POLICY AS TO THE ADMISSION OF NEW PANIES INTO THE FIELD (WISCONSIN) No license, permit, or franchise can be granted to any person, partnership, or cor poration to engage in any public service en terprise, where there is in operation under an indeterminate permit, as provided in the act, a public utility engaged in a similar service, without first securing from the commission a declaration, after a public hearing, that public convenience and necessity require such second utility.
An indeterminate permit may be granted, where the existing public utility is operating without an indeterminate permit (1907). By an act of the legislature in 1911, all existing franchises and permits possessed by public utility corporations were made indeterminate permits.
The commission stating its views on com petition between public service corporations, says:— There are many important differences between public service and commercial enterprises. The former usually require a much larger investment in plant, equipment, and other fixed property, which in turn means heavy annual charges for interest, repairs, and maintenance. The condi tions which surround the former, are also of such a character that the service which they render can usually be furnished at a much lower cost by one plant than by two or more in the same local ity. The differences between them extend to the principles of competition. In most of the ordi nary commercial undertakings, the expense can usually be stopped, whenever competition has reduced prices below a profitable level. This cannot be done in the case of public service cor porations. The investment in these corporations cannot be withdrawn and converted to other pur poses. The interest and maintenance charges go on at about the same rate, whether the plant is in operation or not. Hence it often happens that it is better for the owners that such plants should be kept in operation, even if they fail to earn more than the actual operating expenses.
Duplication of such plants is a waste of capital, whenever the service can be adequately furnished by one plant. It necessarily means that inter est and maintenance must be earned on a much greater, if not twice as great, an investment, and that the actual cost of operation is likely to be relatively higher. Competition in this service,
therefore, usually means a bitter struggle and low rates, until one of the contestants is forced out of the field, when rates are raised to the old level, if not above it. In this way it often happens that the means which were thought to be preventive of onerous conditions become the very agents through which conditions are imposed. In fact active and continuous competition between pub lic service corporations, furnishing the same lo cality, seems to be out of the question. This has been shown by experience. Such competition is also contrary to the very nature of things. Two distinct and separate corporations are not likely to remain separate very long after it becomes clear that the service rendered by both can be more cheaply and effectively furnished by only one of them. (Application of Lacrosse Gas and Electric Company, August, 1907.) That conditions may arise, under which competition to a certain extent is permissible, the commission states in these words: — The legislature doubtless intended that through the administration of this law destructive compe tition and rate wars and competition in all forms injurious to the public should be eliminated. The legislature could not have desired to eliminate all competition absolutely. If such a construction were to be placed on the law, it would in most, if not in all, cases be impossible for any railway to be constructed in the future to enter any city, in which there is an existing railway, because it is axiomatic that in the railway world, within proper limitations, every railway competes with every other railway, largely independent of the exact geographical location of the competitors. (Petition of the Milwaukee and Ox River Rail way.) Enterprises of a speculative nature will not receive the commission's sanction.
It was one of the purposes of the statute, under which this application was made, to insure the public against the undertaking of hazardous en terprises. It was doubtless contemplated to pre vent the projection of lines for speculative pur poses and through which the innocent purchasers would be made to suffer losses. (Petition of the Milwaukee and Ox River Railway.)