Court Opinion

ID: 9859956
Source: CourtListenerOpinion
Date Created: 2023-09-24 23:04:00.891032+00
Date Added: 2024-06-11T11:11:18.709967
License: Public Domain

GIVAN, Chief Justice,
dissenting.
I respectfully dissent from the majority opinion in this case. Although I concur with Justice Prentice in his dissenting opinion, I feel the necessity of writing a separate dissenting opinion due to the importance of this case. On page 611 of the majority opinion, they quote the pertinent part of the PSCI's order in this case. For the sake of brevity it will not be repeated here.
The majority opinion claims the order of the PSCI contains a fundamental flaw, in that "to begin with, utility charges are based upon services." The majority then quotes from Ind.Code § 8-1-2-4 which states "[the charge made by any public utility for any service rendered or to be rendered either directly or in connection therewith shall be reasonable and just."
At page 614 of the majority opinion, they quote the statutory definition of service found in Ind. Code § 8-1-2-1. The beginning sentence of which is:
"The term 'service' is used in this act in its broadest and most inclusive sense and includes not only the use or accommodation afforded consumers or patrons but also any product or commodity furnished by any public or other utility and the plant, equipment, apparatus, appliances, property and facility employed by any public or other utility in performing any service or in furnishing any product or commodity and devoted to the purposes in which such public or other utility is engaged and to the use and accommodation of the public."
As was stated in City of Evansville v. Southern Indiana Gas and Electric Company (1975), 167 Ind.App. 472, 339 N.E.2d 562, the Public Service Commission must establish a rate level sufficient to permit the utility to meet its operating expenses plus a return on investment which will compensate its investors.
There is no question but what the Public Service Commission also has the duty to see that the consuming public is charged a fair rate and that those rates are not fraudulently or carelessly inflated by the utility. However, in order to "render service" any *620utility must be operated on a sound business basis, otherwise there would be no "service." Any business, whether it be a public utility or a privately operated business for profit, must be entirely paid for by its customers. This is true as to absolutely every capital expense and operating expense, whether it be necessary in the rendering of the service directly or whether it be generated by mistakes made in the operation of the business; such as, automobile accidents, faulty construction of buildings and so forth. If the company is to succeed and to continue to operate, absolutely all of these expenses must be paid by the customer. There is no other source of revenue.
It is extremely naive to say that we will not allow the rate to be increased to cover the expense but will require the shareholders to pay that expense. In making such a decision, the Public Service Commission would raise absolutely no income to be used by the utility. Depriving stockholders of return is not a fund raising operation. If the debts of a corporation are to be paid, they must of necessity be paid by the customers. In the instant case, if the corporation is to continue to operate, it must of course pay its debts. Those debts must be paid from the income generated by rates.
The Public Service Commission has the authority to reduce the rates to the extent that little or no return could be paid to the investors by way of dividends. Nevertheless, this lack of dividend would produce no revenue to pay the debts of the corporation. Absolutely every cent of debts paid must be paid out of revenue generated by rates. If the Public Service Commission would reduce the rates to the point where no dividends could be paid, then the health of the utility would be gravely impaired. One of the primary duties of the Commission would be neglected, that being the maintenance of a healthy utility company.
The majority opinion uses an example of an automobile company embarking on a new capital project as though in some manner that differed from the nature of the business of a utility. The only difference of a business in the private sector, operating in the open market, and a business such as a utility in the public sector, operating as a monopoly, is the public control over the company. Whether the control of the company be private or public, sound business practices and reality must be observed.
In the example of the automobile company used by the majority, if the company is to survive and continue in business, any of their losses, including a false start on a new capital project, will eventually be paid for by the customer. If that does not occur, then the company will be an unsue-cessful operation. If it continues for any prolonged period, the company will be bankrupt. If those persons investing their capital in a business enterprise, whether public or private, cannot recoup all of their original capital investment and cannot make a reasonable return on their investment, their company will cease to exist.
It does a disservice to the parties to this litigation and to the public generally to engage in semantics which tend to build a false picture that in some manner some of the debts of the corporation will be paid in a manner other than the collection of rates. If the Public Service Commission would reduce the rate to such a low figure that not only stockholders could not get a return on their investment but that not all the debts could be paid, then bankruptcy would result. The creditors of the corporation would become victims of the bankruptcy. The stockholders of course would lose the value of their stock. For the PSCI to so act would be a gross neglect of their duty under the law.
Referring again to the order of the Public Service Commission, as set forth on page 611 of the majority opinion, I find it to be entirely within the law, entirely lucid and sound in business practice and in fact the only realistic approach to the problem with which they were presented. I go back to the statement made in State ex rel. Water Company v. Boone Circuit Court (1974), 261 Ind. 583, 586-87, 307 N.E.2d 870, 872 where it was stated "[this Court has stated many times that rate making is *621a legislative and not a judicial function. The legislature has seen fit to establish this Public Service Commission for the express purpose of hearing evidence and balancing and weighing the many complicated factors which must be taken into consideration in settling utility rates." I feel that to deviate from this language is to impinge the Public Service Commission with judicial fiat that is wholly unrealistic and makes their job virtually impossible.
I would set aside the opinion of the Court of Appeals and would affirm the decision of the Public Service Commission in its entirety.
PRENTICE, J., concurs.