Case ID: ad_171/html/0580-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Smith, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The People of the State of New York ex rel. New York and Queens Gas Company, Relator, v. Edward E. McCall and Others, Commissioners, Constituting the Public Service Commission of the State of New York for the First District, Respondents.
    First Department,
    March 3, 1916.
    Gas and electricity— review of order of Public Service Commission that gas company extend its service — when order for extension unreasonable.
    Under section 66, subdivision 2, of the Public Service Commissions Law, giving the Commission authority “ To order reasonable improvements and extensions of the works, * * * apparatus and property of gas corporations, electrical corporations and municipalities,” it remains for the court to determine, upon the review of an order by the Commission that a gas company extend its service, whether such extension is reasonable. This question must be considered in the view, first, of the needs of the community, and, second, of the burdens placed upon the company.
    Where, upon the review of an order by the Commission that a gas company extend it mains and service, it appears that at the place sought to be supplied the houses already built have electricity, and that the only requirement for gas is for cooking and heating in the summer months; that none of the houses have been piped for gas; .that for a distance of five miles the mains will have to be changed, and that for a mile there will be no consumers; that the company must borrow money for the new construction, and that the returns from the new customers will not pay one-half the interest on the loan, the order of extension must be held to be unreasonable.
    Certiorari issued out of the Supreme Court and attested on the 30th day of April, 1915, directed to Edward E. McCall and others, constituting the Public Service Commission of the State of New York for the First District, commanding them to certify and return to the office of the clerk of the county of New York all and singular their proceedings had in requiring the relator to extend its mains and services to Douglaston, including Douglas Manor.
    
      John A. Qarver, for the relator.
    
      Arthur Du Bois, for the respondents.
    
      William H. Van Steenbergh, for Douglaston Civic Association.
   Smith, J.:

The New York and Queens Gas Company has its headquarters and manufacturing plant in Flushing, L. I., and is at present engaged in supplying that town and the adjoining town of Bayside with gas. East of Bayside a marsh bisected by a navigable creek extends for somewhat over a mile, and east of this marsh is situated the town of Douglaston including Douglas Manor. The order of the Public Service Commission reads in part as follows:

“ Ordered that the New York and Queens Gas Company be and hereby is directed to extend its gas mains and services in such a manner as may be required reasonably to serve with gas that community lying in the Third Ward of the Borough of Queens, City of New York and known as Douglaston, including Douglas Manor.”

It is the propriety of' this order that it is sought to have reviewed in this proceeding.

The Public Service Commissions Law (Consol. Laws, chap. 48 [Laws of 1910, chap. 480], § 66, subd. 2) empowers the Commission : “To order reasonable improvements and extensions of the works, wires, poles, lines, conduits, ducts and other reasonable devices, apparatus and property of gas corporations, electrical corporations and municipalities.”

We have no doubt that under this law the question remains for the court to determine, upon the review of the determination of the Public Service Commission, whether the extension ordered was a reasonable extension. This question must be considered in the aspect, first, of the needs of the community, and, second, of the burden placed upon the company.

First. Douglaston and Douglas Manor have about 230 houses built. The place is supplied with electric light, so that the gas in question will not be required for illuminating purposes but only for the purpose of cooking and possibly for heating during the summer months. None of the houses which have been erected are piped for gas, indicating that it was not the expectation of those who built the same that gas would be furnished. If this gas were needed for illuminating purposes as well as for heating and cooking, the necessity would be much more imperative, and an entirely different question might be presented.

Second. For a distance of five miles from the gas house in Flushing to the end of the main at Bayside the mains of the company would have to be changed and six-inch pipes substituted for four-inch pipes which now exist. For a mile from the end of the main in Bayside there will be no consumers of gas, as the mains pass through marsh lands where there are no residences. From the records of the company it appears that for the gas furnished the manufacturing and distributing expenses amount to seventy-two and seven-tenths cents per 1,000 feet. This does not include any interest upon the moneys invested, and the company has never declared a dividend. This leaves twenty-seven and three-tenths cents per 1,000 feet upon the price of $1 per 1,000 feet which the company is authorized to charge. A very liberal estimate of the gas which will be consumed in the houses already constructed in Douglaston, Douglas Manor and Little Neck has been given as 6,075,000 cubic feet. Upon this estimate at twenty-seven and three-tenths cents per 1,000 there will be an income to the company over and above the cost of manufacturing and distributing of about $1,660 per year. This, as before said, allows nothing for interest upon bonds or dividends upon stock. The stock of this company is presumably all taken. It has a bonded debt of $800,000, and presumably it must borrow the moneys necessary for the new construction required. Those moneys I am satisfied would amount to between $60,000 and $70,000. Assuming, for the argument, the smaller amount, the interest upon $60,000 at five per cent amounts to $3,000. This would only be about one-half repaid by the $1,660, the return from the gas furnished at Douglaston. The balance, or about $1,500, would be a burden upon the company which must be paid out of other income from other customers. It is undoubtedly true that it is not necessary that the first return from an extension should be large, provided there is reasonable ground to foresee that within a reasonable "time the return from the investment is going to be large enough to cover the expenses and the interest upon the moneys required to make the same. The promise here is so remote that it does not seem to us reasonable to require this company to make this expenditure for this construction, in view of the fact that the only requirement for gas is for cooking and heating in the summer months, and that the place is already supplied with electricity for illumination.

We are not unmindful of the obligations owing by a public service corporation to serve well the entire community through which it has a franchise, hut the statute has defined the extent of its obligation as requiring a reasonable effort so to do. Our attention has been called to the statement of the Commissioners at the time that this determination was made as to the representations made by the Consolidated Gas Company before the Commission when application was made by that company for permission to buy the stock of the relator. Whatever inference might be drawn from those statements as to the reasons which influenced the Commissioners in making the determination hereunder reviewed, we are of the opinion that the facts presented by the record do not present a reasonable justification for the order made.

The determination of the Commission must, therefore, be annulled, without costs, and the application of the petitioners denied.

Clarke, P. J., Dowling, Page and Davis, JJ., concurred.

Determination annulled, without costs, and application of petitioners denied. Order to be settled on notice.