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Ohio High Court Rules on City's Muni Plan

Fortnightly Magazine - November 1 1996

The Ohio Supreme Court has concluded its review of the municipalization dispute between Toledo Edison Co., an electric utility, and the City of Clyde. The court said that a city ordinance passed on January 17, 1995, seeking to force the utility to stop providing service within municipal boundaries, violated state law in attempting to accomplish the municipalization of Toledo Edison's facilities without the approval of the Ohio Public Utilities Commission (PUC). Nevertheless, the court also rejected Toledo Edison's claims that the same law protected its right to serve new facilities and customers not yet in existence. The ordinance only violates state law to the extent that enforcement "amounts to forced abandonment of existing facilities and service," the court explained. The ruling follows a PUC decision denying the city's application for authorization to substitute its service for that of Toledo Edison and to require the utility to remove most of its distribution facilities from the city. See, Re City of Clyde, 168 PUR4th 114 (Ohio P.U.C. 1996).

The court found that a state law known as the "Miller Act" requires PUC review if a municipality seeks to force termination of service over any size facility, including single-customer service lines. The court also ruled, however, that while the Miller Act protects Toledo Edison's existing facilities and lines, it confers no right upon the utility to serve new customers inside the city limits.

The court cautioned, however, that the utility's existing lines do not lose protection of 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, the court said. It directed the city to seek PUC approval before taking any action to terminate Toledo Edison's service to customers served before the effective date of the 1995 ordinance. Toledo Edison Co. v. City of Clyde, No. 95-1358, Aug. 28, 1996 (Ohio).

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