JACKSON - The Mississippi Supreme Court has upheld the constitutionality of a 2002 law designed to address disputes between cities and utilities over who should serve residents in areas annexed by municipalities in recent years.
At the same time, the justices on Thursday upheld a judge's decision that Starkville's right to purchase the 4-County Electric Power Association's distribution facilities and service rights created under a 1963 agreement was nonexistent because the city failed to get approval from the Mississippi Public Service Commission.
Oktibbeha County Chancellor Robert Lancaster entered a final judgment in August 2003 that the contract was unenforceable.
In January 2002, the Supreme Court had ruled in favor of Starkville's bid to buy what's now 4-County's service territory.
In March 2002, the governor signed a bill that blocked such acquisitions. The bill became law when it was signed.
Supporters said the bill clarified a law the Legislature passed in 1987 to restrict the ability of municipalities to seize private utilities' service areas when city limits are expanded. Cities argued municipal-owned utility departments should be able to provide electricity to newly annexed residents, such as was called for by the 1963 contract with 4-County.
The cities argued the new law was detrimental to the interests of the cities involving the people who live in the annexed area.
Consumer-owned electric power associations such as 4-County sought to prevent the loss of customers and revenues that could be taken by cities that expand into zones served by the associations.
Four-County asked Lancaster to dismiss Starkville's case because the city had violated the 2002 law by failing to get PSC approval. Lancaster agreed.
On appeal, the city of Starkville argued to the Supreme Court that Lancaster was wrong.
Justice George C. Carlson, writing Thursday for the court, said there was no argument that the 1963 contract provided that should Starkville annex territory serviced by 4-County, Starkville could unilaterally buy 4-County's service rights and distribution facilities within the newly annexed area, and 4-County would be obligated to sell.
Carlson said Starkville and 4-County, as was clearly shown in the contract, also agreed for their contract to be subject to the approval of the PSC "as is or may hereafter be required by law."
"Based on this contractual provision, Starkville and 4-County obviously envisioned that the Mississippi Legislature would possibly enact future laws which might affect their rights and obligations created under the contract," Carlson said.
Carlson said that the 1987 and 2002 amendments changed the law and Lancaster ruled correctly.
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