Opinion
January 9, 1952.
Present — Foster, P.J., Heffernan, Brewster, Bergan and Coon, JJ. [See post, p. 958.]
Proceeding under article 78 of the Civil Practice Act to review the determination of respondent Public Service Commission made by its order dated May 12, 1950, which authorized the respondent New York Telephone Company to effect a general increase in its rates and charges for telephone services throughout the State of New York. No question is raised upon this review as regards the propriety or legality of the respondent commission's authorization for the general increase in the company's earnings. Instead, the petitioner attacks the rate-making method by which the increased earnings are to be obtained. The authorized rate schedules under attack have been arranged for an over-all increase; in earnings upon a State-wide basis. Under them uniform company-wide rates are fixed for local exchanges of equal size as uniformly measured. In doing this the commission considered that the extent and value of the telephone services available in area served by the local exchange was a fair and proper base for the apportionment of the increase, rather than the cost of service in each or any exchange if considered as a separate jurisdiction for rate-making purposes. The result of this is that the percentage of the authorized increase in earnings as reflected in the new rates enlarges with the size of the exchange as represented by the number of telephone subscribers served thereby, and becomes maximum in the largest exchange which is in New York City. The city contends that this method of rate making is unlawful in that it violates the provisions of sections 91 Pub. Serv. and 97 Pub. Serv. of the Public Service Law; that it works a preference in favor of the company's subscribers outside of New York City and subjects that "locality" to unjust prejudice and disadvantage. In this the petitioner points to the record showing that the need for increased earnings was due to the small net earnings in the smaller exchanges, whereas the earnings in New York City were in line with allowable standard. The city urges that this in effect results in unlawfully using the revenues there earned to subsidize the company's less profitable operations in the rest of the State, where the new rate increases are less and telephone service is rendered at lower rates. The respondent's main answer to this contention is that when all is said and done the proof establishes that the ratemaking method which has been employed simply works out to insure equal rates for equal service which the company renders throughout the entire area of the State. It appears that many years ago as telephone service expanded and improved the "state-wide method" in telephone service rate making was adopted in place of the "local area method" which at one time was in use. That just and reasonable rates are best arrived at by treating the property, revenues and expenses of the company on a unitary basis is amply supported by evidence. The particular question raised is whether the determination of the commission arrived at by use of method employed violates the provisions of the statute aforesaid. In ordaining just and reasonable charges, the statute forbids that they be unequal for "like and contemporaneous service * * * under the same or substantially the same circumstances and conditions." (Public Service Law, § 91, subd. 2.) It is when such charges are unequal that other consequences follow which are forbidden by said statute. The record discloses that throughout the area of its various exchanges there is a marked dissimilarity of the circumstances and conditions under which the company renders its services and also in the extent and reasonably considered assessment of the services. The new rates are equal within the exchanges where like service is rendered under like circumstances. Only the uniform employment of permissible factors causes their variance in other respects. We see no violation of the statute in the determination under review. Determination unanimously confirmed, with $50 costs.