New York Law Review

Consolidated Edison Co. of New York, Inc. v. Public Service Commission, 47 N.Y.2d 94 (1979): Utility Advertising and First Amendment Rights

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The New York Law Review

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47 N.Y.2d 94 (1979)

A utility company does not have a First Amendment right to compel ratepayers to fund all of its informational advertising; the Public Service Commission (PSC) can disallow the inclusion of certain advertising expenses in the rate base if the advertising is not necessary for providing utility services.

Summary

Consolidated Edison challenged a Public Service Commission (PSC) decision that disallowed the inclusion of certain informational advertising expenses in the rates charged to customers. Con Ed argued that this violated its First Amendment rights. The New York Court of Appeals upheld the PSC’s decision, stating that while Con Ed has a right to express its views, the PSC is not obligated to force ratepayers to subsidize all of the utility’s communications. The court reasoned that the PSC has the authority to determine which costs are appropriately borne by ratepayers versus shareholders, and the PSC’s decision was not arbitrary or unsupported by evidence.

Facts

The Public Service Commission (PSC) disallowed Consolidated Edison (Con Ed) from including certain informational advertising expenses in the rates charged to its customers. The disallowed advertising was deemed not necessary for the provision of utility services and primarily served to enhance the utility’s image. Con Ed challenged this decision, arguing that it had a First Amendment right to have ratepayers cover the costs of all its informational advertising.

Procedural History

The Public Service Commission made the initial determination disallowing certain advertising expenses. Con Ed appealed this decision. The Appellate Division affirmed the PSC’s decision. Con Ed then appealed to the New York Court of Appeals.

Issue(s)

Whether a utility company has a First Amendment right to compel its ratepayers to bear the expense of informational advertising that the Public Service Commission deems unnecessary for providing utility services.

Holding

No, because while the Constitution provides a right to engage in certain activities free of governmental restrictions, it does not place a corresponding duty on the government to ensure the availability of all resources necessary to realize that freedom.

Court’s Reasoning

The court reasoned that while Con Ed’s advertising is entitled to First Amendment protection, the PSC did not restrain or restrict Con Ed’s ability to communicate. Instead, the PSC simply refused to allow ratepayers to bear the entire cost of the informational advertising, determining that the utility’s shareholders should cover the portion deemed unnecessary for the provision of utility services. The court emphasized that the PSC has a legitimate function in separating costs borne by ratepayers from those charged to shareholders. The court cited the principle that the Constitution does not generally obligate the government to ensure the availability of resources necessary to exercise a constitutional freedom, referencing Harris v. McRae, 448 US 297, and Norwood v. Harrison, 413 US 455, 462. The court found no evidence that the PSC’s ruling was arbitrary, capricious, or unsupported by substantial evidence, citing Matter of New York State Council of Retail Merchants v Public Serv. Comm. of State of N. Y., 45 NY2d 661, 671-672.

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