New-York tribune., 1907-11-11
IMPORTANT ?. S. RULING
LOCKPORT CASE OPINION
Upstate Board Won't Apmopc CON-
sclidation zith "WGter."

Albany. Nov. 1o.-The Public Service ,-,:
Il TIE 81 District made public to-ujg,, . -. "
which sets forth its attitude on tb - -,
toward competition in publ service facitiog ttlo
g CITY. and on the other, toward what if regards
as attempts 40 eNale ihe prohibition by the new pub
Hc service commission law Of imitation ~ .,.on,
cf securities IN the merger of public service cor
Ioratons. The decision is in the ,oa+te- % e.
proposed purchase by new corporation the Tock
port Light Heat and Power Company Of the Lock
lerl ga anu h"ecric Company and the Economy
Light Fuel and Power COMPANY Of Iocknor+
The decision. even while admitting thar ,to -
posed purchase does not technically constitute n
merger within the meaning Of the law forbids the
"sw company 10 issue securities for a captslIza-
ton above 10000. equivalent to the total tissue %
The two old companies The new cor,r.,,, Iso1
10 issue stock and bonds to a total of 81 200 noo
Tie Nouhunous decision given out tonight also
makes II plain that the raising Of the price Of gas
and electricity by the sitting OF comne.;tion
through the combining Of competitive cornnanios
EiH nos be permitted Tho Economy T5rht t111eI
and Power Company has been engaged in q hitter
var in the city OF ,Lockport. as a result of which
iHN price for electric power in that city is lower
II IS said than in any other place in the country
and Tho price for electric light lower than IN 90
Ior cont OF the cities OF the United States
recently the Dockport Gas and Electric LScht
company was formed 10 purchase the two rival
companies ana TO consolidate the warning interests
IHe merger clause OF the new law prohibits the
issue of securities of coruoration formed h, the
combination Of two % more existing corporations
r. an amount exceeding the total Of those of the
corporations merged The Lockport Light Heat
and Power Company. in applying for authority n
go business, asserted that it was not merger but
no7v corporation The application was opposed
hv the city Of I,ockpoTt and by The Attorney Cen
'ral The city contended that the company pro
posed 10 increase the capitalization exceeding that
o The TWO companies purchased and that the elirni-
nation of competition would result in the raising Of
ta0 price OF gas and electricity The Attorney Cen
0ra' opposed II on the ground thar the proceedings
contemplated The formation OF q monopoly in con
'-aTention Of the statutes Of the state Hearings
we're held and expert sent to L,oc1port TO
ascertain the actual value IF the two old companies
j vas found that the stock and bonds Of the two
companies amounted 70 S7o0Doo. The commission
SAYS in its decision:
technically speaking. the case in question is
neither q consolidation n merger but the prr-
chase by newly formed corporation of the prop-
win be observed also that the prohibition of tho
siaille Is confined TO an increase in a merger
ZION does not expressly apply TO increase OF bond
ovver Is Terfect ~ cear The roison to SC'I1S; "a I
- g i1 - qegnea ] 10 PFeEept m those srge in
ooTn9aned the consoidation of public service cor
gorations in She past and which have imposed
heavy burdens upon municipalities in the way of
inadequate service and excessive prices through the
EroeaEor ny tnF. oYercapitallzed company TO earn
interest and dividends the excessive issue of
statute can be evaded simply BY efectinE consoIida
Ton in fact through the form OF newly organized
consolidation of the existing companies or If it can
unchanged, bur imposing the same 5Irden upon Tie
community through a greatly increased issue Of
intended purpose We think it quite clear that the
~ efecfTic co17Teras in a 1o,,H+ 40 - I,r1e gas
nitted TO sell out their property and franchises
such sale unless the total capitalization Of the
bonds issued IN exchange for the securities Of the
old companies. IS kept down not to exceed
the total capitalization Of the vendor companies
In taking up the objection raised by the city that
the price Of electricity would raised as result
Of the end Of competition the commission points
that this IS likely prove a test case. II
in part:
A business which supplies 10 a community pub
Ic utility like gas electricity for light power
two companies engaged in the same business cannot
he expected 70 prevail permanently. Experience
,1sitfy enqsqad IN the same bnsIness while active
period. the companies generally find 1t to their in
or division Of territorv and in the great majority
Of cases the two companies either become one or
The control OF both passes into the hands of the
ond any possibility Of successful contradiction that
nishing such public utilities to community can, as
general rule, be given by one corporation than by
several and that this can be done With the use OF
less capital.
such duplication It says further. involves public
Inconvenience il the erection of unnecessary and
unsighfly pole lines, tearing up Of pavements ana
50 Oh and. while temporary benefit may result from
competition the usual result is eventual consolida-
ton poor service and enhanced prices, the latter
IN an effort make the city and its Inhabitants
bear the burden involved in paying returns on the
Unnecessary capital invested IN the duplicated
plants The decision then says:
Il is our belief t1at tho provisions Of the public
service commissions law show full appreciation
facts By the Legislature Of the state; w'ie
forlids consolidation either directly or IN
directly without the approval OF this commission
Il a the time permits such consohdatlon
whenever I'm the opinion Df this commission II IS
for the public advantage to do so. and recognizes
that this may be the by placing IN the hancs
0f the Public Service Commission great power
designed 10 the community in that case
against poor service or eXtortonate rates.
The commission accordingly prohibits the raising
OF prices those tnat obtain at present The
objection Of the Attorney General is dismissed as
follows:
The objection raised by the Attorney General that
Size purchase OF the property Of the two gas com
psnies by third company was in contraVention OF
the statutes known the nti-InonOpoiy
statutes not supported by any brief or orill
argument the part Of the Attorney General In
the case OF Rafferty, agt. the Buffalo Gas company
90 Appellate Division reports. SID. and In the
recent decision Of Mr Justice Mccall in the Con
SGlidatec GaE Company case in New York city, the
reached the conclusions that these statutes
did not apply, and held that such consultations do
Tot create monopolies within the meaning OF the
statute