Appeal, No. 163, Jan. T., 1955, from order of the Superior Court of Pennsylvania affirming the order of the Pennsylvania Public Utility Commission at Application Docket No. 15845, in case of Clyde E. Berner et al. v. Pennsylvania Public Utility Commission. Order reversed.
Charles E. Kenworthy, with him Leroy Long and Arthur H. James, for appellants.
John E. Fullerton, Assistant Counsel, with him Thomas M. Kerrigan, Acting Counsel, and Harris J. Latta, Assistant Counsel, for Public Utility Commission, appellee.
Philip Price, with him Robert J. Doran, John C. Kelley, and Harold P. Dicke, for intervening appellee.
Before Stern, C.j., Stearne, Jones, Bell, Chidsey, Musmanno and Arnold, JJ.
OPINION BY MR. CHIEF JUSTICE HORACE STERN
This is an appeal which we allowed from an order of the Superior Court (Berner v. Pennsylvania Public Utility Commission, 177 Pa. Superior Ct. 19, 107 A.2d 882), affirming, by a sharply divided vote, a final order of the Pennsylvania Public Utility Commission which had approved an increase in rates requested under tariff supplements filed by the Commonwealth Telephone Company in November, 1952.
The principal issue involved concerns the nature and extent of the burden of a utility to establish in a rate case the reasonableness of its dealings with closely held affiliates. The Telephone Company and all of the affiliates whose dealings with the Company are here questioned are apparently owned or controlled, directly or indirectly, by the same individual, former Senator Sordoni. Four specific questions are raised on the appeal: (1) the propriety of the allowance by the Commission of certain payments made to affiliates for services rendered by them to the Telephone Company, in the absence of evidence clearly showing the nature and the amount of the services, the cost to the affiliates for rendering the services, and the profit made by them; (2) the propriety of the inclusion by the Commission in the rate base of a large sum for quantities of materials and supplies stockpiled for future use for expansion and in the conversion of the telephone system from manual to automatic operation, where the rate base already included the equipment which the stored materials would replace; (3) the propriety of the Commission's fixing the Company's fair rate of return at 6.8%; (4) the propriety of the Commission's finding as to the estimated annual revenues of the Company under the new rates.
The scope of appellate review of the orders of the Public Utility Commission is set forth in the Public Utility Law of May 28, 1937, P.L. 1053, section 1107, as follows: "The order of the commission shall not be vacated or set aside, either in whole or in part, except for error of law or lack of evidence to support the finding, determination, or order of the commission, or violation of constitutional rights."
Section 312 of the Law provides that "In any proceeding ... upon complaint involving any proposed increase in rates, the ...