conflicting testimony by experts as to which method among those available to experts in their field is best suited for use in resolving a particular question they are asked to address as experts. State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 320 N.C. 1, 358 S.E.2d 35, 1987 N.C. LEXIS 2172 (1987).

And May Not Be Disturbed Merely Because Court Might Have Concluded Differently. —

The Commission’s findings, supported by substantial evidence, may not properly be set aside by the reviewing court merely because a different conclusion could have been reached upon the evidence. State ex rel. Utils. Comm'n v. Mebane Home Tel. Co., 35 N.C. App. 588, 242 S.E.2d 165, 1978 N.C. App. LEXIS 3042 (1978), aff'd, 298 N.C. 162, 257 S.E.2d 623, 1979 N.C. LEXIS 1367 (1979); State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

When the record, considered as a whole, contains substantial evidence supporting the subjective judgment of the Commission on any of these factors in the fixing of reasonable rates, the conclusion reached by the Commission may not be disturbed by a reviewing court merely because the court’s subjective judgment is different from that of the Commission. State ex rel. Utils. Comm'n v. VEPCO, 385 N.C. 398, 206 S.E.2d 283 (1974); State ex rel. Utils. Comm'n v. Edmisten, 29 N.C. App. 428, 225 S.E.2d 101, 1976 N.C. App. LEXIS 2536, aff'd, 291 N.C. 424, 230 S.E.2d 647, 1976 N.C. LEXIS 1001 (1976).

The Commission’s determination, reached pursuant to the mandate of this section and to the statutory procedural requirements, may not be reversed by the Court of Appeals or by the Supreme Court merely because it would have reached a different conclusion upon the evidence, but it is otherwise if it does not appear from the order of the Commission that the statutory mandates have been obeyed. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Under this section the determination of what constitutes a fair rate of return requires the exercise of a subjective judgment by the Commission and its decision may not be disturbed by a reviewing court merely because the court’s subjective judgment is different from that of the Commission. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

When a telephone company offered substantial evidence to show that there was no significant excess plant margin, this conflict of evidence presented a question of fact upon which the finding of the Commission was conclusive and could not be disturbed by the reviewing court, even though the court might have reached a different conclusion thereon. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

A reviewing court may neither retry such disputed questions of fact nor substitute its judgment for that of the Commission. State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 320 N.C. 1, 358 S.E.2d 35, 1987 N.C. LEXIS 2172 (1987).

Evidence Insufficient to Support Commission’s Determination of Rate of Return. —

Reversal and remand of that portion of a North Carolina Utilities Commission’s order in which it authorized a 10.2 percent return on equity for a utility company was appropriate because the order did not contain sufficient findings of fact regarding the impact of changing economic conditions on customers. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 430, 758 S.E.2d 635, 2014 N.C. LEXIS 396 (2014).

Commission’s Decision Will Be Upheld Unless Assailable Under G.S. 62-94(b). —

The decision of the Commission with regard to rates for public utilities will be upheld by the Court of Appeals on appeal unless it is assailable on one of the grounds enumerated in G.S. 62-94(b). State ex rel. Utils. Comm'n v. Mebane Home Tel. Co., 35 N.C. App. 588, 242 S.E.2d 165, 1978 N.C. App. LEXIS 3042 (1978), aff'd, 298 N.C. 162, 257 S.E.2d 623, 1979 N.C. LEXIS 1367 (1979).

Findings, inferences, conclusions or decisions of the Commission which are arbitrary or capricious and which prejudice substantial rights of appellants are not binding on a reviewing court. State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

When Commission’s Orders Affirmed. —

The rate order of the Commission will be affirmed if upon consideration of the whole record the court finds that the Commission’s decision is not affected by error of law and the facts found by the Commission are supported by competent, material and substantial evidence, taking into account any contradictory evidence or evidence from which conflicting inferences could be drawn. State ex rel. Utils. Comm’n v. North Carolina Textile Mfrs. Ass’n, 59 N.C. App. 240, 296 S.E.2d 487 (1982), rev’d on other grounds, 309 N.C. 238, 306 S.E.2d 113 (1983). In accord with the main volume. See State ex rel. Utils. Comm'n v. Thornburg, 325 N.C. 463, 385 S.E.2d 451, 1989 N.C. LEXIS 545 (1989).

Commission May Determine Nature of Proceeding. —

It is within the province of the Commission to determine whether a hearing is a general rate case or a complaint proceeding. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

And Such Determination Must Be Made as to Every Hearing. —

It is necessary as a matter of procedure that a determination as to whether a hearing is a general rate case or a complaint proceeding be made in every hearing involving the establishment, modification or revocation of rates. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

Determination of Commission as to Nature of Case Not Disturbed Absent Showing of Prejudice. —

The findings of the Commission on whether a hearing is a general rate case or a complaint proceeding will not be disturbed in any case in the absence of a clear showing that the right of the parties have been prejudiced. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

As to implementation of 30-day notice requirement by rule requiring written notification, see State ex rel. N.C. Utils. Comm'n v. Atlantic C.L.R.R., 224 N.C. 283, 29 S.E.2d 912, 1944 N.C. LEXIS 355 (1944).

Error to Accept Design Criteria of Division of Water Quality. —

It was error for the Utilities Commission to arbitrarily or subserviently accept, in place of its own determination upon the evidence before it, design criteria of the Division of Environmental Management [now Division of Water Quality] as the actual plant capacity currently needed for service to existing customers—and the beginning point for determining the appropriate additional “capacity allowance” in the rate base of plant which was not presently in service to the public, but was held for future use. State ex rel. Utils. Comm'n v. Public Staff — North Carolina Utils. Comm'n, 333 N.C. 195, 424 S.E.2d 133, 1993 N.C. LEXIS 11 (1993).

III.Fixing of Rates, Generally

The word “rate,” as used in the Public Utilities Act, refers not only to the monetary amount which each customer must ultimately pay, but also to the published method or schedule by which that amount is figured. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

“General Rate” Case. —

Where the whole or a substantial portion of the rate structure of a public utility is being initially established or is under review, and where the required procedure under this section is being carried out, the hearing before the Commission to establish or revise the rates is referred to as a “general rate.” State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

“Complaint Proceeding”. —

A hearing which involves a single rate or a small part of the rate structure is called a “complaint proceeding.” It differs from a general rate case in that it deals with an emergency or change of circumstances which does not affect the entire rate structure and may be resolved without involving the procedure outlined in this section, and does not justify the expense and loss of time involved in such procedure. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

The “reasonable operating expenses,” specified in subdivisions (b)(3) and (5) of this section, relate and must be directly connected to “the reasonable original cost of the public utility’s property used and useful, or to be used and useful within a reasonable time after the test period,” as specified in subsection (b)(1). State ex rel. Utils. Comm'n v. Public Staff — North Carolina Utils. Comm'n, 333 N.C. 195, 424 S.E.2d 133, 1993 N.C. LEXIS 11 (1993).

Fuel Clause Subject to This Chapter. —

It is the fuel clause, a formula for figuring certain monetary additions or subtractions to a customer’s bill, not the ultimate amount so figured, which constitutes that part of the utility’s published schedule subject to the provisions of the Public Utilities Act. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

Section Applicable in Fixing or Revising Rate Schedules and Rate Classifications. —

In fixing rate schedules and rate classifications, or in revising said rates and classifications or a substantial part thereof, the procedure indicated by this section must be observed. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

Section May Not Apply Where Only One or a Few Rates Are Involved. —

This section may not apply where a public utility has many rate schedules applying to many different classes of service customers, and only one rate or a few rates are involved in a petition for amendment, modification or rescission. Ordinarily it is not required that the utility’s property be valued and that the provisions of this section be observed in such case. State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 250 N.C. 421, 109 S.E.2d 253, 1959 N.C. LEXIS 468 (1959); State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

Section prescribes formula which Commission is required to follow in fixing rates for service to be charged by a public utility. State ex rel. Utils. Comm'n v. Morgan, 278 N.C. 235, 179 S.E.2d 419, 1971 N.C. LEXIS 962 (1971).

Formula Under Section. —

The formula of the mandate of this section is: A x B=C (fair rate of return multiplied by the fair value of the properties equals the fair return in dollars). State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Steps Which Commission Must Take Prescribed by Section. —

In order to assure the utility of earnings sufficient to attract capital and also in order to limit its charges for service to levels sufficient for that purpose, the legislature has prescribed in this section the steps which the Commission must take in fixing such charges. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Fixing of “reasonable and just” rates involves a balancing of shareholder and consumer interests; the Utilities Commission must therefore set rates which will protect both the right of the public utility to earn a fair rate of return for its shareholders and ensure its financial integrity, while also protecting the right of the utility’s intrastate customers to pay a retail rate which reasonably and fairly reflects the cost of service rendered on their behalf. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

The question of whether rates prescribed under this Chapter are so unreasonable and unjust to the company and its stockholders that they amount to an unconstitutional confiscation of a utility’s property necessarily involves an inquiry as to what is reasonable and just for the public. The public cannot properly be subject to unreasonable rates in order simply that stockholders may earn dividends. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

Burden of Proof. —

The burden of showing the impropriety of rates established by the Commission lies with the party alleging such error. State ex rel. Utils. Comm'n v. Thornburg, 325 N.C. 463, 385 S.E.2d 451, 1989 N.C. LEXIS 545 (1989).

Rates to Be Based on Domestic Business. —

The reasonableness of the rates to be fixed by the State must be decided with reference exclusively to what is just and reasonable in respect of domestic business. Hence, when a company operates in two or more states, the operations are treated as separate businesses for the purpose of rate regulation. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965).

The Utilities Commission is empowered and directed to make reasonable and just rates as applied to the distribution and sale of power in this State and not otherwise, and such power cannot be directly controlled or weakened by conditions existent in other states, either from the action or nonaction of official bodies there or from dealings between private parties. To hold otherwise would, in its practical operation, be to withdraw or nullify the powers that this section professes to confer. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965).

But Net Return Earned in Other States May Be Considered. —

In fixing intrastate rates for a telephone company operating in several states, the Utilities Commission should take into consideration the net return such utility earns on its properties in such other states to the extent of not requiring customers in North Carolina, in order to maintain the utility’s financial condition, to pay a substantially higher rate than permitted in other states. A substantial differential might be considered some evidence that the rates charged in this State are unreasonable and unjust to the local public. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Commission Need Not Guarantee Return Requested. —

While the Utilities Commission is to fix rates that will enable the utility by sound management to pay all of its costs of operation and to have left over a fair return upon the fair value of its properties, it is not required to guarantee the return requested by the utility where the facts and circumstances warrant otherwise. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

Rate Increase Conforming with Interstate Rates Allowed by Interstate Commerce Commission. —

An order of the Utilities Commission increasing intrastate rates of State carriers so that such rates would conform with an increase in interstate rates allowed by the Interstate Commerce Commission was invalid where such order was unsupported by proof of the fair value of the properties of the carriers used and useful in conducting their intrastate business, separate and apart from their interstate business. State ex rel. Utils. Comm'n v. State, 243 N.C. 12, 89 S.E.2d 727, 1955 N.C. LEXIS 689 (1955).

Objective of Rate Making. —

The fixing of rates for service which will enable the utility to do the things enumerated in subsection (b)(4), and no more, is the ultimate objective of rate making. At best, the result of the complex rate making procedure is an approximation of this objective. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Rate making is, of necessity, a matter of estimate and prediction, since rates are set for the future. State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972); State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

The ultimate question in determining appropriate rates is: What is a reasonable rate to be charged by the particular utility company for the service it proposes to render in the immediate future? The determination of this question is for the Commission, in accordance with the direction of this section. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970); State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972).

A rate must not only be fair, just and reasonable to the consumer, but fair, just and reasonable to the utility. State ex rel. Utils. Comm'n v. Carolinas Comm. for Indus. Power Rates & Area Dev., Inc., 257 N.C. 560, 126 S.E.2d 325, 1962 N.C. LEXIS 382 (1962).

The rates established by the Commission must be fair to both the utility and the customer. State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

What is a “just and reasonable” rate which will produce a fair return on the investment depends on: (1) the value of the investment, usually referred to in rate-making cases as the rate base, which earns the return; (2) the gross income received by the applicant from its authorized operations; (3) the amount to be deducted for operating expenses, which must include the amount of capital investment currently consumed in rendering the service; and (4) what rate constitutes a just and reasonable rate of return on the predetermined rate base. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954); State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 250 N.C. 421, 109 S.E.2d 253, 1959 N.C. LEXIS 468 (1959); State ex rel. N.C. Utils. Comm'n v. Piedmont Natural Gas Co., 254 N.C. 536, 119 S.E.2d 469, 1961 N.C. LEXIS 499 (1961); State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965); State ex rel. N.C. Utils. Comm'n v. Westco Tel. Co., 266 N.C. 450, 146 S.E.2d 487, 1966 N.C. LEXIS 1367 (1966).

The Commission, in fixing a reasonable and just rate of charges for public service corporations, may make a fair estimated value of the property presently used, and in relation thereto consider the tax valuation of the plant. State ex rel. Corp. Comm'n v. Cannon Mfg. Co., 185 N.C. 17, 116 S.E. 178, 1923 N.C. LEXIS 6 (1923).

In finding essential, ultimate facts, the Commission must consider all factors particularized in the statute and “all other facts that will enable it to determine what are reasonable and just rates, charges and tariffs.” It must then arrive at its own independent conclusion, without reference to any specific formula, as to: (1) what constitutes a fair value, for rate-making purposes, of applicant’s investment used in rendering intrastate service, the rate base, and; (2) what rate of return on the predetermined rate base will constitute a rate that is just and reasonable both to the applicant and to the public. While both original cost and replacement value are to be considered, neither constitutes a proper rate base. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954); State ex rel. Utils. Comm'n v. Carolina Power & Light Co., 250 N.C. 421, 109 S.E.2d 253, 1959 N.C. LEXIS 468 (1959); State ex rel. N.C. Utils. Comm'n v. Piedmont Natural Gas Co., 254 N.C. 536, 119 S.E.2d 469, 1961 N.C. LEXIS 499 (1961); State ex rel. N.C. Utils. Comm'n v. Westco Tel. Co., 266 N.C. 450, 146 S.E.2d 487, 1966 N.C. LEXIS 1367 (1966).

In setting rates, the Utilities Commission must consider not only those specific indicia of a utility’s economic status set out in subsection (b) of this section, but also all other material facts of record which may have a significant bearing on the determination of reasonable and just rates. State ex rel. Utils. Comm'n v. Thornburg, 314 N.C. 509, 334 S.E.2d 772, 1985 N.C. LEXIS 2010 (1985).

Calculation of Requisite Additional Gross Revenue When Essential Facts Established. —

When essential ultimate facts are established by findings of the Commission, the amount of additional gross revenue required to produce the desired net return becomes a mere matter of calculation. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965).

The Commission must be given broad discretion with respect to the extent which it will hear evidence relating to a particular schedule when the basic question for consideration is: Does the utility need an increase in rates to function effectively or, conversely, can the utility continue to operate, provide efficient service to its customers, and make a fair return to the owners of its properties, or may it so function after a reduction in rates? State ex rel. Utils. Comm'n v. County of Harnett, 30 N.C. App. 24, 226 S.E.2d 515, 1976 N.C. App. LEXIS 2137 (1976).

Additions for Used and Useful Plant. —

Subsection (c) of this section only requires the Utilities Commission to consider post-test period changes in used and useful plant. It also requires the Commission to consider changes in costs and revenues. If the evidence does not show what changes there may be in matching costs and revenues, the Commission does not have to allow additions to the rate base for a used and useful plant. State ex rel. Utils. Comm'n v. Water Serv., Inc., 328 N.C. 299, 401 S.E.2d 353, 1991 N.C. LEXIS 185 (1991).

Rates charged by one telephone company do not, per se, constitute a standard by which to determine the reasonableness of those of another company, even when the territories served and operating conditions are similar. The probative value of such evidence is slight at best, but where there is evidence of substantial similarity of conditions, evidence of comparative rates may have some relevancy for use as a guide to the limits of the zone of reasonableness. State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

Subdivisions (b)(2) and (b)(3) and subsection (c) contemplate that the Commission will consider “probable future revenues and expenses” in setting rates for the future. Obviously, conditions do not remain static. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

The Commission can take into account the future effect of inflation by fixing rates slightly in excess of that which is necessary to meet the test of reasonableness. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

Determining a Utility’s Capital Structure for Rate Making Purposes. —

The Commission is not required, as a matter of law, to reduce the common equity component of a utility’s capital structure by an amount equal to its investment in its nonregulated subsidiaries in determining the appropriate capital structure for rate-making purposes. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 322 N.C. 689, 370 S.E.2d 567, 1988 N.C. LEXIS 481 (1988).

Formula Not Unreasonably Discriminatory. —

The North Carolina Utilities Commission’s order contained findings sufficient to justify its conclusion that the Industrial Sales Tracker Formula did not unreasonably discriminate between North Carolina Natural Gas Corporation’s customer classes and these findings were supported by substantial evidence in light of the whole record. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Efficiency of Operation. —

Heat rate and capacity factor furnish convenient measuring devices by which to evaluate the overall efficiency with which a particular electrical utility system is operated, and the Utilities Commission should take into account the efficiency of a company’s operation in fixing its rates in a general rate case as provided in this section, although plant efficiency as it bears upon fuel cost is not a factor to be considered in the limited and expedited proceeding provided for by G.S. 62-134(e) (now repealed). State ex rel. Utils. Comm'n v. VEPCO, 48 N.C. App. 453, 269 S.E.2d 657, 1980 N.C. App. LEXIS 3283 (1980).

For present provisions as to increments based upon increase in cost of fuel, see G.S. 62-133.2.

Anticipated Tax Expense. —

Rates for use of a utility’s service are set at a level which will enable the company to pay, among other items, its anticipated tax expense. If, by virtue of some change in the tax law, it develops that the company did not incur the anticipated expense, for the payment of which it collected revenues in prior months, its rates for present and future service may not be cut, on that account, below what it otherwise would be entitled to charge for the present or future service. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 451, 232 S.E.2d 184, 1977 N.C. LEXIS 1214 (1977).

Fundamental Changes in Sources and Supply. —

Where filings reflected decisions by natural gas company’s management to make fundamental changes in its sources of supply of natural gas and to access substantial additional volumes of natural gas, the rate changes generated by these decisions were not of the nature of those to be allowed under former subsection (f) of this section but rather had to be considered and passed upon in a general rate case proceeding pursuant to subsections (a)-(e) of this section. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 106 N.C. App. 218, 415 S.E.2d 758, 1992 N.C. App. LEXIS 452 (1992).

Apportionment of Increases in Retail Natural Gas Rates. —

Any increase in the retail rates attributable to charges by a wholesaler of natural gas for storage capacity must be apportioned in a general rate case pursuant to subsections (a) through (c) of this section. State ex rel. Utils. Comm'n v. CF Indus., Inc., 39 N.C. App. 477, 250 S.E.2d 716, 1979 N.C. App. LEXIS 2524, cert. denied, 297 N.C. 180, 254 S.E.2d 39, 1979 N.C. LEXIS 1353 (1979).

There is nothing in the applicable provisions of the Public Utilities Act which prohibits the use of a fossil fuel adjustment clause in the context of the factual circumstances which the utility and the Commission face in a given case. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

For a discussion of the operation of and the authorities supporting the use of fuel adjustment clauses, see State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

In considering whether fuel adjustment clause would ever operate to increase utility’s rate of return, the Commission was entitled to act on the normal assumption in rate cases generally, there being no evidence to the contrary, that other costs of the utility would not decline but would probably increase or at least remain fairly constant. In the unlikely event that other costs of the utility should decline, the Commission, either on its own motion or that of another interested party, has plenary authority to intervene and make corrections in the utility’s rate schedules including, if circumstances should require it, the abrogation of the fuel clause. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 327, 230 S.E.2d 651, 1976 N.C. LEXIS 995 (1976).

As to the practice of rolling-together accounting data and allocating costs between jurisdictional and nonjurisdictional service, see State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

Shifting of Onus to Parent Corporation. —

In view of the Utilities Commission’s determination that unsound or “absentee” management decisions on the part of a utility, and parental domination on the part of an aluminum producing company that was both parent and customer, left the utility with insufficient resources to meet its steadily increasing public load and lacking in contractual power supply arrangements tailored to meet its public service needs at reasonable prices, it was well within the Commission’s rate making authority to shift the onus of those managerial shortcomings from the pockets of utility’s retail rate payers to the corporate offices of the aluminum producing company. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

Refund of Over-Collection. —

The Commission erred by refunding utility’s over-collection by deducting the amount of the deferred fuel account from the utility’s annual rate increase, as this would, in effect, require the company to pay the refund annually for as long as the rates fixed in the case remained in effect. The Commission should have provided for a lump-sum refund (i.e., a onetime rate reduction) or a rate reduction over a period of time. State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

A schedule of rates fixed by the Commission under the standard prescribed by the legislature is binding upon the interested parties and the courts, provided it is within the bounds of reason. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Rates which the Commission simply allows to go into effect may be challenged by interested parties or the Commission and after a hearing the Commission may order a refund if it finds the rates to be different from those established by the Commission and unjust or unreasonable. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Retroactive rate making occurs when a rate is set so as to permit collection in the future for expenses attributable to past services. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 65 N.C. App. 198, 309 S.E.2d 473, 1983 N.C. App. LEXIS 3460 (1983), aff'd, 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985).

It is not retroactive rate making for a corporation to be held responsible for a refund for the period prior to when it was declared a public utility. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 65 N.C. App. 198, 309 S.E.2d 473, 1983 N.C. App. LEXIS 3460 (1983), aff'd, 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985).

Method Which Did Not Prefer State Customers over Foreign Customers Held Not to Violate Commerce Clause. —

A provision in a Commission order that a “combined system’s North Carolina public load has first call on the total electric energy output of the combined system, and to the extent that said output exceeds the requirements of the North Carolina public load, such excess will be available for sale and will be purchased by [the corporation of which the system was a wholly-owned subsidiary]” would violate the commerce clause. However, where the methodology used by the Commission allowed the combined system to recover the costs of the percentage of energy it used based on its percentage of the costs of the energy generated and purchased by the combined system, North Carolina customers would not be given a preference and no commerce clause violation would occur. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 65 N.C. App. 198, 309 S.E.2d 473, 1983 N.C. App. LEXIS 3460 (1983), aff'd, 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985).

Reduction of Future Rate Held Not Retroactive Rate Making. —

An order which did not reduce revenue to compensate in the future for what may have been an excessive rate in the past, but reduced the future rate for what it found was a more realistic investment credit tax amortization, is not retroactive rate making. State ex rel. Utils. Comm'n v. Public Serv. Co., 59 N.C. App. 448, 297 S.E.2d 119, 1982 N.C. App. LEXIS 3136 (1982).

Court-Ordered Refund Is Not Retroactive Rate Making. —

The Supreme Court has the power to direct the Commission to order refunds from rates established by final order of the Commission. This would not constitute retroactive rate making prohibited under the North Carolina Statutes. Retroactive rate making occurs when the utility is required to refund revenues collected, pursuant to the then lawfully established rates, for such past use. A rate has not been lawfully established simply because the Commission has ordered it. If the Commission makes an error of law in its order from which there is a timely appeal the rates put into effect by that order have not been “lawfully established” until the appellate courts have made a final ruling on the matter. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Adjustment to Cost Study. —

North Carolina Utilities Commission did not err by approving a utility company’s adjustments to a study of the costs of providing retail electric service to a large industrial customer because there was substantial evidence in the record, including the testimony of three expert witnesses, to support the Commission’s findings. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 430, 758 S.E.2d 635, 2014 N.C. LEXIS 396 (2014).

The North Carolina Utilities Commission reviewed the capacity rate set by an arbitrator and determined that he did not properly take into account other potential sources of power, thus his assessment of avoided costs was unreasonably high, and its exclusion of expenses for capacity payments was merely the disallowance of the amount by which the contract rate exceeded power company’s avoided costs; therefore the commission properly disallowed expenses for unreasonably high payments in accordance with this section. State ex rel. Utils. Comm'n v. North Carolina Power Comm'n, 338 N.C. 412, 450 S.E.2d 896, 1994 N.C. LEXIS 705 (1994), cert. denied, 516 U.S. 1092, 116 S. Ct. 813, 133 L. Ed. 2d 758, 1996 U.S. LEXIS 758 (1996).

Improper Costs. —

Commission’s findings were supported by substantial evidence, including the testimony of witnesses acknowledging that errors occurred and explaining that corrective steps were taken to resolve the errors, and it was not shown that the Commission allowed the company to recover any improper costs from ratepayers. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 741, 767 S.E.2d 305, 2015 N.C. LEXIS 32 (2015).

Evidence Not Sufficient. —

Because of the lack of evidence justifying increase and because the Commission did not consider the future revenue potential, the decision of the Commission was not supported by competent, material, and substantial evidence. State ex rel. Utils. Comm'n v. Carolina Water Serv., Inc., 335 N.C. 493, 439 S.E.2d 127, 1994 N.C. LEXIS 10 (1994).

IV.Rate Base
A.In General

Rate Base Defined. —

The “rate base” is the cost of the utility’s property which is used and useful in providing service to the public. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

The general doctrine is that the rate base is made up of values used in furnishing the service. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

There Is But One Rate Base. —

It is incorrect to speak of “the original cost rate base” and the “trended original cost rate base.” There is but one rate base, namely, the fair value of the public utility’s property used and useful in providing the service rendered to the public within this State, which value the Commission must determine as of the end of the test period. The original cost of the properties is simply evidence to be considered in making this determination. The replacement cost, whether determined by use of trended cost indices or otherwise, is also but evidence of the fair value of the properties. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970); State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

It is the duty of the Commission to arrive at an independent rate base upon consideration of all factors, including cost, replacement and trended cost, and it is its duty to exercise its independent judgment in doing so. State ex rel. Utils. Comm'n v. Morgan, 7 N.C. App. 576, 173 S.E.2d 479, 1970 N.C. App. LEXIS 1744, rev'd, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

When Companies Considered as Single, Integrated System for Rate Making. —

Where two companies traded all their generation to TVA and received in exchange for this entitlements of energy which they divided as they pleased, the Commission could conclude from these facts that the two companies constitute a single, integrated system for rate making purposes. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 65 N.C. App. 198, 309 S.E.2d 473, 1983 N.C. App. LEXIS 3460 (1983), aff'd, 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985).

What Operating Expenses May Be Considered. —

This section limits the property upon which North Carolina consumers are required to pay a return to the property used and useful in providing intrastate service; when the provisions of (b)(1), (b)(3) and (c) are read in pari materia, it is apparent that the only operating expenses which the Utilities Commission may consider in setting intrastate rates for North Carolina public utilities are those incurred in the provision of service to a utility’s North Carolina consumers. State ex rel. Utils. Comm'n v. Nantahala Power & Light Co., 313 N.C. 614, 332 S.E.2d 397, 1985 N.C. LEXIS 1705 (1985), rev'd, 476 U.S. 953, 106 S. Ct. 2349, 90 L. Ed. 2d 943, 1986 U.S. LEXIS 61 (1986), disapproved, Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 108 S. Ct. 2428, 101 L. Ed. 2d 322, 1988 U.S. LEXIS 2874 (1988).

This section clearly provides that the rate base and allowable operating expenses of a utility are limited to those costs incurred in providing service to the company’s North Carolina retail customers. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 314 N.C. 171, 333 S.E.2d 259, 1985 N.C. LEXIS 1786 (1985).

Matching Revenues and Costs Required for Use of Post-Test Year Costs in Rate Base. —

Where provider of water and sewer services asks that costs for post-test year use of plants be included in its rate base, the Utilities Commission may, under subsection (c) of this section, require the utility to show matching revenues and costs. State ex rel. Utils. Comm'n v. Water Serv., Inc., 328 N.C. 299, 401 S.E.2d 353, 1991 N.C. LEXIS 185 (1991).

What Property to Be Considered. —

This section clearly contemplates that only that property of the utility which is devoted to the public use for which the utility has been granted a franchise is to be considered, both in arriving at the fair value rate base and in projecting probable future revenues and expenses. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

In a proceeding by a power company for an increase in the cash fares on its city bus system, the Commission was correct in considering the value only of the properties used and useful in connection with the operation of the bus system, without regard to the value of the electric properties of the power company. State ex rel. Utils. Comm'n v. City of Greensboro, 244 N.C. 247, 93 S.E.2d 151, 1956 N.C. LEXIS 397 (1956).

Question Whether Property Is “Used and Useful” Is One of Fact. —

The question of whether specific property is presently “used and useful” in rendering service is one of fact, to be determined by the Commission upon competent and substantial evidence. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 314 N.C. 171, 333 S.E.2d 259, 1985 N.C. LEXIS 1786 (1985); State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 314 N.C. 171, 333 S.E.2d 259, 1985 N.C. LEXIS 1786 (1985); State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

“Excess” Facilities Not “Used and Useful”. —

If facilities are found to be excess, as a matter of law, they can not be considered “used and useful” as that term is used in subdivision (b)(1), and cannot be included in the rate base. State ex rel. Utils. Comm'n v. Thornburg, 325 N.C. 484, 385 S.E.2d 463, 1989 N.C. LEXIS 538 (1989).

Property Not Presently Used to Its Full Capacity. —

The fact that a transmission line, a building or a telephone company’s central office equipment is not presently used to its full capacity does not necessarily justify the exclusion of any portion of it from the rate base on the theory that such portion is not presently “used and useful” in rendering service. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

While central office equipment might have provided at the end of the test period capacity in excess of the amount needed at that moment, there being no question raised that it was not in operation at that time, it was at that time property both used and useful by the utility in providing services to the public; therefore, the Commission had no authority to deduct any portion of its costs in arriving at the reasonable original cost of the property for consideration by it in making its ultimate determination of fair value. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

The question for determination in connection with an alleged overbuilding of a utility plant is whether the properties in question can be deemed “used and useful” in rendering the service, as of the end of the test period. If not, they may not properly be included in the rate base. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Property Held for Future Use. —

A telephone company, with central office equipment sufficient to serve any reasonably anticipated increase in customers, may not properly add to its rate base additional units of central office equipment merely because, in the long future, it hopes to have customers who will use it. This is especially true where the supplier of such equipment is an affiliated corporation, controlled by the same holding company which controls the telephone company. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

There is no merit in the contention that exclusion from the rate base of the value of property held by a public utility for future use amounts to confiscation of its property. State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

Classification as “Extraordinary Property Retirement” Held Error. —

The classification of a physical plant that is not “used and useful” (and thus not includable in a rate base) as “extraordinary property retirement” and subject to recovery through amortization, has no legal basis. State ex rel. Utils. Comm'n v. Public Staff — North Carolina Utils. Comm'n, 333 N.C. 195, 424 S.E.2d 133, 1993 N.C. LEXIS 11 (1993).

Where, after finding a sewer connection to be “no longer used and useful” and erroneously concluding thereupon that it should be treated as extraordinary property retirement and amortized over a six-year period, the Utilities Commission directed the “unamortized balance” to be “included in rate base”, the Commission simultaneously treated the unused property as rate base and reasonable operating expenses in direct violation of the ratemaking process. State ex rel. Utils. Comm'n v. Public Staff — North Carolina Utils. Comm'n, 333 N.C. 195, 424 S.E.2d 133, 1993 N.C. LEXIS 11 (1993).

Subdivision (b)(1) is designed to make utility customers finance reasonable construction costs arising after July 1, 1979, regardless of whether that construction becomes useful to the customers. State ex rel. Utils. Comm'n v. Conservation Council, 64 N.C. App. 266, 307 S.E.2d 375, 1983 N.C. App. LEXIS 3256 (1983), modified, 66 N.C. App. 456, 311 S.E.2d 617, 1984 N.C. App. LEXIS 2897 (1984).

The purpose of subdivision (b)(4a) is to prevent utility companies from obtaining a double recovery by capitalizing the allowance for funds used during construction after they have had construction work in progress expenses for the same construction included in the rate base. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

The Commission must include all reasonable construction work in progress expenditures in the rate base. The only matter left to the discretion of the Commission is whether such expenditures are reasonable and prudent. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Only Reasonable Construction Work in Progress Expenditures Included. —

The legislature mandates that the only expenditures for construction work in progress which can properly be included in rate base are reasonable expenditures. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983).

Under the “financial stability” requirement of subdivision (b)(1) of this section, construction work in progress may be included in a utility’s rate base to the extent that the Commission determines that the inclusion is necessary to allow the utility to maintain a generally good overall financial status. State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

Subdivision (b)(1) clearly commits to the discretion of the Commission the determination of what amount of construction work in progress, if any, to include in the utility’s rate base. This discretion is tempered, however, by the statute’s requirement that the expenditures be reasonable and prudent and that the Commission find that the inclusion is in the public interest and necessary to the financial stability of the utility in question. State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

Including construction work in progress in rate base did not lessen rules and standards set by legislature. Reasonableness remains the standard. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983).

Evidence as to Construction Work in Progress. —

To require the utility company to introduce evidence with respect to every item comprising construction work in progress would be an exercise in futility. The burden of proof would be unduly and unnecessarily burdensome and the rate-making process would become even more time consuming and difficult of administration. State ex rel. Utils. Comm'n v. North Carolina Textile Mfrs. Ass'n, 59 N.C. App. 240, 296 S.E.2d 487, 1982 N.C. App. LEXIS 3098 (1982), rev'd, 309 N.C. 238, 306 S.E.2d 113, 1983 N.C. LEXIS 1386 (1983).

Evidence that utility’s bond rating was in jeopardy of falling from an A rating to a BAA rating and that the inclusion of the additional construction work in progress was necessary to “stabilize” the company at its A rating level, along with other evidence, supported the Commission’s finding that the inclusion of additional construction work in progress was necessary to the utility’s financial stability. State ex rel. Utils. Comm'n v. Thornburg, 316 N.C. 238, 342 S.E.2d 28, 1986 N.C. LEXIS 2062 (1986).

Evidence of whether the plant under construction will be completed within a reasonable time is pertinent to deciding if expenditures for such construction are reasonable and prudent. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

While it is the better practice for the Commission to specifically find that the construction will be completed within a reasonable time, the statute does not require it so long as there is evidence in the record that the plant would be completed within a reasonable time. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Inclusion of Facility in Another State Absent North Carolina Certificate of Authority. —

The Commission acted within the limits of its authority when it included Catawba Unit 1, located in South Carolina, in power company’s rate base, even though no North Carolina certificate of necessity had been obtained prior to beginning construction thereof. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

Inclusion of Ownership Interest in All Common Plant of Nuclear Power Station Held Proper. —

The Commission acted within its authority when it included in power company’s rate base the company’s ownership interest in all of common plant of nuclear power station, despite argument that only half of the common plant should be associated with operating Unit 1, and that the other half should be classified as construction work in progress consistent with the Commission’s treatment of not yet operational Unit 2. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

Before 1977 amendment of subdivision (b)(1), utilities were not allowed to include construction work in progress (CWIP) in rate base. Instead, a utility would add together all of the costs incurred by a project each year and multiply that by the allowance for funds used during construction (AFUDC) rate. The AFUDC rate is a rate of interest which represents as nearly as possible the actual cost of money used for construction. The figure that results from multiplying the costs times the AFUDC rate is capitalized annually until the plant comes into service and is then recovered along with the original costs of the plant. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Exclusion of Plant Under Construction. —

A generating plant of a power company, half-completed at the end of the test period, or a half-completed line of telephone wire, cannot be deemed property “used in providing the service” “as of the end of the test period used in the hearing.” Neither can it be deemed property “useful” in rendering the service at that time. State ex rel. Utils. Comm'n v. Morgan, 278 N.C. 235, 179 S.E.2d 419, 1971 N.C. LEXIS 962 (1971) (decided prior to 1977 amendment) .

It was error for the Commission to include in the rate base of a public utility the value of the plant under construction at the end of the test period, and to make a pro forma adjustment to revenues by adding to the actual revenue earned in the test period “interest charged to construction,” since the plant under construction was not in operation at the end of the test period. State ex rel. Utils. Comm'n v. Morgan, 278 N.C. 235, 179 S.E.2d 419, 1971 N.C. LEXIS 962 (1971) (decided prior to 1977 amendment) .

A telephone plant under construction at the end of the test period is not property “used and useful” within the meaning of this section and is not to be included in the rate base. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972) (decided prior to 1977 amendment) .

Contributions in aid of utility construction must be excluded from rate base. State ex rel. Utils. Comm'n v. Heater Util., Inc., 288 N.C. 457, 219 S.E.2d 56, 1975 N.C. LEXIS 1011 (1975) (decided prior to 1977 amendment) .

The term “the public utility’s property used and useful ... in providing the service” in subdivision (b)(1) was not intended by the legislature to include that portion of the utility plant in service represented by contributions made by the utility’s patrons in aid of construction. State ex rel. Utils. Comm'n v. Heater Util., Inc., 288 N.C. 457, 219 S.E.2d 56, 1975 N.C. LEXIS 1011 (1975) (decided prior to 1977 amendment) .

It makes no difference whether contributions to utility company were made initially by customers or by land development companies, or whether some of the latter were closely related to the utility company. The controlling factor is whether the utility company’s customers ultimately bore the cost of such contributions. State ex rel. Utils. Comm'n v. Heater Util., Inc., 288 N.C. 457, 219 S.E.2d 56, 1975 N.C. LEXIS 1011 (1975) (decided prior to 1977 amendment) .

“Contribution” Correctly Excluded. —

The Utilities Commission did not err in excluding from the rate base of a water utility an amount representing the difference between the original cost of a water system constructed by the developers of a real estate subdivision and the price paid to such developers by the water utility, where the Commission found that such difference amounted to an indirect payment from the customers to the utility through the purchase of their lots, which allowed the original owners to sell the water system to the utility for less than the probable cost of installation. State ex rel. Utils. Comm'n v. Heater Util., Inc., 288 N.C. 457, 219 S.E.2d 56, 1975 N.C. LEXIS 1011 (1975) (decided prior to 1977 amendment) .

The Commission was not required to include a contributed plant in applicant’s fair value rate base. State ex rel. Utils. Comm'n v. Heater Util., Inc., 26 N.C. App. 404, 216 S.E.2d 487, 1975 N.C. App. LEXIS 2063, aff'd, 288 N.C. 457, 219 S.E.2d 56, 1975 N.C. LEXIS 1011 (1975) (decided prior to 1977 amendment) .

When Addition to Plant May Be Added to Rate Base. —

When the addition to plant is completed and put into service, the entire cost of it, including the cost of capital incurred in construction, is added to the rate base of the company. State ex rel. Utils. Comm'n v. Morgan, 278 N.C. 235, 179 S.E.2d 419, 1971 N.C. LEXIS 962 (1971) (decided prior to 1977 amendment) .

Unnecessary Additions. —

A utility may not justify an increase in its rates for service to its present customers by evidence of its present intent to build additions to its plant not reasonably considered necessary for adequate service, including proper reserve capacity, by the end of the time needed for the completion of such additions. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Value of franchise does not enter into computation of the utility’s rate base. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

The rate base should include working capital supplied by the company. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

The utility’s own funds reasonably invested in such materials and supplies and its cash funds reasonably so held for payment of operating expenses, as they become payable, fall within the meaning of the term “property used and useful in providing the service,” and are a proper addition to the rate base on which the utility must be permitted to earn a fair rate of return. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

But such rate base should not include funds supplied by customers. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

As funds collected from customers and used by utility as working capital are not “the public utility’s property” within the meaning of subsection (b)(1). State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

The utility is not entitled to include in its rate base funds which it has not provided but which it has been permitted to collect from its customers for the purpose of paying expenses at some future time and which it actually uses as working capital in the meantime. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

Overcharge to Investment Does Not Directly Affect Rate Base. —

Only those purchases for operating materials and supplies, including current maintenance, are chargeable to operating expense, and purchases for plant construction go into an account for investment in plant, not to operating expense, so that an overcharge, if any, to investment in plant does not affect the net operating income. While such overcharge would improperly add to the account for original cost of the plant, which is an item to be considered in computing the rate base, it actually would not affect the rate base directly, since the rate base is the fair value of the plant, not the cost of it. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Acceptance by Commission of “book value” or “cost less depreciation” as rate base is in conflict with the standard prescribed in the statute. The conclusion is inescapable that by accepting the book value as the rate base, it necessarily excluded consideration of present cost of replacement and all other factors from effective consideration. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Costs are presumed to be reasonable unless challenged. State ex rel. Utils. Comm'n v. Conservation Council, 312 N.C. 59, 320 S.E.2d 679, 1984 N.C. LEXIS 1777 (1984).

Excess of Fair Value over Original Cost Less Depreciation to Be Included in Rate Base. —

This section contemplates that the excess of “fair value,” ascertained by the Commission, over and above the original cost, less depreciation, shall be included in the rate base of the utility, just as if it were a realized profit invested in additional property used and useful in rendering service to the public. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Excess of Fair Value over Total Capital of Company. —

The excess of “fair value” over the actual total capital of the company (debt capital, plus capital stock, plus actual surplus) is to be added to the equity component of the capital structure for the purpose of fixing rates under this section. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

The Commission may reduce a utility’s rate base by increasing its accumulated depreciation account as an offset to a pro forma adjustment by the utility in the same amount to depreciation expense. State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

B.Fair Value

Commission Must Consider Requirements of Section in Arriving at Fair Value of Property. —

In arriving at the fair value of a public utility’s property used and useful in providing the service rendered to its customers, the Commission is charged with the duty to consider the requirements set forth in this section, as well as other relevant factors. State ex rel. N.C. Utils. Comm'n v. Westco Tel. Co., 266 N.C. 450, 146 S.E.2d 487, 1966 N.C. LEXIS 1367 (1966).

“Minimal Consideration” Inadequate. —

The Commission may not brush aside one of the prescribed indicators of original cost and replacement cost by giving it “minimal consideration.” State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Neither the Commission nor the Supreme Court may evade the mandate of this section by determining the number of dollars which would be a fair return on the original cost, depreciated, and then simply translating that amount into a percentage of “fair value.” State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Meaning of “Value”. —

The term “value” in this section does not refer to the original or the replacement cost of the property or to the exchange or sales price it would command, as used or secondhand property, on the market. It has reference to the value of the property actually in use, serving its purpose as a part of a composite public utility, earning an income for its owner. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Value is not the price for which the property could be sold as used or secondhand property. It is not the sale or exchange value of the entire business as a going concern. It is not the same as the fair value to be awarded by a jury in a condemnation case. The concept of “fair value,” as used with reference to a public utility’s rate base, is unique to rate making. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Necessity for Determining Fair Value of Utility’s Property. —

The first step prescribed by subsection (b)(1), that of ascertaining the fair value of the public utility’s property used and useful in providing the service rendered to the public within this State, becomes of critical importance in the rate-making process, for only after the determination of this rate base can judgment be intelligently exercised fixing the rate of return which the utility is entitled to receive on the fair value of its property and fixing rates to be charged by the utility which are fair both to the public utility and to the consumer. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Factors to Be Considered in Determining Fair Value. —

This section contemplates a weighing of (1) the reasonable original cost, less depreciation, (2) the replacement cost, which may be determined by trending such reasonable depreciated cost to current cost levels or by any other reasonable method, and (3) any other relevant factor, by the Commission in the exercise of its own expert judgment in determining “fair value.” State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

This section contemplates that, normally, the Commission will ascertain the “fair value” of the properties at a point somewhere between the original cost, less depreciation, and the cost of replacement new, less depreciation. The Commission has the duty to weigh these evidences of “fair value” and may not disregard either, or brush either aside. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Fair Value Not Ascertainable by Mathematical Formula. —

“Replacement cost” and “fair value” are not synonymous. Nor is “fair value” an arithmetical average of original cost and replacement cost, less depreciation, nor is it to be ascertained by the application of any mathematical formula. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972).

Neither original cost, depreciated, nor replacement cost, depreciated is the measure of “fair value.” They are indicators of “fair value” and their respective weights are to be determined by the Commission in its expert judgment. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

Balancing of Factors by Commission in Determining Fair Value. —

Having made properly supported findings, it is for the Commission, not the reviewing court, to determine, in its expert discretion and by the use of “balanced scales,” the relative weights to be given these several factors in ascertaining the ultimate fact of “fair value.” State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

It is the clear intent of subsection (b)(1) that the Commission, in considering the indicators of “fair value” which themselves are supported by competent and substantial evidence, shall use its own expert judgment as to the credibility of the evidence in the record and as to the weight to be given to it. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Necessity That Commission Review Management Decisions. —

Review of management decisions by the Utilities Commission in a general rate case is not only entirely appropriate but even necessary, for poorly maintained equipment justifies a subtraction from both the original cost and the reproduction cost of existing plant before weighing these factors in ascertaining the present “fair value” rate base of the utility’s properties as required by this section. State ex rel. Utils. Comm'n v. VEPCO, 48 N.C. App. 453, 269 S.E.2d 657, 1980 N.C. App. LEXIS 3283 (1980).

Effect of Improper Plant Engineering and Maintenance. —

Neither the original cost nor the reproduction cost may properly be taken as the present fair value of telephone properties which were improperly engineered, have not been properly maintained, and are consequently in need of extensive rehabilitation. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

The fact that a plant or a unit thereof is not well adapted to, or is inappropriate for, its present and/or reasonably to be anticipated future use tends materially to reduce its value below its reproduction new cost. One of the forms of inappropriateness is inappropriate engineering layout. State ex rel. Utils. Comm'n v. General Tel. Co., 21 N.C. App. 408, 204 S.E.2d 529, 1974 N.C. App. LEXIS 1817, rev'd, 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

The fair value of a new addition, when completed and in service, would almost certainly be found to be its total cost and, thereafter, would be found by considering such cost and the reproduction, or trended, cost, including interest during construction. State ex rel. Utils. Comm'n v. Morgan, 278 N.C. 235, 179 S.E.2d 419, 1971 N.C. LEXIS 962 (1971).

Method of Taking Inflation and Rising Cost of Plant Additions into Account. —

An accepted method of taking inflation and rising cost of plant additions into account in rate making is to fix rates for service sufficient, presently, to bring to the company a rate of return, on its present rate base, slightly in excess of that which is necessary to meet the test of reasonableness. State ex rel. Utils. Comm'n v. Morgan, 278 N.C. 235, 179 S.E.2d 419, 1971 N.C. LEXIS 962 (1971).

Weight of Trended Cost Evidence. —

In times of increased construction costs and decreased dollar value, trended cost evidence deserves weight in proportion to the accuracy of the tests and their intelligent application. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965); State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Trended cost is useful only when it becomes necessary to fix the present value of facilities constructed when the cost was low and replacement has become expensive. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965).

Trended Cost Evidence Useful But Not Conclusive. —

The trended cost takes into account the type of facility, its age, its original and replacement cost, terrain, location, its probable useful life, and other factors. Such evidence is not conclusive, but it does appear to be a useful guide in determining value of facilities. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965).

“Fair value” does not cover money stupidly, extravagantly, or corruptly spent and if a utility has been seriously overbuilt, or its promoters have been seriously overpaid, the law does not intend that its customers shall be saddled with the payment of interest on money that was thrown away. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Utility may not inflate its rate base by extravagance in purchasing equipment or constructing its plant. In this connection, it is immaterial whether such extravagance is due to careless improvidence or willful payment of exorbitant prices to an affiliate. On the other hand, the management of the business of a public utility, including the fixing of the prices which it pays for the construction and equipment of its plant and for its maintenance and operation, rests with its board of directors in the absence of clear mismanagement or abuse of discretion. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Credibility and weight of evidence in determination of “fair value” is for the Commission, not for a court, to determine. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

It is not the meaning of subsection (b)(1) that, in the absence of expert opinion testimony as to the weight to be given the respective indicators of “fair value,” the Commission must give them equal weight and find “fair value” by the mere striking of an arithmetic average of the indicators. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Having made findings of the original cost less depreciation and replacement cost less depreciation, the weight to be given those figures in reaching the ultimate finding of fair value is to be determined by the Commission, not by the reviewing court. State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972).

The Commission is not required to accept expert witness’ opinion as to the weight to be given the original cost and replacement cost increments of fair value, even though there be no contrary expert testimony. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

This section does require expert testimony as to the weight which the Commissioner should give to original cost and to replacement cost factors in carrying out its mandate to “consider” these indicators of “fair value.” State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Reviewing court may not properly disturb an order of the Commission merely because it would have given different weight to each of the indicators of “fair value.” State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974); State ex rel. Utils. Comm'n v. Mebane Home Tel. Co., 35 N.C. App. 588, 242 S.E.2d 165, 1978 N.C. App. LEXIS 3042 (1978), aff'd, 298 N.C. 162, 257 S.E.2d 623, 1979 N.C. LEXIS 1367 (1979).

A reviewing court may not set aside the Commission’s determination of “fair value” merely because the court would have given the respective elements different weights and would, therefore, have arrived at a different “fair value.” State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

A finding of “fair value” by the Commission is not rendered immune to judicial review by Commission’s declaration that, in reaching such finding, it followed no formula. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

The mere recital by the Commission that it has considered all of the factors prescribed by this section in arriving at its ascertainment of “fair value” does not preclude the reviewing court from setting aside the finding of “fair value” where the record discloses that the Commission in fact failed to do so. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972); State ex rel. Utils. Comm'n v. Southern Bell Tel. & Tel. Co., 15 N.C. App. 41, 189 S.E.2d 777, 1972 N.C. App. LEXIS 1821 (1972).

When Commission’s Finding of Fair Value May Be Set Aside. —

The determination of the weight to be given each factor in its ascertainment of “fair value” is for the Commission, not the reviewing court. But if it is clear from the record that the Commission reached its finding of “fair value” by disregarding or giving minimal consideration to one of the enumerated factors, its finding of the ultimate fact of “fair value” may be set aside by the court on the ground of error of law in such ascertainment. Similarly, the finding of “fair value” may be set aside by the reviewing court if it clearly appears that the Commission has made its determination thereof by giving weight to a factor as to which there is no substantial evidence in the record, and likewise where the order of the Commission shows that it reached its determination of “fair value” by considering unspecified facts other than original cost and replacement cost depreciated. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Determination of Fair Value Upheld. —

There was no reversible error in the Commission’s determination that the fair value of the power company’s properties, exclusive of the allowance for working capital, should be determined by giving a weighting of one third to replacement cost, depreciated, and two-thirds weighting to original cost, depreciated. State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974).

C.Original Cost

In fixing fair value, original cost is an item to be considered. State ex rel. Utils. Comm'n v. Public Serv. Co., 257 N.C. 233, 125 S.E.2d 457, 1962 N.C. LEXIS 579 (1962).

But Is Only One Factor. —

The establishment of the reasonable original cost of the property, as referred to in subsection (b)(1), is of significance only because reasonable original cost is one of several figures and factors which the statute requires the Commission to consider in arriving at fair value. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Ordinarily, Price Actually Paid Is Considered Reasonable Original Cost. —

Where a public utility’s property has been purchased from a stranger, ordinarily the price actually paid by the utility would be considered its reasonable costs, though it would not necessarily be so. Even in such a case the Commission may find that the management of the utility acted improvidently or carelessly and paid a price greater than reasonable. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Determining Reasonable Original Cost of Property Sold to Utility by Affiliated Corporation. —

In determining the rate base, the fact that equipment or services are sold to the utility by an affiliated corporation does not alter the ultimate question for the Commission. That question is whether the prices paid by the utility are reasonable and, therefore, reflect the “reasonable original cost” of the properties. The only effect of the affiliation between the utility and its supplier is that such relationship calls for a close scrutiny by the Commission of the price paid by the utility. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

For purposes of determining a utilities rate base, when considering a purchase made from an affiliated company, the bargaining is not at arm’s length and when the transaction is called in question, the burden is upon the utility to show that the price it paid was reasonable. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

In cases in which a substantial portion of a utility’s property was acquired by purchase from an affiliated company, it becomes obligatory upon the Commission to scrutinize the prices paid and, to the extent it finds such prices unreasonable, to make adjustments in the utility’s figures accordingly. This is all the more true where the affiliated supplier so dominates the market that its pricing policies may not be sufficiently controlled by normal competition. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Where the prices paid by a telephone company to an affiliated manufacturing company are the same as those which the manufacturing company charges other affiliated companies to which it makes a majority of its sales, the Utilities Commission could properly determine the reasonableness of the prices charged by the manufacturing company by comparing its rate of return on common equity with the rates of return experienced by other manufacturing companies operating in similar fields. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

D.Replacement Cost

Necessity of Finding Replacement Cost. —

Without a finding by the Commission of the replacement cost of a public utility’s properties “used and useful in providing the service,” the Commission’s finding of “fair value” was affected by an error of law and, consequently, its finding of a fair rate of return on such “fair value” was so affected and was premature. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

While the consideration or weight to be given replacement cost, depreciated, in ascertaining “fair value” rests in the sound discretion of the Commission, the reviewing court cannot satisfactorily determine whether the Commission considered or weighed this element at all, or merely gave it minimal consideration, unless the Commission sets forth what it found this element to be. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Discounting Replacement Cost for Depreciation. —

In determining “fair value,” the Commission may discount the replacement cost new by the same percentage as that indicated by the total accumulated depreciation in arriving at the replacement cost factor, or, if there is evidence to support such a finding, may discount replacement cost new by a greater or a smaller amount on account of depreciation, including obsolescence. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

It is for the Commission to determine what weight to give to evidence as to replacement cost. State ex rel. Utils. Comm'n v. General Tel. Co., 12 N.C. App. 598, 184 S.E.2d 526, 1971 N.C. App. LEXIS 1417 (1971), modified, 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

Fair Value Usually Less Than Reconstruction Cost. —

Ordinarily, the fair value of a utility’s property is found to be less than the reconstruction cost of the property. State ex rel. Utils. Comm'n v. City of Durham, 282 N.C. 308, 193 S.E.2d 95, 1972 N.C. LEXIS 959 (1972).

Fair Value Cannot Exceed Present Cost of Constructing Substitute. —

The present “fair value” of a utility system of generating plants, transmission lines and distribution lines cannot exceed the present cost of constructing a substitute system of modern design, capable of generating and distributing the same quantity of power at less operating expense. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

V.Operating Expenses and Working Capital

Reasonable Operating Expenses Must Be Ascertained. —

In fixing rates to be charged by the public utility, the Commission is directed to ascertain, among other things, the public utility’s reasonable operating expenses. State ex rel. Utils. Comm'n v. North Carolina Consumers Council, Inc., 18 N.C. App. 717, 198 S.E.2d 98, 1973 N.C. App. LEXIS 1990, cert. denied, 284 N.C. 124, 199 S.E.2d 663, 1973 N.C. LEXIS 806 (1973).

Term to Be Liberally Interpreted and Applied. —

When a narrow construction of the operating expense element of a regulatory act would frustrate the purposes of the act, the term should be liberally interpreted and applied. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

A restrictive interpretation of the operating expense element of the rate-making formula would severely limit the ability of the Commission to act in the best interest of the consuming public in emergency situations. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Cost of collecting past-due accounts is an operating expense. State ex rel. Utils. Comm'n v. North Carolina Consumers Council, Inc., 18 N.C. App. 717, 198 S.E.2d 98, 1973 N.C. App. LEXIS 1990, cert. denied, 284 N.C. 124, 199 S.E.2d 663, 1973 N.C. LEXIS 806 (1973).

Cancellation Costs as Operating Expense. —

There was no error in the Commission’s authorization for utility to amortize costs associated with abandoned construction of nuclear power plant as operating expenses for rate making purposes; this action was within the commission’s power and supported by competent, material, and substantial evidence. State ex rel. Utils. Comm'n v. Thornburg, 325 N.C. 463, 385 S.E.2d 451, 1989 N.C. LEXIS 545 (1989).

Costs Held to Be Cancellation Costs. —

Costs of the additional burden assured by one unit at nuclear power plant in anticipation of reducing the costs of the remaining three units, which were later cancelled, should have been treated as cancellation costs of the abandoned units, to be recovered as operating expenses through amortization. State ex rel. Utils. Comm'n v. Thornburg, 325 N.C. 484, 385 S.E.2d 463, 1989 N.C. LEXIS 538 (1989).

Tracking Rate Increases as Operating Expenses. —

Tracking rate increases, designed to recover the reasonable costs of approved exploration projects, must be said to be operating expenses, if practical effect is to be given to this chapter, where the Commission has found that if no new supply source were obtained, the utilities would be unable to supply adequate service to their customers. State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Cost of Service Calculation. —

The Utilities Commission’s ultimate conclusion that the peak and average cost-of-service methodology more properly allocates fixed costs between annual use and peak day utilization of the facilities than does the peak responsibility method or the imputed load factor method was supported by sufficient findings and competent, material and substantial evidence. State ex rel. Utilities Comm'n v. Carolina Util. Customers Ass'n, 351 N.C. 223, 524 S.E.2d 10, 2000 N.C. LEXIS 6 (2000).

As to constitutionality of permitting utilities to recover excess costs of exploration ventures through tracking rate increases, see State ex rel. Utils. Comm'n v. Edmisten, 294 N.C. 598, 242 S.E.2d 862, 1978 N.C. LEXIS 1292 (1978).

Error to Add Interest Charged to Construction to Operating Revenue. —

It was error for the Commission to add to the company’s operating revenue for the best period interest charged to construction during the test period. State ex rel. Utils. Comm'n v. Morgan, 278 N.C. 235, 179 S.E.2d 419, 1971 N.C. LEXIS 962 (1971).

“Depreciation” Defined. —

Broadly speaking, depreciation is the loss not restored by current maintenance which is due to all the factors causing the ultimate retirement of the property. While property remains in the plant, the estimated depreciation rate is applied to the book cost and the resulting amounts are charged currently as expenses of operation. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Depreciation Deductions. —

For rate-making purposes a public utility is allowed to deduct annually, as an operating expense, so much of its capital investment as is actually consumed during the current year in rendering the service required of it. But the cost represents the amount of the investment, and it is the actual cost, not theretofore recouped by depreciation deductions, that must constitute the base for this allowance. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954); State ex rel. Utils. Comm'n v. Heater Util., Inc., 288 N.C. 457, 219 S.E.2d 56, 1975 N.C. LEXIS 1011 (1975).

In establishing rates a public utility is entitled to deduct each year as an operating expense only such depreciation as represents the investment currently consumed and not provided against by maintenance. Thus the integrity of the investment is maintained, and this is all the utility has a right to demand. The rate should be fixed, as near as may be, so that it will extend over the usable life of the property being depreciated. Otherwise the allowance will be unjust either to the utility or to the public. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

The purpose of an annual allowance for depreciation and the resulting accumulation of a depreciation reserve is not, as is sometimes erroneously supposed, to provide the utility with a fund by which it may purchase a replacement for the property when it is worn out. The purpose of the allowance is to enable the utility to recover the cost of such property to it. State ex rel. Utils. Comm'n v. Heater Util., Inc., 288 N.C. 457, 219 S.E.2d 56, 1975 N.C. LEXIS 1011 (1975).

The rate of depreciation allowed by the federal government for income tax purposes is not necessarily the proper rate to be allowed for rate-making purposes. Indeed, for rate-making purposes it would ordinarily be excessive, especially in respect to buildings and like permanent improvements. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Depreciation Based on Original Cost. —

Subdivision (b)(3) clearly directs that the annual allowance for depreciation of durable properties, such as a pipeline, be based upon the original cost of the property to the utility and not upon either its current fair value or the cost of installation borne by a former owner, such as the real estate developers in the present case. State ex rel. Utils. Comm'n v. Heater Util., Inc., 288 N.C. 457, 219 S.E.2d 56, 1975 N.C. LEXIS 1011 (1975).

An instruction that the current rather than the cost value of capital investment shall be used as the basis for estimating depreciation allowances is incorrect. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Using Property Which Has Been Fully Depreciated for Other Purposes. —

It would be unfair to a utility not to take into consideration the present fair value of property now in use but which has been fully depreciated for other purposes. On the other hand, if the rate of depreciation allowed for rate-making purposes is in excess of the investment currently consumed, over and above maintenance costs, it is unfair to the public, for then the company is permitted to recover annually a part of its investment which is not currently consumed. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Transactions Between Utilities and Affiliated Supply Companies. —

It is the duty of the Commission to look closely at transactions between utility operating companies and affiliated supply companies to be sure that the public is not required to pay rates based on excessive costs resulting from excessive profits earned by an unregulated supplier. State ex rel. Utils. Comm'n v. Morgan, 7 N.C. App. 576, 173 S.E.2d 479, 1970 N.C. App. LEXIS 1744, rev'd, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

The financial condition of a public utility and the demand for its bonds and securities which affect its capacity to compete on the open market for additional equity and debt capital are ordinarily material considerations in fixing rates. But these factors are of little moment where the applicant has available at all times a fund provided by its parent company from which it may borrow at will for needed improvements or enlargements. What it has to pay for its borrowings from this fund is of more importance. These are some of the “other facts” the statute requires the Commission to consider. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Capital Investment Determined as of Time Rates Are Effective. —

Where a utility is currently investing large amounts of capital in expansion, the Utility Commission should determine the capital invested as of the time the rates fixed by it are to be effective, rather than the average net investment of the utility for the entire test year, since the rates fixed are prospective. State ex rel. N.C. Utils. Comm'n v. Piedmont Natural Gas Co., 254 N.C. 536, 119 S.E.2d 469, 1961 N.C. LEXIS 499 (1961).

Large Sum of Money on Hand for Working Capital. —

When, in fixing rates which will produce a fair return on the investment of a utility, it is made to appear that it has on hand continuously a large sum of money it is using as working capital and to pay current bills for materials and supplies, that fact must be taken into consideration. And if the fund on hand is sufficient, no additional sum should be allowed at the expense of the public. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Where a public utility uses, for operating capital, moneys collected by it in taxes for the federal government which it is not required to pay to the federal government until a later date, the Utilities Commission should take such capital into consideration in fixing rates, which action is neither a condemnation nor a condonement of the practice. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Advance Billing Not Creditable to Working Capital Requirements. —

In determining the local rates for a telephone company, the amounts paid to the company by its customers as a result of the company’s practice of billing the customers one month in advance are not creditable to the company’s working capital requirements. State ex rel. Utils. Comm'n v. Morgan, 277 N.C. 255, 177 S.E.2d 405, 1970 N.C. LEXIS 595 (1970).

Income Produced by Increase of Facilities. —

In fixing the rate for a telephone company, the Utilities Commission must take into consideration the net income to be produced by the increase in the number of telephones in service at the end of any test period adopted by the Commission. State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

Exclusion of Expenditures Relating to Unsuccessful Expansion Attempt. —

The Commission’s conclusion that expenditures related to utility’s unsuccessful attempt to expand its service area should be excluded from its cost of service was supported by substantial evidence and was neither arbitrary nor capricious. State ex rel. Utils. Comm'n v. Public Staff, 317 N.C. 26, 343 S.E.2d 898, 1986 N.C. LEXIS 2399 (1986).

Contractual Buy-Back Costs. —

The Commission properly classified contractual buy-back costs of power company as operating expenses. State ex rel. Utils. Comm'n v. Eddleman, 320 N.C. 344, 358 S.E.2d 339, 1987 N.C. LEXIS 2262 (1987).

VI.Rate of Return

Rate of Return Defined. —

The “rate of return” is a percentage which the North Carolina Utilities Commission concludes should be earned on the rate base. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

The overall rate of return is a percentage which the Commission concludes the utility should be permitted to earn on its rate base, which is the cost of the utility’s property used and useful in providing service to the public. The rate of return percentage is calculated by subtracting from the utility’s revenues its cost of service and dividing the difference by the rate base. State ex rel. Util. Comm'n v. Carolina Util. Customers Ass'n, 328 N.C. 37, 399 S.E.2d 98, 1991 N.C. LEXIS 10 (1991).

Commission to Determine Fair Rate of Return. —

It is for the Commission, not for the Supreme Court, to determine what is a fair rate of return. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974); State ex rel. Utils. Comm'n v. VEPCO, 285 N.C. 398, 206 S.E.2d 283, 1974 N.C. LEXIS 999 (1974); State ex rel. Utils. Comm'n v. Duke Power Co., 305 N.C. 1, 287 S.E.2d 786, 1982 N.C. LEXIS 1251 (1982).

Determination of Rate of Return. —

Determining the effective rate of return for a particular North Carolina Natural Gas Corporation (NCNG) customer class involves a mathematical computation containing several components. The computation must be performed after the fact by utilizing the financial information for a given test year with adjustments made for any subsequent increase in rates. There are in the computation three basic components which must be ascertained. First, an allocation must be made to determine the portion of the total rate base applicable to each customer class. Likewise an allocation must be made to determine the cost of service or operating expenses applicable to each customer class. Finally, the revenues NCNG collected from each customer class for the test period, adjusted for any subsequent increase in rates, must also be determined. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

The formula for determining the rate of return for each customer class is as follows: Operating revenues less cost of service (operating expenses and taxes) divided by the rate base equals the rate of return. Thus, the rate of return for any particular customer class varies inversely with the amount of the rate base and the amount of the cost of service, and directly with the amount of the revenues, allocated to that customer class. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 323 N.C. 238, 372 S.E.2d 692, 1988 N.C. LEXIS 609 (1988).

Consideration of Factors Held Proper. —

With regard to investor risk, it was not improper for the Commission to consider the fact that a natural gas supply company was a “small but efficient and well managed natural gas utility.” State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 323 N.C. 481, 374 S.E.2d 361, 1988 N.C. LEXIS 703 (1988).

The law permits the Commission to consider both size and management in assessing investor risk insofar as such risk may bear on an appropriate return on equity capital; a utility’s small size may increase investor risk and justify a higher return. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 323 N.C. 481, 374 S.E.2d 361, 1988 N.C. LEXIS 703 (1988).

While efficient management should not justify a higher common equity rate of return, it is appropriate for the Commission to consider good management as a factor which reduces investor risk and militates in favor of a lower return on equity capital. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 323 N.C. 481, 374 S.E.2d 361, 1988 N.C. LEXIS 703 (1988).

Commission could properly consider increased risk to investors caused by the possible loss of customers who may switch to alternative fuels in its determination of the common equity rate of return for a natural gas supply company. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 323 N.C. 481, 374 S.E.2d 361, 1988 N.C. LEXIS 703 (1988).

North Carolina Utilities Commission’s order authorizing a 102 percent return on equity for an electric company was supported by competent, material, and substantial evidence where the order appropriately considered changing economic conditions upon customers, the Commission gave great weight to testimony concerning the State’s unemployment rate, and certain costs were excluded from the rate base for one year in order to serve customer interests. State ex rel. Utils. Comm'n v. Cooper, 367 N.C. 444, 761 S.E.2d 640, 2014 N.C. LEXIS 588 (2014).

What constitutes a fair rate of return on common equity is a conclusion of law, which must be predicated on adequate factual findings. State ex rel. Utils. Comm'n v. Public Staff-North Carolina Utils. Comm'n, 322 N.C. 689, 370 S.E.2d 567, 1988 N.C. LEXIS 481 (1988).

A public utility corporation is entitled to a just and reasonable rate of return based upon the fair value of the properties used and useful in rendering the service for which the rate is established. State ex rel. Utils. Comm'n v. City of Greensboro, 244 N.C. 247, 93 S.E.2d 151, 1956 N.C. LEXIS 397 (1956).

Even though a utility contemplates no substantial expansion of its plant, and so presently does not contemplate the issuance of either stocks or bonds, it is, nevertheless, entitled to charge rates sufficient to enable it to earn a fair rate of return, as defined in subsection (b)(4), upon the fair value of its properties used and useful in rendering its service in this State. State ex rel. Utils. Comm'n v. Edmisten, 291 N.C. 575, 232 S.E.2d 177, 1977 N.C. LEXIS 1222 (1977).

As to a “just and reasonable” rate, see Smyth v. Ames, 169 U.S. 466, 18 S. Ct. 418, 42 L. Ed. 819, 1898 U.S. LEXIS 1506 (1898), modified, 171 U.S. 361, 18 S. Ct. 888, 43 L. Ed. 197, 1898 U.S. LEXIS 1608 (1898), limited, Union Trust Co. v. Stearns, 119 F. 790, 1903 U.S. App. LEXIS 5435 (C.C.D.R.I. 1903); State ex rel. Utils. Comm'n v. State, 239 N.C. 333, 80 S.E.2d 133, 1954 N.C. LEXIS 384 (1954).

What a “just and reasonable” rate of return is depends on several variables: (1) the rate base which earns the return; (2) the gross income received by the applicant from its authorized operations; (3) the amount to be deducted for operating expenses, which must include the amount of capital investment currently consumed in rendering the service; and (4) what rate constitutes a just and reasonable rate of return on the predetermined rate base. State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 348 N.C. 452, 500 S.E.2d 693, 1998 N.C. LEXIS 316 (1998).

Reasonableness of Rate of Return Depends on Whether Property Is Fairly Valued. —

Whether a 4%, 5%, or 6% return is just and reasonable depends very largely on whether the Commission has placed a fair value on the property of the utility which is used and useful in producing its revenue. State ex rel. Utils. Comm'n v. Lee Tel. Co., 263 N.C. 702, 140 S.E.2d 319, 1965 N.C. LEXIS 1352 (1965).

There is no fixed “fair rate of return” applicable to all utility companies, or to a single utility company at all times. State ex rel. Utils. Comm'n v. General Tel. Co., 281 N.C. 318, 189 S.E.2d 705, 1972 N.C. LEXIS 1080 (1972).

“Fair rate of return” is one sufficient to enable the utility to attract, on reasonable terms, capital necessary to enable it to render adequate service. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

In this State the test of a fair rate of return is that laid down by the Supreme Court of the United States in Bluefield Waterworks & Imp. Co v. Public Serv. Comm’n, 262 U.S. 679, 43 S. Ct. 675, 67 L. Ed. 1176 (1923), namely, if the company continues to earn such a rate of return, will it be able to attract on reasonable terms the capital it needs for the expansion of its service to the public? State ex rel. Utils. Comm'n v. Morgan, 278 N.C. 235, 179 S.E.2d 419, 1971 N.C. LEXIS 962 (1971).

The rate-making procedure prescribed in this section is designed to yield to the utility a return which will meet the test laid down in Bluefield Waterworks & Imp. Co v. Public Serv. Comm’n, 262 U.S. 679, 43 S. Ct. 675, 67 L. Ed. 1176 (1923). State ex rel. Utils. Comm'n v. General Tel. Co., 285 N.C. 671, 208 S.E.2d 681, 1974 N.C. LEXIS 1125 (1974).

Crucial Question as to Rate of Return. —

To require the Commission in a general rate case to go into minute details with respect to each of the proposed increases and the possible inequalities which might be created thereby would distract its attention from the crucial question, namely: What is a fair rate of return on company’s investment so as to enable it by sound management to pay a fair profit to its stockholders and to maintain and expand its facilities and services in accordance with the reasonable requirements of its customers in the territory covered by its franchise? State ex rel. Utils. Comm'n v. County of Harnett, 30 N.C. App. 24, 226 S.E.2d 515, 1976 N.C. App. LEXIS 2137 (1976).

What Dollar Return Contemplated. —

Under this section a fair rate of return on the fair value of the properties used in rendering the service clearly contemplates the allowance of a greater dollar return than would be allowed if the rate base were the original cost, depreciated, of the same properties, assuming that the value of the properties has been enhanced by inflation. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Power company is entitled to earn same rate of return on fair value of its plant as on retained earnings which it has reinvested in its plant. State ex rel. Utils. Comm'n v. Duke Power Co., 285 N.C. 377, 206 S.E.2d 269, 1974 N.C. LEXIS 998 (1974).

Absolute Accuracy Not Required. —

Since the rate of return on the fair value of its properties which will enable a utility company to attract the capital it needs cannot be pinpointed with absolute accuracy, it is universally recognized that, for a utility rendering acceptable service, there is a zone of reasonableness extending over a few hundredths of one percent, within which a rate of return fixed by a regulatory commiss