Held: A regulation of appellee New York Public Service Commission which completely bans an electric utility from advertising to promote the use of electricity
violates the First and Fourteenth Amendments. Pp. 561-572 . (a) Although the Constitution accords a lesser protection to commercial speech than to other
constitutionally guaranteed expression, nevertheless the First Amendment protects commercial speech from unwarranted governmental regulation. For
commercial speech to come within the First Amendment, it at least must concern lawful activity and not be misleading. Next, it must be determined whether the
asserted governmental interest to be served by the restriction on commercial speech is substantial. If both inquiries yield positive answers, it must then be decided
whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest. Pp.
561-566 . (b) In this case, it is not claimed that the expression at issue is either inaccurate or relates to unlawful activity. Nor is appellant electrical utility's
promotional advertising unprotected commercial speech merely because appellant holds a monopoly over the sale of electricity in its service area. Since
monopoly over the supply of a product provides no protection from competition with substitutes for that product, advertising by utilities is just as valuable to
consumers as advertising by unregulated firms, and there is no indication that appellant's decision to advertise was not based on the belief that consumers were
interested in the advertising. Pp. 566-568 . (c) The State's interest in energy conservation is clearly substantial, and is directly advanced by appellee's regulations.
The State's further interest in preventing inequities in appellant's rates -- based on the assertion that successful promotion of consumption in "off-peak" periods
would create extra costs that would, because of appellant's rate structure, be borne by all consumers through higher overall rates -- is also substantial. The latter
interest does not, however, provide a constitutionally adequate reason for restricting protected speech because the link between the advertising prohibition and
appellant's rate structure is, at most, tenuous. Pp. 568-569 . [p*558] (d) Appellee's regulation, which reaches all promotional advertising, regardless of the
impact of the touted service on overall energy use, is more extensive than necessary to further the State's interest in energy conservation which, as important as it
is, cannot justify suppressing information about electric devices or services that would cause no net increase in total energy use. In addition, no showing has been
made that a more limited restriction on the content of promotional advertising would not serve adequately the State's interests. Pp. 569-571 . 47 N.Y.2d 94,
390 N.E.2d 749, reversed. Opinions POWELL, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, and MARSHALL,
JJ., joined. BRENNAN, J., filed an opinion concurring in the judgment, post, p. 572 . BLACKMUN, J., post, p. 573 , and STEVENS, J., post, p. 579 , filed
opinions concurring in the judgment, in which BRENNAN, J., joined. REHNQUIST, J., filed a dissenting opinion, post, p. 583 .
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