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The Public Service Commission of New York (PSC), in the interest of conserving energy, enacted a regulation that prohibited electric utilities from promoting electricity use. The PSC's regulation distinguished promotional advertising from informational advertising, which was permitted. Central Hudson Gas and Electric challenged the regulation in a New York State Supreme Court, which upheld the regulation. The Appellate Division of the New York State Supreme Court affirmed the decision, as did the New York Court of Appeals.

Did the PSC's ban on advertising violate the freedom of speech protected by the First and Fourteenth Amendments?

Yes. In an 8-1 opinion, the Court overruled the Court of Appeals of New York and held that the New York's ban violated the right to commercial speech. Writing for the majority, Justice Lewis F. Powell cited the protections for "commercial speech from unwarranted governmental regulation" set forth in Virginia Pharmacy Board v. Virginia Citizens Consumer Council. The Court recognized New York's interest in promoting energy conservation and accepted that the PSC's regulation would directly further that interest. However, since the regulation restricted all promotional advertising regardless of its effect on electricity use, it violated the First and Fourteenth Amendment under First National Bank of Boston v. Bellotti. Justices William J. Brennan, Jr., Harry A. Blackmun, and John Paul Stevens each wrote opinions concurring in part and in the judgment.