Public utility commission

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ As the contract was necessarily made in view of the power of the commission to change its terms to avoid discrimination in dealing with the consumers of water of a public utility, it is very difficult to see why the situation may not be reduced to a uniform one under the power of the commission, if that body deems it equitable and fair to do so in the interest of the public. ”

“ Capital charges cover the allowance, by way of interest, for the use of the capital, whatever the nature of the security issued therefor, the allowance for risk incurred, and enough more to attract capital. The reasonable rate to be prescribed by a commission may allow an efficiently managed utility much more. But a rate is constitutionally compensatory, if it allows to the utility the opportunity to earn the cost of the service as thus defined. ”

“ 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. ”

“ The Supreme Court of Kansas, in applying the statute, recognizes that a contract for rates with a public utility cannot be abrogated, except after a finding by the Commission that they are unreasonable. ”

“ A public utility is entitled to such rates as will permit it to earn a return on the value of the property which it employs for the convenience of the public equal to that generally being made at the same time and in the same general part of the country on investments in other business undertakings which are attended by corresponding, risks and uncertainties ”

“ We recognize that a public service commission, under the guise of establishing a fair rate, may not usurp the functions of the company's directors and in every case substitute its judgment for theirs as to the propriety of contracts entered into by the utility ”

“ In short, the Commission holds that the contract rate is unreasonable solely because it yields less than a fair return on the net invested capital. But, while it may be that the Commission may not normally impose upon a public utility a rate which would produce less than a fair return, it does not follow that the public utility may not itself agree by contract to a rate affording less than a fair return or that, if it does so, it is entitled to be relieved of its improvident bargain. ”

“ That Act deprived federal district courts of jurisdiction to enjoin enforcement of certain state administrative orders affecting public utility rates where 'A plain, speedy and efficient remedy may be had in the courts of such State.' As the order of the Alabama Service Commission involved in this case is not one affecting appellee's rates, the Johnson Act is not applicable. We have assumed throughout this opinion that the court below had jurisdiction, 341 U.S. 345, 71 S.Ct. 766, but hold that jurisdiction should not be exercised in this case as a matter of sound equitable discretion. ”

“ 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. ”

“ The state Supreme Court of Appeals holds that the valuing of the property of a public utility corporation and prescribing rates are purely legislative acts, not subject to judicial review, except in so far as may be necessary to determine whether such rates are void on constitutional or other grounds, and that findings of fact by the commission based on evidence to support them will not be reviewed by the court. ”

“ 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 question in the case is whether the rates prescribed in the commission's order are confiscatory and therefore beyond legislative power. Rates which are not sufficient to yield a reasonable return on the value of the property used at the time it is being used to render the service are unjust, unreasonable and confiscatory, and their enforcement deprives the public utility company of its property in violation of the Fourteenth Amendment. ”

“ 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. ”

“ The primary duty of a public utility is to serve on reasonable terms all those who desire the service it renders. This duty does not permit it to pick and choose and to serve only those portions of the territory which it finds most profitable, leaving the remainder to get along without the service which it alone is in a position to give. An important purpose of state supervision is to prevent such discriminations, see New York & Queens Gas Co. ”

“ The state, by the exertion of legislative power, established the rule that public utility rates, including those charged for gas, shall be just and reasonable. It is powerless to enforce, and therefore must be presumed to have intended that is commission should not attempt to prescribe, confiscatory rates. The commission's field of action is within reasonable limits above the point or line where confiscation would commence. ”

“ And where a city, empowered by the state so to do, makes a contract with a public utility fixing the amounts to be paid for its service, the latter may not be required to serve for less even if the specified rates are unreasonably high. ”

“ 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. ”

“ Appeal from city control.-When a city government has ordered any existing rate reduced, the gas utility affected by such order may appeal to the Commission by filing with it on such terms and conditions as the Commission may direct, a petition and bond to review the decision, regulation, ordinance, or order of the city, town or municipality. Upon such appeal being taken the Commission shall set a hearing and may make such order or decision in regard to the matter involved therein as it may deem just and reasonable. The Commission shall hear such appeal de novo. ”

“ It granted the Commission authority, among other things, to direct a public utility to establish physical connection of its transmission facilities with the facilities of other persons engaged in the transmission or sale of electric energy. § 202 (b) . Since that power was not extended to the United States, the court concluded that a license under Part I of the Act could not be conditioned on an interconnection with federal power. ”

“ Nothing in this law has excited greater interest nor greater antagonism than this very question of home rule and the relations in general to municipalities. When the public utility act was first proposed there is no doubt but that the public utilities of the state thought they would gain by placing in the hands of some kind of a weak commission, a power which would protect them from the localities. They were constantly in fear of the encroachments of municipal ownership and the concerns which were granted spurious franchises in so-called competition. ”

“ But such a rejection of state control as grounds of exemption must be preceded by the finding, giving due weight to the policy declaration in doubtful cases, that the company in question is a 'public utility' by reason of ownership of facilities not used in local distribution. ”

“ The method 'was that generally employed by courts and commissions in arriving at the value of public utility properties under this method.' and in both estimates 'five year average unit prices' were applied. The estimate of the company's engineer was $540,000 and of the city's engineer, $392,000. The principal differences as given by the commission are shown in the margin. [3] The commission disregarded both estimates and arrived at $360,000. It held that the best basis of valuation was the net investment, i. e., the total cost of the property less depreciation. ”

“ Petitioner identifies as the source of its cause of action the Federal Power Act's requirement of reasonable electric utility rates, [6] which, it contends, creates its legal right to rates which a court may deem reasonable, even if different from those accepted by the Federal Power Commission. It is admitted, however, that a utility could not institute a suit in a federal court to recover a portion of past rates which it simply alleges were unreasonable. ”

“ By § 11 (b) (1) [6] a holding company system is to be limited in operations by the Commission 'to a single integrated public-utility system,' [7] provided, however, that it may be permitted to control one or more additional 'integrated public-utility systems' if the Commission finds, inter alia, that ' (e) ach of such additional system cannot be operated as an independent system without the loss of substantial economies which can be secured by the retention of control by such holding company of such system.' § 11 (b) (1) (A) . ”

“ 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. ”

“ Conversely, where a regulatory body has jurisdiction, it will be sustained in its protection of activities in public places when those activities do not interfere with the general public convenience, comfort and safety. The supervision of such practices by the Public Utilities Commission in the manner prescribed in the District of Columbia meets the requirements both of substantive and procedural due process when it is not arbitrarily and capriciously exercised. ”