Driscoll v. Edison Light & Power Co.
307 U.S. 104 (1939)

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U.S. Supreme Court

Driscoll v. Edison Light & Power Co., 307 U.S. 104 (1939)

Driscoll v. Edison Light & Power Co., 307 U.S. 104 (1939)

No. 509

Argued February 7, 8, 1939

Decided April 17, 1939

307 U.S. 104

Syllabus

1. The provision of the Act of May 14, 1934, withholding from the District Courts jurisdiction over suits to enjoin on the ground of unconstitutionality the enforcement of state orders fixing public utility rates, "where a plain, speedy, and efficient remedy at law or in equity may be had in the courts of such State," held inapplicable, by its terms, to a suit attacking temporary rates ordered by the Public Utilities Commission in Pennsylvania, where the

Page 307 U. S. 105

remedy by injunction is confined to proceedings "questioning the jurisdiction of the commission," and where the remedy at law by appeal does not postpone the rates pendente lite. Pp. 307 U. S. 108et seq.

2. The provisions of § 310(a) of the Pennsylvania Public Utilities Act for fixing temporary public utility rates are not limited to utilities which keep continuing property records. Section 310(b) furnishes a partial alternative method. P. 307 U. S. 112.

3. Section 310(a) of the Act empowers the commission to fix temporary rates, to be charged pending final determination of the rate proceedings, which shall be sufficient to provide a return of not less than 5% upon original cost, less accrued depreciation, of the utility's physical property used and useful in the public service. Section 309 requires that permanent rates when, determined, shall be "just and reasonable." In fixing the base for temporary rates in this case, the commission did not confine itself to the single factor of original cost less depreciation, but interpreted § 310(a) as requiring that weight be given also to reproduction cost, going concern value, and the necessity for working capital, in compliance with the rule laid down by this Court in Smyth v. Ames,169 U. S. 400.

Held, that in the absence of any decision of the state court on the subject, this interpretation of § 310(a), not inconsistent with its terms, should be accepted. P. 307 U. S. 114.

A different construction would raise the novel and important question of the constitutionality of a temporary rate, based solely on depreciated original cost, with provision of the statute for recoupment of the loss from insufficient temporary rates as provided in § 310(e).

4. This Court adopts a just and reasonable construction of state statute rendering it clearly constitutional, rather than another that puts its validity in doubt. P. 307 U. S. 115.

5. In determining a rate base, failure to include allowance for cost of financing is not erroneous where the evidence reveals no actual expenditures for that purpose and furnishes no foundation for an estimate. P. 307 U. S. 116.

6. It does not appear from evidence that, in determining rate base, the commission failed in this case to make due allowances for going concern value; nor that, in estimating depreciated reproduction cost, it failed to make adequate allowance for indirect costs, such as interest, supervision, financing, taxes, legal expenses, or refused to consider claimed increase of prices. P. 307 U. S. 117.

7. Six percent held not an inadequate rate of return in the case of an electric power company which operates in a stable community

Page 307 U. S. 106

accustomed to the use of electricity and close to the capital markets, with funds readily available for secure investment. Long operation and adequate records make forecasts of net operating revenues fairly certain. Under such circumstances, a six percent. return after all allowable charges cannot be confiscatory. P. 307 U. S. 119.

8. Even where the rates in effect are excessive, in a proceeding by a commission to determine reasonableness, the utility should be allowed its fair and proper expenses for presenting its side to the commission. P. 307 U. S. 120.

9. In the allowance for such rate-case expenditures, the period over which they are to be amortized will depend upon the character of services received or disbursements made. P. 307 U. S. 121.

There could rarely be an anticipation of annually recurring charges for rate regulation. Under the circumstances here presented, where full statistics on investment, inventory, and labor requirements have been made which, as cumulated, will form largely the basis of all future negotiations, the Court is of the opinion that amortization over a ten-year period is reasonable.

25 F.Supp. 192 reversed.

Appeal from a decree of the District Court of three judges permanently enjoining the enforcement of temporary rates fixed for an electric power company.

Page 307 U. S. 107

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