Miller, J.c.c. (temporarily assigned).
Antique Village, t/a Inn on the Mall, moves for relief from Final Judgment entered on February 14, 1978. Paragraph 7 of the order of final judgment gives the Inn the alternative of either acquiring necessary utilities directly, or entering into a Schedule F agreement with the Mall.
The Inn now urges the court to find that the Mall is subject to regulation by the Board of Public Utility Commission and that any rates charged to the Inn should be set by the PUC.
N.J.S.A. 48:2-13 provides that the Board of Public Utilities Commissioners shall have general supervision and regulation of and jurisdiction and control over all public utilities. "Public Utility" is defined to include a corporation which may own, operate, manage or control gas, electric, heat, power, water, oil, sewer, solid waste collection or disposal for public use, under privileges granted by the State or a political subdivision.
In the case of In re Petition of N.J. Natural Gas Co. , 109 N.J. Super. 324 (App. Div. 1970), the court indicated that the two criteria set out by the statute must be met for the proper exercise of jurisdiction by the Board, namely, (1) whether the system, plant or equipment is operated for "public use" and (2) whether this is done under privileges granted by the State or any of its political subdivisions.
In Lewandowski v. Brookwood Musconetcong River, etc., Ass'n , 37 N.J. 433 (1962), the Supreme Court held that whether a water system operated by an incorporated association of lot owners in a residential development for the benefit of those purchasing lots in the development was operated for "public use" depended on the "character and
extent of use." The Association's water system was held to be a public utility since it supplied "a broad group of consumers." The fact that the supplier was under no obligation to supply water to the general public or any portion thereof was immaterial with respect to the jurisdiction of the board.
While a great many side issues have been sought to be presented, the case turns upon whether the landlord has the right to purchase energy from a utility and distribute the same to its tenants at a different (and presumably greater) rate without being compelled to submit to PUC jurisdiction. It is important to note that the only distributees are tenants under an intricate and complicated lease in an integrated shopping center. This court holds the landlord is not so compelled.
In the case of Public Service Comm'n of Maryland v. Howard Research and Develop. Corp. , 271 Md. 141, 314 A.2d 682, 75 A.L.R. 3d 1193 (Ct. App. 1974), the court dealt with Columbia Mall Shopping Center, an enclosed facility consisting of two major department stores and approximately 100 smaller retail stores which purchased electricity from a regulated utility and then distributed electricity to its tenants at a profit, but at the same time, charged no more than they would have to pay for the electricity from the local utility. As opposed to the Cumberland Mall method, the Columbia Mall provided check metering outlets to the tenants of premises to measure actual consumption and to provide a more accurate basis for determining the specified amount to be billed. The issue came before the Maryland Public Utilities Commission which determined that the rates charged by Columbia Mall were subject to regulation. On appeal, the court reversed the Maryland Public Service Commission. In so doing, the Chief Justice first determined that where electricity is furnished and charged for as part of the rent, it was not a sale and pointed out that in such a transaction, the landlord was merely gambling on the fact that the price of electricity
would not be increased. On the other hand, where the landlord makes a separate charge for electricity, the landlord is merely taking less of a gamble. The Chief Justice concluded:
The "gamble" taken by a landlord is irrelevant to the question of whether his activities are subject to regulation -- a charge for electricity included in the rent is no less ...