Title: Easton v. PSC

State: maryland

Issuer: Maryland Supreme Court

Document:

Town of Easton v. Public Service Commission of Maryland
No. 28, September Term, 2003
Headnote:
A town’s action of annexing 217.1 acres of land that had been provided
electrical service by a private utility company does not automatically abrogate
the private utility’s franchise and right to provide electrical service to that
annexed area.  Under Md. Code (1998), § 7-210(d) of the Public Utility
Companies Article, the Maryland Public Service Commission, upon proper
request, has the sole authority to alter the electrical service territories of
annexed areas, and such change will only be granted when it is shown to be
in the “public interest.”  Here, the Public Service Commission, after reviewing
all of the evidence presented, did not find that a change in the franchise
territories of the annexed area was in the “public interest,” and denied the
town’s petition.  As there was no reason under Md. Code (1998), § 3-203 of
the Public Utility Companies Article to reverse this decision by the Public
Service Commission, the private utility retains its present territorial service
area within the annexed area.  
Circuit Court for Talb ot County
Case #20-C-02-004552 AA
IN THE COURT OF APPEALS OF
MARYLAND
No. 28
September Term, 2003
Town of Easton
v.
Public Service Commission of Maryland
Bell, C. J.
         *Eldridge
Raker
Wilner
Cathell
Harrell
           Battaglia,
JJ.
Opinion by Cathell, J.
Filed:    December 19, 2003
*Eldridge, J., now retired, participated in the hearing
and conference of this case while an active member
of this Court; after being recalled pursuant to the
Constitution, Article IV, Section 3A, he also
participated in the decision and adoption of this
opinion.
1Md. Code (1998), § 3-104(b)(1) of the Public Utility Companies Article states that
“[t]he Commission, a commissioner, or a hearing examiner may conduct hearings, examine
witnesses, administer oaths, and perform any other acts necessary to the conduct of
proceedings.”
This case concerns whether the Town of Easton, Maryland, petitioner, in annexing
217.1 acres of land, can be deemed to have sole electric service provider rights to the
annexed area, thereby extinguishing Choptank Electric Cooperative, Inc.’s (“Choptank”)
electrical service rights to the same area.  To put it in its simplest terms, this is a dispute
between petitioner, on the one hand, and Choptank, on the other, over who has the authority
to provide electrical service to the annexed area.  
On March 5, 2001, petitioner filed a petition with the Public Service Commission
(“Commission”), respondent, for authority to provide electric service to the entirety of the
annexed land.  On May 25, 2001, the case was delegated by the Commission to the Hearing
Examiner Division.1  The Hearing Examiner issued a Proposed Order dated January 18,
2002, which found that Choptank was legally authorized to continue to provide electric
service to the portion of the annexed land within its service territory.  On May 9, 2002, the
Commission unanimously adopted the Hearing Examiner’s Proposed Order.  On May 28,
2002, petitioner filed in the Circuit Court for Talbot County a Petition for Judicial Review
of the Commission’s Order.  In a well-reasoned decision dated January 14, 2003, Judge
William S. Horne of the Circuit Court affirmed the Commission’s Order.  On January 30,
2003, petitioner filed an appeal of the Circuit Court’s decision with the Court of Special
Appeals.  On June 19, 2003, prior to consideration by the Court of Special Appeals, we
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issued a Writ of Certiorari.  Town of Easton v. Public Service Commission of Maryland, 376
Md. 49, 827 A.2d 112 (2003).  Petitioner presents two questions for our review:
“1. Can a rural electric cooperative lawfully provide electric service to
the residents of a new housing development located within the boundaries of
a Maryland municipal corporation without the consent of the governing body
of that municipality?
“2. Did the Public Service Commission of Maryland err in arbitrarily
denying most of the residents of a new housing development in Easton of their
right to receive electrical service from the utilities department of that
municipality?”
In regard to petitioner’s first question, we hold that Choptank does not need
petitioner’s consent to provide service in the disputed area, that petitioner has no right or
authority on its own to expand electric service into the area currently serviced by Choptank,
and that only through the procedure established in § 7-210(d) of the Public Utility
Companies Article can the existing service boundaries between petitioner and Choptank be
altered.
In answering petitioner’s second question, we hold that the Commission did not err
in maintaining the historical territorial electrical service area that Choptank was granted by
the Commission in a 1966 Order.  There exists no fundamental personal right for Easton
Club East (“ECE”) residents to receive electrical service from petitioner or from any specific
provider, nor are the ECE residents’ Equal Protection rights violated by the Commission’s
2As far as the record reflects, no ECE residents are named parties to this proceeding.
3 Section 7-210(d) of the Public Utility Companies Article provides:
    “(d) Authority to supply electricity within annexed area. — If the
boundaries of a municipal corporation are enlarged by annexation, the
municipal corporation may acquire the exclusive right to supply
electricity within the annexed area if:
(1) the municipal corporation:
    (i) files a petition with the Commission seeking approval to
acquire the exclusive right to supply electricity within the annexed
area;
   (ii) provides a copy of the petition to each electric company
whose service territory or electric plant will be affected by the
annexation; and
   (iii) attaches to the petition a copy of the amendment to the
municipal corporation charter the describes the area annexed and a
description of the service territory, plant, equipment, and customers of
each electric company that is likely to be affected by the annexation;
and
(2) the Commission determines that modification of the service
territory of an electric company and the transfer of a franchise or right
under the franchise is in the public interest.”
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decision.2 Accordingly, we affirm the judgment of the Circuit Court for Talbot County. 
I. Facts
On March 5, 2001, pursuant to Md. Code (1998), § 7-210(d) of the Public Utility
Companies Article,3 petitioner filed a petition seeking authority from the Commission to
exclusively supply electricity to an area annexed by petitioner in 1993.  The annexed area that
is the subject of the petition is known generally as “Lyons Farm” and consists of
approximately 217.1 acres of land that is presently being developed into a subdivision,
4When fully developed, Easton Club East will contain approximately four hundred
homes, with the streets, alleys and roadways to be owned, controlled and maintained by
petitioner.
The actual development of the Lyons Farm did not begin until the summer of 2001.
There is no evidence in the record that Easton had any interest in providing service to the
annexed area from 1993 until 2001, i.e., until it appeared that the stage of development had
progressed to the point where the providing of service might be profitable.  Up until that
point Easton was apparently content with having Choptank provide service and during that
period had no problems with the fact that Choptank was utilizing areas within the
municipality to provide such services.
5Choptank originally derived its authorization to service the disputed area in 1940,
when the Board of County Commissioners of Talbot County granted Choptank:
“permission to erect, operate and maintain . . . in perpetuity . . . [facilities] for
the purpose of transmitting and distributing electrical energy . . . on, along,
over and across the county roads and highways, streets, lanes, alleys and
properties within Talbot County, including those in, or in the vicinities of, any
towns or villages incorporated or unincorporated.”
In addition to its franchise from Talbot County, Choptank also has authority from
the Commission to provide electric service within that portion of its service area annexed
by petitioner.  First, in 1941, the Commission granted Choptank’s request to exercise “the
franchises granted to it by resolutions of the County Commissioners of Queen Anne’s,
Talbot, and Somerset counties . . . .”  Application of Choptank Cooperative, Inc., 32 Md.
PSC 49 (1941).  Second, when the Commission designated the service territories of all
electric companies within the State in its 1966 Order, the area in question was included in
the service area of Choptank.  Establishment of Service Areas of Electric Utilities Within
Maryland, 57 Md. PSC 59 (1966).
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Easton Club East.4  At the time of the annexation in 1993, portions of the Lyons Farm were
situated in the electric service territories of two electric companies: the Easton Utilities
Commission (“Easton”), which is petitioner’s municipal electric utility, and Choptank.5  In
a 1966 Order (Order No. 56203 in Case No. 6017) (“1966 Order”), the Commission
demarked the service territories of the various electric companies, including Choptank and
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petitioner.  Of the more than 200 acres annexed by petitioner in 1993, only a small amount
of the area, approximately 10%, was, pursuant to the 1966 Order, located within petitioner’s
electric service territory boundaries with the remainder, and majority, being located, and
serviced, by Choptank.  
In its 2001 petition to the Commission, petitioner asserted that granting Easton the
exclusive right to supply electricity to all of the annexed area would serve the public interest
in the following ways: 1) future ECE subscribers would pay the same rates as other residents
of the Town; 2) Easton’s rates for electric service are now and have been historically lower
than Choptank rates; 3) ECE residents would receive a consolidated statement of all utility
usage, including electricity, natural gas, water and sewerage services; 4) the Easton service
center is located 2.5 miles from ECE, while the Choptank service center is located 18.5 miles
away; 5) ECE residents would be spared the confusion of having neighbors who receive a
different service; 6) Easton owns and maintains generators in Easton, while Choptank has
only partial ownership in two generators in Virginia; and 7) Easton can extend its distribution
system to ECE more economically than Choptank.  
As noted above, petitioner filed this petition with the Commission on March 5, 2001.
On January 18, 2002, a Proposed Order of Hearing Examiner (“Proposed Order”) was issued.
In the Proposed Order, the Hearing Examiner analyzed the Commission’s practices with
respect to electric service area disputes.  The Hearing Examiner found that before an electric
service territory boundary established by the Commission in the 1966 Order could be
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modified, the Commission must first find that the modifications are “in the ‘public interest’
which requires strong and clear evidence of the need, equity and practicality of the proposed
changes.”  The Hearing Examiner found that petitioner did not provide adequate evidence
that such a change would be in the public interest and, thus, by the Proposed Order,
recommended denial of petitioner’s request.
On February 11, 2002, petitioner noted an “appeal” from the Proposed Order.  At the
Commission level, petitioner raised two issues: 1) whether Choptank lacks the legal authority
to install and maintain electric facilities within petitioner’s corporate limits; and 2) whether
maintenance of the existing boundary between Easton and Choptank is contrary to the public
interest.  The Commission, after considering the arguments of the parties and the record
evidence, adopted the Proposed Order.
Petitioner filed a Petition for Judicial Review in the Circuit Court for Talbot County
on May 28, 2002.  By a judgment dated January 14, 2003, Judge Horne, sitting for the Circuit
Court for Talbot County, affirmed the Commission’s Order.  Thereafter, on January 30, 2003,
petitioner noted its appeal of the Circuit Court’s judgment to the Court of Special Appeals.
On June 19, 2003, prior to consideration by the Court of Special Appeals, we issued a Writ
of Certiorari.   
II.  Standard of Review
Md. Code (1998), § 3-203 of the Public Utility Companies Article sets forth the
limited “scope of review” by this Court over decisions by the Public Service Commission.
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It states that:
   “Every final decision, order, or regulation by the Commission shall be prima
facie correct and shall be affirmed unless clearly shown to be: 
(1) unconstitutional;
(2) outside the statutory authority or jurisdiction of the Commission;
(3) made on unlawful procedure;
(4) arbitrary or capricious;
(5) affected by other error of law; or 
(6) if the subject of review is an order entered in a contested proceeding
after a hearing, the order is unsupported by substantial evidence on the record
considered as a whole.”
In addition, while this Court has made clear that a decision of the Commission is
subject to judicial review, it will not be disturbed on the basis of a factual question except
upon clear and satisfactory evidence that it was unlawful and unreasonable.  See Baltimore
Gas & Elec. Co. v. Public Serv. Comm’n, 305 Md. 145, 161-62, 501 A.2d 1307, 1315
(1986); Public Serv. Comm’n v. Baltimore Gas & Elec. Co., 273 Md. 357, 361-62, 329 A.2d
691, 694 (1974); Public Serv. Comm’n v. Baltimore Transit Co., 207 Md. 524, 531, 114
A.2d 834, 836-37 (1955); Mayor and Council of Crisfield v. Public Serv. Comm’n, 183 Md.
179, 185-87, 36 A.2d 705, 708-09 (1944); Public Service Comm’n v. Byron, 153 Md. 464,
479, 138 A. 404, 410 (1927).  Such a decision is accorded the respect due an informed
agency that is aided by a competent and experienced staff.  Potomac Edison Co. v. Public
Serv. Comm’n, 279 Md. 573, 582-83, 369 A.2d 1035, 1041 (1977) (citing Balto. Trans. Co.
v. Pub. Ser. Comm., 206 Md. 533, 558, 112 A.2d 687, 698 (1955)).  Questions of law,
however, are “completely subject to review by the courts.” Cambridge v. Eastern Shore
6The concept of a utility franchise was discussed by the Court of Special Appeals in
Baltimore Steam Co. v. Baltimore Gas & Elec. Co., 123 Md. App. 1, 716 A.2d 1042, cert.
granted, 351 Md. 661, 719 A.2d 1261 (1998), vacated as moot, 353 Md. 142, 725 A.2d 549
(1999):
“The term ‘franchise’ . . . [we] address [is] the type of franchise most
commonly associated with a utility company’s right to dig up the public streets
in the course of providing its particular service. . . . [P]ermanent
encroachments on public property for private use would, in the absence of
(continued...)
-8-
Public Serv. Co., 192 Md. 333, 339, 64 A.2d 151, 154 (1949)(citing Mayor & Council of
Crisfield v. Public Serv. Comm’n, 183 Md. at 189, 36 A.2d at 710).  This is consistent with
the standard of review applicable to administrative agencies generally.  Ramsay, Scarlett &
Co. v. Comptroller, 302 Md. 825, 836-37, 490 A.2d 1296, 1300-02 (1985).  See also Liberty
Nursing Center, Inc. v. Department of Health and Mental Hygiene, 330 Md. 433, 443, 624
A.2d 941, 946 (1993); Caucus Distrib., Inc. v. Maryland Securities Comm’r, 320 Md. 313,
324, 577 A.2d 783, 788 (1990); Maryland State Police v. Lindsey, 318 Md. 325, 334, 568
A.2d 29, 33 (1990); State Election Bd. v. Billhimer, 314 Md. 46, 58, 548 A.2d 819, 825
(1989); Washington Nat’l Arena v. Comptroller, 308 Md. 370, 378-79, 519 A.2d 1277,
1281-82 (1987).
III.  Discussion
Before we delve into the specifics of the case before us, it would perhaps be of some
service to delineate the process by which electric service providers, such as Choptank, are
granted the right to provide electric service to designated areas.  In Maryland, a public
service company cannot operate within the state absent 1) a franchise,6 and 2) the
6(...continued)
authorization, constitute a public nuisance and a trespass against the
governing authority.  Although a municipality can authorize minor
encroachments in any number of ways (by license, permit, or perhaps even
acquiescence), a utility company will generally require the type of ongoing
and widespread authorization that only a franchise can provide.”
Baltimore Steam, 123 Md. App. at 20, 716 A.2d at 1051-52 (citations omitted).
The term “franchise” is often used generally to indicate the territorial rights
established by a state regulatory entity, although strictly speaking, the franchise is granted
by local governments in respect to the grant of rights to utilize public streets, etc.  It has
become customary to refer to the granting of both types of rights as franchises.  We shall use
that term in both ways in our discussion, with context providing distinctions as necessary.
7In a 1966 Order by the Public Service Commission (Order No. 56203 entered in
Case No. 6017), the Commission demarked the service territories of the various electric
(continued...)
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Commission’s authorization to operate or exercise that franchise.  As this Court has stated,
“a franchise may be granted either directly by the Legislature or by a municipal corporation,
provided the latter is clothed with the power, but it must emanate from the State.”  Water Co.
v. Baltimore County, 105 Md. 154, 162, 66 A. 34, 37 (1907).  See also Cambridge v.
Eastern Shore Pub. Serv. Co., 192 Md. 333, 64 A.2d 151 (1949).  The Commission itself,
therefore, does not have the authority to grant such a franchise.  See Cambridge, 192 Md.
at 339.
While the Commission cannot grant a franchise to use the streets in Easton, its
authority to designate the areas in which the service rights may be exercised gives it an
important role in that process and further enables it to assure the efficient and non-
duplicative provision of utility service in geographic areas where more than one electric
utility claims a franchise.7  Of special importance to the case before us, the Commission has
7(...continued)
companies in the state, including those related to Choptank and the area known as Lyons
Farm.  In this Order, the Commission made the specific finding that:
“designation of service areas for electric utilities are in the public interest
because such designation would eliminate future wasteful construction of
duplicate distribution facilities, it would permit electric utilities to develop
unserved portions of their service areas in the most economical manner, and
it would reduce to a minimum disagreements between companies as to service
areas.”
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the sole authority to authorize the areas in which a public utility may provide service and the
power to transfer such rights following an annexation — provided it finds that such a
transfer is in the “public interest.”  See Md. Code (1998), §§ 5-201(a) & 7-210(d) of the
Public Utility Companies Article.  It is with these principles in mind that we turn to
petitioner’s first question: whether Choptank can continue to provide electrical service,
without petitioner’s consent, to the 217.1 acres that have been annexed by petitioner.
As noted above, § 7-210(d) of the Public Utility Companies Article specifically deals
with the authority to supply electricity within an annexed area and, therefore, is directly on
point in this case.  The statute, as relevant here, states that:
   “(d) Authority to supply electricity within annexed area. — If the boundaries
of a municipal corporation are enlarged by annexation, the municipal
corporation may acquire the exclusive right to supply electricity within the
annexed area if: 
         (1) the municipal corporation:
  (i) files a petition with the Commission seeking approval to acquire
the exclusive right to supply electricity within the annexed area;
 (ii) provides a copy of the petition to each electric company whose
service territory or electric plant will be affected by the annexation; and
              (iii) attaches to the petition a copy of the amendment to the municipal
corporation charter that describes the area annexed and a description of the
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service territory, plant, equipment, and customers of each electric company
that is likely to be affected by the annexation; and
(2) the Commission determines that modification of the service
territory of an electric company and the transfer of a franchise or right under
the franchise is in the public interest.”
 
 
On March 5, 2001, petitioner began the process under § 7-102(d) by filing its petition
with the Commission.  The Commission, however, after examining the findings of the
Hearing Examiner, did not find that a transfer of electrical service rights from Choptank to
petitioner was in the public interest, as is required by § 7-102(d)(2).  We cannot say that such
a finding was erroneous under the limited standard of review provided by § 3-203 of the
Public Utility Companies Article.
Of particular relevance to the case before this Court is the decision by the Court of
Special Appeals in Mayor & Council of Berlin v. Delmarva Power & Light Co., 95 Md.
App. 585, 622 A.2d 763, cert. denied, 331 Md. 480, 628 A.2d 1067 (1993) (“Delmarva
Power”).  In that case, the Town of Berlin sought to supply electricity to an area of
approximately 60 acres that it had annexed, and it filed a petition for an order modifying
Delmarva Power’s service area to the 60 acres as established in 1966 by the Public Service
Commission.  The petition was denied by the Commission, but the Town of Berlin decided
to supply electricity to the area anyway, and Delmarva Power filed a complaint to confirm
its exclusive right to provide service to the area.  The intermediate appellate court held that
8Delmarva Power had been granted a franchise directly by the State by way of
specific 1909 charters to its predecessors, The Electric and Ice Manufacturing Company and
The Crisfield Ice Manufacturing Company, to serve that area in Berlin.  Petitioner attempts
to utilize that fact to distinguish that case from the case sub judice.  That is a distinction that
makes no difference in the context of this case.
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Delmarva Power had a perpetual and exclusive state franchise8 to serve the area in question,
and the 1966 Order authorized Delmarva Power to serve the area by exercising its franchise.
Furthermore, the intermediate appellate court held that Delmarva Power did not need the
town’s consent to provide service to the area, and the town had no right or authority on its
own to extend electrical service to that area.  The Town of Berlin’s utility entity had a
limited right, but its exercise was limited by the authority of the Commission.
Petitioner’s contention, much like that of the Town of Berlin in Delmarva Power,
appears to be that a legally operating utility’s authority to provide electrical services to an
area is automatically negated by an act of municipal annexation.  This simply is not the case:
“[T]he general rule seems to be that if a company is granted a franchise in
certain territory that is afterwards annexed to another municipality, the
franchise does not extend beyond the old limits of the territory annexed.
However, the right conferred to exercise the franchise within the limits of the
territory annexed is not annulled thereby.  If the annexed area is being served
by a private utility, the utility owned by the annexing city has no right to
invade such area.  In addition, upon expansion of city limits, the franchise of
a utility serving the annexed city has been held not to supersede the franchise
of the utility that had serviced the annexed area before it came within the city
limits.”
12 EUGENE MCQUILLIN, THE LAW OF MUNICIPAL CORPORATIONS § 34.71 (3d ed. 1995)
(emphasis added) (footnotes omitted).  See, e.g., Delta Elec. Power Ass’n v. Mississippi
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Power & Light Co., 250 Miss. 482, 149 So.2d 504, cert. denied, 375 U.S. 77, 84 S. Ct.
196, 11 L. Ed. 2d 142 (1963); Town of Culpeper v. Virginia Elec. and Power Co., 215
Va. 189, 207 S.E.2d 864 (1974) (both cases holding that municipal annexation cannot
affect a rural electric association’s right to serve current and future members within the
utilities’ certified areas).
To adhere to petitioner’s theory would be to completely ignore the statute enacted by
the Maryland Legislature to cover the specific situation in the case at bar; § 7-210(d) of the
Public Utility Companies Article.  As appropriately noted by Judge Horne, if petitioner were
correct, “annexation would allow Petitioner and other municipalities to undo [the
Commission’s] service territory designations at will, circumventing . . . § 7-210(d) and
thwarting [the Commission’s] stated policy for establishing stable electric service territories
in the first place.”  In Delmarva Power, the Court of Special Appeals stated that when
municipalities are granted limited franchises to provide electric service by the Legislature,
“the exercise of that franchise, like the exercise of any public service company’s franchise,
is subject to the jurisdiction and authority of the PSC.”  Delmarva Power, 95 Md. App. at
591, 622 A.2d at 766.  We agree.  Petitioner’s power to provide electrical service to annexed
areas is subject and subordinate to the Commission’s power to designate the provider of
service.
The language of § 7-210(d) makes it clear that the General Assembly intended that,
before the existing service area of an electric company can be modified and before there can
9In particular, at the pre-hearing conference, the Hearing Examiner decided that the
Commission’s analysis in the case of In Re Mayor and Council of Federalsburg, Maryland,
68 Md. PSC 501 (1977) (“Federalsburg”) would be used to determine whether the proposed
change in service territory would meet the “public interest” standard in § 7-210(d).  In
Federalsburg, the Commission found that a service territory change is in the public interest
when “strong and clear evidence [shows] the need [for], equity [of], and practicality of the
proposed change.”  Federalsburg, 68 Md. PSC at 504.
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be a “transfer of a franchise or a right under the franchise” due to annexation, the
Commission must determine that the transfer is in the “public interest.”  Petitioner cannot
oust Choptank, operating under a lawful, pre-existing franchise and territorial designation,
by way of an annexation unless the Commission determines that modification of the existing
franchise is in the “public interest.”  This “public interest” analysis is based in part on the
need, equity, and practicality of the proposed modification in respect to providers.  Here, the
Commission did not find that petitioner’s desire to service the annexed area was in the
“public interest.”9
As stated earlier, we shall not overturn a factual decision by the Public Service
Commission unless it proves to be unlawful or unreasonable.  See Office of People’s
Counsel v. Public Serv. Comm’n, 355 Md. 1, 14, 733 A.2d 996, 1003 (1999); Baltimore Gas
& Elec. Co. v. Public Serv. Comm’n, 305 Md. 145, 161-62, 501 A.2d 1307, 1315 (1986);
Mayor and Council of Crisfield v. Public Serv. Comm’n, 183 Md. 179, 185-87, 36 A.2d 705,
708-09 (1944).  Therefore, this Court’s review is generally limited to whether a reasonable
mind could have reached the same conclusion, i.e., that a change in electrical service
territories was not in the “public interest” — the interests of the public generally and not just
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the interests of the ECE residents.  In its acceptance of the Hearing Examiner’s finding that
Choptank should continue to provide service to the annexed area, the Commission adopted
the Hearing Examiner’s findings that Choptank demonstrated that it is capable of providing
service to the entire Lyons Farm subdivision and therefore there is no need for petitioner to
take over as provider.  As petitioner has not shown by clear and satisfactory evidence that
the Commission’s decision was unreasonable or unlawful, we hold that the Commission did
not err in its decision that a transfer of electrical service rights from Choptank to petitioner
was not in the “public interest” as intended under §7-210(d)(2) of the Public Utility
Companies Article.  See Public Serv. Comm’n v. Delmarva Power & Light Co., 42 Md. App.
492, 400 A.2d 1147, cert. denied, 286 Md. 746 (1979).
In regard to petitioner’s argument that Choptank cannot continue service in the
annexed area without petitioner’s “consent,” which petitioner may refuse to grant, we hold
that petitioner is not in the position to dictate where Choptank can provide its service within
the annexed land area; that is exclusively the domain of the Commission.  See Md. Code
(1998), § 5-201 of the Public Utility Companies Article.  It was made clear in Delmarva
Power that the electric service provider did “not need the Town’s consent to provide service
in the disputed area . . . .”  Delmarva Power, 95 Md. App. at 590, 622 A.2d at 766.  As such,
whether or not petitioner “consents” to Choptank providing electric services to the annexed
area has no bearing on this Court’s decision.  It is only the determination, i.e., “consent” of
the Commission, by granting a modification of electric service territories through the process
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of § 7-210(d) of the Public Utility Companies Article, that has any weight in such matters.
In Delmarva Power, Berlin argued that it received rights via its annexation that, in
effect, repealed the franchise or territorial designation granted to Delmarva Power by the
State.  Here, petitioner argues that its annexation, in effect, repeals the franchise previously
granted to Choptank by Talbot County and the territorial designation by the Commission.
As in Delmarva Power, in the present case Choptank does not need petitioner’s permission
to provide service and petitioner cannot unreasonably withhold consent for Choptank to
utilize its public ways to provide that service. 
In the latter respect, petitioner argues that, under both the Electric Cooperative Act,
Chapter 179 of the Laws of Maryland of 1976 (“Co-op Act”) and § 7-103 of the Public
Utility Companies Article, its consent is required in order for Choptank to install additional
electric lines into the area that has been annexed.  With respect to the Co-op Act, Section
4(j) authorizes electric cooperatives:
“[t]o construct, maintain and operate electric transmission and distribution
lines along, upon, under and across publicly owned lands and public
thoroughfares, including, without limitation, all roads, highways, streets,
alleys, bridges and causeways, after first securing the proper assent of the
municipal authorities of the city or town, or of the county commissioners or
county council of the county in which such electric lines are proposed to be
constructed, under such reasonable and proper regulations and conditions as
may be prescribed in such assent.”
Similarly, § 7-103 states that:
 “(a) Manufacture, sell, and furnish light and power. — An electric
company incorporated in Maryland may:
(1) manufacture, sell, and furnish electric power in any municipal
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corporation or county of the State;
(2) construct a power line to transmit power under, along, on, or
over the roadways or public ways of any municipal corporation or county
of the State; and
(3) connect the power line from the place of supply to any other
structure or object. 
 (b) Laying of power lines — Consent of local government required. — (1)
An electric company must have the consent of the governing body of the
municipal corporation or county before laying or constructing any power line
in accordance with subsection (a) of this section.
(2) The governing body of the municipal corporation or county may
adopt reasonable regulations and conditions for the laying of a power line,
including regulations requiring the electric company to refill and repave any
roadway or public way under which the power line is laid.” (Emphasis added).
Petitioner contends that the language above makes the right of Choptank to continue
to provide service to the annexed area contingent upon petitioner’s assent. A closer
inspection of the language reveals that this reading is erroneous.  The territorial rights
granted are determined as of the time of the original grant.  In other words, the “or” refers
to the governing entity in control of the service area at the relevant point in time, i.e., when
the service rights are first granted by the Commission. The Co-op Act authorizes an
electrical cooperative to operate in a given area once it has received the assent of the
municipal authorities or the county authorities, whichever is in control at the relevant time,
and to continue that service until, and if, that right is transferred by the Commission pursuant
to the provisions of § 7-210(d) of the Public Utility Companies Article.  Likewise, § 7-
103(b) also uses similar “municipal corporation or county” language.  In other words, absent
a statute to the contrary, municipal corporations during annexations, in respect to the
provision of electric services, annex subject to the existing franchises and territorial
10In Culpeper, the Town of Culpeper had annexed an area that the utilities had been
serving for approximately twenty years.  The Town of Culpeper claimed that, upon its
annexation, the territory became subject to the jurisdiction and control of the town.  The
Town partly based its argument on the language of Article VII, Section 8 of the Constitution
of Virginia, which provided, in part, that “No . . . electric light or power . . . company [or]
. . . association . . . shall be permitted to use the streets, alleys, or public grounds of a city or
town without the previous consent of the corporate authorities of such city or town.”  The
Supreme Court of Virginia held that Va. Const. art. VII, § 8 could not be retroactively
applied to the utilities that had been providing service to the area before annexation.
Therefore, the Town of Culpeper could not legally oust the lawfully existing franchises.
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designations, unless the Commission finds that it is in the “public interest” to change the
territorial designations.
Therefore, the obvious response to petitioner’s argument is that Choptank has not
sought a franchise from petitioner to construct, maintain, and operate electrical lines within
the Lyons Farm area because it received a franchise from Talbot County to serve this area
in 1940, and it has been doing so since that time.  The position taken by petitioner would
serve to revoke the rights previously granted by the governing entity, the county, that then
had the power to grant such rights.  In the case of Town of Culpeper v. Virginia Elec. &
Power Co., 215 Va. 189, 207 S.E.2d 864 (1974), the Supreme Court of Virginia, faced with
facts similar to the ones before us,10 stated that:
“Admittedly, where a utility proposes to enter an incorporated town and
intends to install its facilities therein, the utility must first obtain the consent
of the municipality.  However, we are not dealing here with a utility that seeks
original entry into a town, but with franchised companies which have been
serving the area involved for approximately twenty years prior to its being
annexed by the town.
. . .
“We think it clear that the intention of the framers of the constitutional
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provision in question [requiring consent] was to prohibit a utility from
entering the town without prior consent.  The intent was not to require the
ouster of a utility and its facilities from an area where such facilities were
already franchised and lawfully in existence and the utility was operating
therein prior to such area becoming a part of a town.”
Culpeper, 215 Va. at 191- 94, 207 S.E.2d at 866-68 (alteration added).  We agree with the
analysis of the Virginia Supreme Court in Culpeper concerning its own “consent”
provisions; the intention of neither the Co-op Act nor § 7-103 was to prevent a utility such
as Choptank from continuing its service of an area annexed by a municipality.
While it may be true that Choptank will not be given free reign over the placement
of new electrical lines within the annexed area, it is also true that petitioner may not
unreasonably withhold its consent from Choptank, believing itself to be impervious to
scrutiny under § 7-103(b).  The very nature of the franchise that has been granted to
Choptank confers upon it the right to use the public streets (whether in a municipality or
otherwise) in the course of providing its electrical service.  The municipality may, of course,
impose reasonable conditions.  It would be difficult to conceive of a utility company serving
individual households without the right to make some use of the public streets or other
public property in order to transmit its product to its customers, whether this is accomplished
by hanging wires from poles, laying cables in the ground, or running pipes along a road.  To
hold otherwise would allow for all municipalities to dictate who services an annexed area.
It would permit petitioner to improperly usurp the functions of the Public Service
Commission.  That it cannot do.  Under § 7-103(b)(2), however, petitioner, as we have said,
11The Fourteenth Amendment provides in pertinent part: “. . . No State shall . . . deny
to any person within its jurisdiction the equal protection of the laws.” U.S. CONST. amend.
XIV, § 1.  While the Maryland Constitution contains no express Equal Protection Clause,
this Court has deemed “it settled that this concept of equal treatment is embodied in the due
process requirement of Article 24 of the Declaration of Rights.”  Attorney General v.
Waldron, 289 Md. 683, 704, 426 A.2d 929, 940-41 (1981). 
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“may adopt reasonable regulations and conditions for the laying of a power line,” and these
regulations, if reasonable, must be complied with by Choptank. 
Petitioner next asks this Court to decide whether the Commission’s decision in
maintaining Choptank’s service area in relation to the annexed land wrongfully deprived the
residents of ECE of a right to receive their electrical service from petitioner.  We hold that
it does not.  Petitioner claims that by not allowing all residents of ECE to have their
electrical service provided to them by petitioner, the residents of ECE are being unfairly
discriminated against in violation of the Fourteenth Amendment to the United States
Constitution and Article 24 of Maryland’s Declaration of Rights.11  Even if petitioner has
standing to raise such a claim on behalf of private persons who are not parties to this
proceeding, we do not find this claim to be persuasive.
The Commission is charged with ensuring that all of the residents in this State,
including the residents of Easton, receive adequate and reliable electric service at just and
reasonable rates.  See Md. Code (1998), § 2-113 of the Public Utility Companies Article.
No two electric utilities have the same rates or costs of service.  Simply because the rates
between Choptank and petitioner may vary by a negligible amount does not mean that the
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rates charged by Choptank are either unjust or unreasonable.  It would be contrary to the law
for this Court to hold that a resident in one service territory is being denied equal protection
of the law merely because a resident in a different service territory, with a different cost of
service, is paying a lower rate.  The Commission determines what is in the best interest of
the public as a whole, i.e., all residents of the State, not just those residents of ECE.  The
General Assembly has ensured, via the Commission, that each and every consumer in this
State will have access to adequate, reliable electricity at a just and reasonable rate, without
unjust discrimination.  See Md. Code (1998), §§ 2-113 & 4-102 of the Public Utility
Companies Article.   
Petitioner continues its constitutional argument by arguing that “no rational basis”
can support the Commission’s decision to allocate utility service among ECE residents
between Choptank and petitioner.  Even if the issue is appropriate for us to address in the
present context of this case, because we would not view the future residents of ECE as
belonging to an inherently suspect class, the Commission’s decision to maintain the status
quo of the electric service territories in ECE would only need to pass, as petitioner correctly
suggests, the “rational-basis” test, i.e., whether “the classification challenged be rationally
related to a legitimate state interest.”  City of New Orleans v. Dukes, 427 U.S. 297, 303, 96
S. Ct. 2513, 2517, 49 L. Ed. 2d 511, 517 (1976).  We must therefore look to the reasoning
behind the Commission’s decision.
In finding that the electric service territories established by the 1966 Order continued
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to serve the public interest, the Commission observed:
“In this proceeding, [petitioner] has not shown that there is a need to displace
Choptank as the electricity provider in the Lyons Farm subdivision because
the record demonstrates that Choptank can and will provide reliable service.
In terms of equity, [petitioner’s] assertions are not supported by the record.
Finally, as a practical matter, Choptank is ready, willing, and able to serve the
Lyons Farm subdivision, and in fact is doing so today.”  (2002 Public Service
Commission Order at 21) (alterations added).
As did Judge Horne, we find that providing reliable electric service to the public is clearly
a legitimate state interest and that the Commission’s decision to maintain the pre-existing
electrical service territories of petitioner and Choptank is rationally related to that interest.
Stable electric service territories encourage electricity providers to invest in their
infrastructure. Were the service territories unstable, the service providers would have little
incentive to improve infrastructure they may lose in the future.  Improvements in electrical
infrastructure increase both the safety and the reliability of the electrical distribution system
throughout Maryland.  These purposes are not only unquestionably legitimate, they are the
very core of the Commission’s statutory duties.  See Md. Code (1998), § 2-113 of the Public
Utility Companies Article.  
Lastly, despite petitioner’s claims to the contrary, the right for residents of ECE to
receive their electric service from petitioner, or any specific provider, is not a fundamental
personal right.  Tellingly, petitioner cites no relevant legal authority to support such a
position.  The fact that numerous Maryland municipalities are served by more than one
electric service provider further weakens petitioner’s contention. 
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IV. Conclusion
We hold that petitioner’s 1993 action of annexing an area in Talbot County, to which
a majority of that area Choptank Electrical Cooperative, Inc. provides electrical service, does
not automatically abrogate Choptank’s franchise that was lawfully granted to Choptank by
Talbot County in 1940 and territorially delineated by the Commission in a 1966 Order.
Petitioner has no right to extend its electrical service area beyond that allocated to it by the
Commission without the Commission’s approval.  We find no compelling reason to find that
the Commission’s decision regarding the territorial service areas of the annexed land was
erroneous under our limited standard of review as stated by § 3-203 of the Public Utility
Companies Article.  Because the Commission did not find that a modification of the existing
territorial service areas was in the “public interest,” as is required under § 7-210(d) of the
Public Utility Companies Article, Choptank shall retain its present territorial service area
within the 217.1 acres of annexed land.
We also hold that the Commission’s decision to maintain the historical territorial
electrical service boundaries established in its 1966 Order does not violate ECE residents’
Equal Protection rights, nor does there exist any fundamental personal right for ECE
residents to receive electrical service exclusively from petitioner or from any specific
provider for that matter.  Choptank has lawfully been granted the right to serve a majority
of the annexed area, and this includes the right to provide electrical service to those ECE
residents who reside within Choptank’s service area boundaries.  Choptank is their electrical
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service provider.
J U D G M E N T  
O F  
T H E
CIRCUIT  
COURT 
FOR
T A L B O T  
C O U N T Y
AFFIRMED; COSTS TO BE
PAID BY PETITIONER.