Court Opinion

ID: 7017620
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:27:03.994178+00
Date Added: 2024-06-11T16:10:26.884530
License: Public Domain

Mr. JUSTICE TRAPP, dissenting: The principal opinion construes the authorities to hold that the Commerce Commission received evidence of the current value, gave it some consideration, and “properly rejected replacement cost as a factor of value.” Such conclusion is contrary to the construction of the Utilities Act adopted by the Supreme Court. In support of that conclusion, the principal opinion quotes a part of the language found in City of Chicago v. Illinois Commerce Com. (1954), 4 Ill. 2d 554, 123 N.E.2d 500: ‘[T]he Commission must use a rate base which represents the present fair value of the utility property, arrived at after full and proper consideration of reproduction cost, and a reasonable return, based upon an appraisal of the opportunities available for investment in other enterprises.’ ” (4 Ill. 2d 554, 558, 123 N.E.2d 500, 502.) The language “[m]ust use a rate base * * *” is stated in the imperative. Other language in that opinion states the rule more precisely and definitively in the court’s statement that its former opinions: “[AJdhered to the rule that the rates of this utility must earn a return upon the present value rather than on the original cost of its property.” (Emphasis added.) 4 Ill. 2d 554, 558, 123 N.E.2d 500, 502. In the context of construing the Utilities Act, that opinion states: “For many years, this court has ruled that it is the duty of the Illinois Commerce Commission and its predecessor commissions, under the Public Utilities Act of this State, to allow a proper return upon the present fair value of utility property.” (Emphasis added.) 4 Ill. 2d 554, 558, 123 N.E.2d 500, 502. In Illinois Bell Telephone Co. v. Illinois Commerce Com. (1953), 414 Ill. 275, 111 N.E.2d 329, a case preceding and related to the cited City of Chicago, it was contended that the Commission should be permitted to base its findings, “only [on] the value of the investment, without regard to the present value of the company’s property dedicated and actually used in public service.” (414 Ill. 275, 287, 111 N.E.2d 329, 336.) That record disclosed that the Commission had disregarded the evidence of reproduction costs. In reversing for such error, the court stated: “In construing the statute this court held that the Commission must use a rate base which represents the present fair value of the utility property, arrived at after full and proper consideration of reproduction cost, and a reasonable return, based upon an appraisal of the opportunities available for investment in other enterprises.” (Emphasis added.) 414 Ill. 275, 288-89, 111 N.E.2d 329, 336. The court noted the history of the Utilities Act and citing Peoples Gas Light & Coke Co. v. Slattery (1939), 373 Ill. 31, 25 N.E.2d 482, stated: “* 0 ° that the determination of just and reasonable rates under the Illinois statute depends upon the present fair value of a utility’s property.” (Emphasis added.) 414 Ill. 275, 289, 111 N.E.2d 329, 337. In the context of reversal, the supreme court stated that the Commission erred: “o o 9 -n faj]jng to take into account current economic conditions, present price levels, and reproduction costs.” 414 Ill. 275, 290, 111 N.E.2d 329, 337. In City of Alton v. Commerce Com. (1960), 19 Ill. 2d 76, 165 N.E.2d 513, the supreme court, in reviewing the elements and factors found in an order of the Commerce Commission, stated: “It is well established in Illinois that the utility is entitled to a reasonable overall return on the fair value of its property, not the original cost. This provides a flexible rate-making standard which is equally applicable in periods of rising and falling price levels. (See City of Chicago v. Illinois Commerce Com., 4 Ill. 2d 554.)” (Emphasis added.) 19 Ill. 2d 76, 86-87, 165 N.E.2d 513, 519. The argument in behalf of the Commission and of the intervenors apparently adopted in the principal opinion that judicial review should be limited to consideration of the fairness of the result and that if deemed reasonable the order should be affirmed without regard to the method used or the separate elements weighed in fixing the rate. This argument was expressly rejected in City of Alton v. Commerce Com., where the court said: “The Commission objects particularly to setting aside its order because of purported errors in computing reproduction value less depreciation when the final fair value determination is not challenged as unreasonable. It argues that if the final determination is reasonable the courts should not inquire into the separate elements of value which are considered in reaching that finding. This position ignores the right of the parties and the public not just to a reasonable determination but rather to a determination which arises from sound and lawful analysis of the problems presented. Without power to review the intermediate steps in the administrative decision-making process, effective judicial review would be extremely difficult if not impossible. Neither the statute nor this court’s decisions in the rate regulation field indicate that such a result is intended.” (19 Ill. 2d 76, 80-81, 165 N.E.2d 513, 516.) See also Camelot Utilities, Inc. v. Illinois Commerce Com. (1977), 51 Ill. App. 3d 5, 9, 365 N.E.2d 312, 315. The principal opinion concludes that the Commerce Commission may use the Missouri rate as a factor in fixing the Illinois rate. The order itself reflects that the Commission did more — that is, in fact, adopted the Missouri rate without modification and without application of the Illinois statute, or the Commission’s expertise. As quoted in the opinion, the order notes that “[ujnder traditional rate-making procedures,” the Commission would approve rates yielding acceptable return upon the value of petitioner’s property used in Illinois to serve Illinois customers, but that the peculiar circumstances of the operations in both States: “render such consideration impossible in this instance without imposing unjust and unreasonable discriminatory rates on Illinois rate payers.” The power to determine whether rates are discriminatory under the statute is limited to discrimination with reference to parties who are before the Commission. (Lowden v. Illinois Commerce Com. (1941), 376 Ill. 225, 33 N.E.2d 430.) We find no claim that there is discrimination among the customers served in Illinois. The greatest error is that the Commission has chosen to fix the rates of a utility doing interstate business upon a consideration of evidence which is not properly admissible in cases concerning intrastate utilities. The Commission refuses to apply the same standard and criteria to Union Electric which admittedly would be properly applied in fixing the rates of other utilities in Illinois. Such procedure is arbitrary and capricious without pretense of expertise or equal protection of the law. The judgment of the trial court should be affirmed.