Birmingham Elec. Co. v. Alabama Public Service Commission, 3 Div. 514

CourtSupreme Court of Alabama
Citation47 So.2d 455,254 Ala. 140
Docket Number3 Div. 514
Decision Date20 October 1949

Page 455

47 So.2d 455
254 Ala. 140
3 Div. 514.
Supreme Court of Alabama.
Oct. 20, 1949.
Rehearing Granted Feb. 2, 1950.
Further Rehearing Denied March 30, 1950.
Rehearing Denied June 30, 1950.

[254 Ala. 142]

Page 457

W. B. White, S. M. Bronaugh, and White, Bradley, Arant & All, of Birmingham, for appellant.

[254 Ala. 143] A. A. Carmichael, Atty. Gen., and MacDonald Gallion, Asst. Atty. Gen., for appellee.


The appellant, Birmingham Electric Company, hereinafter called the 'company', is a corporation existing under the laws of the State of Alabama and is engaged in business as a public utility rendering electric, transportation and steam heating service to the public in the Birmingham district. On March 16, 1948, the company filed with the Alabama Public Service Commission, hereinafter called the 'commission', a petition under and by virtue of section 53, Title [254 Ala. 144] 48, Code, filing revised schedule of rates for its public transportation system and requesting that the same be made effective at the earliest possible date.

On March 19, 1948, the commission issued an order of investigation suspending the rates proposed until June 12, 1948, unless otherwise ordered by the commission. Pursuant to this order, the commission heard the matter in Birmingham on April 1, 1948, and on April 30, 1948, issued its order that the schedule of fares filed by the company should not become effective and that the then existing fares should remain in effect until otherwise ordered by the commission. The company thereupon perfected an appeal to the Circuit Court of Montgomery County and after hearing that court affirmed the commission's action. Prior thereto, on July 14, 1948, pursuant to application by the company, the judge of the circuit court granted the application for supersedeas and approved the bond filed by the company in connection therewith.

This appeal is from the judgment of the circuit court affirming the order of the commission.

The company's operations cover three fields, i. e., electric service, steam heat service and transportation service. The increase in rates sought in this proceeding is in transportation fares only. But the company presented its case based on the over-all picture of all three of its operations and asked that the commission make its determination on that basis as to whether or not the transit fare increase should be allowed or denied. The basic increase in transportation fares sought is from a seven cents cash fare to a ten cents cash fare with attendant varying scale for books of tickets, school tickets, etc.

The company and its predecessor companies have furnished Birmingham and the surrounding territory with transportation service since 1884. In 1903 use of electric street cars over the entire system was completed and the electric street railway system was thereafter extended from time to time as the communities served grew. From 1936 through 1940, following studies of modernization of the transportation system, gasoline bus service was substituted for electric street car service on thirteen lines and a program to modernize the system with gasoline buses, trolley coaches, and, on the long haul lines, high speed, modern and quiet street cars, was developed by the company but this program was interrupted by the war.

Mr. C. S. Thorn, president of the company, stated:

'Following the end of hostilities studies which had been carried on during the war years were completed and a fresh start was made on the continuation of the modernization program. Orders were placed for transit equipment--trolley coaches, motor coaches, and PCC cars. In 1945 a new transit franchise was negotiated with the cities served looking toward the completion of the program. Use of the transit service continued to increase as the Birmingham district further expanded and industry diversified. To meet this continued increase additional transit vehicles were ordered. Material progress was made on this program by the end of 1947, and it was expected that the entire program would be completed by the end of 1948 at a cost in excess of $6,000,000 for equipment and facilities. Completion of the program as

Page 458

outlined is dependent upon the company's ability to finance it. In the meantime the cost of all items entering into our operation has gone up; wage rates have increased just as have all other wage rates in the district and materials and supplies needed in the operation have also greatly increased in cost.

'Adequate over all revenues to meet all expenses, including the capital cost of the business are necessary. For, without such adequate revenues it will be extremely difficult, if not impossible, to obtain the needed money for expansion of the system to meet the demands of its customers. To enable the company to furnish the kind of transportation service which the public wants and is entitled to, it is imperative that the proposed transit fare schedule be made effective by April 15, as requested.'

'If the company does not move forward with the modernization program it risks desertion of use of its system by passengers who will find other means of transportation[254 Ala. 145] to do what they have to do and will go to private passenger automobiles or otherwise.

'The program, in any event, contemplates continuance of electric street railway operation for many years with high speed, quiet P. C. C. cars on the long haul lines.'

At the time of the hearing before the commission it was estimated that over $2,010,000 remaining cash expenditure would be necessary for that part of the program to be completed in 1948, a substantial part of which must be raised by financing. Cancellation of the company's outstanding orders for the equipment necessary for such modernization would mean that the company 'would not be able to finish the transit modernization program on the remaining lines that are due for modernization.' The company 'would not be able to make the substitutions' of trolley coaches, motor coaches and P. C. C. cars for old style equipment to be replaced in the modernization program, according to witness N. H. Hawkins, vice-president of the company.

Sections 52, 53 and 54, Title 48, Code of 1940, provide:

Section 52. 'The rates and charges for the services rendered and required shall be reasonable and just to both the utility and the public. Every utility shall be entitled to such just and reasonable rates as will enable it at all times to fully perform its duties to the public and will, under honest, efficient and economical management, earn a fair net return on the reasonable value of its property devoted to the public service. In any determination of the commission as to what constitutes such a fair return, the commission shall give due consideration, among other things, to the requirements of the business with respect to the utility under consideration, and the necessity, under honest, efficient and economical management of such utility, of enlarging plants, facilities and equipment of the utility under consideration, in order to provide that portion of the public served thereby with adequate service.'

Section 53. 'Whenever a utility desires to put in operation a new rate or service regulation or to change any existing rate or service regulation, it shall file with the commission a new schedule embodying the same, not less than thirty days prior to the time it desires to make the same effective; but the commission may, upon application of the utility, prescribe a less time within which the same may be made effective. In the absence of suspension or disapproval by the commission, as herein provided, the new rate or service regulation, embodied in any such new schedule shall become effective at the time specified in such schedule, subject however to the power of the commission at any time thereafter to take any action respecting the same authorized by this title.'

Section 54. 'To enable it to make such investigation, as, in its opinion, the public interest requires, the commission, in its discretion, for a period not exceeding sixty days may suspend the operation of any new schedule of rates or service regulations filed with the commission. Unless as a result of its investigation, the commission otherwise orders before the termination

Page 459

of such period of sixty days, such rate or service regulation shall thereupon become effective. The commission may make any order in the premises which it is authorized by any of the provisions of this title to make in any investigation or complaint, or on its own motion without complaint. Under this section the commission may act with respect to rates and service regulations of any utility prior to a valuation of the property of the utility affected.'

As we have already said, the company based the petition for increased rates in transit fares on the over-all picture of all three of its operations, i. e., electric service, steam heat service and transportation service. The propriety of such a consideration was not raised, and the commission made its order on that basis. We will so review it and in doing so lay to one side the question of whether the facts, not fully developed, justify such consideration.

We also note that this is not a valuation proceeding under section 319, Title 48, Code. The legislative intent, as expressed in section 54, supra, is that the [254 Ala. 146] commission may act with respect to rates and service regulations of any utility prior to a valuation, as contemplated by section 319, supra, of the property of the utility affected. But this does not mean that the mandatory provision of section 52, supra, to the effect that the utility is entitled to such just and reasonable rates as will enable it at all times to fully perform its duties to the public and will, under honest, efficient and economical management, earn a fair net return on...

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