Des Moines Gas Co. v. City of Des Moines
Headline: Local gas-rate ordinance upheld: Court refuses to block Des Moines’ 90¢ per thousand cubic feet cap, denying a permanent injunction while allowing the rate to be tested in practice.
Holding: The Court affirmed the lower court’s confirmation of the valuation report, denied a permanent injunction, and upheld the city’s ordinance fixing gas at ninety cents per thousand, but ordered dismissal without prejudice.
- Lets Des Moines enforce a 90¢ per thousand gas rate while its effects are tested.
- Prevents the gas company from getting an immediate permanent injunction against the ordinance.
- Allows the company to renew its challenge later if rates prove confiscatory in practice.
Summary
Background
A private gas company that has supplied Des Moines since the 1860s sued to stop a 1910 city ordinance that set the price of gas at ninety cents per thousand cubic feet. The company argued the city’s new price would take its property without fair compensation, violate contracts, and be confiscatory. A special master examined the company’s long history, its financing and bonds, and prepared a detailed valuation of the plant and its assets.
Reasoning
The court focused on whether the ordinance would prevent the company from earning a fair return on the value of its plant. The master valued the physical plant (about $1,937,402) and summed items to roughly $2,240,928, allowed fifteen percent overhead ($296,254) and small organization costs, and considered but ultimately rejected a separate $300,000 “going value” item and a $140,000 pavement allowance. The master also found a six percent return would not be confiscatory and estimated gas could be produced for sixty cents per thousand. The District Court confirmed the master’s report and dismissed the company’s suit. The Supreme Court affirmed those factual findings and legal conclusions, agreeing that the special master’s valuation and refusal to include the separate going-value and pavement adjustments were correct.
Real world impact
The decision lets Des Moines enforce the 90¢ rate while the practical effects are tested. The gas company cannot obtain a permanent injunction now, but the dismissal is to be without prejudice — the company may renew its challenge later if actual experience shows the rate is confiscatory.
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