State ex rel. Toledo Edison Co. v. City of Clyde

[This opinion has been published in Ohio Official Reports at 

76 Ohio St.3d 508

.]




THE STATE EX REL. TOLEDO EDISON COMPANY, APPELLANT, v. CITY OF CLYDE
                                   ET AL., APPELLEES.

        [Cite as State ex rel. Toledo Edison Co. v. Clyde, 

1996-Ohio-376

.]
Municipal corporations—Public utilities—Section 3 of Clyde Ordinance 1995-01
        violates the Miller Act with respect to termination of Toledo Edison
        Company’s service to existing facilities inside Clyde—Section 3 of Clyde
        Ordinance 1995-01 not subject to Miller Act regarding new facilities.
      (No. 95-1358—Submitted April 15, 1996—Decided August 28, 1996.)
   APPEAL from the Court of Appeals for Sandusky County, Nos. S-88-046 and
                                         S-95-002.
                                  __________________
        {¶ 1} In July 1965, the Toledo Edison Company (“Toledo”) acquired, by
warranty deed, the electric generating, transmission, and distribution system then
owned and operated by the village (now city) of Clyde, and received a twenty-five-
year nonexclusive franchise to provide electricity to Clyde’s inhabitants.
        {¶ 2} In 1987, Clyde exercised its rights under Section 4, Article XVIII of
the Ohio Constitution and re-established a municipal electric system. The next
year, two years before the franchise agreement expired, Clyde’s city council
authorized Clyde to build a duplicate electric distribution system to provide electric
service to its inhabitants. Later that same year, Toledo asked Clyde to renew the
nonexclusive franchise agreement for an additional twenty-five years. Clyde
declined.
        {¶ 3} Toledo then initiated a mandamus proceeding, case No. S-88-046,
against Clyde, its mayor, its city manager, and its city council members, claiming
that construction of a duplicate system and failure to renew the franchise forced
Toledo to abandon or withdraw from its existing electric distribution facilities and
                              SUPREME COURT OF OHIO




system in Clyde. Toledo argued that Clyde must obtain approval from the Public
Utilities Commission of Ohio before requiring Toledo to abandon its existing
electrical distribution facilities or withdraw from its electric service inside Clyde.
Toledo requested an order directing Clyde to file an application with the
commission seeking approval to require Toledo to abandon its facilities and
withdraw its electric service from Clyde.
         {¶ 4} Subsequently, the court of appeals adopted in its judgment entry the
parties’ settlement agreement in case No. S-88-046, as follows:
         “Toledo Edison and the City of Clyde hereby agree that, in the event that
the City of Clyde determines to undertake any action requiring the cessation of
electric service in Clyde by Toledo Edison, or requiring the withdrawal or
abandonment of Toledo Edison’s facilities within the City of Clyde, the City of
Clyde shall comply with Ohio Revised Code Section 4905.21. Notwithstanding the
expiration of the franchise described in paragraph 1 above, the City of Clyde shall
not require Toledo Edison to abandon or withdraw its facilities within the City of
Clyde, or the electric service rendered thereby, unless and until the City of Clyde
obtains an order from the Public Utilities Commission of Ohio, approving such
abandonment or withdrawal.”
         {¶ 5} The settlement agreement also stated that it did not grant a franchise
to Toledo. Neither party appealed the order adopting the settlement agreement.
         {¶ 6} On January 3, 1995, Clyde’s city council gave the first reading of
Ordinance 1995-01. As passed on January 17, 1995, the ordinance reads as follows:
         “SECTION 2. There is presently no provider of electric, water or sewer
utility services, other than the City of Clyde and its utility departments, that is
authorized by the City of Clyde under Article XVIII of the Constitution of the State
of Ohio, to provide such utility services within the corporate limits of the City of
Clyde.




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                                      January Term, 1996




         “SECTION 3. On and after the effective date of the ordinance, all utility
service arrangements for electric, water or sewer utility service within the corporate
limits of the City of Clyde, as the same may be altered from time to time through
annexation or otherwise, shall be made with the City of Clyde’s electric, water or
sewer utilities.
         “SECTION 4. This ordinance shall not affect utility services or products
currently provided at transmission voltages of approximately 69,000 volts or more.
Nor shall this ordinance affect utility service arrangements between individual
residents of the City of Clyde and providers of utility services other than the City of
Clyde, if such arrangements are existing and in place as of the effective date of this
Ordinance. Such arrangements are hereby permitted to continue, at the option of
the residents having such arrangements, until such time as the City of Clyde obtains
such authorization or approval as may be required under the laws of the State of
Ohio to cause such existing arrangements to be terminated and utility service
provided by the City of Clyde to be substituted for the service provided under such
other arrangements.” (Emphasis added.)
         {¶ 7} That same day, Resolution No. 1995-04 was passed, instructing the
city solicitor to initiate abandonment proceedings before the commission seeking
to replace electric service inside Clyde’s city limits with service by Clyde and also
seeking removal of Toledo’s distribution system from inside Clyde’s city limits.
An application in accordance with the resolution was filed the next day with the
commission, case No. 95-02-EL-ABN.1 The application did not seek commission
approval of Section 3 of Ordinance 1995-01.




1. On April 11, 1996, the commission issued its opinion and order denying Clyde’s abandonment
application in case No. 95-02-EL-ABN, because that application was not in the public interest. The
commission held that the application had an extraterritorial impact and failed to address the issue of
Toledo’s stranded investment. However, the commission noted that Clyde could file another
application sometime in the future.




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                             SUPREME COURT OF OHIO




       {¶ 8} Two weeks later, Toledo filed a new mandamus action against Clyde,
case No. S-95-002, and a separate motion for contempt against Clyde in case No.
S-88-046, alleging that Section 3 of Ordinance 1995-01 violated R.C. 4905.21 and
the judgment entry in case No. S-88-046 because Section 3 closed some or all of
Toledo’s lines for service. Toledo requested a writ of mandamus ordering Clyde
to obey R.C. 4905.21 by filing an application with the commission for permission
to require Toledo to abandon its lines within Clyde and prohibiting the second
reading, enactment, or enforcement of Ordinance 1995-01 to the extent that it
violated the writ of mandamus.
       {¶ 9} Clyde moved to dismiss Toledo’s new mandamus complaint. The
parties then stipulated that the case involved only one substantive legal issue:
“Whether the Clyde Respondents violated this Court’s Journal Entry of April 24,
1989 or the Miller Act by not requesting in Clyde’s Miller Act application at the
Public Utilities Commission authorization for the requirement imposed by Section
3 of the City of Clyde Ordinance No. 1995-01 that all future utility service
arrangements be made with the City of Clyde.”
       {¶ 10} Clyde then filed its answer to the mandamus complaint, asserting
that the complaint failed to state a claim upon which relief could be granted, that
the court lacked jurisdiction to grant the injunctive relief requested, that Toledo had
a plain and adequate remedy at law, and that Toledo lacked standing as a relator
under R.C. 2731.02.
       {¶ 11} The court of appeals stated that Section 3 of Clyde Ordinance 1995-
01 did not apply to anyone currently receiving service from Toledo and that Clyde
was otherwise in compliance with the April 24, 1989 judgment entry and R.C.
4905.21. The court then held, without explanation, that Section 3 of Clyde
Ordinance 1995-01 did not violate R.C. 4905.21, and that Clyde need not seek or
obtain commission approval before enforcing that section of its ordinance. The
court of appeals then found Toledo’s complaint not well taken.




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                                  January Term, 1996




        {¶ 12} The cause is now before this court upon an appeal as of right.
                              _____________________
        Richard W. McLaren, Jr., for appellant.
        Duncan & Allen, Gregg D. Ottinger and John P. Coyle; Homan & Pearce
and William D. Pearce, for appellee.
        Chester, Willcox & Saxbe, John W. Bentine and Jeffrey L. Small, urging
affirmance for amicus curiae, American Municipal Power-Ohio, Inc.
                              ______________________
        Per Curiam.
        {¶ 13} In order to obtain a writ of mandamus, the relator must show “that
the relator has a clear legal right to the relief prayed for, that the respondent is under
a legal duty to perform the requested act, and that relator has no plain and adequate
remedy at law.” State ex rel. Fostoria Daily Review Co. v. Fostoria Hosp. Assn.
(1988), 

40 Ohio St.3d 10, 11

, 

531 N.E.2d 313, 314

. For the reasons that follow, we
reverse the decision of the court of appeals and find that Section 3 of Clyde
Ordinance 1995-01 violates the Miller Act with respect to the termination of
Toledo’s service to existing facilities inside Clyde, but affirm the decision of the
court of appeals that Section 3 of Clyde Ordinance 1995-01 is not subject to the
Miller Act regarding new facilities.
        {¶ 14} Under Section 4, Article XVIII of the Ohio Constitution, “[a]ny
municipality may acquire, construct, own, lease and operate within or without its
corporate limits, any public utility the product or service of which is or is to be
supplied to the municipality or its inhabitants, and may contract with others for any
such product[s] or service.” Thus, Clyde had constitutional authority to build a
municipal utility to serve its inhabitants. Wooster v. Graines (1990), 

52 Ohio St.3d 180, 181

, 

556 N.E.2d 1163, 1164

. This right is not generally subject to statutory
restriction. Lucas v. Lucas Local School Dist. (1982), 

2 Ohio St.3d 13

, 2 OBR 501,

442 N.E.2d 449

; Columbus v. Pub. Util. Comm. (1979), 

58 Ohio St.2d 427

, 12




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O.O.3d 361, 

390 N.E.2d 1201

; Columbus v. Ohio Power Siting Comm. (1979), 

58 Ohio St.2d 435

, 

12 O.O.3d 365

, 

390 N.E.2d 1208

.
       {¶ 15} However, municipal utility operations are subject to statewide police
power limitations for health and safety reasons, for example, water fluoridation
(Canton v. Whitman [1975], 

44 Ohio St.2d 62

, 

73 O.O.2d 285

, 

337 N.E.2d 766

),
approval of sewage projects (Delaware Cty. Bd. of Commrs. v. Columbus [1986],

26 Ohio St.3d 179, 184

, 26 OBR 154, 158-159, 

497 N.E.2d 1112, 1117

), and
designation of a river as a scenic river area (Columbus v. Teater [1978], 

53 Ohio St.2d 253, 260-261

, 

7 O.O.3d 410, 414

, 

374 N.E.2d 154, 159

). Moreover, the
Miller Act, R.C. 4905.20 and 4905.21, requires municipalities to obtain
commission approval before forcing the abandonment of nonmunicipal utility
facilities or the withdrawal of nonmunicipal utility services located inside the
municipality. See, e.g., State ex rel. Klapp v. Dayton Power & Light Co. (1967),

10 Ohio St.2d 14

, 

39 O.O.2d 9

, 

225 N.E.2d 230

; State ex rel. Wear v. Cincinnati
& Lake Erie RR. Co. (1934), 

128 Ohio St. 95

, 

190 N.E. 224

.
       {¶ 16} R.C. 4905.21 provides that any “political subdivision desiring to
abandon or close, or have abandoned, withdrawn, or closed for traffic or service all
or any part of any [electric] line * * * shall make application to the public utilities
commission in writing.” It is undisputed that Clyde is a “political subdivision” and
that Toledo is a “public utility” within the meaning of the Miller Act. Thus, Clyde
must seek commission approval before forcing Toledo to close or abandon its
electric lines or service inside Clyde’s city limits. Therefore, if enforcing Section
3 of Clyde Ordinance 1995-01 amounts to the forced abandonment of Toledo’s
facilities or service, then Clyde’s ordinance violates the Miller Act.
       {¶ 17} This presents us with two issues: First, does the Miller Act require
commission review and oversight for the termination of service over single-
customer service lines, like the ones at issue here? Second, does the Miller Act
give Toledo the right to serve prospective future customers and facilities that might




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                                January Term, 1996




arise inside Clyde’s city limits after the expiration of Toledo’s nonexclusive
franchise and after Clyde has established its own electric utility and declared its
intent to serve all new customers inside Clyde’s city limits? We answer the first
question in the affirmative, finding that the Miller Act requires commission review
regarding the abandonment or closure of all electric lines, regardless of size. As to
the second question, we find that under the circumstances presently before us, the
Miller Act protects Toledo’s existing facilities and service lines, but confers no
right upon Toledo to serve new, prospective facilities inside Clyde’s city limits.
       {¶ 18} A review of the history behind the Miller Act is important in
reaching these conclusions. The Miller Act derives from the Gilmore Act (G.C.
504-2 and 504-3, 107 Ohio Laws 525), which prevented railroads and street railway
companies from abandoning main track lines without notice and prior approval.
See State ex rel. Wear v. Cincinnati & Lake Erie RR. Co. (1934), 

128 Ohio St. 95

,

190 N.E. 224

. Accord Toledo v. Pub. Util. Comm. (1939), 

135 Ohio St. 57, 61-62

,

13 O.O. 329, 331

, 

19 N.E.2d 162, 164

. The focus of the Gilmore Act was to protect
the public, which had come to rely upon the service that was being provided. State
ex rel. 

Wear, supra,

128 Ohio St. 95

, 

190 N.E. 224

. Accord Detroit, Toledo &
Ironton RR. Co. v. Pub. Util. Comm. (1954), 

161 Ohio St. 317

, 

53 O.O. 220

, 

119 N.E.2d 73

, paragraph three of the syllabus.
       {¶ 19} The General Assembly expanded the scope of the Gilmore Act in
1919 to include the provision of utilities, including gas and electric service. G.C.
504-2 and 504-3, as amended by 108 Ohio Laws, Part I, 373. According to a
contemporary newspaper account, this expansion, called the Miller Act, was
prompted by the East Ohio Gas Company’s decision to unilaterally withdraw gas
service from the village of Alliance, leaving it without a gas provider. Ohio State
Journal, Feb. 27, 1919, at 1. See, also, Cleveland v. E. Ohio Gas Co. (1921), 

15 Ohio App. 117, 129

. Prior to this expansion of the Gilmore Act, public utilities
were bound only by the terms of their contracts with municipalities and could




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voluntarily forfeit their right to provide service to the municipalities and withdraw
their services as their contracts permitted. St. Clairsville v. Pub. Util. Comm.
(1921), 

102 Ohio St. 574

, 588-589, 

132 N.E. 151

, 155, citing E. Ohio Gas Co. v.
Akron (1909), 

81 Ohio St. 33

, 

90 N.E. 40

, see paragraph four of the syllabus.
        {¶ 20} “The express purpose of [the Miller Act] is that when a public utility
begins ‘furnishing service or facilities within the State of Ohio,’ regardless of the
terms of the [franchise] contract under which it is operating, or under which it began
such operation, its right to terminate such service is dependent upon the conclusions
of the public utilities commission rather than upon the terms of the contract * * *.”
E. Ohio Gas Co. v. Cleveland (1922), 

106 Ohio St. 489, 508

, 

140 N.E. 410, 416

.
        {¶ 21} Thus, like its predecessor, the Miller Act focuses upon protecting
existing utility customers from having their service terminated without commission
approval. This protection extends to situations where the utility franchise contract
has expired (Lake Shore Elec. Ry. Co. v. State ex rel. Martin [1932], 

125 Ohio St. 81

, 

180 N.E. 540

) and where the service was provided without any franchise
contract (State ex rel. 

Wear, supra,

128 Ohio St. 95

, 

190 N.E. 224

).
        {¶ 22} The operative portion of the Miller Act provides that:
        “[N]o public utility * * * furnishing service or facilities within this state,
shall * * * be required to abandon or withdraw any main track or depot of a
railroad, or main pipe line, gas line, telegraph line, telephone toll line, electric light
line, or any portion thereof, * * * or the service rendered thereby,” without
commission approval. (Emphasis added.) R.C. 4905.20.
        {¶ 23} This language is subject to two reasonable, but conflicting,
interpretations. The Act can be interpreted to apply either to the forced or voluntary
abandonment of (1) any “main pipe line,” “main gas line,” “main electric line,” etc.,
or the service rendered thereby, or (2) not only “main track” or “main pipe line,”
but also any gas line, telegraph line, or electric line, etc., or the service rendered
thereby.




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                                January Term, 1996




       {¶ 24} When a statute is susceptible of more than one interpretation, courts
seek to interpret the statutory provision in a manner that most readily furthers the
legislative purpose as reflected in the wording used in the legislation. United Tel.
Co. v. Limbach (1994), 

71 Ohio St.3d 369

, 372, 

643 N.E.2d 1129, 1131

; Harris v.
Van Hoose (1990), 

49 Ohio St. 3d 24, 26

, 

550 N.E.2d 461, 462

. Courts review
several factors in order to glean the General Assembly’s intent, including the
circumstances surrounding the legislative enactment, the history of the statute, the
spirit of the statute (the ultimate results intended by adherence to the statutory
scheme), and the public policy that induced the statute’s enactment. R.C. 1.49.
       {¶ 25} Several of these factors are relevant to the case at bar. As reflected
above, the Gilmore Act and the Miller Act were specifically enacted and have been
used to protect existing utility facilities, utility consumers, and their utility
providers from the forced termination of utility services or the removal of
nonmunicipal utility facilities without commission approval. E. Ohio Gas Co.,
supra, 

106 Ohio St. 489

, 

140 N.E. 410

; State ex rel. 

Klapp, supra,

10 Ohio St.2d 14

, 

39 O.O.2d 9

, 

225 N.E.2d 230

; State ex rel. 

Wear, supra,

128 Ohio St. 95

, 

190 N.E. 224

. For the reasons that follow, we interpret the Miller Act to apply to the
abandonment or withdrawal of any electric line, regardless of size, or the service
rendered thereby.
       {¶ 26} The interpretation of the Miller Act as limited to main electric lines
applies to the electric industry our holding that the Miller Act applies only to
“main” railroad tracks but not to “spur” or “side” rail track. Toledo, supra, 

135 Ohio St. at 61-62

, 

13 O.O. at 331

, 

19 N.E.2d at 164

. However, we find that Toledo
is factually distinguishable from the case at bar.
       {¶ 27} In Toledo, we reviewed the General Assembly’s specific
preenactment wording changes in the Miller Act, in which the phrase “side track,
spurs or other track” was deleted from the Act and the phrase “main track or tracks”
was inserted in its place. In light of these changes, we determined that the Miller




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Act applied only to “main” track, but not to “spur” or “side” railroad tracks. 

Id.

There were no similar language changes regarding the “electric line” portions of
the Miller Act. Thus, our interpretation of the Miller Act in Toledo may properly
be limited to the railroad industry and is distinguishable from the case at bar.
          {¶ 28} This interpretation is also arguably consistent with our quotation of
the Miller Act in State ex rel. Klapp, wherein we stated that:
          “Section 4905.20 reads:
          “ ‘No * * * public utility as defined in Section 4905.02 of the Revised Code
furnishing service or facilities in this state, shall abandon or be required to abandon
or withdraw any main * * * electric light line * * * or any portion thereof * * *.’”
(Ellipses sic; emphasis added.) 

10 Ohio St.2d at 15

, 

39 O.O.2d at 10

, 

225 N.E.2d at 232

.
          {¶ 29} Our quotation of the statute with these ellipses indicated that the
word “main” did apply to the phrase “electric light line.”               Nevertheless,
notwithstanding this parsing of the statute, we held that the Miller Act required
commission approval before the city of Piqua could force the Dayton Power &
Light Company to abandon service and withdraw all of its facilities from the city
of Piqua, including the small, customer-specific service lines like the ones at bar.
Thus, irrespective of how we may have quoted the Miller Act, we applied the Act
to require commission approval of the withdrawal of all lines and facilities from
inside Piqua, regardless of size. 

Id.

          {¶ 30} Additionally, we find the limitation of the Miller Act to main electric
lines unwise from a policy perspective. This interpretation is ripe for abuse by
municipalities. A municipality could manipulate the Miller Act and systematically
exclude a public utility from serving selected customers, or even an entire service
area, without commission oversight. This situation is inconsistent with the Miller
Act’s focus of protecting existing utility facilities and services to existing
customers.




                                            10
                                 January Term, 1996




         {¶ 31} Additionally, the terms “main,” “spur,” and “side” have no meaning
in the electric industry. The electric industry calls high-voltage lines (69,000 volts
or greater) “transmission lines,” and customer-specific lines “service lines” or
“distribution lines.” See R.C. 4933.81(C). Therefore, interpreting the Miller Act
to apply only to “main” electric lines may well create confusion in the electric
industry.    Therefore, we find that the General Assembly’s intent to protect
consumers is best promoted by interpreting the Miller Act to apply to the
abandonment or withdrawal of services from any electric line, including individual-
customer-service lines like the ones at bar. This interpretation maximizes consumer
protection and reduces the opportunities for abuse by requiring commission
oversight and review over the abandonment of any electric line, regardless of size.
         {¶ 32} Toledo correctly argues that enforcing Section 3 of Ordinance 1995-
01 would terminate Toledo’s service to a facility simply because that facility has a
new occupant. Toledo’s existing electric lines do not become unprotected by the
Miller Act merely because the name on the bill changes. Termination of the current
utility/customer relationship does not alter the fact that the service line itself is
protected by the Act. Accordingly, we find that Section 3 of Clyde Ordinance
1995-01 violates the Miller Act to the extent that it requires Toledo to stop service
over its existing electric lines to facilities inside Clyde’s city limits without
commission approval.
         {¶ 33} However, Toledo incorrectly argues that in addition to protecting its
existing electric lines and service, the Miller Act gives Toledo the right to serve
new facilities and customers not yet in existence. We find that this argument lacks
merit.
         {¶ 34} The Act protects only existing facilities and the service rendered
thereby. The General Assembly incorporated this protection into the Miller Act by
providing that “no public utility * * * furnishing service * * * shall * * * be
required to abandon or withdraw any * * * electric light line” without commission




                                          11
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approval. (Emphasis added.) R.C. 4905.20. This same perspective is also reflected
in R.C. 4905.21, which provides that “[t]his section applies to all service now
rendered * * *.” (Emphasis added.) Thus, the Miller Act protects not only the
utility provider’s electric lines, but also the provider’s right to continue “furnishing
service” over those lines to its current customers. See, e.g., State ex rel. 

Klapp, supra,

10 Ohio St.2d 14

, 

39 O.O.2d 9

, 

225 N.E.2d 230

.
        {¶ 35} This language does not create in a utility the right to expand its
customer base, after its franchise expires, to serve unknown future facilities and
customers inside a city that has not only created its own municipal utility but also
declared an intent to serve all new facilities and customers. Simply stated, the
Miller Act protects the nexus between the utility provider and its existing facilities
or load centers, binding them together in such a manner that only the commission
can compel termination of that relationship. New facilities or load centers have no
nexus to the public utility; their only relationship is with the municipality. First,
these new facilities are hypothetical and may never be realized. Second, no nexus
between the public utility and the new facilities preceded creation of the municipal
utility, so there is nothing for the Miller Act to protect.
        {¶ 36} Finding otherwise would mean that once a municipality entered into
a franchise arrangement with a public utility to provide utility services to municipal
inhabitants, the municipality could terminate that arrangement only with
commission approval. This position is inconsistent with the intent behind Section
4, Article XVIII of the Ohio Constitution and with the concept that “municipalities
have the exclusive power to contract for public utility services. This exclusive
power necessarily presumes that while being able to grant public utility franchises,
a municipality may likewise exclude a public utility from serving its inhabitants.”

Lucas, supra,

2 Ohio St.3d at 16

, 2 OBR at 504, 

442 N.E.2d at 452

.
        {¶ 37} In Lucas, the village of Lucas provided electric power to all of the
village inhabitants, including the Lucas Local School District. The school board




                                           12
                                January Term, 1996




resolved to buy its electric power from a different source. The village then obtained
an injunction to prevent the school board from purchasing power from anyone other
than the village. The court of appeals in Lucas affirmed.
        {¶ 38} We agreed with the trial court and the court of appeals, stating that
“contracting for public utility services is exclusively a municipal function under
Section 4, Article XVIII, of the Ohio Constitution.” 

Lucas, supra,

2 Ohio St.3d at 15

, 2 OBR at 503, 

442 N.E.2d at 451

.             We then applied the “substantial
interference” test set forth in Columbus v. 

Teater, supra,

53 Ohio St.2d 253

, 

7 O.O.3d 410

, 

374 N.E.2d 154

, and held that permitting the school board to contract
separately for electric service would circumvent the village’s right to require a
franchise to serve its inhabitants and would substantially interfere with the village’s
constitutional power to control the public utilities which serve the village’s
inhabitants. Id. at 15-16, 2 OBR at 503, 

442 N.E.2d at 451-452

.
        {¶ 39} Thus, the question at bar becomes whether the expansion of Toledo’s
service territory inside Clyde after the franchise has expired and Clyde has declared
its intent to serve its inhabitants amounts to a substantial interference with Clyde’s
constitutional right to require a franchise to serve its inhabitants. We find that it
does.
        {¶ 40} Municipalities’ power to control operation of utilities within their
municipal boundaries is also reflected in the Certified Territory Act, R.C. 4933.81
to 4933.90.    R.C. 4933.83(A) and 4933.87.          See, also, Legislative Service
Commission Analysis of 1978 H.B. No. 577 (as passed by the House) at 3. Perhaps
the best example of the General Assembly’s recognition of municipal utility
exclusivity appears in R.C. 4933.83(A):
        “Except as otherwise provided in this section and Article XVIII of the Ohio
Constitution, each electric supplier shall have the exclusive right to furnish electric
service to all electric load centers located presently or in the future within its
certified territory, * * * provided that nothing in [the Certified Territory Act] shall




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impair the power of municipal corporations to require franchises or contracts for
the provision of electric service within their boundaries * * *.” (Emphasis added.)
        {¶ 41} Thus, while electric suppliers like Toledo have the “exclusive right”
to furnish electricity to the current and future customers inside their service
territories, this right is expressly limited by Clyde’s right to require a franchise
contract to serve its inhabitants.
        {¶ 42} The right to require a contract necessarily also means the ability to
exclude competitors of a municipal utility. Permitting competition inside the
municipal utility boundaries would be inconsistent with a municipality’s right to
require a contract to serve the municipal inhabitants. Therefore, absent a franchise
or contract with a municipality giving a public utility the right to serve the
municipal inhabitants, that public utility has no right to serve those customers
within its service territory that are located within a municipality with a Section 4,
Article XVIII utility. Accordingly, a municipality may exclude another energy
provider, including the local public utility, from attempting to provide utility
service inside the municipal boundaries.
        {¶ 43} Here, Clyde created a municipal utility and exercised its power to
exclude Toledo from serving new, future utility facilities inside Clyde’s city limits.
At the same time, Clyde sought commission approval to terminate Toledo’s
existing customer relationships and to remove its facilities from inside Clyde under
the Miller Act. As to these new facilities, Clyde did all that was required of it under
the Miller Act.
        {¶ 44} Once Toledo’s franchise with Clyde expired, Toledo was an
occupant at sufferance inside Clyde’s city limits. State ex rel. Klapp v. Dayton
Power & Light Co. (S.D. Ohio 1957), 

170 F. Supp. 722, 725

, affirmed, 

263 F.2d 909

 (C.A. 6, 1959), reversed on other grounds (1959), 

359 U.S. 552

, 

79 S.Ct. 115

,

3 L.Ed.2d 1035

.




                                           14
                                 January Term, 1996




        {¶ 45} “Mere acquiescence in the continued unauthorized occupancy of the
streets, or nonaction on the part of public officials to prevent obstruction, or delay
in bringing action to procure an order of ouster, could not serve to confer any right
upon the defendant [utility] company or estop the city from maintaining this
proceeding [for ouster].” Ohio Elec. Power Co. v. State ex rel. Martin (1929), 

121 Ohio St. 235, 240

, 

167 N.E. 877, 878

.
        {¶ 46} Toledo also argues that, since it has an affirmative duty under R.C.
4905.22 and 4933.83 to serve the current and future electric needs in its service
territory, the Miller Act protects Toledo’s interest in future customers as well as
existing customers. We find that this argument is without merit.
        {¶ 47} The Certified Territory Act does not support this proposition. The
Certified Territory Act expressly exempts home rule municipalities from that Act:
        “[N]othing in [the Certified Territory Act] shall impair the power of
municipal corporations to require franchises or contracts for the provision of
electric services within their boundaries.” R.C. 4933.83(A).
        {¶ 48} Therefore, unless a public utility has a franchise giving it the right to
serve the municipal inhabitants, that public utility has no right to serve customers
within its service territory that are located within a municipality that is operating a
Section 4, Article XVIII utility and declared an intention to serve such customers.
R.C. 4933.87(A).
        {¶ 49} In this case, Toledo’s franchise with Clyde expired in 1990, and
Clyde has refused to enter into another franchise with Toledo. Thus, Toledo has
no right under the Certified Territory Act to serve any Clyde inhabitant or structure
other than those it was serving before Clyde created its own utility and declared an
intent to serve all new customers and facilities inside its city limits.
        {¶ 50} Toledo relies upon several cases as support for its argument that,
absent commission approval, it has the right to serve future customers inside
Clyde’s city limits. Lake Shore Elec. Ry. Co., supra, 

125 Ohio St. 81

, 

180 N.E. 15

                              SUPREME COURT OF OHIO




540; Indus. Gas Co. v. Pub. Util. Comm. (1939), 

135 Ohio St. 408

, 

14 O.O. 290

,

21 N.E.2d 166

; State ex rel. Klapp, supra, 

10 Ohio St.2d 14

, 

39 O.O.2d 9

, 

225 N.E.2d 230

; State ex rel. 

Wear, supra,

128 Ohio St. 95

, 

190 N.E. 224

. None of
these cases stand for the proposition espoused by Toledo.
        {¶ 51} Although we held in Wear, Lake Shore Elec. Ry. Co. and Klapp that
the Miller Act prevailed over a city’s right to oust a public utility or prevent it from
providing service inside its city limits, these cases do not control the situation at
bar. These cases all involved situations involving termination of existing services
to current customers. None asked this court to consider whether, as here, a utility’s
right to serve unknown future customers inside a city that has created its own utility
and declared its intent to serve all new customers with the city’s utility was
protected by the Act.
        {¶ 52} In Wear, the city of Springfield sought to stop the Cincinnati & Lake
Erie Railroad Company from providing passenger rail service through Springfield.
Springfield had no franchise or contract with the railroad. We looked upon the
public’s interest in continued service and the statewide disruption that would occur
if termination were permitted, and held that the Miller Act required commission
approval before Springfield could require the railroad to terminate the service. A
similar result was reached in Lake Shore Elec. Ry. Co. The city of Bellevue sought
to oust the Lake Shore Electric Railway Company from providing passenger rail
service to and through Bellevue. We held that the Miller Act prevented the city
from terminating the rail service without commission approval. Neither Wear nor
Lake Shore Elec. Ry. Co. stands for the proposition that a utility can expand its
reach within a city to new customers after the city has created its own utility and
declared an intent to serve all new customers with the city’s utility.
        {¶ 53} In Klapp, the city of Piqua sought to stop the Dayton Power & Light
Company from providing electric service to Piqua and to compel it to withdraw its
equipment and facilities from within Piqua’s city limits. Piqua had a municipal




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                                 January Term, 1996




utility and intended to serve all of its inhabitants. Piqua asserted its constitutional
authority under Sections 3 and 4, Article XVIII for ousting Dayton Power & Light
without commission approval. We held that the proposed ouster was subject to
commission approval under the Miller Act. As reflected in the court of appeals’
opinion in an earlier phase of the underlying action, “it is obvious that Piqua may
operate its own utility. But this fact has no bearing upon the issue involved herein.
We are concerned with pre-existing facilities and services furnished to the
inhabitants of Piqua by a foreign utility.” State ex rel. Klapp v. Dayton Power &
Light Co. (1960), 

113 Ohio App. 433, 438

, 

178 N.E.2d 838, 842

. In contrast, the
question now before us relates to services for new, prospective Clyde inhabitants
and facilities. Thus, Klapp provides no support for Toledo’s claimed right to serve
new customers and structures in this case.
        {¶ 54} In Indus. Gas Co., the Industrial Gas Company sought commission
permission to change the structure of its company and withdraw service from some
of its customers, but continue to serve other, higher-profit-margin customers in the
same area on a contract basis. The commission denied the company’s application
to selectively withdraw service. We agreed, stating that a public utility must serve
all of the customers within its service territory. Utilities cannot selectively pick out
the best customers to serve and then refuse to serve the remaining customers in its
service territory. 

135 Ohio St. 408

, 

14 O.O. 290

, 

21 N.E.2d 166

, paragraph two of
the syllabus. Here, Toledo is not preserving service to its current customers, but
trying to obtain new customers under the aegis of the Miller Act. Indus. Gas Co.
does not stand for the position espoused by Toledo. Once Toledo’s franchise
expired and Clyde declared its intent to serve all new Clyde customers, Toledo was
prohibited from initiating new service relationships inside Clyde’s municipal utility
boundaries. With the exception of Toledo’s pre-1995 customers and facilities,
Clyde had the exclusive right to provide utility service to its inhabitants after the
franchise expired. Accord R.C. 4933.03 (municipal consent required to supply




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electricity inside the municipality); 4933.16 (municipal consent required to
maintain electric distribution facilities inside city limits); 4933.83(A) (municipal
corporation may require franchise or contract to serve customers within city limits);
4933.87. Accordingly, we hold that the requirement that all new facilities will be
customers of Clyde’s utility department contained in Section 3 of Clyde Ordinance
1995-01 does not violate the Miller Act.        Toledo’s second proposition of law
contends that Clyde’s ordinance amounts to an unconstitutional deprivation of
property without due process of law. We find that this argument is not properly
before us because it was not decided by the court of appeals and is outside the single
issue that the parties agreed by stipulation to present to the court of appeals below.
Toledo’s second proposition of law is without merit.
       {¶ 55} For the reasons set forth above, we find that the court of appeals
incorrectly interpreted the Miller Act. Accordingly, the judgment of the court of
appeals is reversed in part and affirmed in part. We order Clyde to seek approval
from the Public Utilities Commission before taking any action to terminate Toledo
Edison’s service to facilities that Toledo Edison served before the effective date of
Ordinance 1995-01.
                                                          Judgment reversed in part
                                                                and affirmed in part,
                                                                   and writ granted.
       MOYER, C.J., F.E. SWEENEY, PFEIFER, COOK and STRATTON, JJ., concur.
       DOUGLAS and RESNICK, JJ., not participating.
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