Social Control of Public Utilities

On the continent of Europe practically all of the telephone and telegraph systems and so many of the railroad systems are na tionally owned and operated that there is little opportunity for the development of anything approaching the American system of public utility control. This also holds true in a large measure of local utilities. Where local utilities are privately owned they are operated under franchise contracts with the municipalities.

In Great Britain,

however, all of the railroads and so many of the local utilities are in private hands that there has been con siderable development in policies of social control. Restricting ourselves again in the main to local utilities we find that here also these undertakings have been put in a position of special privilege, and have had conferred upon them special powers with a corre sponding measure of special restriction in the public interest. The rendering of water, gas, electric and tramway services is by private corporations, municipal corporations, urban and rural dis trict councils, and also occasionally by joint boards with a distinct corporate existence. Some public utility undertakings were origi nated by royal charter but this has been supplanted by parlia mentary action.

Regulation of public utilities in England is accomplished by the method of "private bill legislation," which is a special act of parliament for each undertaking and which performs the double function of conferring a franchise and of laying down regulatory standards. Usually certain applicable general laws are by reference made a part of the special act, such as the legislation controlling the acquisition of land by condemnation as set forth in the Lands Clauses Consolidation Act of 1845.

Other important general legislation is contained in the following: Railways Clauses Consol. Act, 1845 ; Companies Clauses Consol. Act, 1845 ; Waterworks Clauses Act, 1847 ; Gasworks Clauses Act, 1847; Harbours, Docks and Piers Clauses Act, 1847; Tramways Act; 187o; Electric Lighting (Clauses) Act, 1899.

In certain cases of common occurrence special legislation by parliament establishing public service undertakings is made un-.

necessary by permitting some appropriate department of the Gov ernment to issue "p:ovisional orders" under general legislation after due inquiry. But full parliamentary control is retained by

requiring confirmation of provisional orders, either by parliament itself or, in some cases, by an agency such as the Board of Trade, made effective by resolution of each house of parliament.

The English system of regulation is, accordingly, comparable to the charter or special franchise system in the United States. The most recent legislation of this type is the Gas Regulation Act of 192o, the Electricity Supply Acts of 1919, 1922 and 1926 and the Railways Act of 1921. The focal point of control is the regulation of rates. In the case of private gas companies the first method of control, after a brief preliminary period of competition, was the so-called "Official Revision System." Maximum rates and maximum dividends were fixed in special acts but the power to reduce rates was given to the court of quarter sessions.

Later another method, the system of sliding scales, was used, the adoption of which was optional. There was established a standard selling price for gas and a standard maximum rate of dividend. Then it was provided that the dividend rate might vary in inverse ratio to the rate of charge. Since the maximum dividend method, even when accompanied by official revisions of rates, failed to bring about reductions in charges, the sliding scale method was proposed as a means of automatic regulation and as a stimulus to more efficient management. In 1920 the Board of Trade was empowered temporarily to relieve private gas companies, operating under either method of rate control, of specified rate limitations by reason of changes in economic conditions since In order to bring about mergers and reorganizations in the elec trical industry which would make possible the generation of elec tricity in large units and the attainment of greater economy and efficiency, the Electricity Act of 1919 created a board of "Elec tricity Commissioners" of five members, appointed by the minister of Transport with the approval of the Board of Trade. Most of the regulatory powers over electric undertakings vested in gov ernmental departments were transferred to this body.