United Fuel Gas Co. v. Public Service Commission

Miller, Judge: Tbe relief sought by tbe petitioner, tbe United Fuel Gas Company, is tbe indefinite suspension of tbe order of tbe Public Service Commission promulgated December 4, 1926, upon tbe petition of tbe Huntington Brick and Tile Company against the United Fuel Gas Company, and tbe dismissal of tbe former’s petition. In tbe proceeding in which that order was made, tbe Huntington Development and Gas Company intervened to protect its interests therein as a public service corporation. Tbe order was made by a divided commission, two of three concurring therein, one being against it. It required, for tbe reasons set forth in the written report to this court, that tbe United Fuel Gas Company should furnish tbe complainant, upon its compliance with tbe authorized rules and regulations of tbe utility, with a supply of natural gas at its plant at or near the city of Huntington. And it further ordered that upon tbe installation of such service by tbe United Fuel Gas Company, tbe intervenor, tbe Huntington Development and Gas Company, if it so desired, to discontinue its service to tbe complainant, tbe last being a polite but unwelcome invitation to an ignominious death, for without patrons its death would be assured. Historically, the United Fuel Gas Company was first upon tbe ground, before tbe advent of tbe Public Service Commission, with exclusive contracts with tbe industrial and private consumers to insure it against ruinious competition in tbe service of natural gas. Tbe Huntington Development and Gas Company was later, and after the Public Service Com *308 mission was created by law, organized by some of the industrial and private consumers and others who were ready and willing to breach their contracts with the United Fuel Gas Company, to enter the same field as a competitor, particularly for the supply of industrial gas, and was given a franchise for that purpose by the city of Huntington, and entered the field as a competitor, receiving the patronage of practically all consumers of industrial gas, at a reduced schedule of rates from those fixed by the United Fuel Gas Company, and as the undisputed evidence shows, forcing the latter out of the market for such industrial gas and much of the domestic gas, and at great expense to seek a market in Kentucky and Ohio cities. The Huntington Brick and Tile Company was and continues to be served by this competitive company, and it has made no complaint of that service. The supply of gas, it is admitted, is ample and persistent; and the only complaint lodged with the Public Service Commission was that the rates fixed by the commission for the United Fuel Gas Company were considerable lower than those fixed as reasonable and just by the commission for the Huntington Development and Gas Company, and that it desired the advantage of the lower rates of the former company. The defense to the application interposed by the United Fuel Gas Company was that it did not have the gas with which to serve the applicant as desired; that it would cost it to make the connections desired with its mains at least $750.00, and $550,000.00 to equip itself to supply gas to complainant, and about $1,160,000.00 to supply gas to all the consumers of the Huntington Development and Gas Company; and that then it would be able to furnish no better supply of gas than was being obtained from the other company. The commission was no doubt greatly influenced in reaching its conclusion by the facts elicited from officers of the United Fuel Gas Company respecting the present relationship of both utilities to the Columbia Gas and Electric Company, a holding company, now the owner of 51% of the capital stock of the United Fuel Gas Company, and 49% of the *309 stock of the Ohio Fuel Supply Company, and of a controlling interest in the Huntington Development and Gas Company: wherefore, it was considered that they might with right and justice relieve the one utility and cast its burdens on the other without substantial injury to the rights and interests of either company, which we think can hardly be justified upon any principles applicable to public utilities subject to its control and supervision. There is no community of interest, so far as the record shows, between the utilities involved here. The Columbia Gas and Electric Company was .not before the commission, and the commission’s order could not directly affect the rights of that company. And what has become of the rights of the minority stockholders of the utilities involved here? The directors are bound to administer the properties for the benefit of all stockholders, minority .as well as majority. But the principal ground for the relief granted seems to have been that the commission was without jurisdiction to deny the relief prayed against the United Fuel Gas Company, being one of the two utilities operating under franchises granted by the municipality; that being a public service corporation it is bound to supply all applicants regardless of all the circumstances and conditions relied on as a defense against such enforced service. These matters of defense relied on were presented by demurrer and answer of the United Fuel Gas Company, the petition of the inter-venor, and the demurrer and answer of the complainant thereto. There are no material facts in dispute. The facts established are: First: That complainant is now being served with a satisfactory supply of gas by the intervening petitioner, and that the United Fuel Gas Company would not be able to render any better service. Second: That petitioner made complaint, not because of any failure of service by the intervening company, but for the sole purpose of getting the service at a lower rate, to which the United Fuel Gas Company had been limited by the commission. *310 Third: That the applicant is not personally in a position to serve the complainant without the expenditure of large sums of money for increased supply and facilities, and that other industrial and domestic consumers, as evidenced by at least one application already filed, and other portended by the several groups of counsel who have intervened with briefs as amici curiae, will be demanding like service, and for no better reason, and with like result to the intervenor. The question of the commission’s jurisdiction to deny the relief sought by complainant will be first disposed of. Sections 4, 5, 10 and 11, of chapter 15-0 of the Code, give the commission almost unlimited power and authority to control the facilities, charges and services of all public service corporations and to hear the complaints of those entitled to the services. The only limitation upo'n this authority is that the requirements shall no.t be contrary to law, and that they shall be ‘ ‘ just and fair,” “just and reasonable,’ ’and “just and proper;” and the jurisdiction of this court to review the orders of the commission, as provided by section 16 of said chapter, and within the proper limitations which we have prescribed, is to “ decide the matter in controversy as may seem to be just and right.” We will not undertake to interpose our judgment against the finding of facts by the commission, nor to judge as to what is the better policy, if left to its discretion and judgment. It is very manifest from the state and federal statutes on the subject, that the principal purposes of all commission regulation of public service corporations is to require uniformity in rates, prevent unjust discrimination in rules and practices by them, and unnecessary duplications of plants and facilities, and unjust burdens upon the public resulting therefrom, or ruinous competition between persons and corporations employed in the public service; and certainly we can find no justification in statute law or judicial decisions, for such commissions, by means of regulatory orders, to sacrifice one utility in behalf of another. Commissions came into existence, not to destroy the law, but to fulfill. In the present case both gas companies were born of state and municipal action. Why should one of them be destroyed by *311 tire commission ? Its action is not one of foetal strangulation, but of death of the utility at the bands of its progenitor, by starvation, after reaching its majority. If, as is admitted, the only purpose of the complainant was to get cheaper gas, why was the application not made to the commission to compel the intervenor to reduce its rates? It entered the field as a competitor of the United Fuel Gas Company, and at a greatly reduced rate, and took away a large portion of its patrons. Why not reduce its rates if too high, and not burden the other utility with a service neither desired nor justly imposed upon it? The intervenor is fully equipped, to render the service, is in the field with, all necessary connections, and is ready and willing to serve its customers-Why duplicate the service to the ruination and destruction: of the intervenor and its property? The commission cam be conceded no such arbitrary authority. The courts and public utility commissions generally, construing statutes, deny such power. Supporting this proposition, we begin with the decision of the Supreme Court of the United States in People of the State of New York ex rel. Woodhaven Gaslight Company v. Public Service Commission of New York, 46 Sup. Court Rep. 83, holding that, the court will not substitute its judgment for that of the public service commission as to the necessity for extensions, but will consider advantages to the public from extension, its cost and effect on the company’s income as a whole, and reverse decisions of the commission as repugnant to the due process clause, if it appears that power to regulate was so used as to pass beyond the exercise of reasonable judgment and amount to infringement of rights of ownership, affirming the principle declared in New York & Queens Gas Company v. McCall, 245 U. S. 345. In the Woodhaven Company case, the company’s contention was not upheld, but in that case it did not appear that any other utility was. authorized to furnish gas there, and it was to be assumed that these communities were dependent on the defendant company for service. The case here is very different. Lack of such dependency fully appears. See, also, People ex rel. Woodhaven Gas Co. v. Deehan, *312 153 N. Y. 528. The same principle was applied by ns in United Fuel Gas Company v. Public Service Commission, 95 W. Va. 415. In Public Service Commission v. Loveland, (Colo.), P. U. R. 1924-E. 516, the public service company protested against the granting of a permit to the municipality for the erection’ by it of a municipal electric light plant. It was said, denying the permit: “The question before the commission is one not of local concern, but is a matter rather of general state policy, based on the proposition of the state in its powers of regulation in the interest of the public as a whole, which so regulates as that the duplication of similar utilities shall not-be permitted, as being against public interest.” The principal reason being as declared by the Public Service Commission of Maryland, that, “duplication of generating plants and distribution system increases the-capital investment upon which the rates must yield a return, decreases the area into which service may be extended, reduces the number of consumers who must pay the charges, and hence increases the pro rata share that each user must pay.” Re Mayor and Council of Hagerstown, P. U. R. 1924-B. 211. In that case the commission denied the municipality permission to build, maintain and operate for other than municipal purposes, an electric light plant in the city served by a private electric utility, and situated in a territory served by interconnected private utilities. In Fleetwood & Kutztown Electric Light, Heat & Power Company v. Topton Electric Light & Power Company, (Pa. Pub. Ser. Com.), P. U. R. 1924-A. 353, it was decided that: “An electric utility should not be permitted to invade the territory occupied by another utility when this would be detrimental to the public interest, especially when the equities of the situation are with the existing utility.” And so it was held also in Re Windber Telephone Company, (Pa. Pub. Ser. Com.), P. U. R. 1922-D. 46. In Re Roscoe Electric Electric Company, P. U. R. 1925-A. 176, the Wisconsin Railroad Commission held that a second electric utility should not be permitted to render service to persons already adequately supplied; and to the same effect it was decided by the same commission, In Re Boyceville Tele *313 phone Company, P. U. R. 1925-A. 398. In Re Wells R. Streeper, P. U. R. 1924-B. 392, the Utah Public Utilities Commission decided that the best interests of the general public are served by the stabilization of public service agencies operating in a given field rather than permitting them to be subjected to ruinous hazards of competition. In Ogle v. Home Telephone Company, P. U. R. 1924-D. 308, the Illinois Commerce Commission held that the telephone subscribers in a territory served and developed by the utility with which they were connected should not be transferred to the exchange of another company which would be compelled to make an additional investment and extension which would not pay a fair return, especially when this would result in an unjustifiable rate to subscribers. In United States v. New River Company, 265 U. S. 533, the Interstate Commerce Commission ordered that certain coal companies whose mines were located on two railroads and designated as joint mines, should in the distribution of coal cars be limited to their pro rata share according to the gross daily rating of their mines in like manner as single mines, according to rule 4, regardless of the fact that they had the natural advantage of being accessible to two railroads. The District Court enjoined the enforcement of this order. The Supreme Court reversed this decree, holding that the order of the commission was not so arbitrary and unreasonable as to transcend its power, nor operate to deprive the owners of the joint mines of the advantage of their location on two roads, or of their property without due process of law. The principle which controlled in that case, we conceive, is in some measure at least applicable here. The disposition of patrons of public utilities to reach out for duplicate service by others is opposed to the general principles controlling such public service. With reference to this subject, an able writer says: “The Commissions are constantly denying applications for extensions into occupied territory where the established company is furnishing adequate service at reasonable rates. It has even been held that a Commission cannot establish general rules and regulations governing the extension of water *314 mains in new localities, since the necessity of the extension must he determined from the facts of each case.” 1 Spurr’s Guiding Principles of Public Service Regulation, p. 118. In disposing of the case before us we appreciate the powers and authority conferred upon the Public Service Commission, and the limitations upon our own, recognized in former decisions, and not to be departed from here. We do not undertake to invade the right of the commission to investigate the facts nor to determine questions of expediency, nor what is best for the public interest, nor questions which should be regarded as final when determined by it. We have so held in a number of cases. United Fuel Gas Company v. Pub. Ser. Com., 73 W. Va. 751; Balto. & Ohio R. R. Co. v. Pub. Ser. Com., 99 W. Va. 670, 672; and cases cited; City of Huntington v. Pub. Ser. Com., 101 W. Va. 378. But in our opinion-the conclusion reached by the commission in this case is based first on a mistake of law, that it was powerless to deny the relief sought by complainant, for as we have pointed out it has ample authority conferred by statute to limit such relief to what is “just and reasonable,” “just and fair,” “just and proper,” “just and right,” and “not contrary to law. ’ ’ And as declared here in the cases cited, we may review the judgment of the commission when “based on a mistake of law, ’ ’ or when it acted arbitrarily and unjust without evidence to support it, or when its authority has been exercised in such an unreasonable manner as to cause it to be within the elementary rule that the substance and not the shadow has determined the validity of the exercise of the power, the rule declared also in Interstate Commerce Commission v. Union Pacific Railroad Company, 222 U. S. 541, 547, and followed by us in the cases already cited. And applying these rules we are clearly of the opinion that the order of the Public Service Commission complained of should be set aside, reversed and annulled, and the petition wholly dismissed; and we will finally dispose of the case in this way. Beversed and annulled; petition dismissed.