The task of defining what is meant by dis crimination, however, has not been easy and the different solutions of the problem arrived at by different legislative bodies have produced a highly variegated system of regulations upon the subject. Furthermore, it is not feasible to forbid discrimination of all kinds since abso lute uniformity of rates is undesirable, and it has been necessary, therefore, to leave some leeway in the laws and regulations so that this legitimate discrimination may exist. The result has been to. cast upon the courts a heavy bur den in deciding in a multitude of concrete cases whether or not the particular discrimina tion complained of is forbidden by the statute. The Federal Interstate Commerce Act, for ex ample, enumerates a considerable list of dis criminations which are illegal when practised by common carriers upon those in substan tially similar circumstances and a phrase evidently designed to give a large meas ure of elasticity to the enforcement of the law.
The forms of discrimination in rates which are now commonly forbidden by law are the following: (1) Discriminations for the pur pose of destroying competition, such as the offering of lower rates to a competitor's patrons to induce them to abandon him; (2) conces sions made to large customers when the differ ence lies not in the amount of service rendered at any one time but merely in the total amount during a given period of time; (3) concessions made to exclusive patrons as against those who divide their patronage; (4) discriminations in favor of special kinds of business when the service rendered is the same, as when a rail road charges less for the shipment of goods to be used for one purpose than for another in order to develop particular industries in certain communities.
On the other hand, the law very generally recognizes the legitimacy of certain forms of discrimination. Among these may be mentioned the following: (1) Rates may differ where the services rendered entail different costs. Extra charge may be made, for example, for transpor tation on a train of unusual speed. (2) Lower rates may be charged for services rendered in units which entail less cost and inconvenience. A carload goods may be shipped at a cheaper rate than a single or a large party may be given reduced passenger rates. may be lowered for patrons who Ives furnish a portion of the public utility facilities, such as cars, wharves, etc. All such discrimina tions are, however, closely scrutinized and strictly limited.
Special Regulations in the Interest of Public Convenience.— This point has already been touched upon in discussing therest ing upon public service companies adequate service and suitable facilities and need not be further elaborated here. Legislatures have passed numerous and highly various laws of this kind. An illustration in point is the re quirement sometimes found compelling the es tablishment of certain relations in the interest of public convenience between connecting rail roads.
Machinery of Public Utility Regulation — Commissions.— Experience has demonstrated beyond doubt that public utilities can be effec tively regulated neither by State legislatures nor by courts. As public utilities increased in number and in the complexity of their re lations to the public welfare it became appar ent that some machinery of control was neces sary which would remove the problems of their regulation from partisan politics, protect the public in the matter of rates and service, protect the public utility itself from ill-advised attacks of legislative majorities and secure a scientific, efficient and impartial supervision which should be based upon an examination of facts. It is now universally recognized that these needs are best met by the creation of pub lic utility commissions, modeled roughly after the Interstate Commerce Commission, and such organizations exist in all but one or two States of the Union for the regulation of at least the more important types of public utilities such as common carriers.
These commissions are usually, though not invariably, appointed by the State governor and are supposed to be non-partisan in personnel. The membership varies in number from three to seven, and the term of office varies from 2 to 10 years. The salaries paid range from $1,500 to $15,000. It is almost universally pro vided that no one who has any direct or indi rect pecuniary interest in the public utilities over which the commission has jurisdiction may be a member of it.
The powers of public utility commissions may be grouped under four heads. In the first place, the commissions exercise power over public utility franchises. This power may include the determination of the necessity of granting new franchises, the control over franchise terms and the enforcement of the obligations resting on the public service company. In the second place, control is exercised in some States over the issuance of stocks and bonds of public utility companies for the purpose of preventing over-capitalization. In the third place, the commissions have authority over rates and service. Their powers in this respect differ widely in the several States. They have com monly, however, the right to make detailed in vestigations and conduct hearings for the pur pose of securing data upon which to determine what rates may be charged or what service required. The orders issued upon these points are not final but may be reviewed by the courts. They are, however, regarded as prima facie reasonable and will be nullified only when clearly unreasonable. Finally, public utility commissions are empowered to require public service companies to adopt a uniform system of accounting and periodically to file detailed reports.
The regulation of public utilities by commis sion has not escaped criticism. Reference is made to the delays resulting from the system of appealing to the courts so large a proportion of the orders of the commission. It is pointed out that rates have not, as a rule, been ma terially reduced under this form of control. It has also sometimes happened that State pub lic utility commissions have evinced an un friendly attitude toward the public ownership of municipal utilities and have used their powers to block the progress of that movement. But on the whole it is generally conceded that commissions afford the only solution for the public utility problem. It has succeeded in large measure in taking the problem out of politics, has brought about very general improvements in service, and by creating an administrative agency of more or less expert ability has pro vided a means for dealing in a scientific manner with the perplexing relating to public utilities which remain as yet unsolved.
Bibliography.—American Academy of Po litical and Social Science, (State Regulation of Public Utilities' (1914) ; Cathcart, 'Public Service Corporations' (Vol. VIII,
Law and Procedure,' 1910) ; T•eund,