Alpha Portland Cement Co. v. Public Service Commission

84 Pa. Super. 255 | Pa. Super. Ct. | 1924

Argued October 6, 1924. The Alpha Portland Cement Company, the Nazareth Cement Company, the Penn-Allen Cement Company, and the Coplay Cement Manufacturing Company filed complaints with the Public Service Commission against an increase in rates proposed to be charged them by the Lehigh Navigation and Electric Company for electric power service under its schedule P 2, alleging that the new rates were excessive, unreasonable and discriminatory. Shortly thereafter in September, 1919, the Lehigh Navigation and Electric Company was merged with other companies into the Lehigh Valley Light and Power Company, which filed an answer to the complaints. This merger was a step in a more comprehensive plan which culminated in June, 1920, in the merger of the Lehigh Valley Light and Power Company and other companies into the Pennsylvania Power and Light Company, which became the respondent in the proceedings. In the meantime schedule P 18, filed by the Pennsylvania Power and Light Company, provided for a further increase in the rates to be charged to the complainants. This led to the filing of a second group of complaints containing similar allegations. Both sets of complaints were filed before the effective dates of the increase. The proceedings were consolidated and, after numerous hearings, the commission made an order dismissing the complaints. These four appeals are from that order.

The complaints raised all of the usual questions involved in rate cases, in addition to that of discrimination — in fact the latter charge was apparently an afterthought, for it was introduced by an amendment after the hearings had proceeded for nearly a year. Without making any allowance for cost of development or for going concern value, the commission found that the rates charged by the respondent for services to the cement companies had not yielded any unreasonable return and would not do so in the near future, unless there should be marked changes in cost levels and in operating conditions; that the cement companies "have not paid more than a reasonable return on the cost of the property serving them"; that the charge of unjust discrimination against the cement companies and in favor of three other consumers, namely, the Lehigh Coal and Navigation Company, the Lehigh Valley Transit Company, and the Bethlehem Steel Company, hereinafter referred to as Coal Company, Transit Company and Steel Company, respectively, could not be sustained; that the power sold to the Transit Company is off peak power and the margin of profit received from it at the rate charged was substantial and fair for that character of service; that the circumstances under which the Steel Company demanded and received power, including an arrangement under which the Steel Company at times furnished power to the Power Company, rendered the rate charged to the Steel Company a reasonable one; that while the rates charged to the Coal Company have not yielded an appreciable return on the property involved, whatever preference that company received was not prejudicial to the complainants; that no benefits would accrue to them or to the other customers of the respondent if the commission undertook a revision of the charges for services to the Coal Company, and that the effect of such a revision would probably result in a revision upwards of the charges for other services and therefore would be adverse to the complainants and to the other customers of the Power Company.

All of the many questions raised before the commission have been eliminated in this appeal except one, counsel for appellants stating in their brief that the only issue which they wish to raise here is whether, in view of the rates charged to the Coal Company, the Transit Company and the Steel Company, the rates charged to the Cement Companies are in effect unjustly discriminatory. It is conceded that the rates charged to the appellants were just and reasonable in that they afforded to the utility no more than the cost to it of rendering power service, including as part of the cost a fair return on the property devoted to that service. It is conceded also that the rates required appellants to pay no more than the service is reasonably worth. The commission found the facts which compel these concessions, and no error is alleged in the findings.

The sole ground upon which the appellants base the charge of unjust discrimination is that power service is being rendered to three other patrons, the Coal Company, the Transit Company, and the Steel Company at rates relatively lower, and relatively less profitable than those charged appellants. Conceding for present purposes that this be true, the question arises whether that fact alone amounts to such a discrimination against the appellants as entitles them to the relief sought.

The affirmative statement of the powers of public service corporations with respect to their rates is contained in section 1, of article III, of the Public Service Company Law, which provides that it shall be lawful for every public service company —

"(a) To demand, collect and receive fair, just and reasonable prices, rates, fares, tolls, charges, or other compensation for each and every service rendered or to be rendered by it to any person or corporation, or to any other public service company with whom it interchanges facilities and service."

"(b) To employ, in the conduct and management of its business, suitable and reasonable classifications of its service, patrons and rates; and such classification may, in any proper case, take into account the nature of, the use, and quantity used, the time when used, the purpose for which used, the kind, bulk, value and facility of handling of commodities, and any other reasonable consideration."

The prohibitions upon discrimination are contained in section 8, of article III, which provides that it shall be unlawful for any public service company —

"(a) To charge, demand, collect or receive, directly or indirectly, by any special rate, rebate, drawback, abatement, or other device whatsoever, from any person or corporation, for any service rendered or to be rendered, a greater or less compensation or sum than it shall demand, charge, collect, or receive from any other person or corporation for a like and contemporaneous service under substantially similar circumstances and conditions."

"(b) To make or give any undue or unreasonable preference or advantage in favor of or to any person or corporation or any locality, or any particular kind or description of traffic or service, in any respect whatsoever; or to subject any particular person or corporation or locality, or any particular kind or description of traffic or service, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever."

These provisions of the statute are substantially declarations of the common law as it had been announced by the courts of this State. They are very similar, both in language and effect, to the constitutional and statutory provisions relating to common carriers considered in Hoover v. Penna. R.R., 156 Pa. 220, and almost identical with sections 2 and 3, of the act to regulate commerce, which contains the federal law on the same subject. The Public Service Company Law expressly repealed the Act of June 4, 1883, P.L. 72, which was passed for the purpose of enforcing article XVII, of section 3, of our Constitution, which provides against undue or unreasonable discrimination in charges for, or in facilities for transportation of freight or passengers within the State. Section 8, of article III, of the act inhibits unreasonable discrimination in all forms of public service. It was decided in Hoover v. Penna. R.R., cited, that the Act of 1883, did not prohibit all discrimination in charges, but only discrimination which was undue and unreasonable; and that the prohibited discrimination was further limited by the consideration that it must be for a like service, from the same place, upon like conditions and under similar circumstances. Mr. Justice GREEN said: "If therefore the discrimination, in a given case, is upon conditions which are not like, and circumstances which are not similar, the act is inapplicable, and its penalties are not incurred." In that case the different circumstances and conditions which were held to justify the differences in freight charges to a manufacturing company and to a retail coal dealer were the following: (a) the former was under contractual obligation to ship a certain number of tons per day which the latter was not; (b) the respective shippers were "not competitors in the same business, and a lower rate to the manufacturer would not, under the contract, affect the business of the plaintiffs injuriously." It was held that in the circumstances the lower rate for hauling coal to the manufacturer "was neither an undue nor an unreasonable discrimination against the plaintiffs, because it was an immaterial circumstance as affecting their business." In P. L.E.R.R. Co. v. Colonial Steel Co., 251 Pa. 460 (1916), the Hoover case is cited with approval, Chief Justice BROWN stating that "the policy of the law of this State now was its policy when that case was decided, and we now follow it." Prior to the enactment of the Public Service Company Law, the question of the right of a light, heat and power company to make a discrimination in the rates charged to its customers was before this court in Steinman v. Edison E. Illum. Co., 43 Pa. Super. 77. We held that such a corporation may classify its patrons under proper conditions and that the principles of classification in the conduct of business is as old as trade itself and familiar to everyone engaged in any branch of commerce. The principles announced in the Hoover case were applied to an electric company which, of course, was not subject to the provisions of the Act of 1883. The same principle was applied in Mercur v. Media Electric L. P. Co., 19 Pa. Super. 519. So that even prior to the enactment of the Public Service Company Law, both of the appellate courts of this State recognized the right of a public service company to charge different rates for its service rendered under different conditions, and held that the difference in rates is not unlawful as applied to different classes of patrons where the business interests of the company are responsible for the establishment of different rates, and where the lower rate to one patron does not injuriously affect the other patron in the conduct of his business. The decisions of our own courts are in harmony with what had been decided by the Supreme Court of the United States in construing the Interstate Commerce Act. (See Cincinnati, etc. Ry. Co. v. Interstate Commerce Commission, 162 U.S. 184.) The Public Service Company Law removes all doubt which might have existed under the decisions in this Commonwealth as to the considerations which may govern the utility in classifying its service, patrons and rates. The act expressly authorizes the classifications of patrons and rates, as well as service, and in making such classification, the taking into account of "any other reasonable consideration." The determination of what is and what is not reasonable is left primarily with the utilities in the exercise of their power "generally to manage their important interests upon the same principles which are regarded as sound, and adopted in other trades and pursuits": Cincinnati, etc. Ry. Co. v. Interstate Commerce Commission, cited. The action of the utility is subject to the supervision of the Public Service Commission, the question before the commission in such a case being largely of an administrative character which the commission is peculiarly qualified to decide. The basic principles of law which were applied by the Supreme Court in the Hoover case in the construction of the Act of 1883 are applicable under section 8 of article III of the Public Service Company Law. It contains no requirement that rates for different classes of service be either uniform or equal, or even equally profitable to the utility. The requirement is merely that rates for one class of service shall not be unreasonably prejudicial and disadvantageous to a patron in any other class of service. Before a rate can be declared unduly preferential and therefore unlawful, it is essential that there be not only an advantage to one, but a resulting injury to another. Such an injury may arise from collecting from one more than a reasonable rate to him in order to make up for inadequate rates charged to another, or because of a lower rate to one of two patrons who are competitors in business. There must be an advantage to one at the expense of the other. As we said in N.Y.C. H.R.R. Co. v. Deercreek Lumber Co., 49 Pa. Super. 453,460: "The very term discriminate presupposes some person or persons, natural or legal, who are treated to their detriment." The commission having found on competent and substantial evidence (and that finding is not questioned here) that the rates charged to the appellants have not been more than is reasonable to them, that they have been given the same rate as has been charged to others in their class, and that they have suffered no prejudice or disadvantage on account of the relatively lower rates charged to other classes of patrons, we cannot say that there was any undue or unreasonable prejudice or discrimination against them. They have no better standing to secure relief than had the plaintiffs in the Hoover case. No question of confiscation being involved, they are not entitled to our independent judgment as to matters of fact: Middletown Boro. v. P.S.C., 81 Pa. Super. 289. We have not deemed it necessary to refer to the evidence upon which the commission based its findings of fact. Our examination of it has satisfied us that there was competent and substantial evidence to support the findings, and that the order made was reasonable.

The order of the commission is affirmed and the appeal dismissed at the cost of appellants.