Public utility corporation

“ 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. ”

“ 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. ”

“ The Public Utilities Law is a very comprehensive one. It applies to all public utilities in the District, except steam rilways and steamboat lines. It creates a commission to supervise and regulate them in the matter of rates, tolls, charges, service, joint rates, and other matters of interest to the public. It directs investigation into the financial history and affairs of each utility and its valuation at a fair value as of the time of valuation. ”

“ While the state has the power to absolutely control all public service corporations, it is well to bear in mind that local municipal government, in so far as practicable, is the true policy to pursue and wise state supervision, when dealing with public utilities situated within the corporate limits of cities, will emphasize this principle rather than ignore or override it. The initiative in all local public utility matters should remain with the local authorities. ”

“ 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. ”

“ 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. ”

“ A citizen is entitled to have a clean street before his house because he pays taxes, inter alia, for that purpose. He is much more plainly entitled to have complainant's gas in his house because the 123company must give it to him if he pays for it. I think it apparent that the conceivable good will of a gas company in this city is about equal to that of the street-cleaning department of the municipal government."
Is a public service corporation entitled to add the value of its franchise to the assets from which a fair return may lawfully be demanded? ”

“ No shrewd observer can fail to recognize the increasingly insistent demand of the public for greater publicity in the accounting, and a larger measure of governmental control in the operation, of public service corporations. In its best form, such control will be welcomed by the corporations, as giving greater stability to investment in such property; in its worst, it may prove a serious limitation to prompt development of the best standards of service. In the water-works field, the anti-corporation movement has resulted in taking over by the public many such plants. ”

“ 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. ”

“ The writer believes that, under one form of agreement or another, nearly every kind of public service can be more economically and better performed by a public service corporation than by the public itself through employees directly hired. But if America is not to pass speedily into Government ownership and operation of all public utilities, there must be a pronounced change of attitude on the part of the public toward capital now invested in public service corporations. ”

“ We are confronted with regulation of a unique type of enterprise which I think requires considered rejection of much conventional utility doctrine and adoption of concepts of 'just and reasonable' rates and practices and of the 'public interest' that will take account of the peculiarities of the business. ”

“ The commonest object of private bills is to enable private individuals to enter into combination to undertake works of public utility—the building of railways or tramways, the construction of harbors or piers, the draining of swamps, the supplying of water, gas, or electricity, and the embarking upon a wide variety of other enterprises which in the United States would be regulated chiefly by state legislatures and city councils—at their own risk and, in part at least, for their own profit. ”

“ Because they partake of the nature of a public utility, they, too, must be closely regulated in the public interest. And, as in the case of utilities, the power of regulation must be combined with the power of licensing. The details of regulatory supervision of these facilities are far too great to be handled by legislative bodies. ”

“ 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. ”

“ For a new phase of the public utility problem has arisen—that of the private monopoly in the hydro-electric and superpower field. The private corporations are swiftly seizing upon every possible resource of water power and coal for the production of electric current, capturing and consolidating both private and municipal plants and tieing them into vast interconnected superpower systems. ”

“ But, so long as the specific items of property are employed by the utility, their exchange value is not of legal significance.
The investor agrees, by embarking capital in a utility, that its charges to the public shall be reasonable. His company is the substitute for the state in the performance of the public service, thus becoming a public servant. The compensation which the Constitution guarantees an opportunity to earn is the reasonable cost of conducting the business. Cost includes, not only operating expenses, but also capital charges. ”

“ The Public Utility Holding Company Act of 1935 is a reticulated statute, not a hodge-podge. To observe its explicit provisions is to respect the purpose of Congress and the care with which it was formulated. ”

“ This was apparently so clear at the time the Act passed that in an early and now-repudiated decision the SEC went so far as to hold that gas and electric companies could be combined in the same single integrated public utility system. American Water Works & Elec. Co., 2 S.E.C. 972 (1937) .
Furthermore, a constricted reading of the 'substantial economies' provision is a quite unsuitable way of responding to the dangers in common ownership of competing types of utilities. ”

“ When we reflect that within a few decades of the discovery of electric power, every city, large and small, had its street-car and electric-light service, and that most of these cities, through their councils, gave away these monopoly rights for long periods of time, we can imagine the princely aggregate of the gifts which public service corporations have received at the hands of our municipal governments, and the nature of the temptations these corporations were able to spread before the greedy gaze of those whose gesture would seal the grant. ”

“ 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. ”

“ 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. ”

“ If the commission is granted the power to promulgate rates, to control the service granted to the public, or to order the purchase of new equipment, it has become more than a regulative official body. It has become responsible for the business management of the corporation committed to its charge; and again it must be asserted that mixed control of this kind is bound to take the energy and initiative out of such business organizations. ”

“ The state, which, in the first place, has the power to construct a water-supply system, and charge individuals for the use of the water, may condemn a system already constructed, and continue to make such charge. This is not turning over property from one private corporation to another, but taking property from a private corporation and vesting the title in some municipal corporation for the public use. It is not essential to a public use that it be absolutely free and without any charge to any one. ”

“ For this reason, generating facilities cannot be maintained on the basis of a constant demand. Rather, the utility's generating capability must be geared to the utility's peak load of demand, and also take into account the fact that generating equipment must occasionally be out of service for overhaul, or because of breakdowns. ”

“ As applied to public utilities, the validity under the Fourteenth Amendment of the requirement of the certificate has never been successfully questioned.
Second. Oklahoma declared the business of manufacturing ice for sale and distribution a 'public business'; that is, a public utility. So far as appears, it was the first state to do so. [4] Of course, a Legislature cannot by mere legislative fiat convert a business into a public utility. Producers' Transportation Co. v. Railroad Commission, 251 U.S. 228, 230, 40 S.C.t. 131, 64 L. Ed. 239. But the conception of a public utility is not static. ”

“ The consolidation of effort, the reduction in the number of separate express agencies, the minimizing of accounting, the simplification of management, the pooling of equipment and facilities,—these administrative reforms should result in a marked decrease in relative operating expenses. The transfer of control from a moneyed group—or rather from three moneyed groups—interested primarily in private profits to a public official seeking only service to the public, this similarly is a definite achievement. ”

“ 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 ”

“ A provision in the franchise relating to the quality of gas, or the rate of fare on street railways, or the candle-power of electric lamps may be framed carefully to cover the needs of today, but no one can foresee what will be needed five or ten years hence. Progress is continually being made in the mechanism of public utilities as in all other branches of industry. If regulation is to be effective, it must keep moving forward as new devices and methods come into use. A franchise has the defect of being a closed bargain. ”

“ 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. ”

“ 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. ”

“ Thomas E. Watson, New York.
Dear Sir: I am a regular reader of your Magazine, which I find very interesting and instructive. I believe in the Public Ownership of Public Utilities, but fear that does not go far enough to cure the land of the evils that now curse it. With Government banks, Government railroads, Municipal Ownership of Public Utilities, there would still be that awful strife of the many for bread and butter. If we may ride cheaper on the “Railhighways,” if we get our Water, Gas, and Electric Light cheaper, will not the wages of the workers go down as the cost of living decreases? ”

“ The rates that are charged, and the service rendered, are matters of vast importance to [Pg 35] the people of a city. Municipal ownership of such utilities has never been as extensive in this country as abroad, but the sentiment in favor of it is growing. Franchise rights used to be given for long terms, even in perpetuity, but public sentiment now demands that they be subject to revision at reasonable intervals. Most cities to-day own their own water-supply, and some of them have their own lighting plants. ”