Appendix — Consolidated Edison Co. of New York v. Public Service Commission
Supreme Court brief1980
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APPENDIX
IN THE —
Supreme Court of the United States
OctosperR Term, 1979
No. 79-134
ConsoLipaTeD Epison Company or New York, Inc.,
Appellant,
Vv.
Pusuic Service CoMMISSION OF THE StTaTE OF New York,
Appellee.
ON APPEAL FROM THE COURT OF APPEALS
OF THE STATE OF NEW YORK
JURISDICTIONAL STATEMENT FILED JULY 27, 1979
PROBABLE JURISDICTION NOTED OCTOBER 1, 1979
IN THE
SUPREME COURT OF THE UNITED STATES
Octoser TERM, 1979
No. 79-134
ConsoLtipaTteD Epison Company or New York, Ino,,
Appellant,
v.
Pusuiic SzRvIcE CoMMISSION OF THE State or New York,
Appellee.
ON APPEAL FROM THE COURT OF APPEALS
OF THE STATE OF NEW YORK
INDEX TO APPENDIX
PAGE
Chronological List of Relevant Docket Entries ............ 1
Verified Petition and Complaint of Consolidated Edi-
son Company of New York, Inc. 2
I aaa Ce 10
Verified Answer of the Public Service Commission of
ON cv ieinccatcteitelattleat ae ca 19
I 23
a 49
li
PAGE
Verified Reply of Consolidated Edison Company of
New York, Ince.
Judgment of New York Supreme Court, Albany County
Notice of Appeal of the Public Service Commission of
the State of New York to New York Supreme Court,
Appellate Division, Third Judicial Department ........
Order of New York Supreme Court, Appellate Divi-
sion, Third Judicial Department .......
Notice of Appeal of Consolidated Edison Company of
New York, Inc. to Court of Appeals of the State
of New York .......... ‘
61
64
69
iii
The following opinions, decisions, judgments and orders
have been omitted in printing this appendix because they
appear on the following pages in the appendix to the Juris-
dictional Statement :
| PAGE
Public Service Commission’s Statement of Policy on
Advertising and Promotional Practices of Public
Utilities, issued on February 25, 1977 .... | 3la
Public Service Commission’s Order Implementing Cer-
tain Restrictions on Utility Advertising, issued on
February 25, 1977 .................... 57a
Public Service Commission’s Order Denying Petitions
for Rehearing, issued on July 14, 1977 ...................... 59a
Opinion of the New York Supreme Court, Albany
County, issued on February 17, 1978 ...... 24a
Opinion of the New York Supreme Court, Appellate
Division, Third Judicial Department, issued on July
eg TN aiiipienssigveilinainaicatitentniitiane 16a
Opinion of the Court of Appeals of the State of New
York, issued on May 1, 1979 ........ la
Final Judgment of the Court of Appeals of the State
of New York, entered on May 1, 1979 000... 29a
. a
Chronological List of Relevant Docket Entries
1l- 7-77
11-28-77
12- 5-77
2-17-78
3— 6-78
3— 6-78
7-27-78
8- 2-78
8- 9-78
8-14-78
o- 1-79
5- 1-79
6-26-79
Verified Petition and Complaint Served.
Verified Answer Served.
Verified Reply Served.
Opinion of the New York Supreme Court,
Albany County, issued.
Judgment of the New York Supreme Court,
Albany County, entered.
Notice of Appeal to the New York Supreme
Court, Appellate Division, Third Judicial De-
partment, served and filed.
Opinion of the New York Supreme Court, Ap-
pellate Division, Third Judicial Department,
issued.
Order of the New York Supreme Court, Ap-
pellate Division, Third Judicial Department,
entered.
Notice of Appeal to the Court of Appeals of
the State of New York served.
Notice of Appeal to the Court of Appeals of
the State of New York filed.
Opinion of the Court of Appeals of the State
of New York issued.
Final Judgment of the Court of Appeals of
the State of New York entered.
Notice of Appeal to the Supreme Court of the
United States served and filed.
Verified Petition and Complaint of Consolidated
Edison Company of New York, Inc.
SUPREME COURT
OF THE STATE OF NEW YORK
County or ALBANY
Index No. 11163-77
In the Matter of
ConsoLipaten Epison Company or New York, Inc.,
Petitioner,
for a judgment pursuant to Article 78 of the CPLR,
—against—
Pustic Service CoMMISSION OF THE
State or New York,
Respondent.
ConsoLipaTep Eptson Company or New York, Inc.,
Plaintiff,
—against—
Pustic Servick CoMMISSION OF THE
Strate or New York,
Defendant.
Petitioner-Plaintiff Consonmatzp Epison Company oF
New York, Inc. (Con Edison) by its attorneys, as and:
for its petition and complaint herein against respondent-
3
Verified Petition and Complaint of Consolidated
Edison Company of New York, Ine.
defendant Pusiic Serviczk ComMMISssION OF THE STATE oF
New York (the Commission), alleges:
NATURE OF PROCEEDINGS
1, This is a special proceeding together with actions for
a declaratory judgment and an injunction seeking, on
grounds of unconstitutionality, to set aside and enjoin the
enforcement of certain orders of the Commission which
prohibit Con Edison and other public utility corporations
in this State from utilizing printed matter inserted with
bills mailed to customers (bill inserts) as a means of ex-
pressing the views of such public utility corporations on
“controversial matters of public policy.” Since the expres-
sion of views on controversial subjects is precisely the
liberty that is protected, to individuals and corporations
alike, by the constitutional safeguards against infringe-
ment of freedom of speech and of the press, this restric-
tion on Con Edison’s freedom to communicate is a gross
violation of the First Amendment to the United States
Constitution as made applicable to the States by the Due
Process Clause of the Fourteenth Amendment, and of
similar provisions of the Constitution of the State of New
York.
Cause or Action ror Review Unper
ArticLe 78 or tor OPLR
2. Petitioner-Plaintiff, Con Edison, is a corporation duly
organized and existing under and by virtue of the laws
of the State of New York, with its principal office at 4
Irving Place, New York, New York. Con Edison supplies
electric service in five boroughs of New York City—Man-
hattan, The Bronx, Brooklyn, Staten Island and-most of
4
Verified Petition and Complaint of Consolidated
Edison Company of New York, Inc.
Queens—and in portions of Westchester County; gas ser-
vice in Manhattan, The Bronx and in parts of Queens and
Westchester; and steam service in parts of Manhattan.
_ 3, Respondent-Defendant, the Commission, is an admin-
istrative body organized and existing under the Public
Service Law of the State of New York, charged with the
responsibility by such law of regulating the rates and ser-
vice of Con Edison with respect to the furnishing of
electricity and gas (Article 4) and steam (Article 4-A).
The Commission’s principal office is in the City and County
of Albany.
4. The orders and prohibitions at issue herein have been
promulgated by the Commission under color of the au-
thority granted to it by Articles 4 and 4-A of the Public
Service Law.
5. Pursuant to Sections 73 and 86 of the Public Service
Law, the Commission may impose forfeitures against Con
Edison, or any officer, agent or employee thereof, for each
violation of an order of the Commission.
6. Due to their effectiveness and relatively low cost, bill
inserts constitute the principal means available to Con
Edison for communicating information and views to its
customers. There are no adequate alternatives.
(a) Con Edison utilizes bill inserts to convey messages
required by the Commission’s regulations or by law to be
sent to its customers, and to communicate information on
such topics as new rates, company procedures, safety in
the use of the company’s services, and conservation.
5
Verified Petition and Complaint of Consolidated
Edison Company of New York, Inc.
(b) In addition, Con Edison has utilized bill inserts, and
desires to continue to utilize bill inserts, to communicate
information and its views to its customers on subjects
which are of importance to them as consumers of utility
services. The Commission itself, in its policy statement
(hereinafter more fully referred to in paragraph 7 below),
has recognized the importance of such communication by
stating that “The expression of a utility’s views on a con-
troversial issue may truly reflect its concern for the wel-
fare of its consumers and may make a genuine contribu-
tion to a public policy debate. ..” Examples of the issues
presently confronting the utility industry which have a
significant bearing upon its consumers, and with respect
to which the Commission’s orders prohibit Con Edison
from communicating its views to its customers by means
of bill inserts, are the use of nuclear power to provide the
needs of consumers for electric energy, the replacement
of investor-owned utility service by government-owned fa-
cilities, the siting of power plants and other similar
matters.
7. Notwithstanding the foregoing, on February 25, 1977,
the Commission issued a “Statement of Policy on Adver-
tising and Promotional Practices of Public Utilities” in
which it announced (at p. 11) that
“we will not permit bill inserts to be used by utility
companies for the purpose of advertising their opin-
ions or viewpoints on controversial issues of public
policy.”
(A certified copy of the Commission’s Statement of Policy
is annexed hereto as Exhibit I). [Printed in the appendix
to the Jurisdictional Statement (31a-56a) ]
6
Verified Petition and Complaint of Consolidated
Edison Company of New York, Ine.
8. The Commission’s Statement of Policy relating to
the use of bill inserts was implemented by an order issued
on Fpruary 25, 1977, which provides that
“All utilities subject to the jurisdiction of this Com-
mission shall discontinue the practice of utilizing mate-
rial inserted in bills rendered to customers as a mech-
anism for the dissemination of the utility’s position
on controversial matters of public policy.”
(A certified copy of the Commission’s February 25, 1977,
order is annexed hereto as Exhibit II). [Printed in the
appendix to the Jurisdictional Statement (57a-58a) ]
9. On or about March 22, 1977, Con Edison applied to
the Commission for rehearing pursuant to Section 22 of
the Public Service Law, and on or about June 3, 1977,
Con Edison filed with the Commission a supplement to its
petition for rehearing. (Copies of Con Edison’s petition
for rehearing and the supplement to its petition for re-
hearing are annexed hereto as Exhibits III and IV, re-
spectively). [Exhibit III omitted in printing]
10. By order issued on July 14, 1977, the Commission
denied Con Edison’s petition for rehearing. (A certified
copy of the Commission’s July 14, 1977, order is annexed
hereto as Exhibit V). [Printed in the appendix to the
Jurisdictional Statement (59a-71a) ]
11. In forbidding Con Edison from using bill inserts
to express its views on issues of importance to it and its
customers, as hereinabove alleged, the Commission has
unlawfully instituted a program of government censorship
a a en Es ce
St a TO A I ite
7
Verified Petition and Complaint of Consolidated
Edison Company of New York, Inc.
and placed a prior restraint upon Con Edison’s communi-
cations with its customers in violation of Con Edison’s
rights under the First and Fourteenth Amendments to the
Constitution of the United States and under Article 1,
§8 of the Constitution of the State of New York.
12. In adopting a standard which permits Con Edison
to use bill inserts to communicate “noncontroversial”
matters to customers but forbids Con Edison from using
bill inserts to communicate “controversial” matters to
customers, the Commission has purported to regulate
speech on the basis of content in violation of the First
and Fourteenth Amendments to the Constitution of the
United States and Article 1, §8 of the Constitution of
the State of New York.
13. In promulgating an order which purports to permit
the expression of “noncontroversial” ideas but bans the
dissemination of “controversial” material in bill inserts,
the Commission has enunciated a standard for the reg-
ulation of communicative activity which a) fails to pro-
vide adequate notice of the scope of its proscription and
b) fails to provide adequate guidance for its application
and, thus, is void for vagueness under the First and Four-
teenth Amendments to the Constitution of the United
States and under Article 1, §§6 and 8 of the Constitu-
tion of the State of New York.
14. As a consequence of the Commission’s orders, Con
Edison is suffering irreparable injury by being prohibited
from utilizing an effective and economical means of com-
municating information and views to its customers on
“controversial matters of public policy.”
8
Verified Petition and Complaint of Consolidated
Edison Company of New York, Inc.
15. The Commission’s orders have substantially dimin-
ished Con Edison’s ability to communicate information and
views to its customers on issues of concern to Con Edison
and its customers.
16. Con Edison has no plain, speedy, or adequate rem-
edy at law.
Causg or Action ror DecuaratTory J UDGMENT
17. Con Edison repeats the allegations contained in
paragraphs 1-16.
Causs or Action ror InsuNcTION
18. Con Edison repeats the allegations contained in
paragraphs 1-16.
19. By application dated March 22, 1977, Con Edison
applied to the Commission for stay of its order of Feb-
ruary 20, 1977. Con Edison’s application was denied by
order of the Commission issued on March 30, 1977. (A
certified copy of the Commission’s order of March 30,
1977, is annexed hereto as Exhibit VI). [Omitted in
printing]
Wuenerore, Con Edison respectfully requests this Court
to:
(1) review under Article 78 of the Civil Practice Law
and Rules the orders of the Public Service Commission of
February 25 and July 14, 1977, to the end that judgment
be entered annulling, vacating and setting aside such orders
to the extent they prohibit Con Edison from utilizing bill
—
Sa ee
a
9
Verified Petition and Complaint of Consolidated
Edison Company of New York, Inc.
inserts as a means of disseminating its views on contro-
versial matters of public policy;
(2) declare that the Public Service Commission’s orders
of February 25 and July 14, 1977, to the extent they pro-
hibit Con Edison from utilizing bill inserts as a means
of disseminating its views on controversial matters of
public policy, violate the First and Fourteenth Amend-
ments to the Constitution of the United States, and Article
1, §§ 6 and 8 of the Constitution of the State of New York;
(3) grant judgment enjoining the Public Service Com-
mission from enforcing its orders of February 25 and
July 14, 1977, to the extent such orders prohibit Con
Edison from utilizing bill inserts as a means of dissem-
inating its views on controversial matters of public policy;
and
(4) grant Con Edison such other and further relief as
to the Court may seem just and proper.
Dated: New York, New York
November 7, 1977
(Subscription and verification omitted in printing)
10
Exhibit IV Appended to Verified Petition and Complaint
BEFORE THE NEw YorkK Stare
Pusutic Service ComMIssIon
In the Matter of
STATEMENT ON Pouicy on ADVERTISING AND
PromotionaL Practices or Pusiic Urmiries
PSC Case No. 27052
SUPPLEMENT TO PETITION FOR REHEARING OF
ConsotipaTtep Epison Company or New York, Inc.
To the Public Service Commission of The State of New
York:
Consolidated Edison Company of New York, Inc. hereby
supplements its Petition for Rehearing dated March 22,
1977, for the purpose of bringing to the attention of the
Commission the implications to this case of the decision
of the United States Supreme Court on May 2, 1977 in
the case of Linmark Associates, Inc. v. Willingboro, 45
U.S.L.W. 4441.
By its “Statement of Policy on Advertising and Promo-
tional Practices of Public Utilities’ and accompanying
order, issued on February 25, 1977, the Commission pro-
hibited the use of bill inserts by utility companies for the
purpose of communicating their opinions or viewpoints
on controversial issues of public policy.
In its Petition for Rehearing dated March 22, 1977,
Con Edison alleged that the prohibition was unlawful for
several reasons, including the reason that the prohibition
11
Exhibit IV Appended to Verified Petition and Complaint
abridged Con Edison’s freedom of speech and press in
violation of the First and Fourteenth Amendments to the
United States Constitution. With respect to the antici-
pated argument that the prohibition is justifiable on the
ground that alternative means are available for communi-
cation of the utilities’ viewpoints, we pointed out (at p.
10 of our Petition for Rehearing) that the Supreme Court
has said that “one is not to have the exercise of his liberty
of expression in appropriate places abridged on the plea
that it may be exercised in some other place.” Schneider
v. State, 308 U.S. 147, 163 (1939) ; See also, Virginia State
Board of Pharmacy v. Virginia Citizens Consumer Council,
Inc., 425 U.S. 748, 757-58, n. 15 (1976).
The availability of alternative means of communication
has been deemed to be a relevant consideration in cases
involving “time, place, and manner” restrictions. As the
Supreme Court stated in Virginia Pharmacy:
“We have often approved [time, place, and manner
restrictions] provided that they are justified without
reference to the content of the regulated speech, that
they serve a significant governmental interest, and
that in so doing they leave open ample alternative
channels for communication of the information.” Ibid.
at 771.
The Commission’s prohibition cannot be justified as a
proper time, place, and manner restriction because it regu-
lates the content of communications, and under the prin-
ciples of the decisions cited above the fact that alternative
means of communication are available is not a relevant
consideration. However, since the matter of alternative
means of communication is specifically addressed in the
United States Supreme Court’s opinion in the recent Lin-
12
Exhibit IV Appended to Verified Petition and Complaint
mark case, we now wish to show that even if alternatives
were considered, it must be concluded that Con Edison
has no adequate alternatives to bill inserts under the Lin-
mark standards.
In Lanmark, the Supreme Court struck down a munici-
pal ordinance which prohibited the posting of real estate
“For Sale” or “Sold” signs. The municipality attempted
to justify the ordinance in part on the ground that it re-
stricted only one method of communication, and that al-
ternatives were available for communication of the sellers’
messages.*
The standards utilized by the Supreme Court in analyz-
ing this argument may be found in the following passage
from the Linmark decision:
“... serious questions exist as to whether the [Willing-
boro] ordinance ‘Jeave[s] open ample alternative chan-
nels for communication.’ Virginia Pharmacy, supra,
425 U.S., at 771. Although in theory sellers remain
free to employ a number of different alternatives, in
practice realty is not marketed through leaflets, sound
trucks, demonstrations or the like. The options to
which sellers realistically are relegated—primarily
newspaper advertising and listing with realtors—in-
volve more cost and less autonomy than ‘For Sale’
signs; are less likely to reach persons not deliberately
seeking sales information; and may be less effective
* At the trial of the Linmark case in the Distriet Court, the
Court found that “approximately thirty percent of inquiries to
[plaintiff's real estate] office are a result of ‘For Sale’ signs being
posted on residences.” The opinion of the district court is repro-
duced in the opinion of the Court of Appeals, Linmark Associates,
Inc. v. Willingboro, 535 F.2d 786, 792, n.5. (8rd Cir. 1976).
Seventy percent of plaintiffs inquiries thus came from sources
other than “For Sale” signs.
13
Exhibit IV Appended to Verified Petition and Complaint
media for communicating the message that is con-
veyed by a ‘For Saie’ sign in front of the house to be
sold. The alternatives, then, are far from satisfac-
tory.” Ibid, at 4443 (citations omitted).*
As indicated in the affidavit of Robert O. Lehrman, at-
tached hereto and made a part hereof, Con Edison has
no adequate alternatives to the use of bill inserts for com-
municating to its customers its views on controversial
matters of public policy. A separate mailing would be
prohibitively expensive. Television and radio advertising
are not suitable means of communicating lengthy messages
on complicated subjects. And newspaper advertising is
more costly and less effective than bill inserts.
*In Linmark, the Court also considered the constitutionality of
achieving governmental objectives by restricting the free flow of
truthful information, and concluded that:
“the First Amendment disabled the State from achieving its
goal by restricting the free flow of truthful information.”
Ibid. at 4444.
The Court continued by referring to its decision in Virginia
Pharmacy, where it rejected Virginia’s claim that the only way it
could enable its citizens to find their self interest was to deny them
information that is neither false nor misleading:
“<There is . . . an alternative to this highly paternalistic
approach. That alternative is to assume that information is
not in itself harmful, that people will perceive their own best
interest if only they are well enough informed, and that the
best means to that end is to open the channels of ecommunica-
tion rather than to close them. ... But the choice among
these alternative approaches is not ours to make or the Vir-
ginia General Assembly’s. It is precisely this kind of choice,
between the dangers of suppressing information, and the
dangers of its misuse if it is freely available, that the First
Amendment makes for us.’”’ Linmark Associates, Inc. v. Will-
ingboro, supra at 4444, quoting Virginia Pharmacy, supra,
425 U.S. at 770.
14
Exhibit IV Appended to Verified Petition and Complaint
Wuererore, your petitioner, the Consolidated Edison
Company of New York, Inc., respectfully requests that
for the reasons stated herein and in our Petition for Re-
hearing, the Commission grant rehearing and amend its
Statement of Policy on Advertising and Promotional Prac-
tices of Public Utilities by revoking the prohibition as to
the use of bill inserts by utility companies for the purpose
of communicating their opinions or viewpoints on contro-
versial issues of public policy.
Dated: New York, New York
June 3, 1977
(Subscription and verification omitted in printing)
15
Exhibit IV Appended to Verified Petition and Complaint
Berore THE New York Strate
Pusiic SERvicE CoMMISSION
In the Matter of
STATEMENT oF PoLicy on ADVERTISING AND
PromotionaL Practices or Pusiic UTiities
PSC Case No. 27052
\
\
\
Strate or New York,
County or New York, 83.:
Rosert O. Leneman, being duly sworn, deposes and says:
1. I am Vice President for Public Affairs of Con-
solidated Edison Company of New York, Ine. (“Con Edi-
son”) and have knowledge of the matters involved in this
proceeding and the facts set forth herein.
2. I make this affidavit for the purpose of showing that
Con Edison has no adequate alternatives to the use of
bill inserts for communicating to our customers our views
on controversial matters of public policy.
3. In reaching this conclusion, I considered four alter-
native means of communicating our views on such issues
to our customers: a separate mailing, and television, radio
and newspaper advertising.
\
4. A separate mailing \would be prohibitively expen-
sive. We have a monthly ‘basic bill run of 2.8 million.
16
Exhibit IV Appended to Verified Petition and Complaint
Postage alone, at first class mail rates, would cost in ex-
cess of $350,000. Even at bulk mail rates, postage would
cost $210,000. Because of manpower limitations, our mail-
room would not be able to handle an additional 2.8 million
pieces of mail in any month. We would thus have to utilize
an outside contractor for handling such a mailing, the cost
of which would be approximately $21,000.
5. Television is not an adequate or effective medium for
communicating lengthy messages on complicated subjects
to a mass audience. The issues to which the Commission’s
prohibition apply would require lengthy messages for the
expression of our views. Our February 1976 bill insert on
nuclear power is a good example. Television is simply not
an effective medium for communicating our views on such
subjects. Moreover, there are time limitations applicable
to television commercials. Ordinarily a 60-second spot is
the longest we could obtain. Again, due to the nature of
the subject matter, our messages on controversial subjects
of public importance would require more than 60 seconds.
Further, there are very real questions as to whether tele-
vision stations would accept advertising which THEY
consider “controversial.” The experience of Mobil Oil—
to cite just one example—in being refused advertising
time for what appeared to us to be non-controversial mes-
sages underscores the seriousness of the problem. Tele-
vision and radio stations are admittedly frightened of
equal time requirements that might be imposed under the
Fairness Doctrine. Thus, they seem to err on the side of
conservatism in rejecting any comments that may prompt
a request for “equal time.”
Moreover, even if television stations would accept our
comments, it is an expensive medium. Production costs
17
Exhibit IV Appended to Verified Petition and Complatnt
for a 60-second television message would be approximately
$5,000-$8,000. Costs for just one minute of television time
in the New York area would range from $3,000 to $10,000,
depending on the station and the time. The number of
spots that would be required would depend on the im-
portance of the message, and if we produced a message for
television, we would ordinarily not run it fewer than 20
times.
6. Radio advertising, while less expensive than televi-
sion advertising, is inadequate and ineffective for com-
municating lengthy messages on complex subjects for the
reasons noted above. Studies show that commercial radio
does not reach the majority of the adult population—a
large part of our intended audience—in this area.
7. Newspaper advertising is more expensive in reaching
as wide an audience among our customers as bill inserts.
Newspaper advertising is also less effective than bill inserts
for the reason that in newspapers our message must com-
pete againt news stories, features and other commercial
messages. If we were to use newspaper advertising, the
most economical way of reaching the bulk of our customers
would be to use The New York Times, The Daily News and
The Westchester Rockland Newspaper group. A full page
ad in these papers costs approximately $12,800, $10,800,
and $4,700 respectively. Typesetting would cost an addi-
tional $2,000. Here again we would ordinarily run the
message more than once. If we ran the message four
times, which is the number of times we are required by
law to publish proposed rate changes in the newspapers,
the cost of newspaper advertising would be in excess of
18
Exhibit IV Appended to Verified Petition and Complaint
$100,600. Obviously, to state our point of view on a contro-
versial issue, we would use many more insertions.
8. In sum, Con Edison has no adequate alternatives to
the use of bill inserts for communicating to its customers
its views on controversial matters of public policy. A
separate mailing would be prohibitively expensive. Televi-
sion and radio advertising are not suitable means of com-
municating lengthy messages on complicated subjects. And
newspaper advertising is more costly and less effective
than bill inserts.
/s/ Roserr 0. Lenrman
Robert O. Lehrman
(Sworn to June 3, 1977)
19
Verified Answer of the Public Service Commission
of the State of New York
STATE OF NEW YORK
Supreme Court—County or ALBANY
Index No. 11163-77
(Caption omitted in printing)
Respondent, Public Service Commission of the State of
New York answering the petition herein:
1. Denies the allegations contained in paragraph 1 of
said petition.
2. Admits the allegations contained in paragraphs 2, 3,
4 and 5 of said petition.
3. Denies the allegations contained in paragraphs 6, 7
and 8 of said petition, except admits that Consolidated
Edison has used bill inserts where required by Commission
regulations, and to communicate information and its views
to its customers, and that various issues confronting the
utility industry have a bearing on its customers, and refers
to the Commission’s Statement of Policy on Advertising
and Promotional Practices of Public Utilities and its Order
issued February 25, 1977 appended as Exhibits 1 and 2 to
the petition for the full and accurate contents thereof.
4, Admits the allegations contained in paragraphs 9 and
10 of said petition.
5. Denies the allegations contained in paragraphs 11, 12,
13, 14, 15 and 16 of said petition.
6. Denies the allegations repeated in paragraphs 17 and
18 of said petition which are denied in this Answer.
20
Verified Answer of the Public Service Commission
of the State of New York
7. Admits the allegations contained in paragraph 19 of
said petition.
As AND FoR A STATEMENT OF THE GROUNDS oF THE ACTION
TAKEN BY RESPONDENT Pusuic ServicE CoMMISSION, AND
AN AFFIRMATIVE DEFENSE TO THE PetiTI0Nn, Samp REsPon-
DENT ALLEGES:
8. The Commission’s action under review herein is a
result ¢° decisions in Commission Cases numbered 27036
and 27052. Case 27036 was commenced by Complaint dated
May 24, 1976 by Natural Resources Defense Council, Inc.
et al. which complained of a January 1976 bill insert by
Consolidated Edison. The bill insert was a reprint of an
article discussing the need for the development of nuclear
power to meet the nation’s energy demand. The complain-
ants requested a ruling from the Commission seeking re-
dress for the bill insert, prohibiting the company from dis-
cussing issues of a political nature in future bill inserts,
and the opportunity to submit material for a future bill
insert discussing complainants’ views concerning nuclear
power. A copy of the Complaint and Memorandum of
Points and Authorities in Support of Complaint is append-
ed hereto as Exhibit A. [Memorandum omitted in printing]
9. After the submission of complainants’ Complaint,
petitioner, Consolidated Edison submitted a Memorandum
dated June 21, 1976 and a supplement dated July 1, 1976
opposing the relief sought by complainants. In turn, com-
plainants submitted a response to Consolidated Edison’s
submission. A copy of Consolidated Edison’s Complaint
and supplement is appended hereto as Exhibit B. A copy
of complainants’ response is appended hereto as Exhibit C.
[Exhibits B and C omitted in printing]
21
Verified Answer of the Public Service Commission
of the State of New York
10. Based upon its decision in Case 27052, as discussed
hereinafter, the Commission by Order dated February 17,
1977 denied the complaint of the Natural Resources Defense
Council, Ine. et al., since that matter had been disposed of
within the context of the Commission’s decision in Case
27052. A copy of the Commission’s Order of February 17,
1977 is appended hereto as Exhibit D.
11. Commission Case No. 27052 was commenced by re-
spondent’s Order issued July 28, 1976 issuing a Notice of
Proposed Policy Statement and Request for Comments on
Advertising by Public Utilities and Electric Promotion
Practices. The Notice discussed the issue of promotional,
institutional and informational advertising by utilities. It
solicited comments from interested parties by September
13, 1976. A copy of the Commission’s July 28, 1976 Notice
is appended hereto as Exhibit E.
12. In response to the Commission’s Notice, comments
were submitted by numerous parties including petitioner,
Consolidated Edison. A copy of the comments received
by the Commission are appended hereto as Exhibit F.
[Omitted in printing]
13. After considering the comments of the parties, the
Commission on February 25, 1977 issued its Statement of
Policy on Advertising and Promotional Practices of Public
Utilities. At the same time, the Commission issued an order
implementing certain restrictions on utility advertising. A
copy of the Commission’s Statement and Order of February
25, 1977 are appended to the petition as Exhibits I and IT.
14, By application dated March 22, i977, petitioner ap-
plied for a stay of the Commission’s order. By Order
22
Verified Answer of the Public Service Commission
of the State of New York
issued March 30, 1977, the Commission denied petitioner’s
application. A copy of petitioner’s application is appended
hereto as Exhibit G. The Commission’s order denying the
application is appended to the petition as Exhibit VI.
[Exhibit G omitted in printing]
15. Subsequent to the Commission’s Order of February
25, 1977 several parties, including petitioner Consolidated
Edison, applied for rehearing of the Commission’s Order.
Copies of the petitions for rehearing are appended hereto
as Exhibit H, except the Consolidated Edison petition is
attached to the petition as Exhibits ITI and IV. [Exhibit
H omitted in printing]
16. By Order issued July 14, 1977, the Commission de-
nied the petitions for rehearing including the petition by
petitioner Consolidated Edison. A copy of the Commis-
sion’s Order of July 14, 1977 is appended to the petition
as Exhibit V.
17. Respondent, Public Service Commission’s directives
in its Cases 27052 and 27036 were made only after full
consideration of the positions of all parties to the proceed-
ings. The actions taken by the Commission were in all
respects just, reasonable and lawful, and in no respects
arbitrary, capricious, or unlawful.
WHEREFORE, respondent demands judgment confirming
the Commission’s determinations sought to be annulled
herein and denying the relief sought by petitioner.
Dated: November 28, 1977
(Subscription and verification omitted in printing)
ee
nn a ee eee
23
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
Before the
PUBLIC SERVICE COMMISSION
of New York
NaruraL Resources Derense Counor, Inc.
Scientists’ Institute ror Pusiic InForMaTION,
FRIENDS OF THE HartTH,
Consumer Action Now,
Zero Porpuntation GrowtH, New York CuHaPrTER,
Joan McCat1,
Wurm Kuaser III,
Susan R. Marnwakine,
Complainants,
Vv.
Consotipatep Epison Company or New Yorks, Ine.
Respondent.
CoMPLAINT
1. This is a complaint asserting that Respondent Con-
solidated Edison Company of New York, Inc. (hereafter
“Con Fdison”) has unlawfully discriminated against com-
plainants, Natural Resources Defense Council, et al. (here-
after “Complainants”), in violation of Sections 65(3) and
66(12) New York Public Service Law (McKinney 1955 and
1975), has violated the rights of Complainant organiza-
tions and their members under the First and Fourteenth
Amendments to the United States Constitution and Article
1, Section 8, of the New York Constitution, has violated
24
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
accounting procedures set forth in 16 NYCRR Chapter II,
account 426.4, and has failed to operate in the public in-
terest, by utilizing its customer list and billing process to
enclose in its January 1976 billing packet an insert which
constitutes a political advertisement presenting an ex-
tremely one-sided discussion of the controversial issue of
public importance of nuclear power development, charging
such advertisement to its customers and declining to allow
the billing packet forum to be used for presentation of op-
posing points of view. A copy of the January 1976 billing
insert is attached hereto as Exhibit A. The relief sought
herein includes: (1) a declaratory ruling that the ex-
penses of this political advertisement, including the cost of
production, printing, postage, envelope and labor, must
be borne by Con Edison shareholders; (2) a declaratory
ruling that henceforth the Con Edison customer list and
billing process is not to be used for political advertising
purposes; (3) a declaratory ruling that where the billing
process had been used for purposes of propagating one
side of an issue of political controversy, as it has in the
instant case, the forum must then be opened to access by
contrasting points of view; and (4) an order directing
Con Edison to enclose an appropriate reply insert, as de-
termined by the Public Service Commission, in the electric
bills mailed during the month following the effective date
of the order.
2. Complainant, Natural Resources Defense Council
(NRDC), is a non-profit membership organization char-
tered in 1970 under the laws of the State of New York.
NRDC has long been concerned about the problems of
nuclear energy, is widely regarded as a leading critic of
the government’s nuclear energy programs, and has filed
25
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
several lawsuits on behalf of its approximately 25,000
members seeking better nuclear safeguards and standards,
or greater candor, from federal agencies responsible for
regulating nuclear power. 6,040 of NRDC’s members reside
within the New York City metropolitan area. Many are
customers of Con Edison.
Complainant, Scientists’ Institute for Public Information
(SIPI) is a non-profit, membership organization chartered
in 1963 under the laws of the State of New York. Roughly
800 of SIPI’s 2,000 members reside within the New York
City metropolitan area. Many are customers of Con Kd-
ison. Since its very inception, SIPI has been involved in
nuclear power issues, receiving and disseminating in-
formation, and acting as plaintiff in a lawsuit, SIPI v.
AEC, which required the Atomic Energy Commission to
prepare an environmental impact statement on its Liquid
Metal Fast Breeder Reactor program.
Complainant, Friends of the Earth (FOE) is a non-profit
membership organization chartered in 1969 under the laws
of the State of California. The New York chapter of FOE,
which represents New York State, has approximately 2,200
members, the majority of whom live in the New York City
area. Many are Con Edison customers. FOE has been
heavily involved in nuclear power issues since its found-
ing; its bi-monthly newspaper, Not Man Apart, features a
special section on nuclear energy in each issue.
Complainant, Consumer Action Now (CAN) is a non-
profit, membership organization chartered in 1970 under
the laws of the State of New York. CAN has approximately
20,000 members, the majority of whom reside within the
New York City metropolitan area. Many are customers
of Con Edison. As a consumer information and education
center, CAN has a particular interest in representing the
26
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
right of its members not to be charged by Con Edison for
the distribution of one-sided information on nuclear power
through the customer billing process.
Complainant, New York Chapter of Zero Population
Growth (ZPG), is an unincorporated chapter of a non-
profit national membership organization involved with
population and environmental issues. The New York chap-
ter has approximately 600 members. Many are customers
of Con Edison.
Complainant, Joan McCall, is a Con Edison customer
who resides at 1170 Fifth Avenue, New York, New York
10029.
Complainant, William Klaber III, is a Con Edison cus-
tomer who resides at 7 Avenue A, New York, New York
10009.
Complainant, Susan R. Mainwaring, is a Con Edison
customer who resides at 310 East 23rd Street, New York,
New York 10010.
Those members of Complainant organizations who are
Con Edison customers and ratepayers and individual com-
plainants, who are Con Edison customers and ratepayers,
have a right to receive information on both sides of the
nuclear power debate, have a right not to be charged the
cost of a one-sided presentation on the controversial issue
of nuclear power development, and have a right not to have
the customer list utilized for dissemination of a one-sided
presentation on the controversial issue of nuclear power
development.
3. Respondent, Con Edison, is an investor-owned public
utility with an exclusive franchise to provide electric
power service in an area including New York City and
Westchester County, New York. Con Edison’s rates and
27
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
service operations are regulated by the New York Public
Service Commission.
4. In its monthly billings, Con Edison regularly en-
closes a newsletter entitled “Customer News.” The news-
letter inserted in the January 1976 billing packet contained
an article captioned “Independence Is Still a Goal, and
Nuclear Power Is Needed to Win the Battle.” The article
contends that the development of nuclear power is essential
to the goal of energy self-sufficiency, that two-thirds of the
American people favor building more nuclear power plants,
and that the opponents of nuclear power give the impres-
sion that their numbers are larger than they actually are.
Moreover, Con Edison argues that nuclear power is a
proven technology, that it is safe, economical and clean.
The company states that “nuclear power is not new or
experimental”; that “no member of the public has ever
been injured—much less killed—in a nuclear-related ac-
cident at a nuclear power plant”; that “uranium is the
cheapest energy source available today with which to make
electricity”; that the traces of radiation released into the
air “are well within established local and nation! health
standards”; that a nuclear power plant cannot explode;
and that nuclear power is essential “to free our nation
from dependence on foreign oil.”
5. The development of nuclear power is a political and
controversial issue of public importance nationally and in
Con Edison’s service area.
6. The Con Edison billing insert presents only one side
of this political and controversial issue. Con Edison has
completely ignored the substantial and widely-recognized
contentions of Complainants and other critics of nuclear
power that the operating nuclear reactors in this country
28
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
have been plagued by accidents, some serious, runaway
costs and poor performance; that the likelihood of a major
accident, which could be catastrophic, is greater than the
industry and government promoters of nuclear energy
would have the public believe; that the potential effects of
radiation cannot be accurately calculated at this point in
time; that the cost of nuclear power is directly affected by
the fact that it is one of the most, if not the most, heavily
government-subsidized source of energy in existence; that
despite this subsidy the costs of nuclear power have risen
and are rising dramatically; that the transportation of
radioactive products along the highways and by airplane
creates the real potential of a disastrous mishap; that the
light water reactor, in operation today, could be subject
to a meltdown causing a disastrous release of radioactivity
to the environment; that the fast breeder reactor, now un-
der development, theoretically can explode causing a re-
lease of radioactive elements; and that according to some
expert estimates, if we were to increase our funding of
solar energy research and development to a level compa-
rable to that being invested in nuclear fission, this source
might produce as large a share of our national energy
requirements by the year 2020 as nuclear fission reactors.
(Complainants rebuttal to Con Ed'son’s “Customer News”
of January 1976 is attached hereto as Exhibit B.)
7. At the time Con Edison mailed its pro-nuclear power
bill insert, the New York State Legislature had before it
the Safe Energy Act (A-7104-Haley-Kremer). This bill
would halt the construction of additional nuclear power
plants in the state and spur the development of alternative
energy sources. Furthermore, the bill would exempt nu-
clear plant related expenses from the atility rate base.
29
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
8. Con Edison’s one-sided discussion of the issues in its
January 1976 bill insert clearly was intended to sway pub-
lic opinion on this controversial bill.
9. In a letter dated March 31, 1976, to Charles F. Luce,
Chairman of the Board of Con Edison, a copy of which is
attached hereto as Exhibit C, Complainants expressed
their concern that the Con Edison ratepayers not be
charged with this effort to influence public opinion on this
highly complex and controversial political issue of nuclear
power development. Complainants requested that the cost
of this bill insert, including production, printing, envelope,
postage, and labor, be charged to account 426.4, “Expendi-
tures for Certain Civic Political and Related Activities,”
(16 NYCRR Chapter II), and hence treated as a below-
the-line, non-operating expense. Secondly, Complainants
expressed concern that Con Edison, a regulated utility
with monopoly status, has used its special access to its
customer list to present to those customers only one side of
this political and controversial issue of public importance,
in which Con Edison has a huge personal economic stake.
In view of the irreparable harm already suffered by Com-
plainants, and other Con Edison ratepayers, as a result of
this use of the customer billing list, Complaints urged
that the only appropriate remedy is that the customers of
Con Edison must be presented with the opposing point of
view, and offered their rebuttal to the January 1976 “Cus-
tomer News” bulletin as an appropriate response for in-
clusion in the next Con Edison billing.
10. In a letter dated April 6, 1976, to Marc P. Reisner
of the Natural Resources Defense Council, a copy of which
is attached hereto as Exhibit D, Joyce H. Tucker, assistant
30
Exnibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
Vice-President of Con Edison, responded that the utility
has a “responsibility and duty .. . to put the nuclear power
issue into perspective for our customers;” rejected Com-
plainants request that Con Edison afford its critics an
opportunity for rebuttal; and stated that “this bill insert
clearly falls in the category of customer information and
education and, as such, all costs associated with it are
proper operating expenses.”
11, Con Edison is an investor-owned public utility which,
by virtue of a franchise from the State of New York, has
a legal monopoly over the provision of electric power ser-
vice in New York City and Westchester County, New York.
Con Edison is required, in its accounting procedures, to
deduct from its income expenditures for political activity,
including expenditures “for the purpose of influencing the
decisions of public officials or advancing the political objec-
tive of the utility.” 16 NYCRR Chapter II, account 426.4.
See also, Federa) Power Commission Uniform System of
Accounts, Subacconnt No. 426.4. Such expenditures are
properly charged to the company’s shareholders and are
not to be considered operating expenses to be borne by the
company’s ratepayers. Thus, Con Edison may not charge
any of the costs of its January 1976 pro-nuclear power bill
insert to its customers and ratepayers.
12. Moreover, Con Edison is prohibited by statute from
making or granting
any undue or unreasonabie preference or advantage to
any person, corporation or locality, or to any partic-
ular description of service in any respect whatsoever,
or subject{ing] any particular person, corporation or
31
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
locality or any particular description of service to any
undue or unreasonable prejudice or disadvantage in
any respect whatsoever. Section 65(3) New York Pub-
lic Service Law (McKinney 1955).
or from extending
to any person any form of contract or agreement, or
any rule or regulation, or any privilege or facility,
except such as are regularly and uniformly extended
to all persons under like circumstances. Section 66(12)
New York Public Service Law (McKinney 1975).
As a government-sanctioned, government-regulated monop-
oly, Con Edison was required to refrain from using its
special access to the customer mailing list through the
monthly billing mechanism for purposes of propagandizing
this “captive audience” on one side of a controversial politi-
cal issue in which it has enormous self-interest, and to
refrain from charging any of the costs of such political
advertising to its utility customers.
13. Having used the billing packet for purposes of prop-
agating its political point of view, however, Con Edison
converted the utility’s otherwise neutral mailing into a
forum for political debate on this controversial public issue.
Hence, Sections 65(3) and 66(12) of the New York Public
Service Law, the First and Fourteenth Amendments to the
United States Constitution, Article 1, Section 8 of the
New York Constitution, and proper public policy require
that the billing packet forum be made equally accessible to
critics of nuclear power development. Con Edison’s use of
the billing mechanism for presenting one side of the issue
32
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
of nuclear power development has conferred an undue or
unreasonable preference or advantage upon the company’s
management and stockholders, and those who agree with
Con Edison’s point of view on this issue, in violation of
Section 65(3) New York Public Service Law. Con Edison
has extended to such persons the privilege of access to the
facility of the billing packet and has denied this privilege
to those who disagree with Con Edison, in violation of
Section 66(12) New York Public Service Law. This denial
constitutes an undue or unreasonable prejudice or disad-
vantage to Complainants, also in violation of Section 65(3)
New York Public Service Law, and constitutes an abridge-
ment of Complainants’ rights, under the First and Four-
teenth Amendments to the United States Constitution and
Article 1, Section 8 of the New York Constitution, to com-
municate and to receive arguments on both sides of an
important controversy affecting the public health and
safety.
Wuererore, Complainants request that the Commission
issue:
1. adeclaratory ruling that the costs of the January 1976
billing insert, including production, printing, postage, en-
velope and labor must be charged to account 426.4 and thus
borne by the shareholders of Con Edison;
2. a declaratory ruling that henceforth the Con Edison
customer list and billing process is not to be used for pur-
poses of political advertising;
3. a declaratory ruling that where the billing process has
been used for purposes of advocating one side of a political
and controversial issue of public importance, the forum of
33
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
the billing packet must then be opened to contrasting points
of view;
4. an order directing Con Edison to enclose an appro-
priate insert, which presents contrasting points of view on
the issue of nuclear power development, as determined by
the Public Service Commission, in the electric bills mailed
during the month following the effective date of the order.
5. an order granting such other and further relief as
the Commission deems necessary and appropriate.
(Subscription omitted in printing)
May 24, 1976
34
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
“Exhibit A”
Con January, 1976
Epson
CUSTOMER NEWS
Independence Is Still a Goal, and Nuclear Power
Is Needed To Win the Battle
As our nation celebrates the Bicentennial of its political
independence, it is still far from winning its battle for
energy independence.
The oil-exporting nations have shown they can cripple
our economy by tripling or quadrupling the price of oil at
will, or by cutting off oil supplies entirely. Yet our nation
has made almost no progress toward the goal of energy
self-sufficiene® .
Efforts are even being made to block development of the
energy resources our nation does have—such as off-shore
oil and gas, coal and nuclear power. Along with a strong
program of energy conservation, development of these re-
sources is essential if we are to break the grip—economic
and political—that the oil-exporting countries hold on our
nation.
The efforts to slow down or halt the development of nu-
clear power are of particular concern to us as we seek to
meet our obligations as the supplier of electricity to 9
million people.
A recent Louis Harris poll shows that almost two-thirds
of the American people favor building more nuclear power
plants, with only 19 percent opposed. But opponents of
nuclear power sometimes give the impression that their
numbers are larger than they actually are—a fact that was
also pointed out by the Harris poll.
35
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
No technology—be it airplanes or elevators—is without
risk, and nuclear power is no exception. We do not claim
otherwise. However, we believe the benefits of nuclear
power far outweigh any potential risk. Therefore, we
thought you would be interested in the following facts about
nuclear power:
1. Proven Technology—Nuclear power is not new or ex-
perimental. There are more than 50 nuclear power plants
licensed to operate in this country and nearly twice as
many in foreign countries. Five are in New York State. By
1990, 16 additional units are planned to be in operation in
New York State.
Nuclear power plants make electricity the same way con-
ventional power plants do except that instead of burning
coal or oil or natural gas to boil water to make the steam
to turn turbine-generators, nuclear plants get their heat
from the energy released from splitting atoms.
2. Safe—No member of the public has ever been injured
—much less killed—in a nuclear-related accident at a nu-
clear power plant. Working in nuclear power plants is so
safe that workers can buy life insurance at the same rates
as other people. According to a reactor safety study by
Dr. Norman C. Rasmussen of the Massachusetts Institute
of Technology, the chances of being killed in an auto acci-.
dent in any one year are one in 4,000 compared to one
chance in 5,000,000,000 of being killed in a nuclear reactor
accident. This assumes 100 nuclear power plants in opera-
tion—twice as many as in operation today in the U.S.
3. Economical—Except for water power, which is not
available to Con Edison, uranium is the cheapest energy
36
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
source available today with which to make electricity. In
1975, electricity produced at our nuclear power plant at
Indian Point saved Con Edison’s customers more than $120
million in fuel costs, including related taxes. The total cost —
of electricity produced at Indian Point in 1975 was only one-
third to one-half the cost of electricity produced at Con
Edison’s modern oil-fired power plants.
4. Clean—Although sophisticated equipment is used to
minimize air pollution at fossil-fueled plants, even the most
modern oil or coal plants can’t match nuclear plants for
cleanliness. Nuclear power plants put into the air none of
the usual pollutants that come from a conventional power
plant. This is because there is no combustion. Traces of
low-level radiation are released into the air, but these small
amounts are well within established local and national
health standards. A former Atomic Energy Commission
commissioner, Clarence E. Larson, put things in perspec-
tive when he said: “A person living every minute at the
boundary of one of our licensed nuclear plants—drinking
the discharge water, breathing the air and eating fish from
the same water—would have to remain there for more than
200 years to get the same radiation exposure effect as will
result from a single chest X-ray.
5. Can’t Explode—A nuclear power plant cannot explode
like a bomb because the arrangements and characteristics
of the key ingredients are fundamentally different.
6. Needed fer Energy Independence—A one-million-kw
nuclear power plant saves about 10 million barrels of oil a
year—enough oil to provide electricity for a city of about
1,000,000 people. Further, reducing oil imports that much
—
37
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
means about $125 million a year less going to foreign oil-
producing countries. If we are going to free our nation
from dependence on foreign oil, we will need more nuclear
power, not less. Coal is not permitted in New York City
for the generation of power, and the supply of natural gas
is growing ever shorter. We support development of ad-
vanced forms of energy production. But solar electric
power, fusion and other future methods for generating
electricity are still far from practical everyday use. Nuclear
power is here and now.
38
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
“Exhibit B”
REBUTTAL TO CON EDISON “CUSTOMER NEWS,”
JANUARY 1976
With your January Con Edison bill, you received a “Cus-
tomer News” bulletin with a statement about energy inde-
pendence and nuclear power. We feel strongly that the
opinions presented in this statement as “facts” need to be
examined from an opposing viewpoint in order to enable
citizens to develop informed opinions on this matter based
on a just and reasonable balance of information.
Con Edison claims that efforts are being made to “block
development of the energy resources our nation does have
—such as off-shore oil and gas, coal and nuclear power.”
The truth of the matter is that no responsible person or
organization wants to “block” the development of coal or
off-shore oil and gas. However, environmentalists have
raised some legitimate questions about the costs, timing,
safeguards, and priorities involved in such development.
In a similar manner, we have raised legitimate questions
about nuclear energy—the subject under discussion here—
because we believe that making ourselves hopelessly de-
pendent on it—which is the course we are presently on—
has profound implications that all of us, as citizens of a
free society, have a responsibility to think about.
If we are going to build hundreds if not thousands of
nuclear power plants during the next few decades, there
must be reasonable assurances that nuclear power is ac-
ceptably safe and economical. Contrary to what Con Edison
says, there are still no firm assurances that it is either one.
39
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
Con Edison Claim Number One: Nuclear power is a proven
technology
Although there are 56 operating nuclear reactors in this
country, they have been plagued by accidents (some of
them serious), runaway costs and poor performance. The
average nuclear plant produces only 56 percent of the elec-
tricity it can theoretically generate because of chronic re-
liability problems, and the newer and larger reactors are,
surprisingly, much less reliable than the older and smaller
ones.
In a recent fifteen-month period there were 861 “abnor-
mal occurrences” in U.S. reactors, including such poten-
tially dangerous phenomena as fuel densification, fuel rod
warping, and coolant pipe fissuring. Some of these prob-
lems continue to worry and baffle nuclear engineers, and
were part of the reason that three senior General Electric
engineers quit their jobs in protest last February, saying
that nuclear power plants are “technological monsters”
which cannot be controlled.
Con Edison Claim Number Two: Nuclear power is safe
The statement that “no member of the public has ever
been injured—much less killed—in a nuclear-related acci-
dent at a nuclear power plant” is both premature and mis-
leading—somewhat reminiscent of the old tobacco industry
claim that it has never been “proven” that cigarette smok-
ing has killed anyone. Nuclear power plants produce radia-
tion, and radiation can cause cancer—but cancer takes ten
to twenty years to develop and the cause is usually difficult,
if not ‘impossible, to identify.
Although nuclear plants are heavily shielded against re-
leases of radioactivity and their record in this regard has
40
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
been good, the real issue is that, should a major accident
occur, thousands of people could be killed outright and
many more contaminated with potentially lethal doses of
radiation. (A single large plant contains the radiation
equivalent of 20,000 Hiroshima bombs.) Many eminent
scientists, including Nobel laureates, believe that the likeli-
hood of such a catastrophic accident occurring is far
greater than the nuclear industry would have us believe.
Most of the work on the Rasmussen Study cited by Con
Edison was actually performed by staff members of the
ardently pro-nuclear Atomic Energy Commission, and the
methodology of parts of the study has been criticized by
the American Physical Society, the preeminent organiza-
tion of physicists in this country.
Con Edison Claim Number Three: Nuclear power plants
are economical
Nuclear power is the most heavily subsidized source of
energy in existence. Most of the multi-billion dollar re-
search and development costs were paid, and are still being
paid, by the federal government. All the enormously so-
phisticated and expensive uranium enrichment plants were
built by the government. Uranium exploration is being
subsidized by the government (the oil companies do their
own exploration). The expensive search for a suitable
radioactive waste disposal site is being carried out by the
government. Nearly four-fifths of the nuclear insurance
taken out by utilities operating nuclear plants is guaran-
teed by the government. And now nuclear proponents are
proposing that more billions in taxpayer dollars be fun-
neled into the financially troubled nuclear industry.
If, despite these hidden subsidies, Con Edison insists
upon calling nuclear power “cheap”, it should at least tell
41
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
its customers about the rate at which the costs of nuclear
power have been rising. Nuclear power plants are now 16
percent more expensive to build than scrubber-equipped
coal-fired plants, and a team of scientists at Harvard and
M.I.T. recently concluded that nuclear plant construction
costs are increasing twice as fast as those of coal-fired
plants. Meanwhile, uranium fuel which not long ago was
expected to cost $17 per pound in 1985 is already difficult
to obtain for less than $30 per pound. Nuclear power may
be cheaper today if one forgets about its vast government
support, but its economic advantage is being steadily
eroded.
Con Edison Claim Number Four: Nuclear power is clean
Even though radioactive emissions from a nuclear plant
operating normally are relatively insignificant compared to
background and medical radiation, each reactor contains an
awesome inventory of hideously toxic radioactive products
with half-lives ranging upwards of 24,000 years (meaning
they must be guarded literally forever). These lethal sub-
stances cannot stay in the reactor indefinitely; periodically
they must be taken out and reprocessed or disposed of. As
a result, they are regularly moving along our highways,
and a substance frequently described as the most danger-
ous ever handled in quantity by man—plutonium—has been
flown into Kennedy Airport, despite doubts on the part of
some experts that the containers in which the powdered
plutonium was shipped could withstand a high impact air-
plane crash. In forty-five years, according to a 1974 Atomic
Energy Commission report, there could be 55,000 annual
shipments of highly radioactive spent fuel assemblies
alone. At some points in the nuclear fuel cycle, such ship-
42
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
ments will make inviting targets for terrorists or deranged
criminals, because purified plutonium can be used to make
a crude fission bomb and other radioactive substances could
wreak havoc if dispersed.
Con Edison Claim Number Five: A nuclear power plant
cannot explode
A light water reactor—the type in operation today—can-
not explode. However, if the cooling water is lost, the core
could melt through the bottom of the reactor, causing a
disastrous release of radioactivity to the environment.
Thus one of the most important safety systems in a reactor
is the emergency core cooling system, which is designed to
flood the reactor core with water in an emergency and
prevent a meltdown from occurring. But full-scale emer-
gency core cooling systems have never been tested, and
tests on a miniature-scale model failed repeatedly despite
computer predictions that this would not happen.
A new type of reactor being developed today, which Con
Edison is pushing very emphatically, is called the fast
breeder reactor. Unlike a light water reactor, a fast breeder
can theoretically explode. Such an explosion is admittedly
unlikely and would be nothing like an atomic bomb, but
some responsible scientists believe that it might be sufficient
to rupture the reactor’s containment structure and release
the viciously poisonous radioactive elements inside.
Con Edison Claim Number Six: Nuclear energy is needed
for energy independence
America’s use of energy is wasteful and extremely ineffi-
cient. According to estimates of the federal government
and the Ford Foundation’s recently completed Energy Pol-
43
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
icy Project, a comprehensive national program of energy
conservation and improved efficiency could save as much
energy as nuclear power is expected to produce by the end
of this century. Such a program would probably be much
cheaper, kilowatt for kilowatt, than building nuclear power
plants.
Another federal study, commissioned by NASA and the
National Science Foundation, predicted that if we were to
increse our funding of solar energy research and develop-
ment to a level more comparable to the funding now going
into nuclear fission, this seemingly safe, non-polluting and
eternally renewable source of energy could produce nearly
as large a share of our national energy requirements by the
year 2020 as nuclear fission reactors. A crash program to
develop safer alternative sources of energy, combined with
tough conservation and efficiency programs and burning of
coal and some oil away from densely populated areas, could
greatly reduce the need for new nuclear power plants.
We realize that Con Edison has a special problem in that
it is currently prohibited from burning coal in New York
City. However, this is no reason for Con Edison to paint
such a rosy picture of nuclear power for its customers
when the actual facts do little to support the company’s
unjustifiably optimistic and one-sided view.
We strongly support the goal of energy independence.
But all citizens today must beware that, in our struggle for
self-sufficiency, we do not blindly embrace a solution which
could cause grievous public injury and domestic insecurity,
at the same time creating an awesome burden of responsi-
bility for future generations of Americans.
a
44
Exhibit A Appended to Verified Answer of the Public
Service Commission of the Staie of New York
“Exhibit C”
(Letterhead of Natural Resources Defense
Council, Inc. omitted in printing)
March 31, 1976
Mr. Charles F. Luce, Chairman
Consolidated Edison Company
of New York, Inc.
4 Irving Place
New York, New York 10003
Dear Mr. Luce:
In its January 1976 billing packet, Con Edison inserted
a “Customer News” bulletin with a statement about energy
independence and nuclear power. The article attempts to
persuade Con Edison customers that nuclear power is a
proven technology, that nuclear power is safe, that nuclear
power is clean, that a nuclear power plant cannot explode,
and that nuclear energy is needed for energy independence.
The Natural Resources Defense Council, the Scientists’
Institute for Public Information, Consumer Action Now,
the Environmental Action Coalition, Friends of the Earth,
and the New York Chapter of Zero Population Growth are
concerned that the ratepayers of New York not be charged
with this effort to influence public opinion on the highly
complex and controversial political issue of nuclear power
development. (All of the above mentioned scientific, con-
sumer or environmental organizations are concerned about
the implications of rapid nuclear power development and
represent thousands of citizen members in New York City
and Westchester County, many of whom share this con-
45
Exhibit A Appended to Verified Answer of the Public
Service Commission of the Siate of New York
cern.) It is clear that the cost of this bill insert should be
charged to account 426.4 (16 NYCRR Chapter IT), which
includes expenses “for the purpose of influencing public
opinion” with respect to issues requiring action by legis-
lative bodies or regulatory agencies, as well as expenses
“for the purpose of influencing the decisions of public
officials or advancing the political objectives of the utility.”
Under this classification the cost of the advertisement
would not be considered an operating expense chargeable
to the Con Edison ratepayers, but properly charged to the
company’s shareholders.
Our concern, however, is not only with the cost of pre-
paring and printing the pro-nuclear power message. Rea-
son dictates that if a political message is to share an
envelope with the customer’s monthly bill (and we seriously
question the propriety and legality of this practice), the
advertisement should not in effect have a “free ride” on the
billing process but, rather, should share the costs of post-
age, envelopes, labor, etc. A proper allocation of the costs
between ratepayers and shareholders must include all ex-
penses in the total process.
Moreover, we are concerned that Con Edison, a utility
with monopoly status, has used its special access to the
customer list to present to those customers only one side
of this political and controversial issue of extreme public
importance, in which Con Edison has a huge personal
economic stake. We believe that some of the “facts” pre-
sented in this statement are incorrect or misleading. We
also believe that the Con Edison statement misrepresents
the goals of those who have challenged some of the federal
government’s energy programs. For example, the state-
ment that nuclear power is “the cheapest energy source
46
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
available today with which to make electricity” relies on
certain assumptions which have been disputed by responsi-
ble authorities on nuclear power economics and ignores
the vast taxpayer-financed subsidies which have been
poured into the nation’s fission power program; and the
claim that nuclear power plants “cannot explode like a
bomb” does not apply to breeder reactors and should
probably be qualified even in the case of light water re-
actors because of the potential for steam explosions. Also,
we are particularly concerned that Con Edison obliquely
accuses environmentalists of trying to “block development
of the energy resources our nation does have.” Raising
questions about the cost, safety, or wisdom of energy pro-
grams is a far cry from attempting to “block” them. In
short, we believe that the consumers of electrical power
must, in fairness, be given the opposing point of view.
We request that you inform us, as soon as possible, how
Con Edison intends to classify the costs of this political
advertjément, including the total costs of the mailing pro-
cess. In addition, we offer for your consideration our
rebuttal to your allegations regarding nuclear power. We
suggest that our response would be appropriate for in-
clusion in the next Con Edison billing, in order that your
customers might receive a fair and well-balanced presen-
tion on this complicated and controversial subject.
Sincerely yours,
Scientists’ Institute for Public Information
Natural Resources Defense Council
Consumer Action Now Friends of the Earth
Environmental Action Coalition
New York Chapter, Zero Population Growth
47
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
“Exhibit D”
(Con Edison letterhead omitted in printing)
April 6, 1976
Mr. Marc P. Reisner
Natural Resources Defense
Council, Ine.
15 West 44th Street
New York, New York 10036
Dear Mr. Reisner:
The letter of March 31, 1976 to Mr. Luce, signed by you
and others, has been referred to me for reply.
We must disagree with your assertion that the cost of the
bill insert in question should be grouped with those ex-
penses that are “‘for the purpose of influencing public
opinicn’ with respect to issues requiring action by legis-
lative bodies or regulatory agencies, as well as expenses
‘for the purpose of influencing the decisions of public of-
ficials or advancing the political objectives of the utility,’ ”
In our view this bill insert clearly falls in the category of
customer information and education, and, as such, all costs
associated with it are proper operating expenses.
Opponents of nuclear power had made many claims and
statements that were not only untrue but—much worse—
frightening to members of the public. As the operator of
a nuclear facility within our service territory, we consider
it our responsibility and duty to answer these statements
and to put the nuclear power issue into perspective for
our customers.
48
Exhibit A Appended to Verified Answer of the Public
Service Commission of the State of New York
We cannot accept your suggestion that we enclose your
proposed “response” with our next billing. Our January
bill insert was in fact a response to the anti-nuclear views
espoused by, among others, some of the organizations listed
in your letter of March 31. These views have been widely
disseminated and fully reported in the communications
media, both within and outside of our service area.
Sincerely,
/s/ Joyce H. Tucker
Joyce H. Tucker
ec: Alan McGowan
Barbara Niles
Lorna Salzman
Sherry Koehler
Ingrid Eisenstadter
se
49
Exhibit D Appended to Verified Answer of the Public
Service Commission of the State of New York
Stare or New York
Pusuic Servicr ComMIssION
At a session of the Public Service
Commission held in the City of Albany
on February 17, 1977
COMMISSIONERS PRESENT:
Alfred E. Kahn, Chairman
Edward Berlin, Deputy Chairman
Carmel Carrington Marr
Harold A. Jerry, Jr.
Anne F. Mead
Charles A. Zielinski
CasE 27036—Complaint of Natural Resources Defense
Council, Ine. e¢ al. with respect to a billing
insert of Consolidated Edison Company of
New York, Inc. concerning nuclear power.
By THE ComMMISssION :
By complaint dated May 24, 1976, Natural Resources
Defense Council, Inc., Scientists’ Institute for Public In-
formation, Friends of the Earth, Consumer Action Now,
Zero Population Growth, New York Chapter, Joan McCall,
William Klaber III and Susan R. Mainwaring (Complain-
ants) complain of a bill insert circulated by Consolidated
Edison Company of New York, Inc. (Consolidated Edison)
in its January 1976 billing. The bill insert discusses the
desirability and need for additional nuclear generating
facilities as a means of guaranteeing the country’s energy
independence from foreign oil producers.
50
Exhibit D Appended to Verified Answer of the Public
Service Commission of the State of New York
The Complainants have requested that the Commission
issue a declaratory ruling that the cost of the insert be
borne by the shareholders of Consolidated Edison, and
that henceforth the Consolidated Edison customer lists and
billing process not be used for purposes of political ad-
vertising. In addition they assert that where the billing
process is used for advertising on one side of a political
controversy, the billing packet must then be opened to
contrasting points of view; therefore, the Complainants
also request that the Commission order that Consolidated
Edison enclose an insert representing the opposing points
of view on the issue of nuclear power in a future monthly
billing. The Complainants have previously written to Con-
solidated Edison requesting that the company insert their
suggested billing supplement in its next monthly bill. The
company has refused to do so. By response dated June 21,
1976, Consolidated Edison has opposed the relief sought
by the Complainants. A reply dated July 23, 1976 was
submitted by Complainants.
Subsequent to the complaint, we issued a Notice of Pro-
posed Policy Statement and Requests for Comments on
Advertising by Public Utilities and Electric Promotion
Practices. Our resolution of the issues considered there
provides the framework in which to consider the requests
of Complainants. We have decided as a matter of general
policy to disallow expenditures for political advertising
when we determine rates for electric utilities. Further, as
we discuss in our revised Statement, we have decided to
prohibit utilities from using bill inserts to discuss political
matters, including the desirability of future development
of nuclear power.
As a result of these determinations, most of Complain-
ants’ contentions have been resolved. Our determination
51
Exhibit D Appended to Verified Answer of the Public
Service Commission of the State of New York
that the billing process should not be used for political
purposes makes it unnecessary that we discuss Complain-
ants’ request that it be opened to opposing points of view,
except insofar as the request relates to bill inserts already
published.
We are unable to agree with Complainants’ request that
we require a remedial bill insert in response to Consolidated
Edison’s January bill insert. That action would be dictated
were Complainants’ First Amendment rights to have been
violated by “state action” as would have occurred had this
Commission authorized Consolidated Edison to circulate
its bill inserts.* But we did not. In Jackson v. Metropolitan
Edison Co., 419 U.S. 345 (1974), the United States Supreme
Court declined to find state action even though the cus-
tomer disconnection involved there was undertaken pur-
suant to tariff leaves on file with the Pennsylvania Com-
mission. Here the company’s action was taken completely
on its own without the consultation or approval of this
Commission.
The Commission orders:
1. For the reasons discussed above, Complainants’ re-
quest for relief from and redress of Consolidated Edison’s
January bill insert is denied.
2. This proceeding is closed.
By the Commission,
(SEax) (SicéneD) Samvuez R. Mapison
Secretary
* As the United States Supreme Court recently stated, “it is, of
course, a commonplace that the constitutional guarantee of free
speech is a guarantee only against abridgment by government,
federal or state.” Hudgens v. National Labor Relations Board,
424 U.S. 507, 513 (1976).
52
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
Notice or Proposep Poricy SrareMent aNpD REQUEST FOR
CoMMENTs oN ADVERTISING By Pusiic Urtmiries AND
‘Execrric Promotion Practices
(Issued July 28, 1976)
Over the years, the Commission kas developed a series of
policies relating to advertising by public utility companies
and other practices designed to stimulate increased sales
of electricity. Some of these policies have in recent months
been called into question, and the Commission is consider-
ing revising them. To this end, we solicit comments from
interested parties to be submitted, in writing, to the Secre-
tary of the Commission, Empire State Plaza, Albany, New
York 12223, not later than September 13, 1976.
The promotion of electricity sales
On December 6, 1973, at the height of the energy crisis
precipitated by the exporting countries’ boycott, the Com-
mission flatly prohibited all sales promotional activities by
electric companies. We are now considering relaxing that
prohibition.
There is one aspect of the proposed relaxation on which
we do not solicit comments at this time. That would be
such promotion as would be the incidental consequence of
efforts by electric utility companies to publicize, explain,
and advise consumers on how best to take advantage of
time-of-consumption rates. As the companies introduce
53
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
such rates, informational activities of this kind are clearly
desirable, even where they might have the incidental effect
of increasing the aggregate sales of electricity.
The proposition on which we do solicit reactions is that
we relax our absolute prohibition of sales promotional ac-
tivities by electric companies generally, apart from those
that are merely ancillary to the introduction of time-of-
consumption rates. (The distinction will in important in-
stances be difficult to draw: since the downstate companies
are summer-peaking, one purpose or result of rates varying
by the season of the year could be to promote the use of
electric heating, and, largely because of the very heavy use
of electricity involved, this is the most controversial pro-
motion of all.)
On the side of continuing the flat prohibition are such
considerations as the following:
1. Electric companies are franchised monopolists, and no
public interest or need is served by permitting monopolists
to promote sales. >
2. It is especially undesirable to cover the costs of such
promotional activities in rates, thereby forcing captive cus-
tomers to pay for activities designed to influence their con-
sumption habits (in contrast with merely providing them
with information).
3. Turning specifically to the promotion of electric re-
sistance space and water heating: it conflicts with the na-
tional interest in energy conservation to promote additional
utilization of electricity, which by its very nature uses ap-
proximately 3 Btu’s of source energy to deliver 1 usable
Btu. Electric resistance heating is therefore inherently in-
efficient in its use of primary energy, compared with the
o4
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
direct burning of gas or oil in furnaces, even after making
allowance for the greater efficiency-in-use of the electricity
than those fuels.
4. The equipment for electric resistance heating is con-
siderably less costly than for gas or oil. Since builders
typically have a strong incentive to hold down the first
costs of construction, they may already have a distorted
incentive to install the former in preference to the latter,
even though the result may be to impose markedly higher
annual heating costs thereafter on the purchasers, who are
frequently, perhaps typically, not in a position to weigh
the higher future running costs against the lower initial
purchase price in making their purchase decisions. In these
circumstances, it is particularly undesirable further to en-
courage irrational purchase decisions by permitting the
promotion of electric heating.
5. The heat pump promises to mitigate some of these
efficiency disadvantages of electric resistance heating; how-
ever, the effects of its widespread introduction on utility
peak load and load factors are uncertain.
Arguing on the side of a relaxation are the following
considerations:
1. In major uses, electricity competes with oil and gas,
and while we proscribe the promotion of gas, the distribu- —
tion of heating oils is totally outside our control, and adver-
tising by those distributors freely permitted: in these cir-
cumstances, it is not only unfair but produces distorted
results for consumers to be freely exposed to advertising
messages by one set of competitors, while the other is
totally prohibited from communicating with them.
59
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
2. Electricity and electrical appliances compete with all
other goods and services for the consumer’s limited dollars.
It is inconsistent with a consumer-sovereign and free enter-
prise economy for certain goods and services to be denied
the right to compete for those dollars while other competi-
tors—many of which may be promoting even less energy-
conserving consumption—remain unrestricted. It is the
function of a regulatory Commission in such an economy
to see to it that prices accurately reflect cost—not to go
beyond that and dictate to consumers and businesses, di-
rectly or indirectly, how they should allocate their expendi-
tures. Consumers are, to be sure, entitled to protection
against misleading advertising, and the foregoing consider-
ations would probably not absolve the Commission from
responsibility to ensure that the promotional information
supplied by franchised public utilities is in fact not mis-
leading. The proper solution to the possible problem, de-
scribed earlier, arising from the possibility that builders
may have a distorted incentive to install electric resistance
heating, because of its lower first cost, is to provide pur-
chasers with reliable info mation about the expected life
cycle costs of buildings equipped with different heating
systems.
3. The function of the Commission is to see to it that the
prices of the services it regulates reflect society’s costs in
supplying them, and that consumers are well-informed—
not to tell consumers what advertising messages they may
and may not hear.
4. Gas is in short supply, and in most territories unavail-
able for use in new construction, so that for most uses the
only available alternative to electricity for space heating
36
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
is oil. Prohibition of electricity promotion thus contributes
to giving oil a monopoly in that market (whether this
creates a danger of monopolistic exploitation depends on
the effectiveness of competition in the oil industry).
5. While promotion of heating with electricity generated
_ from oil (because of its less efficient use of the primary
energy source) runs counter to our national policy of re-
ducing our dependence upon imported oil, the increased use
of electricity generated from nuclear fuel and coal would
make a positive contribution to that goal.
6. Electric space heating is environmentally preferable
to the direct combustion of oil: it is less polluting to burn
fuels in central electricity generating stations than in thou-
sands of individual furnaces.
Institutional and informational advertising
The Commission does not flatly prohibit advertising of
these kinds, nor does it contemplate doing so. (Institutional
advertising is difficult to define except as all advertising
that is not fairly clearly intended to promote sales. It
usually embraces informational advertising, but in some
contexts a distinction between the two is useful.) The issue
on which we solicit reactions has to do with the extent to
which advertising of these kinds may properly be recovered
in rates, as legitimate expenses of doing business and serv-
ing consumers.
We do not solicit comments on two kinds of advertising
our policy with respect to which is of long standing and
essentially noncontroversial:
1, Advertising that provides information of direct use
to consumers is a legitimate expense of doing business, and
57
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
properly recovered in rates. This would include, for ex-
ample, appeals for conservation; instructions in the proper
use of equipment; information about new rates, billing
practices, inspection and meter-reading; reports on matters
of direct interest to the public concerning the utility com-
pany’s service—service difficulties and progress in over-
coming them.
2. At the other extreme, political advertising in support
of or opposed to specific governmental actions—proposed
legislation or referenda—may not properly be covered by
rates, on the ground that it is either serving the interest
or promulgating the particular opinions of management
or shareholders, which may or may not coincide with those
of ratepayers. Ratepayers should clearly not be expected
to pay to have a company’s political views expressed. All
clearly political advertising is therefore recorded in a non-
operating expense account, below the line, and expenditures
recorded in this account routinely excluded from the rate-
making process.
It is in the wide area between these two extremes that we
seek guidance—the institutional advertising that is not
clearly useful to utility customers, on the one hand, or
clearly directed toward influencing specific legislation, on
the other.
There is advertising, for example, in which a company
defends, justifies, or even merely explains and describes
its activities. It might be argued, on the one hand, that
there is no reason for ratcpayers to bear the costs of such
self-justification ; that it is not of direct usefulness to them.
On the other hand, it is extremely difficult to argue, espe-
cially these days when public utilities are subjected to
frequently unjustified public attack and criticism, that these
58
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
are not, within limits, legitimate and indeed inescapable
costs of doing business in today’s conditions. It seems un-
reasonable not to afford utility managements under attack
an opportunity to explain and justify themselves. It might
be argued, of course, that since such expenditures are on
behalf of the companies rather than in the direct service of |
their ratepayers, they ought to be paid for by the share-
holders. But if they are inescapable costs of doing business,
and if, as in our policy, we allow shareholders returns only
at the minimum level necessary to attract capital, then at
least in principle if we were nominally to disallow these
expenditures from rates, we would have to provide a corre-
spondingly larger return on equity. It can be argued, in
short, that “disallowances” of such expenditures from rates
are nominal only, if not disingenuous.
One of the most controversial kinds of expenditure in
this area is advertising that directly or indirectly promotes
the merits of nuclear power. Argument over whether the
cost of advertising of this kind should be allowed in rates
has assumed major proportion. It might arguably be char-
acterized either as informative, and permissible, or polit-
ical, and to be disallowed.
The Commission has come to the view that exclusion of
the costs of such advertising from rates on the traditional
grounds that it can be fairly characterized as “political” is
no longer adequate to protect the interest of the public
generally and of ratepayers specifically. The public issues
surrounding nuclear power generation are very compli-
cated, and the public is being beset by discussions on mat-
ters in which it is of great importance that all points of
view be presented. We feel there is a definite ratepayer
interest, therefore, in a free and fair public discussion of
this matter, and that utility companies do have a contribu-
59
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
tion to make to that discussion, regardless of whether we
agree or disagree with the content of their messages in
specific instances: after all, the Commission’s assessments
today of the substantive merits of controversies like these
could well prove to be wrong tomorrow. Accordingly, a
majority of us has in two recent cases considered advertis-
ing that presented the case in favor of nuclear generation
to be informational in nature and properly included as a
cost in computing ratés in modest quantities. Others of us
have felt, however, that such an allowance in rates should
be permitted only on condition that the company use its
funds to provide something like “equal time” to reasonable
statements of legitimate opposition to this position. We
will appreciate reactions to this latter alternative.
In addition to soliciting advice on these complicated
matters, we solicit reactions to an alternative possible ap-
proach to this subject. The alternative would retain our
present scrutiny of advertising with a view to continuing
our traditional policy, described above, with respect to
advertising that can clearly be labeled as informational on
the one hand and political on the other—with routine al-
lowance of the former and disallowance of the latter; but
would abandon the necessity for detailed scrutiny and de-
termination of what to do with advertising that falls in
the broad and relatively amorphous midde area.
For that broad middle area of informational and insti-
tutional advertising, the suggestion is that we might rou-
tinely allow the companies in rates some very small pool
of dollars, based roughly on past practices, probably on
some sort of sliding scale—say, ranging between 1/10 and
1/25 of one percent in sales, possibly in inverse relation-
ship to the size of the companies—and suspend the vexing
and essentially arbitrary process of deciding with respect
60
Exhibit E Appended to Verified Answer of the Public
Service Commission of the State of New York
to each advertisement whether it should be allowed or dis-
allowed.
This proposal would obviously not solve all the problems
we have described: we would still have to determine which
advertisements are clearly political and/or self-serving,
and specifically disallowed, and which clearly informational
and of direct use to ratepayers, and therefore explicitly
allowed; and parties in rate cases would still be free to
question the propriety of the lump-sum allowance ‘for ad-
vertising in the broad intermediate category. On the other
hand, it would have the virtue of recognizing that some,
modest institutional expenditures are an inescapable and
legitimate cost of doing business, and get the Public Service
Commission out of the business of any item-by-item content
examination and evaluation of past advertisements—an
activity in a sense redundant anyhow, in view of the fact
that all we really do is set a reasonable level of rates for
the future.
If any interested parties have alternative suggestions we
would be pleased to receive them. In proposing alterna-
tives, we ask respondents to bear in mind the desirability
of reducing the considerable amount of staff and Commis-
sion time now consumed in the detailed serutiny of ad-
vertising, and in hair-splitting determinations where the
amount of dollars involved is close to minimal.
By the Commission,
SamveL R. Maptson
Secretary
alas ibaa sassenbiciCiten inti es
61
Verified Reply of Consolidated Edison
Company of New York, Inc.
SUPREME COURT
OF THE STATE OF NEW YORK
County or ALBANY
Index No. 11163-77
(Caption omitted in printing)
Petitioner-Plaintiff Conso~ipatep Epison Company oF
New York, Ino. (Con Edison) by its attorneys, as and for
its reply to the new matter contained in the answer of
Respondent-Defendant Pustic Service CoMMISSION OF THE
State or New York (the Commission), states as follows:
Tue PETITIONER OBJECTS TO, AND Moves To SrRikz,
THE New Matter ConrAaINEeD IN THE ANSWER HEREIN
Upon THE Grounp THat Tus Court Dors Nor Haves
JURISDICTION TO Review SucH Matrer
1. This is a special proceeding together with actions for
a declaratory judgment and injunction commenced by Con
Edison seeking, on the grounds of unconstitutionality, to
set aside and enjoin enforcement of orders of the Commis-
sion issued on February 25 and July 14, 1977, in Commis-
sion Case No. 27052, which prohibit Con Edison and other
public utility corporations in this State from utilizing bill
inserts as a means of expressing the views of such public
utility corporations on “controversial matters of public
policy.”
2. Case No. 27036 is a separate Commission proceeding
which was commenced by Complaint dated May 24, 1976 by
Natural Resources Defense Council, Inc. and seven other
individuals and organizations, seeking various rulings
62
Verified Reply of Consolidated Edison
Company of New York, Inc.
from the Commission with respect to the use of bill inserts
by Con Edison. A Commission order disposing of the
Complaint in Case 27036 was adopted at a session of the
Commission on February 17, 1977, and was received by
Con Edison on or about March 2, 1977. None of the parties
to Case No. 27036 sought judicial review of the Commis-
sion’s February 17, 1977 order in that proceeding, and an
Article 78 proceeding for review of that order is now barred
by the provisions of Section 217 of the CPLR.
3. In its Verified Answer in this proceeding, the Com-
mission asserts that
“The Commission’s action under review herein is a re-
sult of decisions in Commission Cases numbered 27036
and 27052” (Verified Answer, 8).
4. In paragraphs 8-10 of its Verified Answer, the Com-
mission describes the proceedings in Case No. 27036 and
appends as Exhibits A through D to its Verified Answer
the pleadings, briefs and its order in Case No. 27036.
5. After alleging certain matters relating to Case No.
27052 (Verified Answer, 11-16), the only Commission pro-
ceeding which is before this Court for review, the Com-
mission’s Answer concludes by asserting that
“Respondent, Public Service Commission’s directives
in its cases 27052 and 27036 were made only after full
consideration of the positions of all parties to the
proceedings. The actions taken by the Commission
were in all respects just, reasonable and lawful, and
in no respects arbitrary, capricious, or unlawful”
(Verified Answer, 17).
iain a iii ial ia
63
Vertfied Reply of Consolidated Edison
Company of New York, Inc.
6. This Court has no jurisdiction to review the Commis-
sion’s order in Case No, 27036. The Commission may not
seek review of its own orders, and as alleged in paragraph
2 above, none of the parties to that proceeding has sought
judicial review of the Commission’s order in that proceed-
ing, and an Article 78 proceeding for review of that order
is now barred by the provisions of Section 217 of the
CPLR.
7. Review of the Commission’s order in Case No. 27036
is not necessary for review of the Commission’s orders in
Case No. 27052. Case No. 27052 was a separate proceeding
wholly independent from Case No. 27036 and must stand
or fall on its own record; indeed, Case No. 27036 is no-
where referred to by the Commission in its orders or
Statement of Policy in Case No. 27052.
8. Consideration of the Commission’s Case No. 27036
would be prejudicial to Con Edison by injecting irrelevant
issues into this proceeding.
WuererorgE, Con Edison demands judgment striking
paragraphs 8 through 10 of the Verified Answer of re-
spondent, so much of paragraph 17 as refers to Case No.
27036, and Exhibits A through D attached to the Verified
Answer; and prays that the relief requested in its Verified
Petition and Complaint be granted.
Dated: New York, New York
December 5, 1977
(Subscription and verification omitted in printing)
64
Judgment of New York Supreme Court, Albany County
Index No. 11163-77
At a Special Term, Part I, of the Supreme Court
of the State of New York, held in and for
the County of Albany, at the County Court-
house, Hagle and Columbia Streets, Albany,
New York, on the 9th day of December, 1977.
PRESENT:
Hon. Rocer J. Miner,
Justice.
In the Matter of
Consotipatep Epison Company or New York, Inc.,
Petitioner,
for a judgment pursuant to Article 78 of the CPLR,
—against—
Pusiic Service ComMiIssION oF THE StaTE or NEw York,
Respondent.
ConsoLipatep Epison Company or New York, Inc.,
Plaintiff,
—against—
Pusiic Service CoMMIssION OF THE STATE or NEW York,
Defendant.
65
Judgment of New York Supreme Court, Albany County
The above-named Petitioner-Plaintiff (“Con Edison”)
having commenced a special proceeding and actions for
declaratory judgment and injunction, under Article 78 and
section 3001 of the Civil Practice Law and Rules, by a
notice of petition and summons dated November 7, 1977,
for judgment:
1. Annulling, vacating and setting aside orders of the
Public Service Commission of February 25, and July 14,
1977, in a proceeding entitled “Notice of Proposed Policy
Statement and Request for Comments on Advertising by
Public Utilities and Electric Promotion Practices”, to the
extent such orders prohibit Con Edison from utilizing bill
inserts as a means of disseminating its views on contro-
versial matters of public policy;
2. Declaring that the orders of the Public Service Com-
mission of February 25 and July 14, 1977, ina proceeding
entitled “Notice of Proposed Policy Statement and Request
for Comments on Advertising by Public Utilities and Elec-
tric Promotion Practices”, to the extent such orders pro-
hibit Con Edison from utilizing bill inserts as a means of
disseminating its views on controversial matters of public
policy, violate the First and Fourteenth Amendments to
the Constitution of the United States and Article 1, $§6
and 8 of the Constitution of the State of New York;
3. Enjoining the Pubiic Service Commission from en-
forcing its orders of February 25 and July 14, 1977, in a
proceeding entitled “Notice of Proposed Policy Statement
and Request for Comments on Advertising by Public
Utilities and Electric Promotion Practices”, to the extent
such orders prohibit Con Edison from utilizing bill inserts
66
Judgment of New York Supreme Court, Albany County
as a means of disseminating its views on controversial mat-
ters of public policy; and
4. Granting Con Edison such other and further relief
as to this Court may seem just and proper,
And the said matters having regularly come on to be
heard before me on the 9th day of December, 1977, and
Petitioner-Plaintiff having appeared by Joseph D. Block,
Esq. and Peter Garam, Hsq., in support of the petition and
complaint, the Respondent-Defendant having appeared by
Peter H. Schiff, Esq., Howard J. Read, Esq., of Counsel,
in opposition thereto, LeBoeuf, Lamb, Leiby & MacRae,
Esqs., Ronald D. Jones, Esq. and Andrew Gansberg, Esq.,
of Counsel, having appeared in support of the petition and
complaint for National Fuel Gas Distribution Corporation
and Orange and Rockland Utilities, Inc., amicus curiae,
and upon reading and filing the notice of petition and sum-
mons dated November 7, 1977, the petition and complaint,
verified on the 7th day of November, 1977, and exhibits I
through VI annexed thereto, the answer, verified on the
28th day of November, 1977, and exhibits A through H
annexed thereto, and the reply, verified on the 5th day of
December, 1977, and upon all the pleading and proceedings
heretofore had herein, and after due deliberation the Court
having made and filed a decision in writing on the 17th day
of February, 1978, in favor of Petitioner-Plaintiff, and
‘against Respondent-Defendant,
Now, on motion of Joseph D. Block, Esq., attorney for
Petitioner-Plaintiff, it is
ApsupDGED AND Decrzep that the relief requested in the
petition and complaint be and the same hereby is granted
in full; and it is further
67
Judgment of ‘New York Supreme Court, Albany County
ADJUDGED AND Decreep that the orders of the Public
Service Commission of February 25 and July 14, 1977, in
a proceeding entitled “Notice of Proposed Policy State-
ment and Request for Comments on Advertising by Public
Utilities and Electric Promotion Practices”, to the extent
such orders prohibit Con Edison from utilizing bill inserts
as a means of disseminating its views on controversial
matters of public policy, be and the same hereby are an-
nulled, vacated, and set aside; and it is further
ADJUDGED AND DecreEp that the orders of the Public
Service Commission of February 25 and July 14, 1977, in
a proceeding entitled “Notice of Proposed Policy State-
ment and Request for Comments on Advertising by Public
Utilities and Electric Promotion Practices”, to the extent
such orders prohibit Con Edison from utilizing bill inserts
as a means of disseminating its views on controversial
matters of public policy, are hereby declared to violate
the First and Fourteenth Amendments to the Constitution
of the United States and Article 1, §§ 6 and 8 of the Con--
stitution of the State of New York; and it is further
ADJUDGED aND Decreep that the Public Service Commis-
sion be and hereby is permanently enjoined from enforcing
its orders of February 25 and J uly 14, 1977, in a proceed-
ing entitled “Notice of Proposed Policy Statement and Re-
quest for Comments on Advertising by Public Utilities and
Electric Promotion Practices”, to the extent such orders
prohibit Con Edison from utilizing bill inserts as a means
of disseminating its views on controversial matters of pub-
lie policy.
68
Judgment of New York Supreme Court, Albany County
Dated March 2, 1978, Hudson, N.Y.
Enter.
/s/ Roczr J. Miner
Justice of the Supreme Court
Guy S. Paquin
March 6, 1978
OFFICE OF
Aupany County CLERK
Mar 6 1:11 PM ’78
Ausany, N.Y.
69
Notice of Appeal of the Public Service Commission of
the State of New York to New York Supreme Court,
Appellate Division, Third Judicial Department
STATE OF NEW YORK
SUPREME COURT—COUNTY OF ALBANY
Index No. 11163-77
(Caption omitted in printing)
Puease Take Notice that the above named Respondent-
Defendant hereby appeals to the Supreme Court, Appellate
Division, Third Department, from the J udgment of the
Honorable Roger J. Miner, dated March 2, 1978, and en-
tered in the Office of the Clerk of the County of Albany,
New York, on the 6th day of March, 1978, and from each
and every part of said Judgment and Order.
Dated: Albany, New York
March 6, 1978
(Subscription and addressees omitted in printing)
70
Order of New York Supreme Court, Appellate
Division, Third Judicial Department
At a Term of the Appellate Division of the
Supreme Court of the State of New York,
held in and for the Third Judicial Depart-
ment, at the Justice Building in the City
of Albany, New York, commencing on the
19th day of June, 1978.
Present:
Hon. A. Frankurn Manoney,
Presiding Justice,
Hon. Louis M. Greensiort, .
Hon. Micuaret E. Sweeney,
Hon. Roserr G. Mary,
Hon. Ann T. Mrxott,
Associate Justices.
County Clerk’s Index No. 11163-77
In the Matter of
ConsoLipatep Epison Company or New York, Inc.,
Petitioner-Respondent,
For a judgment pursuant to Article 78 of the CPLR,
—against—
Pustic Service CoMMISSION OF THE
State or New York, .
Respondent-A ppellant.
Consotipatep Epison Company or New York, Inc.,
Plaintiff-Respondent,
—against—
Pusiic Service CoMMISSION OF THE
Strate or New York,
Defendant-Appellant
71
Order of New York Supreme Court, Appellate
Division, Third Judicial Department
The appellant, Public Service Commission of the State
of New York having appealed from a judgment of the
Supreme Court of Albany County, entered on the 6th day
of March, 1978, in the office of the clerk of the County of
Albany, and said appeal having been presented during the
above-stated term of this Court, and having been argued
by Howard J. Read, Esq., of counsel for appellant, and by -
Joseph D. Block, Esq., of counsel for respondent, and, after
due deliberation, the Court having rendered a decision on
the 27th day of July, 1978, Justices Sweeney and Main
dissenting, it is hereby
OrvereEp that the judgment entered March 6, 1978 be and
hereby is reversed, on the law, without costs, and the order
declared constitutional.
ENTER:
/s/ John J. O’Brien
Clerk
Darep anp Enterep: August 2, 1978.
A True Copy:
Joun J. O’Brien
Clerk
72
Notice of Appeal of Consolidated Edison Company of
New York, Inc. to Court of Appeals of
the State of New York
SUPREME COURT
OF THE STATE OF NEW YORK
County or ALBANY
Index No. 11163-77
(Caption omitted in printing)
Piease Take Norice that Consolidated Edison Company
of New York, Inc. (“Con Edison”), relying upon questions
directly involving the construction of the provisions of
Article 1, Sections 6 and 8 of the Constitution of the State
of New York and the First and Fourteenth Amendments
to the Constitution of the United States, appeals as of
right to the Court of Appeals of the State of New York
from the order of the Appellate Division, Third Depart-
ment, entered in the office of the Clerk of the Appellate
Division on August 2, 1978, which order declared an order
of the Public Service Commission constitutional and which
order reversed on the law the judgment of the Supreme
Court herein, entered in the office of the Clerk of the
County of Albany on March 6, 1978. Justices Sweeney
and Main of the Appellate Division, Third Department,
dissented on a question of law in favor of Con Edison
from the order of reversal and would vote to affirm the
judgment of the Supreme Court on the law. The judgment
of the Supreme Court annulled, declared unconstitutional,
and permanently enjoined enforcement of orders of the
Public Service Commission prohibiting utilities, including
Con Edison, from utilizing bill inserts as a means of dis-
73
Notice of Appeal of Consolidated Edison Company of
New York, Inc. to Court of Appeals of
the State of New York
seminating their views on controversial matters of public
policy.
Piease Take Furruer Notice that Con Edison appeals
from each and every part of the order of the Appellate
Division and from the whole thereof, pursuant to Section
5601(a) and (b)(1) of the Civil Practice Law and Rules.
August 9, 1978
(Subscription and addressees omitted in printing)
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.