Question Submitted by: The Honorable Charlie O. Morgan, Oklahoma House of Representatives
1981 OK AG 45
Decided: 11/02/1981
Oklahoma Attorney General
Cite as: 1981 OK AG 45, __ __
¶0 The Attorney General is in receipt of your request for an opinion wherein you ask:
"Are there any constitutional or statutory limitations on the operation or acquisition of another business by a public utility where such other business is not 'reasonably incidental' to the operation of the public utility company?"
¶1 Public utilities are defined in 17 O.S. 151 (1971). 17 O.S. 151 provides:
"The term 'Public Utility' as used in 17 O.S. 151 through 17 O.S. 155 of this title, shall be taken to mean and include every cor poration, association, company, individuals, their trustees, lessees, or receivers, successors or assigns, except as hereinafter provided, and except cities, towns, or other bodies politic, that now or hereafter may own, operate, or manage any plant or equipment, or any part thereof, directly or indirectly, for public use, or may supply any commodity to be furnished to the public.
"(a) For the conveyance of gas by pipeline.
"(b) For the production, transmission, delivery or furnishing of heat or light with gas.
"(c) For the production, transmission, delivery or furnishing electric current for light, heat or power.
"(d) For the transportation, delivery or furnishing of water for domestic purposes or for power."
¶2 Title 17 O.S. 152 (1971) gives the Corporation Commission general supervisory control over all public utilities operating within Oklahoma.
¶3 Title 17 O.S. 154 (1971) further provides that:
"In case the owner or operator of any public utility is engaged in carrying on any other business in connection with the operation of such public utility, the Commission may require the cost of the operation and gross revenues of such joint business to be kept in such form and manner as may be prescribed by the Commission so that the cost of the operation and gross revenues of the public utility may be ascertained."
¶4 The Supreme Court of Oklahoma has construed these statutes in relation to the Corporation Commission's duty to regulate public utilities.
¶5 During a rate making hearing, the Commission examines the Company's operations to determine if they are "used and useful" to the rate payers. In Application of Oklahoma Natural Gas Co., 406 P.2d 273 (Okl. 1965), the Supreme Court reviewed the Commission's method of separating the company's utility and nonutility operations. The Court found that is was proper to exclude nonutility property from the rate base and include only those items used exclusively in the company's public utility function. Furthermore, the Commission should properly require a nonutility business to share its portion of expense of maintaining a central office building and other properties used in nonutility operations. (406 P.2d at 276, 277) The Court inherently recognized the ability of the public utility to own and operate a nonutility business. The only qualification, however is that the nonutility business must be excised from the rate base for rate making purposes.
¶6 All corporations are limited and restricted by their articles of incorporation. Title 18 O.S. 1.27 (1971) provides in pertinent part:
"The provisions, concerning objects, purposes, powers and authorized business of the corporation, set out in the articles of incorporation shall have the effect of limitations and restrictions upon the powers and authority of such corporation, and the acts of the corporation shall be confined within such powers and authority as modified or affected by such limitations and restrictions."
¶7 A public utility corporation, as any other corporation, must confine its business activities to those enumerated as "authorized" in its articles of incorporation.
¶8 Finally, the first paragraph of 18 O.S. 1.27 (1971), last sentence, states:
". . . Provided that no gas or electric public service corporation shall engage in the business of selling gas and/or electric appliances."
¶9 It is, therefore, the official opinion of the Attorney General that:
1. A public utility may operate or acquire another business that is not "reasonably incidental" to the operation of the utility, provided the articles of incorporation authorize the company to engage in such a business, and provided further that the investment in and expenses, costs and profits of such nonutility business must be kept separate from those of the public utility for rate making purposes; and
2. However, a public utility corporation engaged in the sale and distribution of electricity or gas is prohibited by 18 O.S. 1.27 (1971) from engaging in the business of selling gas and/or electric appliances.
JAN ERIC CARTWRIGHT
ATTORNEY GENERAL OF OKLAHOMA
FLOYD W. TAYLOR
FIRST ASSISTANT ATTORNEY GENERAL
| Cite | Name | Level |
|---|---|---|
| None Found. |
| Cite | Name | Level | |
|---|---|---|---|
| Title 17. Corporation Commission | |||
| Cite | Name | Level | |
| 17 O.S. 151, | Public Utility Defined - Exemptions - Requirements | Discussed at Length | |
| 17 O.S. 152, | Commission's Jurisdiction Over Public Utilities | Cited | |
| 17 O.S. 154, | Records of Public Utility Business | Cited | |
| 17 O.S. 155, | Orders of Commission - Scope - Right of Appeal | Cited | |
| Title 18. Corporations | |||
| Cite | Name | Level | |
| 18 O.S. 1.27, | Repealed | Discussed at Length | |