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Consolidated Edison Co. v. Public Service Commission, nan

Facts

The PSC issued an order on February 25, 1977, prohibiting utilities from using bill inserts to express their positions on controversial public policy matters. Consolidated Edison Company challenged this order, arguing it was unconstitutional. Additionally, the PSC classified expenses for advertising aimed at swaying public opinion as nonoperational, which Central Hudson Gas and Electric Corporation sought to vacate. The Special Term annulled the PSC's order regarding bill inserts but upheld the classification of advertising expenses.

The PSC had issued an order providing that all utilities subject to its jurisdiction shall discontinue the practice of utilizing material inserted in bills rendered to customers as a mechanism for the dissemination of the position of the utilities on controversial matters of public policy and the petitioner Consolidated Edison Company had challenged the validity thereof.

Issue

The main legal issues were whether the PSC had the authority to prohibit utilities from using bill inserts for political advertising and whether the classification of advertising expenses as nonoperational was valid.

The issue before us is whether, given these powers, the PSC may prevent management from expressing its political positions in a manner that is inevitably subsidized by the consumer, particularly when the PSC places no restrictions on advertisement by any other means.

Rule

The court applied the principle that the PSC has general powers of supervision and regulation over gas and electric utilities, which includes the authority to prevent consumer subsidy of management's political activities.

The PSC has general powers of supervision and regulation over activities of gas and electric utilities.

Analysis

The court found that the PSC's order was justified as it aimed to prevent consumers from subsidizing the costs of political advertising through utility bills. The court reasoned that the PSC's duty to protect consumers from such charges allowed it to restrict the use of bill inserts for political purposes. Furthermore, the court determined that the order did not infringe upon the utilities' free speech rights, as it did not prevent them from expressing their views through other means.

The PSC protests that, given the manner of airing its views chosen by Con Edison, it cannot fulfill that duty. We agree that it would be impossible to separate out the costs attributable to mailing the bills (a customer expense) from the costs attributable to mailing out management statements (a shareholder expense).

Conclusion

The Appellate Division reversed the judgment of the Special Term, declaring the PSC's orders constitutional and affirming the classification of advertising expenses as nonoperational.

The judgment entered March 6, 1978 must be reversed.

Who won?

The Public Service Commission prevailed in the case as the Appellate Division upheld its authority to regulate the use of bill inserts and classify advertising expenses, emphasizing the need to protect consumers from subsidizing political activities.

The Appellate Division reversed the judgment in the first above-entitled proceeding and declared the order constitutional and modified the judgment in the second above-entitled proceeding by deleting so much thereof as annulled the directive of the PSC.

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