State Pub. Utilities Comm'n ex rel. City of Springfield v. Springfield Gas & Elec. Co.

• Citation: 291 Ill. 209,125 N.E. 891
• Decision Date: 06 February 1920
• Docket Number: No. 13048.,13048.
• Court: Supreme Court of Illinois
• Parties: STATE PUBLIC UTILITIES COMMISSION ex rel. CITY OF SPRINGFIELD v. SPRINGFIELD GAS & ELECTRIC CO.

291 Ill. 209

125 N.E. 891

STATE PUBLIC UTILITIES COMMISSION ex rel. CITY OF SPRINGFIELD

v.SPRINGFIELD GAS & ELECTRIC CO.

No. 13048.

Supreme Court of Illinois.

Dec. 17, 1919.

Rehearing Denied Feb. 6, 1920.

Proceedings by the State Public Utilities Commission, on the relation of the City of Springfield, against the Springfield Gas & Electric Company. From judgment setting aside an order of the commission, relator City appeals.

Judgment modified and affirmed.Appeal from Circuit Court, Sangamon County; Norman A. Jones, judge.

Edward J. Brundage, Atty. Gen., and George T. Buckingham and Matthew Mills, both of Chicago, and Albert D. Rodenberg, of Springfield, for Utilities Commission.

Stevens & Herndon, of Springfield, for City of Springfield.

Frank J. Quinn, of Peoria, and Philip Barton Warren, of Springfield, for appellee.

THOMPSON, J.

This appeal is prosecuted to reverse the judgment of the circuit court of Sangamon county setting aside an order of the Public Utilities Commission entered March 9, 1916, in a proceeding begun January 12, 1914, by petition of the city of Springfield. The city complained that the rates charged for gas by appellee were unjust, and asked that the commission investigate and fix a just and reasonable rate. May 1, 1914, was fixed as the time to which valuation of the appellee's property should relate. During the two years this matter was before the commission 24 separate hearings were held, consuming 62 days of time. More than 10,000 pages of testimony were taken, and hundreds of exhibits were received as evidence. The net rates complained of were $1 a thousand cubic feet for the first 10,000 cubic feet of gas consumed a month, 90 cents for the next 10,000, 80 cents for the next 30,000, 75 cents for the next 50,000, 70 cents for the next 50,000, 65 cents for the next 50,000, and 60 cents for all over 200,000. The commission filed an opinion, in which it reached a decision establishing a net rate of 80 cents a thousand cubic feet for the first 10,000 cubic feet of gas consumed a month, 75 cents for the next 10,000, 70 cents for the next 30,000, 65 cents for the next 150,000, and 60 cents for all over 200,000. These rates were based on a 7 per cent. net return on a valuation of $800,000, the commission deciding that 50 cents a thousand was a reasonable operating expense. In setting aside the order of the commission the circuit court found that in fixing the value of the appellee's property for rate-making purposes the commission had wholly excluded an item of $250,000, known as ‘going value’; that the commission did not give appellee sufficient credit for a new million-foot gasholder; that the classification of rates discriminates between users because the rates fixed by the commission require that that part of the gas sold to the small consumer be sold at a loss, and that the profits of the company must all come from that part sold to the large consumer, which is only about one-third of the total amount of gas sold by appellee, and that the commission acted contrary to the manifest weight of the evidence in fixing the total operating expense at 50 cents a thousand.

The question presented for us to determine is whether the commission proceeded legally in establishing the rates, and whether its conclusion that the rates established are just and reasonable is supported by the evidence. In order to determine this question it is necessary to determine what elements shall be considered in fixing the value for rate-making purposes, what methods shall be used in determining the value of these several elements for this purpose, and what shall be considered a fair and reasonable return on the value so ascertained. It will also be necessary for us to determine to what extent this court will review the decisions of the Public Utilities Commission.

The law is settled in this state that the matter of rate regulation is essentially one of legislative control. The fixing of rates is not a judicial function, and the right to review the conclusion of the Legislature or administrative body, acting under authority delegated by the Legislature, is limited to determining whether or not the Legislature or the administrative body acted within the scope of its authority, or the order is without substantial foundation in the evidence, or a constitutional right of the utility has been infringed upon by fixing rates which are confiscatory or insufficient to pay the cost of operating expenses and give the utility a reasonable return on the present value of its property. Chicago, Milwaukee & St. Paul Railway Co. v. Public Utilities Com., 268 Ill. 49, 108 N. E. 729;Public Utilities Com. v. Chicago & West Towns Railway Co., 275 Ill. 555, 114 N. E. 325, Ann. Cas. 1917C, 50. The Public Utilities Act gives the courts power to determine whether or not evidence has been properly receivedor rejected, and whether there is sufficient evidence in the record to support the finding of the commission. If the order does not contravene any constitutional limitation and is within the constitutional and statutory authority of the commission and has a substantial basis in the evidence, it cannot be set aside by the courts. The court is without authority to set aside such an order unless it is against the manifest weight of the evidence. Public Utilities Com. v. Terminal Railroad Ass'n, 281, Ill. 181, 118 N. E. 71;Public Utilities Com. v. Toledo, St. Louis & Western Railroad Co., 286 Ill. 582, 122 N. E. 158;Chicago Bus Co. v. Chicago Stage Co., 287 Ill. 320, 122 N. E. 477;Public Utilities Com. v. Chicago, Milwaukee & St. Paul Railway Co., 287 Ill. 412, 122 N. E. 803. In People v. McCall, 219 N. Y. 84, 113 N. E. 795, Ann. Cas. 1916E, 1042, it was said:

‘The court has no power to substitute its own judgment of what is reasonable in place of the determination of the Public Service Commission, and it can only annul the order of the commission for the violation of some rule of law. The Public Service Commissions were created by the Legislature to perform very important functions in the community, namely, to regulate the great public service corporations of the state in the conduct of their business and compel those corporations adequately to discharge their duties to the public and not to exact therefor excessive charges. It was assumed, perhaps, by the Legislature that the members of the Public Service Commissions would acquire special knowledge of the matters intrusted to them by experience and study, and that when the plan of their creation was fully developed they would prove efficient instrumentalities for dealing with the complex problems presented by the activities of these great corporations. It was not intended that the courts should interfere with the commissions or review their determinations further than is necessary to keep them within the law and protect the constitutional rights of the corporations over which they were given control.’

This interpretation was approved by the Supreme Court of the United States in People v. McCall, 245 U. S. 345, 38 Sup. Ct. 122, 62 L. Ed. 337.

The statute governing and the practice before the state Public Utilities Commission with respect to rate cases are substantially the same as the statute and procedure governing the hearing of such cases before the United States Interstate Commerce Commission. Public Utilities Com. v. Terminal Railroad Ass'n, supra; Wishkah Boom Co. v. Greenwood Timber Co., 100 Wash. 472, 171 Pac. 234. In Interstate Commerce Com. v. Union Pacific Railroad Co., 222 U. S. 541, 32 Sup. Ct. 108, 56 L. Ed. 308, the Supreme Court of the United States said:

‘In determining these mixed questions of law and fact, the court confines itself to the ultimate question as to whether the commission acted within its power. It will not consider the expediency or wisdom of the order or whether, on like testimony, it would have made a similar ruling. ‘The findings of the commission are made by law prima facie true, and this court has ascribed to them the strength due to the judgments of a tribunal appointed by law and informed by experience.’ Illinois Central Railroad Co. v. Interstate Commerce Com., 206 U. S. 441 [27 Sup. Ct. 700, 51 L. Ed. 1128]. Its conclusion, of course, is subject to review, but when supported by evidence is accepted as final; not that its decision, involving, as it does, so many and such vast public interests, can be supported by a mere scintilla of proof, but the courts will not examine the facts further than to determine whether there was substantial evidence to sustain the order.'

In the Minnesota rate cases (Simpson v. Shepard, 230 U. S. 352, 33 Sup. Ct. 729, 57 L. Ed. 1511, 48 L. R. A. [N. S.] 1151, Ann. Cas. 1916A, 18), it is said:

‘The rate-making power is a legislative power, and necessarily implies a range of legislative discretion. We do not sit as a board of revision to substitute our judgment for that of the Legislature, or of the commission lawfully constituted by it, as to matters within the province of either.’

It is clear from the salary fixed for the commissioners and the great power vested in the commission by the PublicUtilities Act that the Legislature intended to create an office of dignity and great responsibility. It is therefore not to be expected that through fear of popular disfavor the commission will coyly toy with the situation. It sits to administer justice to individual and corporation, the weak, the strong, the poor, the wealthy, indifferently, fearing none and fawning on none. The notion that commissions of this kind should be closely restricted by the courts, and that justice in our day can only be had in courts, is not conducive to the best results. There is no reason why the members of the Public Utilities Commission of this state should not develop and establish a system of rules and precedents as wise and beneficial, within their sphere of action, as those established by the early common-law judges. All doubts as...