HOLYOKE WATER POWER CO. vs. CITY OF HOLYOKE & another.

CUTTER, J. The plaintiff (the company) brings this bill for declaratory relief against the city and against the city's

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gas and electric commission (see St. 1922, c. 173). A plea in bar was sustained on the grounds stated in the margin. [Note 1] By final decree the bill was dismissed. The company appealed. The facts are stated as alleged in the bill.

The city "owns and operates its own gas and electric department . . . and is actively engaged in the manufacture and sale of electricity" in Holyoke. The company is "also actively engaged in the manufacture and sale of electricity" in Holyoke, in competition with the city for customers purchasing" lots of 100 horsepower or greater." By St. 1947, c. 289, Section 1, the city was authorized to "sell and distribute steam generated by its municipal gas or electric plants to any person" within the limits of the city, and for such purposes has all the powers and is subject to the liabilities of a city in the operation of a municipal lighting plant. See Adie v. Mayor of Holyoke, 303 Mass. 295, 298-299; Municipal Light Common. v. Taunton, 323 Mass. 79, 84.

Holyoke has installed a steam distribution system and is engaged in selling steam within a large portion of Holyoke's industrial area. Among the persons to whom the city sells steam "are users of electricity for whose electric business the . . . [company] and the . . . [c]ity . . . are engaged in active competition." The city completely dominates the market for steam in the part of the industrial area served by its system and, through its control of the public ways, is able to maintain an effective monopoly of the sale of steam in that area.

Prior to March 1, 1963, the city "sold steam on an equal and uniform basis to steam customers in accordance with a rate schedule filed pursuant to" G. L. c. 164, Section 58, but, "effective

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as of March 1, 1963, the [c]ity . . . altered its . . . rate schedule by offering a discount of five percent . . . to those of its steam customers who purchase their electrical requirements as well as their steam requirements from the . . . [c]ity . . . [and] the [c]ity . . . has . . . in fact granted a discount of five percent . . . to those of its steam customers who purchase their electrical requirements from the . . . [c]ity."

The purpose and effect of the discount is to enable the city "to use its economic power in the steam market, for the purpose of compelling users of electricity to purchase their electrical requirements from the . . . [c]ity . . . and to . . . restrain . . . the competition that has previously existed between the . . . [company] and the . . . [c]ity." It is alleged "that by its . . . discount the [c]ity . . . unreasonably and unlawfully discriminates against those of its steam customers who choose to purchase their electrical requirements from" the company. The company "is also a steam customer of the . . . [c]ity" and, since it does not purchase its electrical requirements from the city, the discount is not granted to the company. Consequently it is asserted that the discount discriminates against the company as well as against other steam customers.

The city contends that the department, by virtue of G. L. (Ter. Ed.) c. 164, Section 58 [Note 2] (taken together with St. 1947, c. 289,

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in respect of the sale of steam), is given "jurisdiction, not only over the stated rates, prices, and charges for various classifications of service, and the relationship between classifications, but also over reasonably related terms and conditions stated in the fixed schedule." Support for this contention is found in the circumstance that the provisions of G. L. c. 164, Sections 34-69 (as amended), give to the department various regulatory powers, in addition to those conferred by Section 58, with respect to municipal electric plants, and require that the department be furnished with various types of information relating to such plants. See, for example, Sections 37, 38, 43, 47, 52, 54, 57 (as amended through St. 1963, c. 347, Section 3), 59 (as amended through St. 1953, c. 502), 60, 63, and 68. General Laws c. 164, Sections 65 and 66, [Note 3] emphasize various aspects of similarity of municipal plants to privately owned public utilities in respect of the application of at least parts of the chapter. Cf. Howard v. Chicopee, 299 Mass. 115, 121-122 (holding that a city is not an "electric company" within the meaning of G. L. [Ter. Ed.] c. 164, Section 94A; since amended by St. 1941, c. 400, Section 1). Section 69 gives to this court "jurisdiction on petition of the department or of twenty taxable inhabitants of the town to compel the fixing of prices by the town in compliance with" Sections 57 and 58, "to prevent any town from . . . operating . . . a gas or electric plant in violation of any provision of this chapter, and generally to enforce compliance with the . . . provisions thereof relative to the . . . distribution of . . . electricity by a town" (emphasis supplied). In the context of c. 164, the term "town" should be taken to include "city." G. L. c. 4, Section 7, Thirty-fourth. See Waltham v. Mignosa, 327 Mass. 250, 253.

The applicable provisions of c. 164, already cited, indicate to us that the department has been given sufficient

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powers of supervision (see Adie v. Mayor of Holyoke, 303 Mass. 295, 298; see also Municipal Light Commn. v. Taunton, 323 Mass. 79, 83) over municipally owned electric plants, [Note 4] their service practices, and charges to make it appropriate for a person, affected by practices of such a plant alleged to be discriminatory, to apply to the department for relief in the first instance before seeking relief in the courts. It will be noted that c. 164, Section 69, quoted in part above, gives only to the department, or to twenty taxable inhabitants, the right granted by that section to seek enforcement of compliance with the chapter.

We need not now determine whether and to what extent c. 164, Sections 65 and 66 (fn. 3), may make applicable to municipally owned utilities principles like those set out in c. 164, Section 94, [Note 5] but not stated, at least in comparably explicit detail, in c. 164, Section 58. It is sufficient for present purposes to state (1) that the department by c. 164, is given substantial power to supervise municipally owned utilities and to ask a court to require a city's compliance with c. 164; (2) that exercise of the department's regulatory powers may afford to the company some measure of relief (if it is entitled to any relief) and, in any event, may affect the scope and character of any judicial relief which may be given, and (3) that, in this controversy between a municipality conducting

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a public utility and a competing regulated public utility, exhaustion of the possibilities of departmental action should precede independent action (not expressly authorized by c. 164, Section 69) in the courts to prevent alleged discriminatory practices. [Note 6] The department has not had opportunity to determine whether to take action under its general powers, or under G. L. c. 164, Section 69. Until it acts, there is no occasion to consider whether the discount arrangement based upon combined sales of electric current and steam is discriminatory, an improper competitive practice, or an unreasonable exploitation of the city's semimonopoly as a utility.

Decree affirmed.