United States Supreme Court Justice Thurgood Marshall explained the basis for this fundamental concept in a 1986 concurring opinion involving Pacific Gas and Electric Company (PG&E): [A] consumer who purchases food in a grocery store is for the store’s rent, heat, electricity, wages, etc., but “paying” no one would seriously argue that the consumer thereby acquires a property interest in the store. That the utility passes on its overhead costs to ratepayers at a rate fixed by law rather than the market cannot affect the utility’s ownership of its property, nor its right to use that property for expressive purposes. The State could have concluded that the public interest would be best served by state ownership of utilities. Having chosen to keep utilities in private hands, however, the State may not arbitrarily appropriate property for the use of third parties by stating that the public has for the “paid” property by paying utility bills. Likewise, customers who may have subsidized a portion of the Lancaster streetlight system were not making capital contributions and have no ownership interest in the streetlights merely because they paid their electric bills. Second, while ORA implies that SCE created in the rate “inequities” structure and should therefore pay the gain on sale to customers to make them it is the Commission -- not SCE -- that decides which customers pay “whole,” which rates. setting of utility rates and rates of return is a legislative act, “The delegated by the Legislature to the Public Utilities Commission.” The Commission for a test period the utility expense, the “determines utility rate base, and the rate of return to be allowed. Using those figures, the commission determines the revenue requirement, and then fixes the rates for the consumers to produce sufficient income to meet the revenue requirement.”
United States Supreme Court Justice Thurgood Marshall explained the basis for this fundamental concept in a 1986 concurring opinion involving Pacific Gas and Electric Company (PG&E): [A] consumer who purchases food in a grocery store is “paying” for the store’s rent, heat, electricity, wages, etc., but no one would seriously argue that the consumer thereby acquires a property interest in the store. That the utility passes on its overhead costs to ratepayers at a rate fixed by law rather than the market cannot affect the utility’s ownership of its property, nor its right to use that property for expressive purposes. The State could have concluded that the public interest would be best served by state ownership of utilities. Having chosen to keep utilities in private hands, however, the State may not arbitrarily appropriate property for the use of third parties by stating that the public has “paid” for the property by paying utility bills. Likewise, customers who may have subsidized a portion of the Lancaster streetlight system were not making capital contributions and have no ownership interest in the streetlights merely because they paid their electric bills. Second, while ORA implies that SCE created “inequities” in the rate structure and should therefore pay the gain on sale to customers to make them “whole,” it is the Commission -- not SCE -- that decides which customers pay which rates. “The setting of utility rates and rates of return is a legislative act, delegated by the Legislature to the Public Utilities Commission.” The Commission “determines for a test period the utility expense, the utility rate base, and the rate of return to be allowed. Using those figures, the commission determines the revenue requirement, and then fixes the rates for the consumers to produce sufficient income to meet the revenue requirement.”
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