West Ohio Gas Co v. Public Utilities Commission of Ohio

• Decision Date: 07 January 1935
• Docket Number: No. 213,213
• Citation: 55 S.Ct. 324,79 L.Ed. 773,294 U.S. 79
• Parties: WEST OHIO GAS CO. v. PUBLIC UTILITIES COMMISSION OF OHIO
• Court: U.S. Supreme Court

294 U.S. 79

55 S.Ct. 324

79 L.Ed. 773

WEST OHIO GAS CO.

v PUBLIC UTILITIES COMMISSION OF OHIO.

No. 213.

Submitted Dec. 7, 1934.

Decided Jan. 7, 1935.

Messrs. Edmond W. Hebel, of Indianapolis, Ind., Harry O. Bentley, of Lima, Ohio, and Charles C. Marshall, of Columbus, Ohio, for appellant.

Messrs. John W. Bricker and Donald C. Power, both of Columbus, Ohio, for appellee.

Mr. Justice CARDOZO delivered the opinion of the Court.

The rates to be charged by the appellant in Kenton, Ohio, are the subject-matter of this controversy.

An ordinance adopted by the city council of Kenton on July 16, 1929, effective on August 16, prescribed a schedule of rates within the city for a period of two years. The appellant, West Ohio Gas Company, filed a complaint with the Public Utilities Commission, maintaining its existing schedule for the time being and giving bond as it had done in the Lima Case (West Ohio Gas Co. v. Public Utilities Comm.) (No. 212), 294 U.S. 63, 55 S.Ct. 316, 79 L.Ed. 761, for the return of the excess, if any. The commission fixed the value of the property in Kenton for the purpose of a rate base at $189,856.56. The company acquiesced in the valuation, which for the purpose of this review must be accepted as correct. Thereafter, on March 10, 1933, the commission made a final order determining the ordinance schedule to be unjust and unreasonable, and establishing a new schedule, which was to be effective during the period of the ordinance (August 16, 1929, to August 16, 1931) and a year and a half afterwards (i.e., till February 16, 1933). Collections during the course of the proceeding in excess of the new rates were to be refunded to consumers. A motion for a rehearing having been denied, the company filed a petition in error with the Supreme Court of Ohio, asserting that the order of the commission was in contravention of the limitations of the Fourteenth Amendment. The Supreme Court of Ohio affirmed, writing a single opinion here and in the Lima Case. 128 Ohio St. 301, 191 N.E. 105. An appeal to this court followed.

The intention of the commission was to establish a schedule of charges that would enable the appellant to receive a return of 6 per cent. upon the value of the Kenton property. To accomplish that result there was need of a net income of $11,391.39. As the result of mathematical errors, the commission arrived at the conclusion that income in that amount had been earned in 1929, the year chosen as a standard. In fact the rate of return for that year was only 4.92 per cent., even if all contested rulings in respect of points of law are assumed to be correct.

Errors of computation such as these are far from exhausting the list of defects in these proceedings. There are others more clearly vital. To ascertain the gross income and the operating expenses the commission confined itself to the business in 1929, predicting on that basis the income and expenses to be looked for in the years to follow. Besides the figures for 1929, there was evidence, full and unchallenged, as to the actual revenue and outlay for 1930 and 1931. The commission refused to give any heed to that evidence in fixing the new rates. It did this in the face of a petition for rehearing which sharply brought to its attention the effect of such exclusion. If heed had been given to the later years, the return for 1930 would have been seen to be 4.23 per cent., and for 1931 only 3.68 per cent., all this, moreover, on the assumption that further error was not committed in the classification or disallowance of operating charges. If such error existed, the return would be even lower.

We think the adoption of a single year as an exclusive...