Western Distributing Co. v. Public Service Comm'n - 285 U.S. 119 (1932)
U.S. Supreme Court
Western Distributing Co. v. Public Service Comm'n, 285 U.S. 119 (1932)
Western Distributing Co. v. Public Service Commission
Argued January 14, 1932
Decided February 29, 1932
285 U.S. 119
1. Where a corporation selling natural gas locally procures its supply by agreement in interstate commerce from a pipeline company with which it is so affiliated that the two are not at arm's length in their dealings, the reasonableness of the interstate price is subject to be inquired into by state authority when applied to be the local company for permission to increase its local rate. Smith v. Illinois Bell Telephone Co., 282 U. S. 133. P. 285 U. S. 123.
2. A local distributor of natural gas, in a common corporate control with an interstate pipeline company from which it brought its supply in interstate commerce, sought to enjoin the enforcement of a local rate in a particular city which the state commission had declined to increase without proof that the interstate price was reasonable.
(1) Adjudications upholding the same wholesale rate in relation to other cities of the state, in suits to which the city now in question was not a party, do not make a prima facie case here. P. 285 U. S. 125.
(2) Undenied allegations to the effect that the distributor, though it has tried, cannot obtain its supply otherwise or at a lower price than from the pipeline company, that that the same price is charged by that and other lines to other distributors, do not establish the reasonableness of the price in this case in view of the affiliation of the two companies. P. 285 U. S. 125.
(3) In view of the relations of the two corporations and the power implicit therein arbitrarily to fix and maintain costs, as respects the distributing company, which do not represent the true value of the service rendered, the state authority is entitled to a fair showing of the reasonableness of such costs, although this may involve a presentation of evidence which would not be required in the case of parties dealing at arm's length and in the general and open market. P. 285 U. S. 126.
Appeal from a decree of the district court of three judges dismissing a bill to enjoin a state commission and a city from enforcing local rates for gas alleged to have become confiscatory.