Court Opinion

ID: 9418834
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:40:49.743466+00
Date Added: 2024-06-11T17:14:50.096424
License: Public Domain

Me. Justice Stone,
concurring.
As there was a denial of due process by-the Commission in arbitrarily reducing the allowance for “ unaccounted for gas,” and in failing to apply consistently either of the two methods of allocation of distribution and commercial expenses adopted in the two cases submitted to us, I concur in the judgment of the Court that the case must be remanded for further proceedings. But wiih two of the conclusions in the opinion I am unable to agree.
1. I think that the petitioner has failed to sustain the burden, which rests upon it in a confiscation case from *78a state court as well as from any other, to show that the item of expense for “ new business ” was a proper charge against gross income. The property for which constitutional protection is invoked is that “ used and useful in the public service,” not the enlarged business of the future which petitioner hopes to obtain through the present expenditure of money. I know of no constitutional principle upon which this expenditure must be taken from the pockets of the patrons of the present business, any more than the cost of future service lines required to carry on the new business. The record does not suggest that the expenditure for new business was necessary to prevent shrinkage of the present business, and the petitioner has failed to show that the charge is not a capital charge, which it appears on its face to be. If the action of the Commission with respect to1 this item alone were sustained, the rate of return, as found by this court, would be increased to 4.91%.
2. I am not prepared to say that petitioner sustains the burden of showing confiscation, by showing a rate of return even as low as 4.91% where it is upon reproduction value determined as of March 31, 1928. We judicially know, and cannot ignore, the large declines in price levels and the earnings of capital which have taken place since that date. The period for which the ordinance fixed the rate extends from April 19, 1928, to April 19, 1933. At least three of the five years are those of declining prices and diminishing capital returns. Since the commission’s order was based on known income for four of the five years, the possibly lowered revenues of the fifth year cannot be taken to off-set the effect of the declining prices and capital returns. The record gives no hint of what the rate base would be were it ascertained for the entire period. While the Commission and the Ohio courts are bound to adopt a rate base determined as of the beginning of the ordinance period, this does not relieve the com*79pany of the burden of showing that the value of the property for the entire period is such that the net return under the Commission’s rates would have been so low as to confiscate its property. See Los Angeles Gas & Electric Corp. v. Railroad Commission, 289 U. S. 287, 304. No contention is made that the Ohio procedure precludes such proof or that it prevented petitioner from showing facts which would establish confiscation.