Page:Harvard Law Review Volume 32.djvu/560

524 524 HARVARD LAW REVIEW agance or inefficiency — has repeatedly been made by state com- missions.^^ One class of cases which seem or purport to lay down as a rule of law that rates need not always provide a reasonable return in- volve merely an encounter with the fact that rates cannot always produce such a return. An increase of rates will not always in- crease profits; if it would, there would presumably be no failures in business. It may and does occur that while a given rate will not produce a reasonable return, a higher rate, by cutting off custom, would produce a net return as small or even smaller. No rate, high or low, will earn some companies a fair return, for the simple reason that there is not a demand for their product in paying quantities and at a paying price. Where this condition exists, the enforcement of rates which produce an inadequate return involves no theory that the company is not entitled to an adequate return, whether because of a conflicting right in the public to a reasonable rate or for any other reason; it involves merely a recognition of the fact that to charge the consumer more in order that the company may earn less would benefit nobody. As the Wisconsin Railroad Commission has said: "If the rates are placed at too high a figure, consumption wiU fall off and the gain from the high rate charges" is "likely to be more than offset by losses in the number of takers." ^^ In another case the Wis- consin commission was obliged to fix rates at an unremunerative point for the reason that there was no remunerative point. Be- cause of the ease with which water could be got in its locality, the business of a water company was competitive, and customers simply would not pay a rate high enough to give the company a profit. The commission said: "The fact that consumers will not pay a rate which will enable the utility to earn what would ordinarily constitute a reasonable rate of return upon its property, may not affect the justice of such a charge or the legal right of the utility to charge such rates, but the fact that the utility has a legal right to a reasonable return upon its property will " Re Atlantic County Electric Co., P. U. R. 1918 B, 589, 591 (N. J. Board of Pub. Util. Commrs.); Re Charles Town Water Co., P. U. R. 1916 D, 725, 733 (W. Va. Pub. Serv. Com.). Cf. Salisbury v. Salisbury Lt., Ht. & Pwr. Co., P. U. R. 1918 E, 331, 335 (Md. Pub. Serv. Com.); San Diego Water Co. v. San Diego, 118 Cal. 556, 572, 50 Pac. 633 (1897), and note, 52 L. R. A. (n. s.) 51. ^ In re Manitowoc Gas Co., 3 Wis. R. R. Com. 163, 177 (1908).