Public Utilities Commission

“ Respondent California Electric Power Company produces electricity in California, partially by hydroelectric projects licensed under Part I of the Federal Power Act, 41 Stat. 1063, as amended by Title II of the Public Utility Act of 1935, 49 Stat. 838, 16 U.S.C. § 791a et seq., 16 U.S.C.A. § 791a et seq., and markets the greater portion of it, subject to respondent Public Utilities Commission's authority, in that state. ”

“ Controversy with utilities is obviously injurious, also, to the public interest. The prime needs of the community are that facilities be ample and that rates be as low and as stable as possible. The community can get cheap service from private companies, only through cheap capital. It can get efficient service only if managers of the utility are free to devote themselves to problems of operation and of development. It can get ample service through private companies only if investors may be assured of receiving continuously a fair return upon the investment. ”

“ SEC. 7 A transportation company may not grant free passes or discounts to anyone holding an office in this State; and the acceptance of a pass or discount by a public officer, other than a Public Utilities Commissioner, shall work a forfeiture of that office. A Public Utilities Commissioner may not hold an official relation to nor have a financial interest in a person or corporation subject to regulation by the commission. ”

“ An informal survey by the Commission has shown that out of a total of about 1,000 privately-owned electric utilities there are only 12 which own or operate step-down substation facilities for taking out-of-state energy and which would not otherwise be public utilities under the Act. The problem is thus one peculiarly within the competence of the Commission, which has shown no desire to use the principle it has enunciated in this case and could not use it as a vehicle for assuming unjustified jurisdiction over the facilities of all the local distributing companies in the nation. ”

“ Accepting the loss as proved, the commission refused to allow it for more than 7 per cent. upon the ground that with proper care of the system the loss would have been less. A public utility will not be permitted to include negligent or wasteful losses among its operating charges. The waste or negligence, however, must be established by evidence of one kind or another, either direct or circumstantial. In all the pages of this record, there is neither a word nor a circumstance to charge the management with fault. Cf. Ohio Utilities Co. ”

“ To withhold from a public utility the privilege of including a depletion allowance among its operating expenses, while confining t to a return of 6 1/2 per cent. upon the value of its wasting assets, is to take its property away from it without due process of law, at least where the waste is inevitable and rapid. The commission has found that the life expectancy of the operated gas fields is only there years and two months. ”

“ They had been given power to require complete annual reports from carriers, with a consequent great increase in public knowledge concerning railway operation and practice. The most recent type of state commission is the so-called Public Utility Commission, of which the best examples are those of New York and Wisconsin, established in 1907. In both states, the Commissions have power over electric railways and local public utilities furnishing heat, light and power, as well as over steam railway transportation, and the Wisconsin Commission also has control over telephone companies. ”

“ On the other hand, Arneson, Federal Regulation of Electric Utilities, 66 U.S.L.Rev. 133, and Updegraf, Extension of Federal Regulation of Public Utilities, 13 Iowa L.Rev. 369, hold that the states' power to regulate rates of sales for resale in interstate commerce was completely wiped out.↑ Actually, an exception to federal commission authority for power generated at licensed hydroelectric projects would have had little real significance in 1935, in terms of limiting resport to that authority. Forty percent of the Nation's electric energy was produced at hydroelectric projects. ”

“ They provide for complaints and petitions for rehearing by municipalities. And § 3 (7) contemplates municipalities as users and distributors of power. To accept respondents' contention as to Mineral County would thwart the premise of these provisions: that such political subdivisions of the states can be aggrieved by the failure of a public utility selling power to them to satisfy the requirements of Part II.
Nor do we find any evidence of conscious coordination of §§ 3 (3) , (4) and 201 (d) from the legislative history. ”

“ No such presumption attends rates which have been fixed pursuant to rate orders of the Commission. Nor can we make any such presumption as respects rates fixed by the utilities themselves without the compulsion of a rate order. For experience does not indicate that utilities are wont to charge themselves out of business. ”

“ And the Supreme Court decided that any of the orders of the Commission prescribing rates and regulating the service of such utilities are as much a law of the state as if enacted by the Legislature, and that a public utility in furnishing natural gas is as much subject to the provisions of such orders as if they had been made an integral part of the contract between the consumer and the public utility. ”

“ Respondents point to this as satisfying § 20, and thus ousting any Part II regulation. In short, they contend-what at first blush may appear anomalous-that federal rate jurisdiction under Part II may be prohibited by the fact that some portion of the power sold originated in hydroelectric projects federally licensed under Part I. We do not agree.
Admittedly, § 20 contemplated state regulation. And it may well be, as indicated by the congressional hearings, [6] that Congress quite frankly chose the local authorities to regulate the bulk of interstate sales of electricity from licensed projects. ”

“ By this appeal we are called on to decide whether an order of the commission prescribing specific, as distinguished from maximum, rates to be charged for natural gas furnished by a public utility is repugnant to the due process clause of the Fourteenth Amendment. ”

“ We cannot agree. With some express exceptions not here relevant, the language of Part II of the Act makes all 'public utilities' subject to the regulation it prescribes. No reason has been advanced which could possibly justify a judicial exception to this statutory command. A major purpose of the whole Act is to protect power consumers against excessive prices. ”

“ It is possible for a state to authorize a municipal corporation by agreement to establish public service rates and thereby to suspend for a term of years not grossly excessive the exertion of governmental power by legislative action to fix just compensation to be paid for service furnished by public utilities. ”

“ In 1913 the state Legislature adopted an act providing that the corporation commission 'shall have general super vision over all public utilities, with power to fix and establish rates and to prescribe rules, requirements and regulations, affecting their services.' Laws 1913, c. 93, § 2. It was under this act, and after a full hearing on a petition presented by the gas company, that the order in question was made. ”

“ Any commissioner as designated by the commission may hold a hearing or investigation or issue an order subject to commission approval.
SEC. 3 Private corporations and persons that own, operate, control, or manage a line, plant, or system for the transportation of people or property, the transmission of telephone and telegraph messages, or the production, generation, transmission, or furnishing of heat, light, water, power, storage, or wharfage directly or indirectly to or for the public, and common carriers, are public utilities subject to control by the Legislature. ”

“ While the commission and the Ohio courts are bound to adopt a rate base determined as of the beginning of the ordinance period, this does not relieve the company of the burden of showing that the value of the property for the entire period is such that the net return under the commission's rates would have been so low as to confiscate its property. See Los Angeles Gas & Elec. ”

“ For reasons deemed suitable to it, the state has elected to confide this duty to the same agency which has power to exercise statewide regulatory supervision over public utilities, including railroads. ”

“ Indeed, the very intention of the California Legislature in making special provision for the Government to negotiate with the Commission was to enable it to secure advantageous rates which would not even have been possible if the rate schedules were binding upon all shippers without the possibility of administratively granted exceptions. ”

“ A third factor, in addition to the statutory scheme and legislative history of § 201 (d) , is the rejection of respondents' contention by the Commission and courts. Three circuits have just recently done so, [24] and the Federal Power Commission's long assertion that it has authority over rates of sales to municipalities has probably risen to the dignity of an agency 'policy.' [25] We have often stated our sympathy with established administrative interpretations such as this. ”

“ The Congress may fix utility rates in situations subject to federal control without regard to any standard except the constitutional standards of due process and for taking private property for public use without just compensation. ”

“ No matter how vehement our denial, the truth is that the Commission has laced Penn Water to Consolidated under a management contract that leaves Penn Water no initiative of private management.
Of course the Commission has authority under § 202 of the Federal Power Act to promote and at times compel interconnection and coordination of the facilities of public utility companies. ”

“ Section 20 provides that, whenever any public utility shall desire to make a change in any rate or rates, it shall file with the Commission a schedule showing the changes desired to be made and put in force by such public utility, but that no change shall be made in any rate without the consent of the Commission, and within 30 days after such changes have been authorized by the Commission copies of such schedule shall be filed in every station, office, or depot of such public utility for public inspection. ”

“ The necessity for prior administrative consideration of an issue is apparent where, as here, its decision calls for the application of technical knowledge and experience not usually possessed by judges. The Federal Power Commission is an administrative agency the decisions of which involve those difficult problems of policy, accounting, economics and special knowledge that go into public utility rate making. ”

“ The desire to reduce excessive rates should not blind us to the greater evil. It is far better that one public utility win one more legal skirmish in its struggle against regulation, than that we abandon legal standards and let the regulatory agency run riot.
We start here with the exploitation of the public through an unholy alliance between two public utility companies-Penn Water and Consolidated. ”

“ No public utility shall sell, lease, or otherwise dispose of the whole of its facilities subject to the jurisdiction of the Commission, or any part thereof of a value in excess of $50,000, or by any means whatsoever, directly or indirectly, merge or consolidate such facilities or any part thereof with those of any other person, or purchase, acquire, or take any security of any other public utility, without first having secured an order of the Commission authorizing it to do so. ”

“ Long before the Federal Government could be stirred to regulate utilities, courageous states took the initiative and almost the whole body of utility practice has resulted from their experiences.
We must not forget that regulatory measures are temporary expedients, not eternal verities-if indeed they are verities at all. Certainly one of the matters on which the states might well be indulged-the right to an opinion of their own-is as to the accounting methods of a utility whose whole property and business being accounted for is within the state. ”

“ A license under the Act empowers the licensee to construct, for its own use and benefit, hydroelectric projects utilizing the flow of navigable waters and thus, in effect, to appropriate water resources from the public domain. The grant of authority to the Commission to alienate federal water resources does not, of course, turn simply on whether the project will be beneficial to the licensee. ”

“ But no one would question that the reasonable cost of an efficient public utility system 'is good evidence of its value at the time of construction.' We have said that 'such actual cost will continue fairly well to measure the amount to be attributed to the physical elements of the property so long as there is no change in the level of applicable prices.' McCardle v. ”

“ The point cannot be sustained. The section is in form and in substance a mere amendment. It does not alter the form of the city government, or make extensive changes in the existing charter, but is confined to matters pertaining to public utilities, more especially the acquisition, maintenance, and operation of a municipal water plant. ”

“ These provisions were plainly designed to protect the consumer interests against exploitation at the hands of private natural gas companies. When it comes to cases of abandonment or of extensions of facilities or service, we may assume that, apart from the express exemptions [21] contained in § 7, considerations of conservation are material to the issuance of certificates of public convenience and necessity. But the Commission was not asked here for a certificate of public convenience and necessity under § 7 for any proposed construction or extension. ”