Cite as: 519 U. S. 278 (1997)
Opinion of the Court
and, after initial efforts at regulation by statute at the state level proved unwieldy, the States generally left any regulation of the industry to local governments. See Dorner §§ 2.03, 2.04. Many of those municipalities honored the tenets of laissez-faire to the point of permitting multiple gas franchisees to serve a single area and relying on competition to protect the public interest. Ibid. The results were both predictable and disastrous, including an initial period of "wasteful competition," 5 followed by massive consolidation and the threat of monopolistic pricing.6 The public suffered through essentially the same evolution in the electric industry.7 Thus, by the time natural gas became a widely mar-5 During this period, " '[t]he public grew weary of the interminable rate wars which were invariably followed by a period of recoupment during which the victorious would attempt to make the price of the battle of the consumers by way of increased rates. Investors suffered heavy losses through the manipulation of fly-by-night paper concerns operating with 'nuisance' franchises. . . . Everybody suffered the inconvenience of city streets being constantly torn up and replaced by installation and relocation of duplicate facilities. The situation in New York City alone, prior to the major gas company consolidations, threatened municipal chaos.' " Dorner § 2.03 (quoting Welch, The Odyssey of Gas—A Record of Industrial Courage, 24 Pub. Utils. Fortnightly 500, 501-502 (1939)).
6 Reticence was not the order of the day. When, for example, the last two surviving gas companies supplying the citizens of Brooklyn announced their merger in October 1883, they also announced that gas prices would immediately double. Dorner § 2.03.
7 The electric industry burgeoned following Thomas Edison's patent on the first incandescent electric lamp in 1878. Dorner, Beginnings of the Gas Industry, in 1 Regulation of the Gas Industry § 1.06 (American Gas Assn. 1996). Again, after an initial period of unsuccessful regulation by state statute, States mostly left regulation of the electric industry to municipal or local government. Swartwout, Current Utility Regulatory Practice from a Historical Perspective, 32 Nat. Res. J. 289, 298 (1992). "[M]ultiple franchises were handed out, and duplicative utility systems came into being." Id., at 299. The results were "ruinous and short lived." Ibid. For example, 45 mostly overlapping franchises were granted for electric utility operation in Chicago between 1882 and 1905. By 1905, however, a single monopoly entity had emerged from the chaos, and customers ended up paying monopoly prices. Id., at 300.
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