Opinion ID: 2279609
Heading Depth: 1
Heading Rank: 8

Heading: Inclusion of the Lakehause Line

Text: [¶ 13] The Lakehause line is an approximately 1200 foot distribution main attached to the Water Company's Route 4 line and extending into the Lakehause development, a three building condominium complex. The Lakehause line provides water service to nine condominiums in the three buildings. The Water District contends that the referee improperly included the Lakehause water line in the valuation of the Water Company. The condemnation order issued by the Rangeley Water District on January 22, 1993, stated that it was taking by eminent domain the entire plant, properties, franchises, rights and privileges owned by the Rangeley Water Company.... The referee concluded that the Lakehause line was owned by the Water Company. [¶ 14] Chapter 65 of the Maine Public Utilities Commission (PUC) rules establishes standards and conditions for the extension of water utility lines. Under Chapter 65, § 1(H) (1987), a main or main extension is defined under the PUC rules as: a water line in a public way owned by the utility to serve one or more customer, multi-unit dwelling complex, or commercial or industrial development; or a water line owned by the utility on private property to serve more than one customer, multi-unit dwelling complex, or commercial or industrial development or to serve a single customer, multi-unit dwelling complex or commercial or industrial development if another person or entity has an easement or other right of access for water line purposes. A new main shall be a main extension for the 10 years following connection of the first customer. Pursuant to a decision by a utility under section 2(C), a new water line on private property to serve a single customer, multi-unit dwelling complex development shall be a main extension. Ch. 65, § 1(H) (1987). [7] Section 2(C) of Chapter 65 provides that [a]ny private line which will continue to be used as a main shall be conveyed to the utility without charge. All mains shall be owned and maintained and replaced by the utility as provided in section 2(A) and the utility shall be provided all necessary easements. Refusal or failure to comply with the requirements stated herein or failure of the unauthorized connecting person to voluntarily disconnect shall be grounds for disconnection.... Section 2(A) of Chapter 65 provides that all water main extensions constructed pursuant to this rule shall be owned, maintained and... replaced by the utility. Ch. 65, § 2(A) (1987). [¶ 15] Despite these rules, the Water District cites evidence in the record that the Water Company sought to have ownership of the line transferred from Rangeley Lake Hause, Inc., the developer of the condominium complex, to the Water Company. In a letter dated September 5, 1989, Water Company President Eldon Morrison wrote to the condominium developer that ownership of the line needs to be transferred to the Rangeley Water Company via a recordable document. . . . The Water District argues that no such transfer was ever made, and thus ownership of the Lakehause line rests with the condominium complex. [8] We agree, however, with the Water Company's contention that no formal deed was required because the Water Company, pursuant to the rules of the PUC, owns the Lakehause line by operation of law. [¶ 16] The activities of the Water Company reflect this ownership. Albert Hodsdon, an engineer, testified before the referee that he was hired by the Water Company to prepare a design for the Lakehause line. He testified that the Water Company decided to design the line after we realized ... that they didn't have the expertise to do  to prepare a design for it. So we prepared the design of the Lakehause for them. [9] Eldon Morrison of the Water Company testified that since the time he acquired a controlling interest in the company in 1988 the residents of the Lakehause condominium units had been billed for service by the Water Company. He also testified that the Water Company conducted annual maintenance activity on the Lakehause line. [¶ 17] Even if the Water Company owns the Lakehause line as a matter of law, the Water District contends that the referee should not have included the line in his valuation of the Water Company because the Company did not pay for construction of the line and is thus being unfairly compensated for property that the Water Company suffered no expense in acquiring. In a rate proceeding, contributed property is not included in a utility's rate base because it would be unfair to allow the utility's investors to recoup from ratepayers money that the utility did not expend. Depreciation on contributed property is therefore disallowed not to credit the donees, but to insure that investors who did not supply capital for the contributed property do not recover on an `investment' they did not make. Central Maine Power Co. v. P.U.C., 405 A.2d 153, 166-7 (Me.1979). The P.U.C. will not permit utilities to recover from ratepayers the depreciation of contributed property because the utility did not make the original investment in the contributed property, [and] it has nothing to recover through depreciation. Maine Water Co. v. P.U.C., 388 A.2d 493, 495 (Me.1978). [¶ 18] The condemnation of utility property, however, involves different considerations. Valuation of the utility's condemned property must ensure that as the end result of the exercise of the power of eminent domain, the owner will be receiving the equivalent monetary worth for the value of the property taken from the time of taking. Orono-Veazie Water District v. Penobscot County Water Co., 348 A.2d 249, 255 (Me.1975). The Rangeley Water Company is entitled to just compensation for the taking of [its] property by the process of eminent domain. Curtis v. Maine State Highway Comm'n, 160 Me. 262, 265, 203 A.2d 451, 453 (1964). Constitutional protection against confiscation does not depend on the source of the money used to purchase the property. It is enough that it is used to render the service. Board of Public Utility Commissioners v. New York Tel. Co., 271 U.S. 23, 31, 46 S.Ct. 363, 366, 70 L.Ed. 808 (1926). The original source of the funds for construction of the Lakehause line does not prevent the inclusion of the line in the valuation of the Water Company when the line was Water Company property under the law. The complete dissimilarity between rate-making concepts and the just or full compensation standards which govern eminent domain have resulted in rejection of attempts to equate rate-making with eminent domain as a basis for determining fair market value. Dade County v. General Waterworks Corp., 267 So.2d 633, 640 (Fla.1972) (citation omitted). The Water Company owned the line and used it in the provision of water service, thus entitling the company to compensation for the line when it was condemned.