HomeMy WebLinkAboutA003 - legal opinion, May 12, 1982 CITY
5001 I 0
515/232-6210
May 12, 1982
Honorable F. Paul Goodland, Mayor
And Members of the City Council
of the City of Ames, Iowa
Re: Special Contract with Sundstrand
Dear Mayor Goodland and Council Members:
The City Manager has asked that I write a brief statement of the legal
basis for a special contract with the Sundstrand Corporation. The
existing contract expires at the end of June. Sundstrand has asked to
have it renewed. Without the special contract Sundstrand would come
under the standard rate structure, presumably in the Large Power cate-
gory.
It appears to me to be the legislature's intent to allow special con-
tracts for municipal utility service only when the special circum-
stances, aspects or conditions of a particular user in comparison with
other users, make it unfair to that customer to apply the general rate
structure. Section 388.6, Code of Iowa, states:
"Discrimination in Rates. A city utility or a combined utili-
ty system may not provide use or service at a discriminatory
rate, except to the city or its agencies, as provided in
section 384.91."
That section alone could be interpreted as flatly prohibiting special
contracts. However, the legislature clearly intended otherwise in en-
acting subsection 384.84(2)(b) which states:
"2. The governing body of a city utility . . . may:
x x x
b. Contract for the use of or services provided by a
city utility, . . . with persons whose type or quan-
tity of use or service is unusual."
This language of the Code has not been interpreted by a reported deci-
sion of the Iowa Supreme Court. However, it is a long established
principle that the municipal owner of a utility must furnish service
impartially to everyone similarly situated, and may not arbitrarily
discriminate between customers. See Knotts v. Nollen (1928) 206 Iowa
261, 218 N.W. 563.
The issue is ultimately one of judging whether the "type or quantity" of
use by Sundstrand is so "unusual" that it should, in fairness, be grant-
ed exemption from the provision of the rate structure and provided
electric service under a special contract. The judgment as to "unusual"
will need to be made by comparison with other customers presently in the
Large Power category.
Respectfully/submitted,
John R. Klaus
City Attorney
JRK/dls
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