In the 1917 case of People of the State of New York ex rel. New York & Queens Gas Company v. McCall et al., the Supreme Court examined whether a public service commission had overstepped its authority by ordering a gas company to provide service in an area where it was not profitable for them to do so. The court ruled that while public utilities have certain obligations due to their monopoly status, these obligations are not unlimited and must be balanced against the utility's right to earn a reasonable return on its investment. In this particular case, they found that requiring the gas company to serve an unprofitable area would place an undue burden on them and therefore exceeded the commission's regulatory powers.

In the dissenting opinion for People of the State of New York ex rel. New York & Queens Gas Company v. McCall et al., it was argued that the Public Service Commission's order to reduce gas rates was an unconstitutional deprivation of property without due process. The dissenting justices believed that while public utilities are subject to regulation, this does not give regulators carte blanche authority to set rates so low as to be confiscatory and thus violate constitutional protections against taking private property for public use without just compensation. They contended that a fair return on investment should be guaranteed in rate-setting decisions, which they felt had been ignored by the majority ruling in favor of consumer interests over those of utility shareholders.