In the 1905 case of Peoria Gas and Electric Company v. Peoria, the U.S Supreme Court ruled in favor of the city of Peoria, affirming that it had a right to regulate gas prices within its jurisdiction. The dispute arose when the City Council passed an ordinance setting maximum rates for gas sold by utility companies operating within its boundaries. The Peoria Gas and Electric Company challenged this ordinance on grounds that it violated their Fourteenth Amendment rights as they were not given a fair opportunity to contest these rates before they were implemented. However, Justice Holmes delivered the opinion of court stating that due process does not require advance notice or hearing before rate regulation is imposed on public utilities like gas companies; rather such matters can be contested after implementation through courts if deemed unreasonable or confiscatory. This decision upheld municipalities' power to regulate public utilities for protecting consumers against exorbitant charges while ensuring reasonable returns for service providers.

In the dissenting opinion for Peoria Gas and Electric Company v. Peoria, Justice Harlan argued that the city of Peoria had no right to unilaterally alter or terminate its contract with the gas company without mutual consent. He contended that such a move violated both state law and constitutional principles protecting contractual obligations from impairment by legislative action. Harlan believed that once a municipality enters into a valid contract, it cannot simply change its terms because it later finds them inconvenient or undesirable; this would undermine faith in public contracts and potentially deter private companies from entering into agreements with municipalities in future. Thus, he disagreed with majority's ruling which allowed cities to modify their own contracts at will.