The Telegraph-courier. [volume] (Kenosha, Wis.) 1888-1946, 1909-08-12
Railroad Commission Hands Down
the Most important Decision
Since Its Organization
FRANCHISE VALUES FIXED
Amigo Water Case Gives State Com
mission a Chance to Hand
Down Decision in Regard
80 Franchise Values

The claims which the public utility
corporations of Wisconsin made to the
effect that they should be allowed
large sums as the value Of franchises,
going value and other intangibles
have been practically swept off the
board by the railroad commission in
its first decision dealing conclusively
with these questions. If any value at
all is allowed in these public service
properties on account of intangibles,
this value must be clearly shown to
| be of the nature of actual investment,
that is money expended and with a
reasonable degree of wisdom. Such
a value the commission holds to come
within the law as property fused and
useful for the convenience of the
public. =
The first announcement of the views
of the commission with respect to
these claims made by the corporations
in. contained in the decision of the
Amigo Water case, wherein a reduc-
ton of rates and improvement of
service WIS demanded by citizens.
When such complaint is entered, the
commission, according to the public
utilities law determines the value of
the property devoted to the public
service and then fixes rates, which the
law says shall be at least sufficient to
pay all Of the operating expenses
maintain the property intact and leave
a fair return upon the investment.
When the commission came to value
the first public utility plants against
whom complaints had been made, these
corporations Immediately tried to in
fate their values setting up claims to
the effect that the value of the plant
comprised not only the values of the
physical elements Of the property, but
| also a large sum in addition on &C
count of such 'intangible' values as
franchise value "going business value
based upon the. bigness Of the earnings
which the property had made in the
past.
With respect to franchise value the
commission holds that only in such
cases as where the. municipality de-
manded and received a sum of money
for the franchise can this value be
allowed. If the franchise is granted
without actual payment therefor the
commission says no value upoa she
franchise will be allowed.
With reference to the claims that
substantial value lay in the fact that
the business was established and the
concern was a going enterprise some
companies claimed that they should be
allowed to earn on as high as twice
as much capitalization as was required
to build the physical plant The Madi-
son Gas & Electric company claimed
some $4,000 or more on this account
To the settlement of these important
questions, the commission devoted
many months of time and in this case
declares that "going value as s basis
for rates will be allowed only when
the requirement of the going element
of the business has involved neces-
sary and reasonably wide investment
of money, and even this may not be
allowed in case it appears that the cor
poration has exacted from the people
such high rates in the past, SO that
these costs of getting business shall
have been returned to the investors.
Throughout the decision the commits
sion made it plain that it has APP
jproached the question as one of equity
and fairness as between the consumer
and the investor
The Amigo case was brought by
twenty or more petitioners headed
by the mayor, George w. Hill, alleging
| inadequate service and unreasonable
charges and demanding that meters be
/ installed and the rates be based upon
the actual amount of water used by
each consumer The commission i'm
: mediately ordered the service improv-
ed and in compliance with this order
the company has spent nearly $4,000
in betterments and in a recent service
test it was found that all requirements
of the commission had been made by it
$50 far as service was concerned. The
commission defers making an order for
a general installation of meters, de
claring that this subject will be taken
Fup again at an early date or as soon
las observation can be had of the effect
of the recent changes on the finances
[of the property and then a re-adjust-
Ement of the rates may be made. The
net result therefore to the people Of
Amigo is that while for a short time
at least they will pay the same rates
Ethey are getting more for their money
because the service has been material
lly improved.
|
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