CITIES AND TOWNS ‑- MUNICIPAL ELECTRIC UTILITY ‑- ANNEXATION BY A CITY OF TERRITORY SERVED BY P.U.D. ‑- AUTHORITY OF EACH TO OPERATE IN TERRITORY

CITIES AND TOWNS ‑- MUNICIPAL ELECTRIC UTILITY ‑- ANNEXATION BY A CITY OF TERRITORY SERVED BY P.U.D. ‑- AUTHORITY OF EACH TO OPERATE IN TERRITORY.

Where a city operating its own electric utility within the boundaries of a county-wide public utility district, annexes territory presently served by the public utility district, the public utility district may continue to serve the territory notwithstanding the right of the city to provide the same service in the same territory.

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                                                                 August 26, 1965

Honorable Herbert H. Davis
Prosecuting Attorney
Benton County Court House
Prosser, Washington

                                                                                                                Cite as:  AGO 65-66 No. 33

Dear Sir:

            By letter previously acknowledged you have requested the opinion of this office on two questions which we paraphrase as follows:

            1. In the event that a city, which operates its own electric utility and is located within the boundaries of a county-wide public utility district, annexes territory presently served by such public utility district, may the public utility district continue to serve the annexed territory?

            2. If the answer to the first question is in the negative, will it be necessary for the annexing city to purchase or condemn the properties of the public utility district which lie within the newly extended city limits?

            We answer your first question in the affirmative, and therefore, an answer to your second question appears to be unnecessary.

                                                                     ANALYSIS

            It is a general rule of common law that two municipalities cannot serve simultaneously the same geographic area.  See,P.U.D. No. 1 of Pend Oreille County v. The Town of Newport, 38 Wn.2d 221, 227, 228 P.2d 766 (1951), and cases cited therein.  However, the state supreme court in its opinion in that case concluded that rule does not apply with regard to the exercise of proprietary functions by municipal corporations,  [[Orig. Op. Page 2]] as distinguished from governmental functions.  The holding of the case was that cities and public utility districts may legally provide services within the same geographic area.

            The supreme court considered the question as one of statutory construction.  Specifically in that case the court construed certain portions of Remington's Revised Statutes, now codified as RCW 54.05.020 (authorizing the establishment of P.U.D.'s) and RCW 35.92.0501/ (authorizing cities and towns to acquire and operate electrical utilities).

            In summary, the court concluded that since the legislature has authorized both public utility districts and cities to engage in the business of selling electricity, each may do so concurrently and compete with each other in an area until the legislature forbids or affirmatively restricts such competition.

            We have not overlooked the possible application of RCW 54.04.030 which provides in pertinent part as follows:

            ". . . No public utility district created hereunder shall include therein any municipal corporation, or any part thereof, where such municipal corporation already owns or operates all the utilities herein authorized; . . ."

            Arguably, this statute only applies to encroachment by a public utility district rather than expansion (through annexation) by a city.  However, even assuming that the statute could otherwise be held applicable to the factual situation involved here, it does not apply where the public utility district is county-wide.  See,Hillier v. Public Utility District No. 3, 188 Wash. 602, 63 P.2d 392 (1936);Ex rel. Panesko v. P.U.D. No. 1, 9 Wn.2d 581, 115 P.2d 692 (1941).

            Since the particular public utility district involved in your question is a county-wide public utility district, it is not in any event prohibited by RCW 54.04.030,supra, from having part or all of the territory of a city within its boundaries.  Accordingly, your first question is answered in the affirmative.

            From the context of your letter it appears that the answer to your second question is desired only in the event of a  [[Orig. Op. Page 3]] negative answer to your first question; i.e., in the event we concluded that a public utility district would automatically lose its authority to serve the annexed territory immediately upon its annexation to the city.  Since that is not the case, we trust the foregoing is a complete answer to your request.

            We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

ROBERT F. HAUTH
Assistant Attorney General