Borough of Lansdowne v. Public Service Commission
Borough of Lansdowne v. Public Service Commission
Opinion of the Court
Opinion by
Complaints were filed with the Public Service Commission by various boroughs and private consumers alleging that the rates charged by the Springfield Consolidated Water Company were unjust, unreasonable, excessive and discriminatory. The complaints were consolidated and hearings had which received widespread publicity. An exhaustive investigation was made of the company’s plant and its value for rate making purposes, the cost of operation, the revenue which the company was entitled to receive and its apportionment between municipal and private consumers) or between fire protection and domestic consumption, and all the other matters proper to be considered by the commission for the purpose of fixing an equitable schedule of rates, in the course of which an immense amount of testimony and engineering data was received. A report was filed which one needs only to read to be convinced of the care and thoroughness which the commission gave the whole subject. In this report a schedule of rates was fixed which somewhat reduced the revenues of the company, lowered the rates for domestic consumers very considerably and largely increased the amounts to be paid for fire protection service by various boroughs and townships, which had theretofore paid only $15 per annum for each fire hydrant installed, in accordance with contracts entered into between the parties prior to the passage of the Public Service Company Law. Thereupon a number of the boroughs and townships affected by said order filed complaints alleging that the rates for public fire protection made operative by the order of the commission were excessive, unfair, unreasonable and prohibitive, and illegal because impairing the obligation of the several contracts made between them and the company. After hearing the parties and such proofs as were submitted, the original order was upheld and the complaints were dismissed. From this last order separate appeals were taken by the above-named complain
In its report on the original complaints, the commission fixed the fair value of the company’s property for rate-making purposes at $7,203,320, ordered additional improvements estimated to cost $1,048,100, and found that the company was entitled to a gross annual revenue of $899,732, of which it apportioned $719,602 to be charged against domestic and industrial service and $180,130, to be paid by the various boroughs and townships served by the company, for fire protection. In securing this sum, $180,130, for fire protection service, it was necessary to distribute it as equitably as possible among the various municipalities affected, and the plan adopted by the commission was to make a small charge of $7 per annum for every fire hydrant in use, deduct the amount received from this source, plus the revenue received from private fire protection, from $180,130, and divide the remainder by the number of miles of mains four inches and over in diameter which were furnishing fire protection service. The result, $355, represented the amount per mile of assessable pipe, (as before described), within its limits to be charged annually against every borough or township receiving fire protection, and, together with $7 per fire hydrant, fixed the sum to be paid for fire service and fire protection by the several municipal divisions. It is this charge which is complained of in these proceedings.
The stipulation entered into between the several appellants and the intervening appellee, has materially narrowed the scope of our inquiry. Under its provisions no question is raised “concerning the valuation and rate of return, gross and net revenues, and operating expenses of the Springfield Consolidated Water Company fixed in the original proceeding.” For the purposes of these appeals, it is thus admitted that the value of the company’s property was rightly fixed at $7,203,320, and
In reviewing the order of the commission it is not our province to substitute our judgment as to the rates to be charged for that of the commission or usurp administrative functions committed to it. Power to make the order and not the mere expediency or wisdom of having made it, is the question: Ben Avon Boro. v. Ohio Valley Water Co., 260 Pa. 289, p. 297. The order of the commission in the premises is final unless (1) beyond the power which it could constitutionally exercise; or (2) beyond its statutory power; or (3) based upon a mistake of law; or (4) the result of the commission’s having arbitrarily fixed the rates contrary to evidence, or without evidence to support it, or in a grossly unreasonable manner. With this chart to guide us we will consider the reasons advanced by the several appellants why the order of the commission is illegal and invalid.
(1) It was not necessary that the appellant boroughs should be made parties to or have special notice of the proceedings under the original complaints. The hearings were held publicly, were widely advertised, were largely attended and were a matter of great public interest. The appellants must have had knowledge of the proceeding — “for this thing was not done in a corner”'— and could have intervened and been heard had they so desired. But apart from that, it is not feasible to require that notice of hearings on schedules of rates should be given to every person who may be affected thereby. Otherwise no complaint by a private consumer as to rates could be considered without making every other consumer a party to the proceeding. The rights of the appellants were fully protected by the provisions of article VI, section 14, of the act, authorizing a rehearing,
(2) Charges for public fire protection service cannot fairly be computed on the same basis as for domestic or industrial consumption. They are not to be measured by the quantity of water consumed for that may be negligible in amount. Nor should they be reckoned solely by the number of fire hydrants in use. The hydrant is merely the opening through which to deliver the water supplied by the pumping plant and pipe lines, and the number of such hydrants does not fairly determine the cost of the service. The old method of paying the company what the municipality was willing to give has no basis whatever to rest upon. The consensus of modern engineering and accounting opinion is that the amount to be paid for such service should be based on the cost of the plant devoted to public fire protection, in connection with its fair share of the cost of maintenance, operation and depreciation. Where the same pumps, reservoirs and mains are used for both domestic consumption and fire protection, the problem confronting the commission is to apportion the cost of the plant between the two services, for in order to afford adequate fire protection, the pumps, reservoirs, mains, etc., are necessarily larger than would be required for domestic use alone. Just how the apportionment should be made is a scientific not a legal question. A number of methods are in use which appeal differently to different engineers. We are not satisfied that the method adopted by the commission, known as the Peak Load Theory, which divides the cost of the various items of property in proportion to the maximum demand made upon them by the two services,
(3) Complaint is made that the appellants are required to pay for potential service, the order being that
(4) It would seem that the question whether the Public Service Commission may set aside a contract with a public service corporation which provides for the payment of an unfair, unreasonable, preferential, or discriminatory rate, has been definitely settled in this State. It is an exercise by the State, through its duly constituted agent, of the police power, which the Constitution declares “shall never be abridged or so construed as to permit corporations to conduct their, business in such a manner as to infringe the equal rights of individuals or the general well-being of the State.” This power of the commission is distinctly recognized in Klein-Logan Co. v. Duquesne Light Co., 261 Pa. 526,
(5) There is no merit in the contention that the order ' of the commission is equivalent to a levy of taxes upon the borough. It is a determination of the fair, just and reasonable amount which the borough should pay for the fire protection service which it is receiving by its own motion.- The commission no more levies a tax upon it than does a jury in an action against a borough upon a contract or in trespass.
(6) Nor does the Public Service Company Law violate Article III, Section 20, of the Constitution, which forbids the general assembly delegating to any special commission, private corporation or association any power to make, supervise or interfere with any municipal improvement, money, property or effects, or to levy taxes or perform any municipal function whatever. The Public Service Commission is not a special commission within the meaning of this section of the Constitution and the commission has not the power or authority to usurp, and is not usurping, any municipal power or function, which is the thing forbidden.
(7) Nor is it material that the several boroughs have not provided for the payment of the amounts they are respectively required to pay under the order of the commission in the budget for the year.
The verdict of a jury in a suit on a contract is not invalid because its payment had not been provided for in
On a full review of the appeals, we are not satisfied that the order of the commission, in so far as it affects the present appellants, was unconstitutional, unlawful, arbitrary or unreasonable, and the appeals are accordingly dismissed at the costs of the several appellants.
Reference
- Full Case Name
- Borough of Lansdowne v. The Public Service Commission
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- Public service companies — Water companies — Boroughs—First-class townships — Fire protection rates — .Reasonableness. 1. Under the procedure before the Public Service Commission it is not necessary that boroughs, affected by an increase of rates of water companies doing business therein, should have special notice of complaints made to the increased rate. The rights of all parties are fully protected by the provisions of article VI, section 14, of the Public Service Company Law authorizing a rehearing, or by permitting parties interested to file complaints as to the new rates ordered by the commission, and to present their ease as to the alleged unfairness, injustice and unreasonableness of the schedule complained of. 2. The amount to be paid by a municipality for fire protection should be based on the cost of the plant devoted to public fire protection, in connection with its fair share of the cost of maintenance, operation and depreciation. Where the same pumps, reservoirs and mains are used for both domestic consumption and fire protection, the problem confronting the commission is to apportion the cost of the plant between the two services, for in order to afford adequate fire protection, the pumps, reservoirs, mains, etc., are necessarily larger than would be required for domestic use alone. Just how the apportionment should be made is- a scientific not a legal question. 3. The determination by the Public Service Commission that approximately 75 per cent of the total investment in a water company’s plant was properly apportionable to domestic and industrial service, and approximately 25 per cent to fire service; and that 9.6 per cent of the company’s operating expenses were applicable to fire protection, and apportioning $180,130, or practically 20 per cent of the company’s gross revenues, to be derived from fire protection service, is reasonable and in conformity with law, and will not be disturbed on appeal. 4. The order of the Public Service Commission, fixing the rates to be charged the various boroughs and first-class townships to which its lines extend, for fire protection service, will be affirmed, where it appears that the commission determined the approximate amount of the company’s invested capital which should be apportioned to such fire service, and determined the proportional amount of revenue which should be obtained for such service and fixed rates to raise this amount of revenue, which provided for- a nominal charge of $7 for each fire hydrant and for a charge of $355 a mile for each mile of water main furnishing fire protection service within the borough or township. 5. The determination of such rates is within the power of the Public Service Commission, even though they will supersede rates fixed by contracts between the company and the respective boroughs and townships made before the Public Service Company Law went into effect. 6. The Public Service Company Law does not violate article III, section 20> of the Constitution of Pennsylvania forbidding the general assembly to delegate to any special commission any power to make, supervise or interfere with any municipal improvement, money, property or effects, or to levy taxes or perform any municipal function whatever. The Public Service Commission is not a special commission within the meaning of this section of the Constitution, and it has not the power or authority to usurp, and is not usurping, in the determination of rates to be charged by a public utility, any municipal power or function. 7. The determination by the commission of the fair, just and reasonable amount which a borough must pay for fire protection service, is not a levying of a tax against the borough, nor is it material, in the fixing of such rates, that the borough or township has not provided for the payment of the requisite gums during the current year.