63 N.Y.2d 372 (1984)
A public service commission can require utilities to allocate a portion of the fixed costs associated with including political messages in billing statements to their shareholders without violating the utilities’ First Amendment rights.
Summary
Consolidated Edison challenged a Public Service Commission (PSC) order requiring utilities to allocate 50% of the fixed costs of including political messages in billing statements to their shareholders. The PSC reasoned that without this allocation, ratepayers would be subsidizing the utility’s political speech. The New York Court of Appeals upheld the PSC’s order, finding it did not violate the utility’s free speech rights. The court distinguished between expenses that benefit the corporation (shareholder responsibility) and those that benefit ratepayers. The court held that the cost allocation represented a reasonable balance of First Amendment interests, preventing ratepayers from being forced to subsidize the utility’s speech.
Facts
Following a Supreme Court decision (Consolidated Edison Co. v. Public Serv. Commn., 447 U.S. 530 (1980)) that struck down a PSC ban on political inserts in utility bills, the PSC initiated proceedings to determine how to allocate the costs of such inserts.
The PSC issued an order stating that if utilities included inserts concerning matters defined in Account 426.4 (expenditures for influencing public opinion on political matters), 50% of fixed costs associated with preparing and mailing billing statements would be allocated to the utilities’ shareholders.
The PSC determined that using the billing process to disseminate political messages provides a subsidy to utility management, as the costs are typically borne by ratepayers.
Procedural History
The Public Service Commission issued an order requiring the cost allocation.
Consolidated Edison challenged the order.
The Appellate Division affirmed the PSC’s order.
Consolidated Edison appealed to the New York Court of Appeals.
Issue(s)
Whether the Public Service Commission’s order requiring utilities to allocate a portion of the fixed costs associated with political messages in billing statements to their shareholders violates the utilities’ First Amendment rights.
Holding
Yes, because nothing in the Constitution requires that shareholders get a free ride on the backs of the ratepayers; the allocation of costs represented a reasonable balance of First Amendment interests.
Court’s Reasoning
The court relied on its prior decision in Rochester Gas & Elec. Corp. v. Public Serv. Commn., 51 N.Y.2d 823 (1980), which held that the PSC could exclude certain informational advertising costs from being charged to ratepayers. The court stated, “nothing in the Constitution requires that the shareholders get a free ride on the backs of the ratepayers.”
The court rejected the argument that Account 426.4 was impermissibly based on the content of speech. Instead, the court stated that “the thrust of the regulation is to distinguish between expenditures that primarily advance the interests of the corporation (properly chargeable to the shareholders) and expenditures that primarily advance the interests of the ratepayers (properly chargeable to them).”
The court emphasized that the PSC was implementing its statutory mandate to ensure just and reasonable utility rates.
The court also noted that the ruling attempted to balance the competing First Amendment interests of shareholders and ratepayers. Without the cost allocation, ratepayers could argue they were being compelled to subsidize the utility’s speech, violating the principles of Abood v. Detroit Bd. of Educ., 431 U.S. 209 (1977), and Wooley v. Maynard, 430 U.S. 705 (1977).
The court quoted the dissenting justices in Consolidated Edison Co. v. Public Serv. Commn., 447 U.S. 530 (1980), stating, “[e]ven though the free ride may cost the ratepayers nothing additional by way of specific dollars, it still qualifies as forced support of the utility’s speech.”
The court concluded that the 50-50 cost division was reasonable and within the PSC’s discretion.