If the State Ports Authority installs meters and bills its tenants for the electricity they actually use, does that make the Authority a public utility subject to North Carolina Utilities Commission regulation?
Plain-English summary
At the Wilmington Terminal in 1993, the State Ports Authority bought bulk electricity from Carolina Power and Light Company and distributed it to its tenants through Authority-owned lines. The Authority recovered the cost by lumping an estimated electric charge into each tenant's lease payment. The estimate did not match actual usage and gave tenants no reason to conserve. The Authority wanted to install tenant meters and bill each tenant for actual usage at cost (the CP and L price plus the cost of metering and billing). The question was whether that step would convert the Authority into a regulated public utility under Chapter 62.
Attorney General Michael F. Easley and Assistant AG Karen E. Long concluded the Authority remained outside Utilities Commission jurisdiction.
The starting point was N.C.G.S. § 62-3(23)(d), which has a complex two-sentence structure. The first sentence carves a person out of public utility status when the person furnishes a service only to himself, his employees, or his tenants and the service is not resold. The second sentence cancels that carve-out when the person bills the tenant by individual meter, treating the resale-by-meter as triggering public utility status with respect to the metered service. Read literally, that would have caught the Ports Authority's plan.
But the carve-out's structure assumed a "person" within the meaning of Chapter 62. The AG focused on the definition of "person" in N.C.G.S. § 62-3(21), which extends to "a corporation, individual, copartnership, company, association or any combination of individuals or organizations doing business as a unit." That list described business organizations. It did not include "bodies politic and corporate," even though G.S. § 12-3(6), the general statutory construction rule for "person," does.
The AG drew the inference. The General Assembly was presumed to know the broader G.S. § 12-3(6) definition and to have deliberately chosen the narrower § 62-3(21) wording when writing Chapter 62. Where one statute (Chapter 62) deals with a subject in detail in a particular context and another (§ 12-3(6)) deals with the same subject generally, the particular statute controls. That meant the Chapter 62 definition of "person" excluded the state and its agencies.
This statutory-construction conclusion sat on top of a broader sovereign-immunity rule. Under United States v. Herron and Yancey v. Highway Commission, a general statute does not bind the State unless the State is expressly named or included by necessary implication. The Utilities Commission has been held not to extend over a UNC-affiliated telephone company (Chapel Hill Telephone Company) precisely because the statute did not include the State or any State agency in its public-utility definition.
When the General Assembly wanted state-affiliated providers subject to Utilities Commission rate regulation, it said so expressly. G.S. § 116-35 was the example: that statute let UNC member institutions sell surplus electric power to the community at rates approved by the Utilities Commission. Without that specific provision, the Commission could not have regulated the rates even for UNC's outside-the-campus electric sales. In Western Carolina University rate proceedings, the Commission acknowledged in writing that the statute did not confer utility status on the University but only permitted rate regulation.
The conclusion: under the plain text of Chapter 62, under the general rule of state sovereignty, and under the Chapel Hill Telephone Company precedent, the SPA was not a "person" subject to Utilities Commission regulation. It could install tenant meters, bill at actual cost plus metering and billing expense, and operate the system without a certificate of public convenience and necessity and without rate-regulation oversight.
Currency note
This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Public Utilities chapter and the State Ports Authority statutes have been amended several times in the years since 1993, and the deregulation of retail electric markets in some neighboring states has influenced how state agencies handle internal electricity distribution. Anyone advising a current SPA-style tenant-metering arrangement should confirm the current version of N.C.G.S. § 62-3(23)(d) and the SPA enabling act.
Background and statutory framework
North Carolina's Public Utilities Act, codified as Chapter 62, vests the North Carolina Utilities Commission with broad jurisdiction over the rates, services, facilities, and operations of regulated utilities. The chapter's structure draws a sharp line between regulated and unregulated providers. Regulated providers must get a certificate of public convenience and necessity before operating, face rate review on each price change, and submit to operational standards. Unregulated providers can act on contract terms with their customers.
The Authority's planned tenant-meter program was a textbook resale-by-meter, the situation N.C.G.S. § 62-3(23)(d) sentence two was designed to cover. Without sentence two, a landlord could buy bulk electricity at industrial rates and resell it to tenants at retail rates, capturing the margin while evading utility regulation. Sentence two solved that gap by treating any landlord who individually meters tenants as a public utility with respect to the metered service.
The AG's opinion did not attack sentence two on its merits. It simply held that the SPA was outside the entire definitional framework because the SPA was not a "person" at all. That conclusion sidestepped the resale-by-meter rule rather than carving an exception inside it. The structural choice mattered because it preserved the resale-by-meter rule's bite against private landlords while sparing the SPA the regulatory burden.
The opinion fit a long line of North Carolina cases under which general regulatory statutes do not bind the state without express inclusion. The Chapel Hill Telephone Company case was the closest parallel: a phone company owned by UNC was sought to be regulated by the Utilities Commission, the Commission declined jurisdiction, and the Court of Appeals affirmed. The court held that even the University's voluntary participation in a hearing could not confer jurisdiction the statute did not grant. The Springer v. Shavender language quoted in Chapel Hill Telephone makes the broader point: a court without subject-matter jurisdiction does not gain it by anyone's consent.
The opinion's reasoning generalizes to other state agencies that own and operate utility-style infrastructure. UNC institutions that distribute electric power to dorms and labs, the Department of Transportation when it operates ferries and ferry terminals that consume utility services, state mental hospitals with internal heating plants and distribution systems, all sit outside Utilities Commission jurisdiction by the same logic, unless the General Assembly has expressly subjected them to regulation by a § 116-35-style statute.
Common questions
Did the SPA's plan to add a metering and billing fee on top of CP and L's actual cost change the analysis?
No. The opinion noted the planned charge "would take into account only the actual cost of electricity from CP and L plus the cost of metering and billing." Because the SPA was not a "person" at all, the structure of the rate did not matter.
Could a private landlord at the SPA terminal individually meter and resell electricity to its own subtenants?
The opinion did not address that, but the analysis would be different. A private landlord is a "person" under N.C.G.S. § 62-3(21), so the second sentence of § 62-3(23)(d) would apply, and metered tenant billing would make that landlord a public utility for the metered service.
What if the SPA leased terminal facilities to a private subtenant who in turn metered and billed its own subtenants?
By the same logic, the private intermediate operator would be a "person" and would be a public utility for its metered tenant service. The state-agency immunity does not flow through to private parties leasing state property.
Did the Utilities Commission's prior orders treating UNC institutions as subject to rate regulation undercut the AG's analysis?
No. The opinion noted that in Western Carolina University proceedings the Commission expressly said the statutory grant in § 116-35 did not confer utility status on the University; it only permitted rate regulation that would otherwise be unavailable. The Commission's own orders confirmed the state-immunity baseline.
Did the opinion address whether the SPA could deny service to a particular tenant?
No. Outside Utilities Commission jurisdiction, the SPA's relationship with tenants was governed by the leases and by the SPA's enabling statutes, not by common-carrier obligations.
Citations
- N.C.G.S. § 62-2 (general purposes of utility regulation)
- N.C.G.S. § 62-3(21), (23)(a), (23)(d) (definitions)
- N.C.G.S. § 116-35 (UNC institution surplus power)
- N.C.G.S. §§ 143B-453(1), 143B-456.1(a) (SPA powers)
- N.C.G.S. § 12-3(6) (general definition of person)
- Guthrie v. State Ports Authority, 307 N.C. 522 (1983)
- Nat Harrison Associates v. State Ports Authority, 280 N.C. 251 (1972)
- State ex rel. Utilities Commission v. Chapel Hill Telephone Company, 12 N.C. App. 543 (1971)
Source
Original opinion text
FORMAL OPINION
8 June 1993
Subject: State Ports Authority; Public Utility Status.
Requested by: J. J. Scott, Jr., Executive Director, North Carolina State Ports Authority
Question:
. Is the North Carolina State Ports Authority a "public utility" as defined by G.S. 62-3(23) and G.S. 62-3(23)(d) if it sells electric power to its tenants through facilities it owns and operates?
. Is the North Carolina Ports Authority required to obtain a certificate of public convenience and necessity from the North Carolina Utilities Commission to sell electricity to its tenants?
. Is the State Ports Authority subject to regulation by the North Carolina Utilities Commission of its services, rates and charges when it sells electric power to its tenants?
Conclusion:
. No, the State Ports Authority is not a public utility as defined by G.S. 62-3(23) or G.S. 62-3(23)(d).
. No, the State Ports Authority is not required to obtain a certificate of public convenience and necessity from the Utilities Commission.
. No, the State Ports Authority is not subject to regulation of its services, rates, and charge by the North Carolina Utilities Commission.
The N.C. State Ports Authority (SPA) is "a true agency and instrument of the State," Guthrie v. State Ports Authority, 307 N.C. 522, 532, 299 S.E. 2d 618 (1983), empowered to accomplish a public purpose, Nat Harrison Associates, Inc. v. State Ports Authority, 280 N.C. 251, 258, 185 S.E.2d 793, 797, reh. denied 281 N.C. 317 (1972). The SPA's enabling legislation authorizes it to construct and maintain facilities at state ports, G.S. 143B-453(1), and permits it to issue bonds for special projects which include the construction of utility facilities, G.S. 143B-456.1(a). Under its general statutory grant of authority, the SPA can lease its facilities to private corporations. North Carolina State Ports Authority v. First Citizens Bank and Trust Co., 242 N.C. 416, 88 S.E.2d 109 (1955).
The SPA currently receives electric service at its Wilmington Terminal from Carolina Power and Light Company. It transmits that electricity through lines it owns to various buildings and facilities at the Wilmington Terminal. Currently, the SPA is reimbursed by some of its tenants for electric usage by including the estimated cost of that tenant's electrical usage in the tenant's lease payment. This method is unsatisfactory because it does not fairly reimburse the SPA for the actual usage of its tenants and provides no incentive for tenants to conserve electricity. For these reasons, the SPA would like to install meters for its tenants and charge them for the amount of electricity they use. The SPA envisions that these charges would take into account only the actual cost of electricity from CP and L plus the cost of metering and billing. The SPA queries whether it may undertake this activity without regulation by the North Carolina Utilities Commission.
Chapter 62 of the General Statutes vests in the North Carolina Utilities Commission the authority to regulate a "public utility." G.S. 62-3(23) defines "public utility" as:
(a) ... a person, whether organized under the laws of this State or under the laws of any other state or country, now or hereafter owning or operating in this State equipment or facilities for:
Producing, generating, transmitting, delivering or furnishing electricity ....
(d) The term "public utility," except as otherwise expressly provided in this Chapter shall not include ... any person not otherwise a public utility who furnishes such service or commodity only to himself, his employees or tenants when such service or commodity is not resold to or used by others; provided however, that any person ... who distributes or provides utility service to his ... tenants by individual meters ... with a charge for metered ... service shall be a public utility within the definition and meaning of this Chapter with respect to the regulation of rates and provisions of service rendered through such meter ... imposing such separate metered utility charge. (Emphasis added).
The threshold question then is whether the SPA as an agency of the State is a "person" within the meaning of G.S. 62-3(23)(a) subject to regulation by the Utilities Commission. Chapter 62 provides guidance. G.S. 62-3(21) defines "person" for the purpose of utility regulation as "a corporation, individual, copartnership, company, association or any combination of individuals or organizations doing business as a unit ..."
Normally when construing a statute, the words used are given their ordinary meaning unless it appears from their context that they should be taken in a different sense. Abernethy v. Board of Commissioners, 169 N.C. 631, 86 S.E. 577 (1915). Nothing in the context of Chapter 62 appears to negate the plain meaning of the words used in the definition. Given their plain meaning, the words of the definition appear to limit "persons" who are "public utilities" to business organizations: corporations, individuals, partnerships, joint ventures and the like.
The legislative intent in defining "person" under Chapter 62 is even clearer when that definition is contrasted with the definition of "person" supplied by G.S. 12-3(6), the Legislature's instructions for general statutory construction. The rules of general statutory construction define "person" much more broadly as "extending and being applied to bodies politic and corporate," which could arguably include governmental bodies. When construing statutes, the General Assembly is presumed to have acted with care and deliberation, having full knowledge of prior and existing laws, State v. Benton, 276 N.C. 641, 174 S.E.2d 793 (1970). Thus the elimination from the definition of "person" in Chapter 62 of "bodies politic" is presumed to have been deliberate.
Additionally, the definition of "person" that extends to bodies corporate and politic is found in a statute of general application. Where one statute deals with a subject in detail with reference to a particular situation, and another deals with the same subject in general and comprehensive terms, the particular statute controls. State v. Leeper, 59 N.C. App. 199, 296 S.E.2d 7, disc. rev. denied, 307 N.C. 272, 299 S.E.2d 218 (1982). Under these rules of statutory construction, the definition of "person" in Chapter 62 controls, and that definition does not extend to the state or an agency of the state as a body politic.
This statutory interpretation is consistent with the general rule that when the effect of a statute is to restrict or limit the rights of the state, to affect its interests or to impose liabilities on it, the statute is deemed to be inapplicable to the state unless the state is named expressly or by necessary implication. United States v. Herron, 20 Wall (U.S.) 251, 22 L.Ed. 275. In North Carolina, courts have consistently held that a general statute does not bind the State unless the State is expressly mentioned within the statute. Yancey v. Highway Commission, 222 N.C. 106, 22 S.E.2d 256 (1942).
Adhering to this general rule, North Carolina courts have held that "public utility" as it is defined in Chapter 62 does not include agencies of the state. In State ex rel. Utilities Commission v. Chapel Hill Telephone Company, 12 N.C. App. 543, 183 S.E.2d 802, cert. denied, 279 N.C. 729, 184 S.E.2d 887 (1971), the Utilities Commission declined to extend jurisdiction over the services of the Chapel Hill Telephone Company, a utility owned and operated by the University of North Carolina at Chapel Hill. The Court of Appeals upheld the Commission's decision reasoning:
The General Statutes, (G.S. 62-3(23), in establishing the Utilities Commission, defined a public utility over which the Commission would have jurisdiction, and did not include in that definition the State or any agency, such as the University of the State. 12 N.C. App. at 545 (Emphasis added).
The fact that the appellant [the University] participated to a limited extent in the hearing does not confer jurisdiction on the Commission. The appellant expressly reserved its objection to the jurisdiction of the Commission. The appellant, even by its presence or consent, could not confer greater jurisdiction on the Commission than was conferred by the statutes establishing it.
"No man can put himself in the place of the sovereign and make the adjudication of a court valid by ratifying an unauthorized exercise of power by its agent when the law of the land, which is the agent's power of attorney, declares that the court has no authority to render the judgment ...." Springer v. Shavender, 118 N.C. 33, 23 S.E. 976 (1896).
12 N.C. App. at 545-546.
The Court in the Chapel Hill Telephone case implicitly recognized that provision of utility service is a governmental, rather than a proprietary, function of the State. G.S. 62-2 provides:
Upon investigation, it has been determined that the rates, services and operations of public utilities as defined herein, are affected with the public interest and that the availability of an adequate and reliable supply of electric power and natural gas to the people, economy and government of North Carolina is a matter of public policy ... (Emphasis added.)
Provision of utility service by nongovernmental entities is strictly regulated by the State Utilities Commission, G.S. 62-1 et seq., and the State grants a certificate to provide utility service to a private entity only if public convenience and necessity requires it.
At those times when the General Assembly has intended to allow the State and its agencies to be regulated by the Utilities Commission, it has expressly so indicated. In G.S. 116-35, the General Assembly has specifically stated that member institutions of the University of North Carolina which operate electric power plants and distribution systems can sell the surplus power to the "people of the community at a rate or rates approved by the Utilities Commission." Without such a specific provision, the individual member institutions of the University could not have their rates regulated by the Utilities Commission. In those instances where the Commission regulates rates and charges of University providers pursuant to this statute, the Commission clearly states in its orders that the statutory language does not confer utility status on the University but only permits regulation of rates. See, e.g., In re Application of Western Carolina University for an Adjustment in its Rates and Charges, "Recommended Order Granting Rate Increase," NCUC docket number E-35, Sub 12 at page 2 (August 25, 1983).
In summary, under plain words of Chapter 62, the general rule of the sovereignty of the State and the holding of Chapel Hill Telephone Company, the Attorney General concludes that the SPA is not a "person" subject to utility regulation.
Michael F. Easley
Attorney General
Karen E. Long
Assistant Attorney General