Public Utilities Commission of Rhode Island v. Attleboro Steam Electric Co

Decision Date03 January 1927
Docket NumberNo. 217,217
Citation273 U.S. 83,47 S.Ct. 294,71 L.Ed. 54
PartiesPUBLIC UTILITIES COMMISSION OF RHODE ISLAND et al. v. ATTLEBORO STEAM & ELECTRIC CO
CourtU.S. Supreme Court

Messrs. R. W. Boyden, of Boston, Mass., Arthur M. Allen and Charles P. Sisson, both of Providence, R. I., and Frank D. Comerford, of Boston, Mass., for petitioners.

Messrs. Robert G. Dodge, of Boston, Mass., Archibald C. Matteson, of Providence, R. I., and Harold S. Davis, of Boston, Mass., for respondent.

Mr. Justice SANFORD delivered the opinion of the Court.

This case involves the constitutional validity of an order of the Public Utilities Commission of Rhode Island putting into effect a schedule of prices applying to the sale of electric current in interstate commerce.

The Narragansett Electric Lighting Company is a Rhode Island corporation engaged in manufacturing electric current at its generating plant in the city of Providence and selling such current generally for light, heat and power. The Attleboro Steam & Electric Company is a Massachusetts corporation engaged in supplying electric current for public and private use in the city of Attleboro and its vicinity in that state.

In 1917 these companies entered into a contract by which the Narragansett Company agreed to sell, and the Attleboro Company to buy, for a period of twenty years, all the electricity required by the Attleboro Company for its own use and for sale in the city of Attleboro and the adjacent territory, at a specified basic rate; the current to be delivered by the Narragansett Company at the state line between Rhode Island and Massachusetts and carried over connecting transmission lines to the station of the Attleboro Company in Massachusetts, where it was to be metered. The Narragansett Company filed with the Public Utilities Commission of Rhode Island a schedule setting out the rate and general terms of the contract and was authorized by the Commission to grant the Attleboro Company the special rate therein shown; and the two companies then entered upon the performance of the contract. Current was thereafter supplied in accordance with its terms; and the generating plant of the Attleboro Company was dismantled.

In 1924 the Narragansett Company-having previously made an unsuccessful attempt to obtain an increase of the special rate to the Attleboro Company 1-filed with the Rhode Island Commission a new schedule, purporting to cancel the original schedule and establish an increased rate for electric current supplied, in specified minimum quantities, to electric lighting companies for their own use or sale to their customers and delivered either in Rhode Island or at the state line.

The Attleboro Company was in fact the only customer of the Narragansett Company to which this new schedule would apply.2

The Commission thereupon instituted an investigation as to the contract rate and the proposed rate. After a hearing at which both companies were represented, the Commission found that, owing principally to the increased cost of generating electricity, the Narragansett Company in rendering service to the Attleboro Company was suffering an operating loss, without any return on the investment devoted to such service, while the rates to its other customers yielded a fair return; that the contract rate was unreasonable and a continuance of service to the Attleboro Company under it would be detrimental to the general public welfare and prevent the Narragansett Company from performing its full duty to its other customers;3 and that the proposed rate was reasonable and would yield a fair return, and no more, for the service to the Attleboro Company. And the Commission thereupon made an order putting into effect the rate contained in the new schedule.

From this order the Attleboro Company prosecuted an appeal to the Supreme Court of Rhode Island which-considering only one of the various objections urged-held, on the authority of Missouri v. Kansas Gas Co., 265 U. S. 298, 44 S. Ct. 544, 68 L. Ed. 1027, that the order of the Commission imposed a direct burden on interstate commerce and was invalid because of conflict with the commerce clause of the Constitution; and entered a decree reversing the order and directing that the rate investigation be dismissed. 46 R. I. 496, 129 A. 495.

It is conceded, rightly, that the sale of electric current by the Narragansett Company to the Attleboro Company is a transaction in interstate commerce, notwithstanding the fact that the current is delivered at the state line. The transmission of electric current from one state to another, like that of gas, is interstate commerce, Coal & Coke Co. v. Pub. Serv. Comm., 84 W. Va. 662, 669, 100 S. E. 557, 7 A. L. R. 108, and its essential character is not affected by a passing of custody and title at the state boundary not arresting the continuous transmission to the intended destination. People's Gas Co. v. Pub. Serv. Comm., 270 U. S. 550, 554, 46 S. Ct. 371, 70 L. Ed. 726.

The petitioners contend, however, that the Rhode Island Commission cannot effectively exercise its power to regulate the rates for electricity furnished by the Narragansett Company to local consumers, without also regulating the rates for the other service which it furnishes; that if the Narragansett Company continues to furnish electricity to the Atteboro Company at a loss this will tend to increase the burden on the local consumers and impair the ability of the Narragansett Company to give them good service at reasonable prices; and that, therefore, the order of the Commission prescribing a reasonable rate for the interstate service to the Attleboro Company should be sustained as being essentially a local regulation, necessary to the protection of matters of local interest, and affecting interstate commerce only indirectly and incidentally. In support of this contention they rely chiefly upon Pennsylvania Gas Co. v. Pub. Serv. Com., 252 U. S. 23, 40 S. Ct. 279, 64 L. Ed. 434; and the controlling question presented is whether the present case comes within the rule of the Pennsylvania Gas Co. Case or that of the Kansas Gas Co. Case upon which the Attleboro Company relies.

In the Pennsylvania Gas Co. Case, the company transmitted natural gas by a main pipe line from the source of supply in Pennsylvania to a point of distribution in a city in New York, which it there subdivided and sold at retail to local consumers supplied from the main by pipes laid through the streets of the city. In holding that the New York Public Service Commission might regulate the rate charged to these consumers, the court said that while a state may not 'directly' regulate or burden interstate commerce, it may in some instances, until the subjectmatter is regulated by Congress, pass laws 'indirectly' affecting such commerce, when needed to protect or regulate matters of local interest; that the thing which the New York Commission had undertaken to regulate, while part of an interstate transmission, was 'local in its na- ture,' pertaining to the furnishing of gas to local consumers, and the service rendered to them was 'essentially local,' being similar to that of a local plant furnishing gas to consumers in a city; and that such 'local service' was not of the character which required general dn uniform regulation of rates by congressional action, even if the local rates might 'affect' the interstate business of the company.

In the Kansas Gas Co. Case the company, whose business was principally interstate, transported natural gas by continuous pipe lines from wells in Oklahoma and Kansas into Missouri, and there sold and delivered it to distributing companies, which then sold and delivered it to local consumers. In holding that the rate which the company charged for the gas sold to the distributing companies-those at which these companies sold to the local consumers not being involved-was not subject to regulation by the Public Utilities Commission of Missouri, the court said that, while in the absence of congressional action a state may generally enact laws of internal police, although they have an indirect effect upon interstate commerce, 'the commerce clause of the Constitution, of its own force, restrains the states from imposing direct burdens upon interstate commerce,' and a state enactment imposing such a 'direct burden' must fall, being a direct restraint of that which in the absence of federal regulation should be free, Minnesota Rate Cases, 230 U. S. 352, 396, 33 S. Ct. 729, 57 L. Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18; that the sale and delivery to the distributing companies was 'an inseparable part of a transaction in interstate commerce-not local but essentially national in character-and enforcement of a selling price in such a transaction places a direct burden upon such commerce inconsistent with that freedom of interstate trade which it was the purpose of the commerce clause of secure and perserve;' that in the Pennsylvania Gas Co. Case the decision rested on the...

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