The Supreme Court, rebuffing a long-standing cause of consumer and energy activists, yesterday struck down government bans against advertising and political propagandizing by utilities.
The court invalidated two New York regulations, saying they violated the utilities' right of free speech.
One regulation banned ads promoting new uses of electricity. The other prohibited the inserts -- on controversial topics such as nuclear power -- that utilities sometimes mail with monthly bills.
The fact that the utilities are regulated "monopolies," the court ruled, does not deprive them of their constitutional protections.
The court's 8-1 ruling does not prevent regulatory agencies from ensuring that the costs of utility advertising and bill inserts do not fall to the consumer.
The rulings in two seperate cases appeared to expand significantly the rights of regulated commercial enterprises to speak out on issues with constitutional protections closer to those allowed individuals.
The Mobil Oil Co., for example, had been closely following these cases because of its widespread and controversial public-issue advertising campaign.
Anticipating future attempts at restriction -- on grounds that it, too, is heavily regulated by government -- Mobil filed an amicus curiae brief with the Supreme Court, urging it to overturn the ban.
Mobil also hoped to win support in its fight with television networks that have refused to run its ads. But yesterday's decision appeared to have no immediate bearing on that dispute.
Yesterday's rulings stemmed from regulations imposed by the New York State Public Service Commission and challenged in court by the Central Hudson Gas and Electric Corp. and Consolidated Edison.
The ban on advertising promoting new uses of electricity was first imposed during the 1973 energy crisis as a way of conserving energy. Officials of the state regulatory agency believed the action legal because the utility was a state-regulated monopoly.
The justices ruled that monopolies do not necessarily give up the right of free speech already protected for other commerical enterprises by prior decisions.
Five of the eight justices acknowledged, to the consternaton of Justices Harry Blakcmun, William Brennan and John Paul Stevens, that there might be times under which the state could restrict otherwise lawful commercial free speech.
But this case was not one of those times, Justice Lewis Powell wrote for the five.
New York, he said, passed only one of four tests required before commerical free speech can be suppressed.
The state did show that it has a "substantial" interest in energy conservation, but failed to show that the ban helped conserve energy, that the ads were unlawful and misleading and that the state had explored other, less far-reaching ways of achieving its stated purpose.
The connection between the advertising prohibition and the possibility of conserving energy was "tenuous" and "speculative," Powell wrote.
The second case's ban on bill inserts imposed in New York prohibitied only matters of a controversial nature. The case arose from a complaint by anti-nuclear activists about a ConEd insert in January 1976: "Independence Is Still a Goal," the insert read, "and Nuclear Power is Needed to Win The Battle."
With Powell writing, the Court ruled 7-2 that while restrictions on the "time, place and manner" of free speech could be legitimate, the New York insert ban was impermissibly aimed at the content of free speech or the nature of the message itself.
The commission "has undertaken to suppress certain bill inserts precisely because they address controversial issues of public policy." The fact that the state banned inserts on either side of the controversy does not save the prohibition, the court said. Nor does its contention that bill recipients, the consumers, are a "captive audience." They can throw out the inserts if they choose.
The ban, the court said, "strikes at the heart of the freedom to speak."
Justices Harry Blackmun and William Rehnquist dissented in the ConEd case, arguing that a utility's status as a state-created monopoly gives it lesser protection than other companies. They said that allowing the bill inserts in effect forces consumers to foot the cost of a "coerced subsidy."
Rehnquist dissented for similar reasons in the other utility case.