Public Utility Regulation by Los Angeles

• Author: Charles K. Mohler
• Published date: 01 May 1914
• DOI: 10.1177/000271621405300110
• Date: 01 May 1914
• Subject Matter: Articles

PUBLIC UTILITY REGULATION BY LOS ANGELES
BY CHARLES K. MOHLER,
Chief Engineer Railway Department, Board of Public Utilities,
Los Angeles, Cal.
California cities have enjoyed a large measure of home rule
granted by the state constitution. In this respect they are more
fortunate than most American cities. A still greater latitude for
the larger cities to work out their local problems is desirable. The
city of Los Angeles has generally made good use of the privileges it
enjoys in this respect. It has, however, in a measure fallen short of
the best requirements in creating a strong and well equipped depart-
ment for regulating public utilities.
Up to the time the board of public utilities was created by char-
ter amendment the rate-making and regulating power was vested
exclusively in the city council.
Board Created by Referendum
The Municipal League of Los Angeles started the movement in
1907 to secure a board of public utilities. After two years of agita-
tion the city attorney was instructed by the city council, then about
to retire, to prepare an ordinance to create a board. The city at-
torney’s draft was rejected by the council and another substituted
instead. This in turn did not meet with the approval of the Munic-
ipal League. The league prepared a substitute ordinance which was
passed as an initiative measure by popular vote at the ensuing elec-
tion by 16,626 for and 9,696 against.
Thus was first created a department of public utilities. On
December 20, 1909, the mayor appointed the three commissioners
to make up the board. The board was organized on December 27.
As constituted under the provisions of this ordinance the rate-making
powers of the board were limited to that given in the following lan-
guage : &dquo;To recommend to the City Council .... a sched-
ule of charges for the services specified .... &dquo;
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109
Board Created by Charter Amendment
On March 25, 1911, fourteen city charter amendments were
approved, article 15 of which provided for a department of public
utilities. Previous to this charter amendment, as indicated above,
the board could only recommend to the council the rates to be
charged.
In preparing the draft of the charter amendment creating a
board, the framers proposed to give it full power to fix rates subject
to review only by the courts. The council refused absolutely to
submit the amendment carrying that power for the board. They
insisted that rate making was a prerogative that should not be
given up by the council as it required their guardianship to stand
between the people and the power of the corporations.
Three commissioners constitute the board, with a term of office,
of four years. They are appointed by the mayor subject to confirma-
tion by the council. Up to March 1, 1912, all commissioners served
without pay. Since that time the president has been allowed a
salary of $3,600 a year and is expected to devote his entire time to
the work of the board. The commissioners are subject to the re-
call as are all city officials.
Powers and Duties of the Board
The city charter provides that the powers and duties of the
board of public utilities shall be as follows:
To make at such times as may be prescribed by ordinance a
thorough investigation into the affairs of all persons, firms or cor-
porations operating or maintaining water, electric lighting, power,
gas or telephone systems, or street railways, or interurban railroads,
or other public service utilities, in the city of Los Angeles. Such
data shall. include a valuation, a detailed statement of gross and
net earnings, expenses, capitalization and indebtedness thereof, and
such other matters as the board may deem proper, and also such
facts and figures as may be obtainable regarding the operation and
maintenance of similar systems and utilities in other municipalities.
To fix, subject to approval, change or modification by the council,
the rates to be charged and collected for the service mentioned, for
a period not less than one year, nor for a longer period than three
years.

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110
Any person interested in or affected by the rates specified in
any such resolution may ,file objections thereto. The council may,
upon any such petition, by a vote of two-thirds of its members,
order a rehearing of the rates objected to, and shall have the power to
finally fix such rates1 by approving, changing or modifying the same.
The a~rmative vote of two-thirds of the entire council shall be
necessary.
To investigate complaints against the service or charges of any
person, firm or corporation operating any public service utility in
the city.
To superintend the inspection of all public utilities operated,
maintained or furnished by persons, firma or...