EFFECT OF OPERATION OF SEPARATE ELECTRIC UTILITY BY MUNICIPALITY

CITIES AND TOWNS ‑- DISTRICTS ‑- PUBLIC UTILITY DISTRICTS ‑- TAXATION ‑- ELECTIONS ‑- EFFECT OF OPERATION OF SEPARATE ELECTRIC UTILITY BY MUNICIPALITY

(1) The residents of the Town of McCleary who are registered voters therein remain entitled (under the facts of this opinion) to participate in the election of Grays Harbor Public Utility District No. 1 commissioners even though the town operates its own electrical system.      

(2) Property situated within the Town of McCleary may not be taxed to construct, purchase or support the public utility district's electrical system, so long as the town continues to own or operate its own electrical utility.

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                                                                   April 20, 1982

Honorable Curtis M. Janhunen
Prosecuting Attorney
Grays Harbor County
P.O. Box 550
Montesano, Washington 98563                                                                                                                 Cite as:  AGLO 1982 No. 8

Dear Sir:

            By recent letter you requested our opinion on the following questions regarding public utility districts:

            "(1) May the residents of an incorporated municipality, which is operating its own electrical system, and which is located within the boundaries of a public utility district, vote in the election of public utility district commissioners?

            "(2) Is property located within an incorporated municipality, which maintains and operates its own electrical system and does not utilize any services of the public utility district within which it lies, subject to levy and collection of taxes by that public utility district?"

             [[Orig. Op. Page 2]]

            Under the factual situation here involved, we answer your first question in the affirmative and your second question in the negative for the reasons set forth in our analysis.

                                                                     ANALYSIS

            A city or town, although located in a public utility district, may elect to provide competing utility services.  Public Utility District No. 1 v. Town of Newport, 38 Wn.2d 221, 228 P.2d 766 (1951).  And, according to your letter, the Town of McCleary, in Grays Harbor County, is currently doing so through the maintenance and operation of its own electrical system.  Notably, however, the incorporation of McCleary postdated, by four years, the establishment of Public Utility District No. 1 of Grays Harbor County by a county-wide election in 1938.  Furthermore, the town electrical system did not come into existence until 1965 when, according to your letter,

            ". . . McCleary entered into a contract whereby the town purchased its powers from Bonneville Power Administration and the district allowed the Bonneville power to be transmitted over its system to McCleary. . . ."

            Your two questions require us to consider the legal effect of RCW 54.04.030 in the context of this factual situation.  That statute, which codifies § 12, chapter 1, Laws of 1931 (the law first authorizing the formation of public utility districts in the state) reads as follows:

            "This act shall not be deemed or construed to repeal or affect any existing act, or any part thereof, relating to the construction, operation and maintenance of public utilities by irrigation or water districts or other municipal corporations, but shall be supplemental thereto and concurrent therewith.  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:  PROVIDED, that in case it does not own or operate all such utilities it may be included within such public utility district for the purpose of establishing or operating therein such utilities as it does not own or operate:  PROVIDED, FURTHER, That no property situated within any irrigation or water districts or other municipal corporations shall ever be taxed or assessed to pay for any utility, or part  [[Orig. Op. Page 3]] thereof, of like character to any utility, owned or operated by such irrigation or water districts or other municipal corporations."

            Before considering your two questions, separately, there is a threshold issue to be resolved.  In AGO 65-66 No. 33, which related to the effect of annexation by a city of territory served by a PUD, we stated that RCW 54.04.030, supra, does not apply to county-wide public utility districts, citingHillier v. Public Utility District No. 3, 188 Wash. 602, 63 P.2d 392 (1936) andState ex rel. Panesko v. Public Utility District No. 1, 9 Wn.2d 581, 115 P.2d 692 (1941).  A closer reading of those two cases, however, reveals that they do not truly establish the inapplicability of RCW 54.04.030 to county-wide public utility districts as a matter of law.  Rather, the cases merely mean that a county may use the procedural provisions for creating a county-wide public utility district, despite RCW 54.04.030, even though the county includes a city which would be excluded from the district because of its ownership or operation of ". . . all the utilities which may be operated by a public utility district."  We therefore now conclude that AGO 65-66 No. 33, supra, was in error to the extent that it purported to deny the applicability of RCW 54.04.030, outright, to a county-wide public utility district.  There is no basis in the statute itself, or in the context in which it appears in chapter 1, Laws of 1931,supra, for such a conclusion.

            Question (1):

            Your first question, repeated for ease of reference, asks:

            "May the residents of an incorporated municipality, which is operating its own electrical system, and which is located within the boundaries of a public utility district, vote in the election of public utility district commissioners?"

            Clearly, all registered voters who reside within the boundaries of a public utility district are entitled to vote in all district elections.  Accord, RCW 54.04.060.  The issue which is thus raised by your first question, therefore, is whether RCW 54.04.030,supra, operates to actually exclude the Town of McCleary, and its residents, from Public Utility District No. 1 of Grays Harbor County.

            We think not for the following two reasons:

             [[Orig. Op. Page 4]]

            (1) First, the exclusion rule of RCW 54.04.0301/ only applies where the municipal corporation owns or operatesall the utilities which may be operated by a public utility district.  See,Public Utility District No. 1 of Whatcom County v. Superior Court, 199 Wash. 146, 90 P.2d 737 (1939).  In this case, however, McCleary is only operating an electrical utility‑-which, under chapter 54.16 RCW (enumerating the powers of a public utility district) is only one of several types of utility which a public utility district is authorized to maintain and operate.

            (2) Second, a statute such as RCW 54.04.030, supra, should be construed so that each word is given effect.  AFL-CIO v. City of Walla Walla, 90 Wn.2d 828, 586 P.2d 479 (1978).  With that in mind, we note the word "already" in the statute‑-which means to us that the exclusion rule was intended to apply only at the time the particular public utility district was created.  But at the time Public Utility District No. 1 of Grays Harbor County was created, the Town of McCleary did not even exist‑-much less have its own municipal electrical system.

            We therefore conclude that the residents of McCleary remain residents of the public utility district, as well, even though the Town operates its own electrical utility.  To the extent that they are also registered voters, they are, therefore, entitled to vote in the election of public utility district commissioners.

            Question (2):

            Your second question asks:

            "Is property located within an incorporated municipality, which maintains and operates its own electrical system and does not utilize any services of the public utility district within which it lies, subject to levy and collection of taxes by that public utility district?"

            This question involves another portion of RCW 54.04.030,  [[Orig. Op. Page 5]] supra;  namely, the second proviso thereto which reads as follows:

            "PROVIDED, FURTHER, That no property situated within any irrigation or water districts or other municipal corporations shall ever be taxed or assessed to pay for any utility, or part thereof, of like character to any utility, owned or operated by such irrigation or water districts or other municipal corporations."

            This statutory language was interpreted in Public Utility District No. 1 v. Superior Court,supra, as follows:

            ". . . The territory embraced within the limits of the cities [of Blaine and Sumas] may be included within the utility district, because the cities do not own or operate all of the utilities contemplated by Laws of 1931, chapter 1,but their property cannot be taxed to construct, purchase, or support public utility district utilities already owned or operated by the cities.. . ."  (Emphasis supplied)

            It is true that this case involved two cities which, while operating their own utilities, were included within the boundaries of a newly formed public utility district.  We believe, however, that the same rule relative to taxation would apply where a city has elected to operate its own utility in competition with a preexisting public utility district.

            Notably, this portion of RCW 54.04.030‑-unlike the portion with which we were concerned in responding to your first question‑-does not contain the modifying word "already."  Also, while a proviso ordinarily modifies only the immediately preceding clause, a more comprehensive meaning will be accorded if necessary to effectuate legislative intent.  McKensie v. Mukilteo Water District, 4 Wn.2d 102, 102 P.2d 251 (1940); State ex rel. Morrison v. City of Seattle, 6 Wn.App. 181, 492 P.2d 1078 (1971).  Here, by declaring that no property in a municipal corporation owning its own utility shallever be taxed to support any utility of like character, the legislature demonstrated its clear intent that this proviso apply even to municipal corporations which first acquire and begin to operate their own utilities after the formation of the particular public utility district.

            We therefore answer your second question in the negative.  Property situated within the Town of McCleary may not be taxed to construct, purchase, or support the public utility district's  [[Orig. Op. Page 6]] electrical system, so long as the town continues to own or operate its own electrical utility.