Commission Regulation of Public Utilities: a Survey of Legislation
| Published date | 01 May 1914 |
| DOI | 10.1177/000271621405300101 |
| Date | 01 May 1914 |
| Author | I. Leo Sharfman |
| Subject Matter | Articles |
1
COMMISSION
REGULATION
OF
PUBLIC
UTILITIES:
A
SURVEY
OF
LEGISLATION
BY
I.
LEO
SHARFMAN,
A.B.,
LL.B.,
Junior
Professor
of
Political
Economy,
University
of
Michigan,
Ann
Arbor,
Mich.
I.
THE
SCOPE
OF
UTILITY
LEGISLATION
In
the
early
days
of
the
development
of
public
utility
properties
there
was
little
or
no
regulation
for
the
safeguarding
of
public
welfare.
In
order
to
afford
effective
stimulus
for
inventive
genius
and
busi-
ness
initiative
it
was
necessary
to
provide
a
free
field
for
private
enterprise,
unhampered
by
legislative
restriction.
The
technique
of
utility
operation,
in
which
so
high
a
degree
of
efficiency
has
now
been
attained,
had
yet
to
be
worked
out;
and
the
permanent
necessity
and
financial
practicability
of
the
utility
services,
which
have
now
been
recognized
beyond
recall,
had
yet
to
be
established.
In
these
monop-
olistic
industries,
as
in
private
business,
public
welfare
counseled
a
policy
of
laissez-faire.
In
spite
of
their
monopolistic
character,
it
was
felt
that
the
public
service
industries,
in
order
to
be
ready
for
public
control
no
less
than
for
public
ownership,
must
first
have
reached
a
stage
of
maturity
consistent
with
the
lessened
opportunities
for
private
gain
necessarily
involved
in
a
system
of
effective
public
regulation.
During
the
first
half
of
the
nineteenth
century,
therefore,
franchise
privileges
were
freely
granted
by
the
state
legislatures.
These
fran-
chises
extended
for
long
periods
and
often
in
perpetuity.
As
a
re-
sult,
the
privileges
essential
for
supplying
the
future,
as
well
as
the
then-existing,
needs
of
the
city
were
given
to
private
corporations
with
little
thought
of
immediate
restriction
or
of
reservation
of
power
for
future
regulation.
The
public
service
franchise
was
looked
upon
as
a
private
contract
between
the
state
and
the
grantee
corporation,
instead
of
as
a
permit
by
the
sovereign
for
the
performance
by
pri-
vate
individuals
or
corporations
of
functions
largely
public
in
their
nature.
Regulation
by
the
states
through
administrative
commissions
of
the
type
that
prevails
today
is
very
recent.
The
Railroad
Com-
2
mission
of
Wisconsin
was
not
established
until
1905
and
it
was
not
given
jurisdiction
over
utilities
other
than
railroads,
express
com-
panies
and
telegraph
companies
till
1907.
The
public
service
com-
missions
of
New
York
were
not
established
till
1907.
The
Wisconsin
and
New
York
commissions
have
served,
to
a
large
degree,
as
models
for
the
numerous
administrative
bodies
for
the
regulation
of
public
utilities
that
have
sprung
into
being
since
1907;
and
the
Wisconsin
and
New
York
laws
have
been
the
basis
of
a
large
mass
of
the
public
utility
legislation
recently
enacted.
These
laws
substitute
adminis-
trative
regulation
for
direct
legislative
control.
Large
powers
are
entrusted
to
special
boards
or
commissions
whereby
they
are
enabled
to
keep
themselves
constantly
and
thoroughly
informed
of
the
prac-
tical
operation
as
well
as
of
the
general
policy
of
public
service
cor-
porations,
on
the
basis
of
which
knowledge
and
information
they
exercise
such
supervision
over
these
utilities
as
may
tend
to
har-
monize
the
private
interests
of
the
owners
and
the
general
welfare
of
the
public.
With
but
few
exceptions,
present-day
utility
regula-
tion
is
legislative
in
character
only
in
the
sense
that
the
extent
of
commission
jurisdiction
and
power
is
determined
by
statutory
enactment.
Now
a
complete
r6sum6
of
utility
legislation
would
include,
in
addition
to
the
so-called
commission
laws,
all
special
franchises
and
charters,
with
such
restrictions
as
they
contain,
and
all
direct
legis-
lation
imposing
duties
upon
utilities
for
the
enforcement
of
which
no
provision
is
made.
A
comprehensive
survey
of
commission
legisla-
tion
even
would
include
many
laws
whereby
duties
are
imposed
upon
utilities
by
direct
legislative
enactment
with
power
of
enforcement
vested
in
commissions.
This
paper
deals
almost
exclusively
with
commission
laws.
Emphasis
is
here
placed
upon
the
organization
and
powers
of
commissions
rather
than
upon
the
duties
of
utilities.
Moreover,
the
discussion
is
limited
to
state
commissions.
Since
the
authority
of
the
Interstate
Commerce
Commission
extends
primarily,
if
not
entirely,
to
interstate
business,
it is
given
no
consideration
here,
in
spite
of
its
large
influence
upon
state
commission
legislation.
Municipal
commissions
are
likewise
beyond
the
scope
of
this
paper.
Although
there
has
been
considerable
American
experience
with
municipal
commissions,
usually
deriving
their
direct
authority
from
municipalities
and
exercising
jurisdiction
over
utilities
whose
business
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