Page:Harvard Law Review Volume 32.djvu/112

78 78 HARVARD LAW REVIEW strued to be prospective only as to that particular type of contract; '® and increases made in rates by the public utility pursuant to the deter- mination of the commission as to what is a just and reasonable rate become effective when filed and apply alike to contract and non-contract consumers. ^^ To determine when the contract rate becomes unlawful, we must consider the situation in states which have not yet adopted commis- sion regulation of public service rates, and in those jurisdictions where certain utilities are not governed so strictly in this respect by the public utilities act in force. The basic principles of the law of pubUc utilities require that rates must be just and reasonable in order to provide a fair return on the in- vestment,^* and to enable the utility to maintain a safe, adequate and efl&cient service. Therefore it seems clear that whenever the rates for the public service, though fixed by long termed contracts between the utility and its customers, become so low as to be unjust and unreasonable and to directly tend to disable the company from performing its public service obligations, as defined above, said rates are ipso facto unlawful and void, and it is the legal duty, not the privilege, of the public utility enterprise to discontinue performance of said contracts and to increase Pinney & Boyle Co. v. Los Angeles Gas & Electric Corporation, i68 Cal. 12, 141 Pac. 620 (1914); Portland Railway Light & Power Co. v. City of Portland, supra. For cases distinctly upholding power of commission, or other lawfully authorized administrative body, to reduce rates below those fixed by contract, see Rogers Park Water Co. v. Fergus, 180 U. S. 624 (1901); City of Chillicothe v. Logan Natural Gas & Fuel Co., 8 Ohio N. P. 88 (1901). Recent decisions to effect that power to establish just and reasonable rates includes power to increase them, in excess of the maximum fixed by contract or agreement. Collingswood Sewerage Co. v. Borough of CoUingswood, 102 Atl. 901 (N. J.); P. U. R. 1918 C, 261. People ex rel. New York & North Shore Traction Co. v. Public Service Commission of New York, Second District, 175 App. Div. 869, 162 N. Y. Supp. 405; P. U. R. 191 7 B, 957 (1916). See 31 Harv. L. Rev. 1168. And even though the contract rate was approved by the commission when made: The Golden Cycle Mining & Reduction Co. v. The Colorado Springs Light, Heat and Power Co. (Col. Pub. Util. Com.), 13 Rate Research, 131 (1918); Re Public Service Electric Co., P. U. R. 1918 E, 898. The unique case of a public utility company objecting that a minimimi rate was too rigid was presented in Economic Gas Co. v. City of Los Angeles, 168 Cal. 448, 143 Pac. 717 (1914)- The so-called beneficiary right of the consumer in public service rate-contracts between other parties which tend to redoimd to his benefit has been discussed in some recent cases: Borough of North Wildwood v. Board of PubUc Utility Com- missioners, 88 N. J. L. 81, 95 Atl. 749; P. U. R. 1916 B, 77 (1915). See CoUingswood Sewerage Co. v. Borough of Collingswood, supra. Cf. Natick-Framingham-Marl- boro Gas Petition (Mass. B'd Gas & Electric Light Comm'rs, May, 1918), 13 Rate Research, 200. " PubUc Service Electric Co. v. Board of PubUc UtiUty Commissioners and City of Plainfield, 88 N. J. L. 603, 96 Atl. 1013 (1916). See Salt Lake City v. Utah Light & Traction Co., supra. " Re PubUc Service Electric Co., supra; The Golden Cycle Mining & Reduction Co. V. The Colorado Springs Light, Heat & Power Co., supra. 1* Smyth V. Ames, 169 U. S. 466 (1897); KnoxviUe v. Knoxville Water Co., 212 U. S. I (1908); WiUcox V. Consolidated Gas Co., 212 U. S. 19 (1908); Cedar Rapids Gas Co. V. Cedar Rapids, 223 U. S. 655 (i9i2),afl5rming 144 la. 426 (1909); Mississippi Railroad Commission v. Mobile & Ohio R. Co., 244 U. S. 388; P. U. R. 1917 E, 791; DameU v. Edwards ei al. (Miss. R. Comm.), 244 U. S. 564 (1917). See State ex rel, Webster :;. Superior Court, 67 Wash. 37, 120 Pac. 861 (1915).