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THE STATE OF SOUTH CAROLINA

In The Supreme Court

City of Camden, Respondent,

v.

Public Service

Commission of South

Carolina and Black

River Electric

Cooperative, Appellants.

Appeal From Richland County

J. Derham Cole, Judge

Opinion No. 24973

Heard June 9, 1999 - Filed July 19, 1999

AFFIRMED

F. David Butler, of Columbia, for appellant Public

Service Commission.

Arthur G. Fusco, of Columbia, for appellant Black

River Electric Cooperative.

James M. Brailsford, III, of Robinson, McFadden &

Moore, of Columbia, for respondent.

MOORE, A.J.: This appeal is from a circuit court order

reversing a decision of appellant Public Service Commission (PSC) that

assigned an area already served by respondent (City) to appellant Black

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River Electric Cooperative (Coop). We affirm.

FACTS

In October 1996, several residents of the Red Hill area of Lee

County filed a complaint with the PSC alleging inadequate and

undependable electrical service from City. The complainants sought relief

under S.C. Code Ann. § 58-27-660 (1977), which allows a change in electric

supplier for inadequate service, and asked that Coop take over service of

the area.

A hearing was held on June 25, 1997. Two residents testified to

power surges and outages occurring from 1990 through the summer of

1996. City Manager Broom testified City had retained an electrical

engineering firm in September 1996 which recommended repairs including

adding voltage regulators and capacitor banks, replacing reclosers, and

coordinating the types and sizes of reclosers and fuses. This work had

been completed by the date of the hearing at a cost of $35,000. Broom

further testified that long-term improvements to meet growing demand

were in the planning stages.

City also put up the testimony of an electrical engineer, A.J. Molnar,

who corroborated that all the recommended repairs had been completed in

April 1997. He testified that as of the weekend before the hearing,

voltage readings in the Red Hill area indicated a constant voltage of 122

volts which is considered "very good." These readings indicated no voltage

surges or low voltage problems. Molnar testified that the current

electrical status of the Red Hill area would be sufficient for "a good

number of years" and could accommodate a five percent increase in load.

In its order, the PSC sua sponte took judicial notice that it had in

its files no certificate of public convenience and necessity to support City's

service of the area as required under S.C. Code Ann. § 58-27-1230 (1977).1

a municipality within its corporate limits with these exemptions:

(a) for any extension within any municipality or district within

which it had lawfully commenced operations prior to April 8,

1932, (b) for an extension within or to territory already served by

it, necessary in the ordinary course of its business or (c) for an

extension into territory contiguous to that already occupied by it

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It concluded City was not lawfully serving the Red Hill area (which City

had served since at least 1940) because City had failed to prove it was

exempt from obtaining such a certificate. Accordingly, the PSC assigned

the Red Hill area to Coop under S.C. Code Ann. § 58-27-640 (1977).

On appeal, the circuit court reversed. It found there was no

substantial evidence that City's electrical service was inadequate at the

time of the PSC hearing. Further, it was an error of law to assign the

Red Hill area to another supplier under §58-27-640 because the legality of

City's service was never raised by the pleadings and City had no notice.

The PSC and Coop appeal.

ISSUES

1. Did the circuit court apply the appropriate standard of

review?

2. Did the PSC properly assign the area to Coop because City's

service was unlawful?

DISCUSSION

1. Standard of review

Appellants contend the circuit court's order should be reversed

because it substituted its own view of the facts in finding there was no

evidence of inadequate service. See Porter v. South Carolina Pub. Serv.

Comm'n, 333 S.C. 12, 507 S.E.2d 328 (1998) (appellate court may not

substitute its judgment for that of the PSC). This issue is without merit.

First, the record is clear there was no evidence of inadequacy at the

time of the hearing before the PSC. Moreover, regardless of the circuit

court's finding, the PSC did not rest its decision on inadequacy of service

presumably because reassignment for inadequacy of service under §58-27-

660 does not apply to municipalities. 2Relief for inadequacy of service by a

municipality is limited under S.C. Code Ann. § 58-27-1520 (1977) to

2 Section 58-27-610(l), which applies to Article 5 of Chapter 27, excludes

a municipality from the definition of "electric supplier." Section 58-27-660 is

part of Article 5 and therefore does not apply to municipalities.

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ordering City to improve its electrical service.3Accordingly, inadequacy of

service could not support assignment of the Red Hill area to Coop in this

case.

2. Lawfulness of City's service

Appellants contend the circuit court improperly relied on Camden v.

South Carolina Pub. Serv. Comm'n, 283 S.C. 380, 323 S.E.2d 519 (1984),

in reversing the assignment to Coop. Camden involved an area serviced

by a municipality outside its city limits that was assigned by the PSC to

an electric cooperative. The Court concluded on the facts of the case that

since the municipality was lawfully servicing the area, the PSC lacked

authority to assign the area to another electric supplier under § 58-27-640.

In this case, the circuit court concluded the lawfulness of City's

service to the Red Hill area was not properly in issue because it was not

raised by the pleadings. Accordingly, the holding in Camden applied and

the PSC could not assign the Red Hill area to Coop under § 58-27-640.

We agree with the circuit court's ruling. In this case, no allegation

was ever raised regarding unlawful service. In fact, City had no notice of

any such challenge to its service until the PSC issued its order. See

Cameron & Barkley Co. v. South Carolina Procurement Review Panel, 317

S.C. 437, 454 S.E.2d 892 (1995) (administrative agency's consideration of

an issue without notice resulting in prejudice violates procedural due

process).

Further, S.C. Code Ann. § 58-27-1270 (1977) provides the proper

procedure in a case of unlawful service:

Whenever ... [a] governmental body ... is engaged ... in

Whenever the Commission, after a hearing had upon

its own motion or upon complaint, finds that the

service of any electrical utility is unreasonable,

unsafe, inadequate, insufficient or unreasonably

discriminatory the Commission shall determine the

reasonable, safe, adequate and sufficient service to be

observed, furnished, enforced or employed and shall

fix the same by its order, rule or regulation.

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operation without having secured a certificate of public

convenience and necessity as required by the provisions of this

chapter, or otherwise in violation thereof, any interested

electrical utility, electric cooperative, consolidated political

subdivision, corporation or municipality may file a complaint

with the Commission. The Commission may, with or without

notice, make its order requiring the party complained of to

cease and desist ... until the Commission may, after hearing,

make such order and prescribe such terms and conditions in

harmony with this chapter as are just and reasonable.

(emphasis added).

This section clearly envisions a complaint and action to specifically

challenge unlawful service by an electric supplier.

The circuit court's order reversing the PSC's assignment of the Red

Hill area to Coop is AFFIRMED.

FINNEY, C.J., TOAL, WALLER, and BURNETT, JJ., concur.

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