Opinion
No. 37878
Decided June 19, 1963.
Public Utilities Commission — Gas companies — Federal and state control — Realignment of producing and distributing companies — Wholly owned and operated subsidiaries — Sale and purchase of utility property.
APPEAL from the Public Utilities Commission.
The Ohio Fuel Gas Company, a wholly owned subsidiary of the Columbia Gas System, Inc., is a public utility organized and existing under the laws of this state and engaged in the business of producing, purchasing, transporting, storing, distributing and selling natural gas at wholesale and retail within the state.
The Columbia Gas of Ohio, Inc., proposing to be a wholly owned subsidiary of Columbia, is a corporation organized and existing under the laws of this state and desires to become a public utility engaging in the business of purchasing, transporting, distributing and selling natural gas at retail within the state.
The two corporations filed a joint application with the Public Utilities Commission, seeking permission for Columbia of Ohio to purchase and operate and for Ohio Fuel to sell all the latter's natural gas retail distribution properties in the state, together with all auxiliary and appurtenant equipment, structures and properties. If permission from the various authorities is granted, Ohio Fuel will own and operate the production, transmission and storage facilities in Ohio and will sell natural gas to wholesale customers only, including Columbia of Ohio which will own and operate the retail distribution facilities now owned by Ohio Fuel and distribute and sell natural gas to retail customers only. The property which Columbia of Ohio will own and operate will be substantially identical to the distribution property now owned by Ohio Fuel and upon which the rates of Ohio retail consumers are directly based. The production, transmission and storage facilities retained by Ohio Fuel will be those presently owned by it and upon which its wholesale rates are directly based. The proposed transaction, if carried out, will not effect any change in retail rates.
This joint application is a step in the long-range plan of the Columbia Gas System to separate the wholesale and retail gas facilities of its subsidiary companies operating in various states. When accomplished, the retail distribution facilities will be owned and operated by subsidiary companies subject only to the jurisdiction of the state in which each operates, and the production, transmission and storage facilities will be owned by a corporation subject to the jurisdiction of the Federal Power Commission.
The Public Utilities Commission issued an order granting the joint application.
An appeal from the order of the commission brings the cause to this court for review.
Mr. Russell Leach and Mr. John C. Young, city attorneys, Mr. Alba L. Whiteside and Mr. C. Howard Johnson, Jr., for appellants.
Mr. William B. Saxbe, attorney general, Mr. Andrew R. Sarisky and Mr. Jay C. Flowers, for appellee the Public Utilities Commission.
Mr. W.F. Laird and Mr. Ralph N. Mahaffey, for appellees The Ohio Fuel Gas Company and the Columbia Gas of Ohio, Inc.
This plan seems to be in accord with the federal plan of control as prescribed in the National Gas Act of 1938 (Title 15, Section 717, U.S. Code), and as stated in Public Utilities Commission of Ohio v. United Fuel Gas Co., 317 U.S. 456, 467, "Congress meant to create a comprehensive scheme of regulation which would be complementary in its operation to that of the states, without any confusion of functions. The Federal Power Commission would exercise jurisdiction over matters in interstate and foreign commerce * * * and local matters would be left to the state regulatory bodies."
Appellants contend that the proceeding under Section 4905.40 et seq., Revised Code, relative to the issuance of securities by Columbia Gas of Ohio, and the proceeding under Section 4905.48, Revised Code, relative to transactions between the two utility companies, are separate proceedings, and that the commission was in error in not holding separate hearings on the joint application. This court does not agree with that contention. There is no statutory prohibition against a joint application or a joint hearing in such a case.
Appellants contend that the commission's order is violative of Section 4905.62, Revised Code, which provides that no franchise or right to own, operate or manage a gas company "shall be granted or transferred to any corporation not incorporated under the laws of this state." Columbia of Ohio is a gas company incorporated under the laws of this state. The fact that the Columbia Gas System, Inc., will eventually own all the stock of Columbia of Ohio is not a matter within the purview of that section.
Appellants contend further that the order of the commission is unlawful because, under Section 4905.48, Revised Code, Ohio Fuel cannot be lawfully authorized to sell only a part of its property, and that Columbia of Ohio cannot lawfully be authorized to purchase public utility property because it is not now engaged in the business of a public utility. These contentions are without merit. Section 4905.48, Revised Code, authorizes a utility to "purchase or lease the property * * * of any other such public utility and to sell or lease its property," without limitation as to all or any part thereof. Section 4905.63, Revised Code, provides that "companies formed to acquire property or to transact business which would be subject to Chapters * * * 4905 * * * of the Revised Code, * * * are subject to such chapters, although no property has been acquired * * * or no franchise has been exercised by them." This clearly permits the acquisition of public utility property by Columbia of Ohio before it actually engages in or conducts a business of a public utility.
An examination of the record discloses nothing to establish that the realignment of these corporations as approved by the commission would be unlawful or detrimental to the public interest.
The order of the Public Utilities Commission, being neither unlawful nor unreasonable, is affirmed.
Order affirmed.
TAFT, C.J., ZIMMERMAN, MATTHIAS, O'NEILL, GRIFFITH, HERBERT and BROWN, JJ., concur.
BROWN, J., of the Seventh Appellate District, sitting by designation in the place and stead of GIBSON, J.