204 rosa: regulation of natural monopolies 



gas or water pipes in the ground, or two sets of telephone or ele- 

 tric hght wires and poles encumbering the streets. Having two 

 telephone companies in a city forces a large proportion of their 

 patrons to pay for both services; two street railway systems gen- 

 erally give less satisfactory service and fewer transfers than one 

 would do. In short, these utilities are natural monopolies, and 

 the highest efficiency and lowest rates are only possible when 

 each one has the entire business of a given city or territory. So 

 long as the right to regulate public service companies was denied, 

 the idea of granting monopoly privileges was repugnant, and hence 

 competition was encouraged with the hope of escaping the ill 

 effects of unregulated monopoly. But now that the right and 

 duty of regulating all public service corporations is admitted by 

 the companies themselves as well as by the courts, the ill effects 

 of monopoly maj^ be escaped and at the same time the beneficial 

 results of economy and efficiency may be realized. To understand 

 what effective regulation involves, we must consider the obliga- 

 tions imposed upon public utility companies, and the character 

 of the service rendered by each. 



When a community grants an exclusive franchise for a term of 

 years or for an indefinite period to a corporation, with the right 

 to regulate the quality of the service it shall render and the prices 

 it may charge for such service, it undertakes a serious responsi- 

 bility. The interests of the public must be safeguarded, but at 

 the same time the interests of the company and its stockholder 

 must be respected. A public service commission, equipped with 

 a full knowledge of the technical, commercial and legal aspects 

 of the business, and endowed with a judicial spirit, will see that 

 the following duties are fulfilled by each public utility company 

 in its jurisdiction. 



1. To perform any duties especially prescribed by law. 



2. To serve all who request service and make nondiscrimina- 

 tions. 



3. To provide safe and adequate service. 



4. To charge just and reasonable rates. 



