{
  "id": 8519302,
  "name": "STATE OF NORTH CAROLINA, ex rel. UTILITIES COMMISSION, and the PUBLIC STAFF OF THE NORTH CAROLINA UTILITIES COMMISSION v. MARTHA H. MACKIE, Applicant Appellant",
  "name_abbreviation": "State ex rel. Utilities Commission v. Mackie",
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    "judges": [
      "Judge BECTON concurs.",
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    "parties": [
      "STATE OF NORTH CAROLINA, ex rel. UTILITIES COMMISSION, and the PUBLIC STAFF OF THE NORTH CAROLINA UTILITIES COMMISSION v. MARTHA H. MACKIE, Applicant Appellant"
    ],
    "opinions": [
      {
        "text": "MARTIN, Judge.\nI\nThe scope of judicial review of a decision of the Utilities Commission is delineated by G.S. 62-94. According to G.S. 62-94(b), this Court may reverse or modify a decision of the Utilities Commission only when\n[T]he substantial rights of the appellants have been prejudiced because the Commission\u2019s findings, inferences, conclusions or decisions are:\n(1) In violation of constitutional provisions, or\n(2) In excess of statutory authority or jurisdiction of the Commission, or\n(3) Made upon unlawful proceedings, or\n(4) Affected by other errors of law, or\n(5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted, or\n(6) Arbitrary or capricious.\nG.S. 62-94(b); Utilities Commission v. Bird Oil Co., 302 N.C. 14, 273 S.E. 2d 232 (1981). Grounds for relief not specifically set forth in the notice of appeal may not be relied upon in the appellate courts. G.S. 62-94(c). 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 argument in support thereof. Utilities Commission v. Bird Oil Co., supra.\nII\nThe first issue presented by appellant is whether the Commission erred in concluding and decreeing that she is operating a public utility subject to regulation by the Utilities Commission. In the notice of appeal filed with the Commission, and in the assignments of error in the record on appeal, appellant referred to five of the six statutory criteria as grounds for relief. It is apparent, however, that the basis of her argument before this Court, as to this first issue, is her contention that the Commission erred in its application of the law to the facts found by it. Thus our review of the Commission\u2019s conclusion and decree that appellant is operating a public utility is properly conducted under G.S. 62-94(b)(4), whether the Commission\u2019s order was affected by errors of law.\nIn its findings of fact, the Commission summarized the history of the water service and sewage disposal facilities from their beginning until the subject property was acquired by Mrs. Mackie. It found that appellant\u2019s husband was aware, when he purchased the property, that the facilities were on the property and were in use. After appellant acquired the property, she continued to provide the services, maintained the equipment, employed men to operate the facilities, and charged fees to those using the services. Although it found that no new homes have been connected to the system since appellant acquired it, the Commission found that appellant had extended service to new residents of homes already connected. At the time of the hearing, appellant was selling water to eighteen customers and providing sewage disposal service to nineteen customers. Appellant has not assigned error to the Commission\u2019s findings of any of the foregoing facts; they are supported by competent evidence and are conclusive on appeal. Utilities Commission v. Intervenor Residents, 305 N.C. 62, 286 S.E. 2d 770 (1982).\nThe term \u201cpublic utility\u201d is defined by G.S. 62-3(23). With respect to water and sewer utilities, the statute provides:\nG.S. 62-3(23)a. \u201cPublic utility\u201d means a person, . . . owning or operating in this State equipment or facilities for:\n2. 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 \u201cpublic utility\u201d shall not include any person or company whose sole operation consists of selling water to less than 10 residential customers ....\nApplying the definition to the facts found by the Commission, there is no question that appellant meets the statutory criteria of distributing water and providing sewage disposal service to more than ten residential customers for compensation. The basis of appellant\u2019s argument, however, is that since she has not offered to extend services to any residence other than those already connected to her system when she acquired it, she is not operating a public utility because she does not provide the services \u201cto or for the public.\u201d\nAlthough it excluded from the definition of \u201cpublic utility\u201d those water and sewer systems serving less than ten residential customers, the General Assembly did not attempt, in Chapter 62 of the General Statutes, to define the word \u201cpublic\u201d or establish any standardized test as to when a utility service is provided \u201cto or for the public.\u201d Hence, our Supreme Court has twice been required to consider this question and to attempt a definition of the word \u201cpublic\u201d as used in the utilities law. In Utilities Commission v. Carolina Telephone and Telegraph Co., 267 N.C. 257, 148 S.E. 2d 100 (1966), the Court defined \u201cpublic,\u201d as used in G.S. 62-3(23) as follows:\nOne offers service to the \u201cpublic\u201d within the meaning of the statute when he holds himself out as willing to serve all who apply up to the capacity of his facilities. It is immaterial, in the connection, that his service is limited to a specified area and his facilities are limited in capacity.\nId. at 268, 148 S.E. 2d at 109. In Utilities Commission v. Simpson, 295 N.C. 519, 246 S.E. 2d 753 (1978), the Court rejected a definition of \u201cpublic,\u201d that would have required a service to be offered to an indefinite class or to the community at large. Instead, the Court approved a more flexible interpretation of the term.\n[WJhether any given enterprise is a public utility within the meaning of a regulatory scheme does not depend on some abstract, formulistic definition of \u201cpublic\u201d to be thereafter universally applied. What is \u201cpublic\u201d in any given case depends rather on the regulatory circumstances of that case. Some of these circumstances are (1) nature of the industry sought to be regulated; (2) type of market served by the industry; (3) the kind of competition that naturally inheres in that market; and (4) effect of non-regulation or exemption from regulation of one or more persons engaged in the industry. The meaning of \u201cpublic\u201d must in the final analysis be such as will, in the context of the regulatory circumstances, . . . accomplish \u201cthe legislature\u2019s purpose and comport with the public policy.\u201d (Citation omitted.)\nId. at 524, 246 S.E. 2d at 756-57. The Court concluded that although a service may be offered only to a definable class, rather than to the public at large, it still may be considered an offering of service to the \u201cpublic\u201d within the meaning of the regulatory statutes.\nWe believe that appellant is providing water and sewage disposal service \u201cto or for the public\u201d under the holdings of both Carolina Telephone and Telegraph Co. and Simpson. Since her acquisition of the water distribution and sewage disposal facilities, appellant has provided services to any resident of a house connected thereto who desired the services. Although she has solicited no customers and has not extended her facilities to any residences not previously served, she has willingly provided service to new customers who moved into homes already connected to her facilities. In so doing, she has held herself out as willing to serve, indiscriminately, all who have applied, up to the capacity of her facilities, within the holding of Carolina Telephone and Telegraph Co., supra.\nBy application of the \u201cregulatory circumstances\u201d interpretation of Simpson, supra, we reach the same result. By excluding from its definition of public utility those water systems serving fewer than ten customers, G.S. 62-3(23)a.2, the General Assembly manifested its clear intent that systems serving ten or more customers serve a sufficient segment of the public to create a public interest in their regulation to make certain that adequate service is provided at fair rates. G.S. 62-2. Evidence before the Commission indicated that more than half of all water systems regulated by the Commission serve a limited number of users in limited areas, such as a single residential development. The effect of non-regulation of these systems would expose their users to the risk of inadequate service and exorbitant rates, with no alternative sources of service.\nWe hold, therefore, that appellant is providing water and sewage disposal service \u201cto or for the public\u201d within the meaning of G.S. 62-3(23)a.2 and is subject to regulation by the Utilities Commission. That portion of the Commission\u2019s order so holding is affirmed.\nIll\nAfter concluding that appellant is operating a public utility, the Commission also concluded that her operation of the water and sewer systems served the public convenience and necessity. In her notice of appeal and exceptions filed with the Commission, appellant asserted that such conclusion was in excess of the statutory authority of the Commission and was arbitrary and capricious. She based her exception on the grounds that she was not operating a public utility system. In view of our affirmation of the Commission\u2019s decision that appellant is, in fact, operating a public utility, its determination that the public convenience and necessity were served thereby is clearly within its statutory authority. See G.S. 62-110, -118.\nIn her assignments of error contained in the record on appeal, appellant seeks to rely on an additional ground for relief, not stated in her notice of appeal, i.e., that the Commission\u2019s conclusion is not supported by any finding of fact which is supported \u201cby competent, material and substantial evidence in view of the entire record as submitted. . . .\u201d G.S. 62-94(b)(5). Although G.S. 62-94(c) precludes her reliance on this ground, we have considered it in connection with our consideration of appellant\u2019s contention that the Commission\u2019s conclusion is arbitrary and capricious.\nEvidence before the Commission indicates that a number of the residences served by the water and sewer systems are situated on quarter-acre lots, which are of insufficient size to support both a well and septic system. The occupants of these residences, who are currently among appellant\u2019s customers, have no alternative means of water supply or sewage disposal other than the service provided by appellant. This evidence clearly supports the Commission\u2019s finding of fact that: \u201cThe customers do not have wells; some customers do not own enough land to install a septic tank.\u201d Considering the recognized importance of an adequate and safe water supply and sanitary means of sewage disposal, the Commission\u2019s finding supports a conclusion not only that appellant\u2019s services constitute a convenience to that segment of the public who use them, but also that such services are necessary to the safety and health of the public.\nThe words \u201carbitrary\u201d and \u201ccapricious\u201d have similar meanings, generally referring to acts done without reason or in disregard of the facts. In re Housing Authority of Salisbury, 235 N.C. 463, 70 S.E. 2d 500 (1952). We find nothing arbitrary or capricious in the Commission\u2019s conclusion that appellant\u2019s water and sewer services serve the public convenience and necessity.\nIV\nThe next issue presented for our consideration concerns the denial of appellant\u2019s application for authority to abandon her public utility service. She seeks review of this portion of the Commission\u2019s order upon grounds that it is unsupported by competent evidence, is arbitrary and capricious, is in excess of the Commission\u2019s statutory authority and is in violation of constitutional provisions. We need reach none of these grounds for review because we find the order, as it addresses this issue, inadequate to permit appellate review.\n(a) 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:\n(1) Findings and conclusions and the reasons or bases therefor upon all material issues of fact, law, or discretion presented in the record, ....\nN.C. Gen. Stat. \u00a7 62-79(a) (1982). 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\u2019s resolution of the controverted issues. Utilities Commission v. Conservation Council, 312 N.C. 59, 320 S.E. 2d 679 (1984); Utilities Commission v. Queen City Coach Co., 4 N.C. App. 116, 166 S.E. 2d 441 (1969).\nAppellant based her application to discontinue service upon the following provision of G.S. 62418(a): \u201cUpon finding . . . 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 ... to authorize by order any public utility to abandon or reduce such service.\u201d The power of the Commission to authorize an abandonment of service is, in large measure, discretionary. Utilities Commission v. Southern Railway Co., 254 N.C. 73, 118 S.E. 2d 21 (1961). This is so because the Commission\u2019s decision must ultimately rest on a balancing of the public\u2019s interests and the financial ability of the utility to provide service. However, the Commission\u2019s power to require the utility to continue a service is not unlimited. To require a utility, particularly a small operation such as the one involved in the present case, to continue an unprofitable operation would violate constitutional guaranties against the taking of property without just compensation. See F. Welch, Cases and Text on Public Utility Regulation 226 (rev. ed. 1968). The burden is on the utility seeking authorization to abandon service to establish \u201cthat there is no reasonable probability of its being able to realize sufficient revenue by the rendition of such service, to meet its expenses.\u201d Utilities Commission v. Haywood Electric Membership Corp., 260 N.C. 59, 131 S.E. 2d 865 (1963).\nIn the present case, as previously summarized, appellant presented substantial evidence as to her actual expenses of operation and projected future expenses of operation, as well as the necessity of repairs to the water tank and the estimated cost thereof. Although no evidence of the original cost of the system or accumulated depreciation of original cost previously recovered was available to her, she presented evidence of her cost of acquisition of the entire property upon which the facilities are located and estimates of replacement costs of the facilities. The Commission based its denial of appellant\u2019s application to abandon service upon its Finding of Fact 11:\n11. The financial evidence offered by applicant fails to show that there is no reasonable probability of her realizing sufficient revenues from the utility services to meet her utility expenses.\nThe Commission repeated virtually the same language in its third Conclusion of Law:\n3. The Applicant has failed to show that there is no reasonable probability of her realizing sufficient revenue to meet the expenses of the operation of the public utility water and sewer systems. . . .\nThough denominated a finding of fact by the Commission, the statement contained in Finding of Fact 11 is in reality a conclusion of law in that it applies principles of law, rather than a determination of facts from the appellant\u2019s evidence, to resolve the issue. In order to review this legal conclusion, we must determine whether facts otherwise found by the Commission are sufficient to support its legal determination that appellant\u2019s evidence did not establish her entitlement to abandon service. See Jones v. Andy Griffith Products, Inc., 35 N.C. App. 170, 241 S.E. 2d 140, disc. rev. denied, 295 N.C. 90, 244 S.E. 2d 258 (1978).\nThe Public Staff argues that the Commission has complied with G.S. 62-79(a)(1) because the Hearing Examiner, in his Discussion of Evidence and Conclusions in the Recommended Order, stated the reasons for his rejection of appellant\u2019s financial evidence, and the Commission adopted the Recommended Order as its Final Order. It is true that the Hearing Examiner summarized appellant\u2019s contentions as to her operating costs, depreciation expense and fair return. He rejected her evidence of operating costs because he was \u201cunable to reproduce the calculation\u201d and because an item of capital equipment was erroneously included in appellant\u2019s schedule of expenses for \u201cRepairs and Maintenance.\u201d He rejected her evidence of depreciation expense because he found it \u201cexaggerated\u201d and because he determined that it had been improperly calculated insofar as rate-making purposes are concerned. He rejected her evidence as to fair return because he found that her contention was based upon the full purchase price of all of the property, when only a part was used for utility purposes. The Hearing Examiner\u2019s discussion of the evidence, however, does not sufficiently resolve material issues of fact to permit a determination of the controversy.\nThe ultimate issue for resolution is whether the operation of the system can produce sufficient revenues to meet the expenses of operation. G.S. 62-118(a). To resolve the issue, there must necessarily be findings of fact as to the reasonable expenses of operation and the revenues which the system may be reasonably expected to produce. Neither the Hearing Examiner nor the Commission made findings as to either of these material facts. Moreover, there is no indication from the findings made, or from the Hearing Examiner\u2019s Discussion of Evidence and Conclusions, that the Commission gave any consideration to appellant\u2019s evidence concerning the anticipated costs of necessary repairs to the water tank. Thus, we hold that the Commission failed to find sufficient facts to enable this Court to determine the correctness of the Commission\u2019s ruling on the controverted issue. Its failure to do so necessitates that we remand this issue for further proceedings.\nIn connection with our decision to remand this issue to the Commission, we note that appellant has attempted to bring to our attention, in her brief, evidence which was not before the Commission and which, according to appellant, became known to her only after the Commission acted in this matter. We have not considered this evidence, nor has the appellant attempted to proceed in accordance with G.S. 62-93 in order to present this evidence to the Commission pending appeal. Upon remand, the decision as to whether to permit the taking of additional evidence will be that of the Commission.\nV\nAppellant also asserts that the Commission\u2019s order that she apply for a certificate of public convenience and necessity to operate the water and sewer systems is in excess of the Commission\u2019s statutory authority and in violation of constitutional provisions. While this issue may or may not arise after remand, depending upon the Commission\u2019s findings, we choose to address it.\nN.C. Gen. Stat. \u00a7 62-110 (1982) (amended 1984) provides in pertinent part:\nNo public utility shall hereafter begin the . . . operation of any public utility plant or system or require 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 . . . acquisition, or operation ....\nAppellant argues that although the foregoing statute creates a condition precedent upon the right of a person to enter the utility business, the Commission exceeds its statutory authority by requiring a person who has failed to comply with the statute to apply for and accept a certificate of public convenience and necessity. According to her argument, the Commission may do no more than order her to cease and desist from operating the water and sewer systems in violation of the statute, an order with which she would willingly comply.\nChapter 62 of the North Carolina General Statutes confers upon the Utilities Commission broad powers to regulate public utilities and to compel their operation in accordance with the policy of the State, as declared in G.S. 62-2. Utilities Commission v. Robert Morgan, Att\u2019y Gen., 277 N.C. 255, 177 S.E. 2d 405 (1970), aff\u2019d on rehearing, 278 N.C. 235, 179 S.E. 2d 419 (1971). The status of an entity as a public utility, entitled to the rights conferred by the statutes 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. Utilities Commission v. Carolina Telephone and Telegraph Co., 267 N.C. 257, 148 S.E. 2d 100 (1966). 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.\nG.S. 62-30 vests the Utilities Commission with \u201cgeneral power and authority to supervise and control the public utilities ... as may be necessary to carry out the laws providing for their regulation, and all such other powers ... as may be necessary or incident to the proper discharge of its duties. G.S. 62-32(b) specifically vests the Commission \u201cwith all power necessary to require. and compel any public utility to provide and furnish . . . reasonable service of the kind it undertakes to furnish . . . .\u201d (Emphasis added.) G.S. 62-118(b) authorizes the Commission, specifically with respect to abandonment of water and sewer utility service without the Commission\u2019s consent, to seek injunctive relief from the superior court to compel the continued operation of such water and sewer utility services. Thus, we hold that the Commission does not exceed its statutory authority by ordering one who is, in fact, operating as a public utility to comply with laws providing for utilities regulation.\nHowever, we find redundant the Commission\u2019s order that appellant apply for a certificate of public convenience and necessity. The effect of such a certificate is to grant a utility an exclusive right to sell its service within the territory allotted to it, based upon a finding that such service would be a convenience to, and fill a need of, the public. The Commission has already made such a finding. Should the Commission again conclude, upon remand, that appellant\u2019s application to abandon service should be denied, no purpose is served by requiring appellant to apply for a certificate, the issuance of which is dependent upon a finding which the Commission has already made. Instead, 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.\nNeither do we agree that an order of the Commission, based upon proper findings and conclusions, requiring appellant to continue operation of her utilities would 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. 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.\nProperty does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good.\nMunn v. Illinois, 94 U.S. 113, 126, 24 L.Ed. 77 (1877).\nVI\nIn summary, we affirm that portion of the Commission\u2019s Final Order holding that appellant owns and operates public utility water and sewer systems and, as such is subject to the jurisdiction of the Commission. We also affirm that portion of the Commission\u2019s Final Order holding that the public convenience and necessity are served by her operation of those systems. For the reasons previously stated, however, we vacate that portion of the Final Order denying appellant\u2019s application for authority to abandon service and remand this case to the Utilities Commission to make necessary findings upon which it may properly resolve the issue.\nAffirmed in part, vacated in part, and\nRemanded.\nJudge BECTON concurs.\nJudge Webb dissents.",
        "type": "majority",
        "author": "MARTIN, Judge."
      },
      {
        "text": "Judge Webb\ndissenting.\nI dissent. I do not believe Martha H. Mackie offers water and sewerage services to all who apply up to the capacity of her facilities. For this reason I would hold she does not operate a public utility.",
        "type": "dissent",
        "author": "Judge Webb"
      }
    ],
    "attorneys": [
      "Vickie L. Moir, Staff Attorney, for Public Staff of the North Carolina Utilities Commission, intervenor-appellee.",
      "I. Beverly Lake for applicant-appellant."
    ],
    "corrections": "",
    "head_matter": "STATE OF NORTH CAROLINA, ex rel. UTILITIES COMMISSION, and the PUBLIC STAFF OF THE NORTH CAROLINA UTILITIES COMMISSION v. MARTHA H. MACKIE, Applicant Appellant\nNo. 8510UC69\n(Filed 4 February 1986)\n1. Utilities Commission \u00a7 19\u2014 water and sewer services \u2014 public utility\nAppellant is providing water and sewer services \u201cto or for the public\u201d within the meaning of N.C.G.S. 62-3(23)a.2 and is subject to regulation by the Utilities Commission where, ever since she acquired property containing water distribution and sewage disposal facilities, she has provided such services to any resident of a house connected to her facilities who desired the services; she provides water to eighteen customers and sewage services to nineteen customers in an unincorporated village; and although appellant has solicited no customers and has not extended her facilities to any residences not previously served, she has provided service to new customers who moved into homes already connected to her facilities.\n2. Utilities Commission \u00a7 19\u2014 water and sewer services \u2014 public convenience and necessity\nThe Utilities Commission did not err in concluding that appellant\u2019s operation of water and sewer systems served the public convenience and necessity where the evidence before the Commission indicated that a number of residences served by appellant\u2019s water and sewer system were situated on lots of insufficient size to support both a well and a septic system and the occupants of these residences thus have no alternative means of water supply and sewage disposal.\n3. Utilities Commission \u00a7 19\u2014 water and sewer services \u2014 refusal to permit abandonment-insufficient findings\nThe facts found by the Utilities Commission were insufficient to support its conclusion that appellant\u2019s evidence did not establish her entitlement to abandon her operation of water and sewer systems on the ground that operation of the systems cannot produce sufficient revenues to meet the expenses thereof where the Commission failed to make findings as to the reasonable expenses of operation and the revenues which the systems might reasonably be expected to produce and failed to give consideration to appellant\u2019s evidence concerning the anticipated costs of necessary repairs to a water tank. N.C.G.S. 62-79(a); N.C.G.S. 62-118(a).\n4. Utilities Commission \u00a7 1\u2014 utilities regulation \u2014 order to comply with laws\nThe Utilities Commission does not exceed its statutory authority by ordering one who is, in fact, operating as a public utility to comply with laws providing for utilities regulation. N.C.G.S. 62-30; N.C.G.S. 62-32(b); N.C.G.S. 62418(b).\n5. Utilities Commission \u00a7 2\u2014 water and sewer services \u2014 finding of public convenience and necessity \u2014 order to apply for certificate unnecessary\nAn order of the Utilities Commission requiring appellant to apply for a certificate of public convenience and necessity for the operation of water and sewer systems was redundant where the Commission has already found that appellant is operating a utility which serves the public convenience and necessity. If the Commission should conclude that appellant\u2019s application to abandon service should be denied, the Commission should proceed to establish the territory to be served by appellant, issue the certificate, establish the rates to be charged for the services, and, if necessary, exercise its statutory powers to compel compliance with its lawful orders.\n6. Utilities Commission \u00a7 19\u2014 requiring continuation of public utility \u2014 no involuntary servitude\nAn order of the Utilities Commission requiring appellant to continue the operation of public water and sewer utilities would not violate constitutional prohibitions against involuntary servitude so long as appellant is justly compensated for the services she provides.\nJudge Webb dissenting.\nAppeal by applicant from order of North Carolina Utilities Commission entered 10 September 1984. Heard in the Court of Appeals 29 August 1985.\nOn 25 January 1984, Martha H. Mackie made application to the North Carolina Utilities Commission for authority to cease providing water service and sewage disposal service to residential customers in the unincorporated village of Falls of the Neuse in Wake County. In her application, Mrs. Mackie maintained that she was not operating a public utility and was not therefore, subject to the regulatory jurisdiction of the Commission. However, in the event that she was found by the Commission to be subject to its jurisdiction, Mrs. Mackie asserted that she should be permitted to discontinue service because the revenues derived from providing water and sewer services were insufficient, after meeting her costs of operation, maintenance and depreciation, to yield a fair return. The Commission scheduled a public hearing on the application for 10 April 1984. On 6 April 1984, upon motion of the Public Staff, the scope of the hearing was expanded \u201cto also consider the issue of whether or not Martha H. Mackie is a public utility under the jurisdiction of the North Carolina Utilities Commission.\u201d\nThe evidence before the Commission tended to show that in the fall of 1982, George C. Mackie, Jr., applicant\u2019s husband, purchased two tracts of land located in Falls of the Neuse from Scarsdale Investment Corporation for the sum of $45,000.00. Title to the tracts, consisting of 18.69 acres and 1.0 acres respectively, was taken in Mrs. Mackie\u2019s name as a gift to her from her husband for long-range investment purposes. When Mrs. Mackie acquired the property, there was located on the 18.69 acre tract a water distribution system consisting of a water pipeline from a spring located on property owned by the United States Government, a pumphouse containing a pump and concrete holding tank, and an elevated steel water storage tank connected to water lines running to residences in the village. A sewage disposal facility, consisting of a large sand pit, was located on the 1 acre tract, which is not contiguous to the larger tract. Sewage is emptied into the sand pit through a main located beneath the roadway.\nThe evidence showed that Falls of the Neuse was originally a mill village which grew around a textile mill operated by the Neuse Manufacturing Company. Neuse also owned most of the residences in the village, and provided a water system. Neuse went out of business, and the mill was intermittently operated by a succession of owners and receivers until after World War II, when Erwin Mills purchased the mill and some of the residences. In approximately 1949, Erwin Mills constructed the water and sewer systems which presently exist, and provided water and sewage disposal services to its own employees and tenants and also to other residents of the village. After Erwin Mills ceased operating the mill, the property was sold. Gradually, the residences were conveyed to individuals. The property upon which the water system and sewage disposal facility are located was conveyed to Henry Young and Lewis Walton and, later, to Scarsdale Investment Corporation. These owners continued to provide water and sewage disposal services to residents of the village.\nWhen Mrs. Mackie acquired the property, Scarsdale Investment Corporation had been charging a monthly fee of $10.00 for water service and $5.00 for sewage disposal. Soon after she acquired the property, Mrs. Mackie increased the monthly charges to $15.00 for water service and $10.00 for sewage disposal. Five customers discontinued use of the systems after the rates were increased. At the time of the hearing, there were 17 users of both water and sewer services, 1 user of water service only, and 2 users of sewer service only.\nThe evidence does not disclose the total number of residences to which the water or sewer systems were capable of providing service, however, no additional residences have been connected to either system since Mrs. Mackie acquired it. The systems do not serve all of the residences in Falls of the Neuse Village; those residences which do not obtain water from Mrs. Mackie\u2019s tank are served by wells and those residences which do not use her sewage disposal system are served by septic tanks. Although no additional residences have been connected, new occupants have moved into residences already connected and have Obtained water and sewer service from Mrs. Mackie.\nMrs. Mackie testified that she did not acquire the property for the purpose of operating a water or sewer utility and that she had made no effort to attract customers. She has continued to provide the same service as had been provided by her predecessors in title as a convenience to the present users. In her opinion, the presence of the water supply facility is a hindrance to the development of her property. George H. Mackie, Jr., testified that although he had been aware of the water and sewer facilities when he purchased the property, he had been advised that he could terminate the service. According to all of the evidence, the system had never been authorized or regulated by the Utilities Commission; its existence was unknown to the Commission until it received a complaint when Mrs. Mackie increased the monthly charges for service. Upon the complaint being made, Mrs. Mackie was contacted by Jerry Tweed, Director of the Water Division of the Public Staff of the Utilities Commission, who advised her that she should file either an application for a certificate of public necessity and convenience, in order to continue providing service, or an application to abandon service.\nMrs. Mackie also offered evidence as to her actual out-of-pocket expenses for operation of the system for the 14 month period from 1 January 1983 until 29 February 1984, exclusive of property taxes, depreciation, major repairs, bookkeeping and accounting expenses, or salary to her or her husband. Based upon these figures, she estimated that the annual cost of operation, including taxes and bookkeeping expenses but excluding major repairs, depreciation or salary to herself or her husband, will be approximately $4,600.00. Assuming that the number of present customers remains constant, total revenues for a one-year period will be approximately $5,500.00. There was evidence tending to show that the water tank is in need of painting at an estimated cost of $5,000.00. No evidence of the original cost of the facilities was available, however, Mrs. Mackie offered evidence as to the present cost of replacement.\nThe Public Staff offered evidence tending to show that many of the residences served by the system were located on lots which were of insufficient size to support both a well and a septic tank. Therefore, many of Mrs. Mackie\u2019s customers would have no alternative source of water or sewer service if Mrs. Mackie was permitted to discontinue service.\nAfter making findings of fact and conclusions of law, the Commission entered a Final Order (1) declaring that Mrs. Mackie was \u201ca public utility providing water and sewer service in the village of Falls of the Neuse,\u201d (2) denying her application to discontinue the service, and (3) ordering her to submit an application for a certificate of public necessity and convenience. Mrs. Mackie appeals.\nVickie L. Moir, Staff Attorney, for Public Staff of the North Carolina Utilities Commission, intervenor-appellee.\nI. Beverly Lake for applicant-appellant."
  },
  "file_name": "0019-01",
  "first_page_order": 47,
  "last_page_order": 62
}
