Perth Amboy evening news., 1912-12-27

to acceed to 1t meant the fix
ing, without investigation, of rates
for a period of five years.
Complaint by Paterson.
1t was on June 8, 1911, that the
hrst complaint vas filed with the
board by Mayor Andrew F. Mcbride,
of Paterson, relating to gas, cleo
trio, water, trolley and railroad COM
mutation rates. On July 25 the
Board adopted a resolution calling
for a hearing "as to whether the ex-
listing schedule of rates of public
service gas companies for gas is Just
and reasonable" The city of Pas
sale on August 1 filed a petition for
an inquiry 8s to gas rates. The TAX
ing of testimony was begun January
3, 1912, and was completed Septem-
Der 13, last.
Va1uing the Property.
In valuing the tangible property of
the company in the Passaic Division
as a basis for determining a reason
able rate, the State Board fixed the
figure at $4,75O,0 600, while the quot
ed value framed by the company was
$8,909,491. The state board arrived
at its total by the following compila-
ton: Value of land, s111,160; man
ufacturing plant, $~1,161,55O; distrib-
uting system, $2,465,270; working
capital, $4,000, a total of $3,987,-
$50; allowances were made of
$4,000 to adjust figures to July l.,
1911, the valuations having been
taken as of october 1, 1911, and for
depreciation, of 5000, $50, leaving a
net valuation on these items of $3.-
$4,000. For these items the COM
pany claimed a value of $5,818,940.
AS to the intangible property, In
Guiding organization, franchises, cost
of establishing business, ETC., the
board allowed $1,025,00O, while the
company claimed a value on this item
OF ~s3,O90,55l.
The State Board allows nothing
whatever for good will" on the con-
tention that where a particular SER
vice is furnished by only one COM
pany within a given area, competition
being absent, good will does not
exist. With respect to going con-
Germ" value, the decision says hat a
public utility a have an excess In
value owe and above the value Of Its
tangible property. A plant with a
business attached. the board declares,
has a value greater than the value of
attached. The board decides, too,
that the going concern value"
should enter into the base upon
which public utilities are entitled to
earn a fair return.
The Franchise Value.
Commenting upon it's fixing the
franchise value at $1,O25,0O0, in
place Of the ~$1,392,235 claimed by
the company, the board says, in part:
at is the public policy of the
State of New Jersey at present not to
allow the capitalization Of franchises
for an amount in excess of the actual
cost involved In obtaining said fran
That this Is a wise and equit-
able policy, we think is incontesta-
The state commission further de- !
that securities issued inner |
gers, as was done In this case by the
Public Servfee Corporations. are not
/ proper basis for rates. The COM
pany commended that the par value of
securities originating In the merger
Of six different gas and electric con-
in this district in 1899 deter
mines an amount below which the
boards aggregate valuation should
not fall. This contention is express
ly denied by the state board.
Dealing with this contention, the
board points out that in the CONSOLE
of the six gas and electric
Passaic Gas & Electric Company In
4 Ona %ho o~ttol,1of3or re fhn lottnr
company vas fixed at 100000 in
and a like amount in bonds.
OF this, approximately all the stock
and $~4,100,O00 of the bonds were
used in effecting the consolidation.
The board finds that the c~apitaliza-
ton resulting from the consolidation
was in excess OF the real assets.
Return on Investment.
The state board states that it does
not wish to go on record as favoring
any particular rate Of return applica-
BILE to all cases. 1t declares, how
ever, that the return must be suffi-
cient to attract the large amount of
capital required each year in making
the additions and extensions to plant
and distribution system which the
growth in communities demands. 1t
says that the price fixed, ninety cents
per thousand cubic feet. will afford a
return of approximately 5 per cent.
on the value Of the property as found
by the board. The board finds that
the general efficiency Of the company
is at least as good and probably bet
ter than the average Of the compa-
MES with which comparisons have
been made.
The transcript OF the testimony
fills 2,541 pages. not including ex-
hibits. The counsel in the case were
as follows: For the board, Frank Fl.
Sommer: for the company, Thomas
NJ. McCarter. Frank Bergen, l.. D. H.
Gilmour and E. A. Armstrong: for
Paterson. Thomas F. McCran and
Edward F. Mercy; for Passaic.
George l.. Record and Albert o. Mil
Ter. The engineers who made the in
ventory and the appraisal were: For
the board. Forstall and Robson, and
Phllander Belts: and for the COM
pany, William w. Randolph. Pro-
lessor Edward w. Bemmis repre-
scented the cities as expert advisor,
and Marvin Scudder was the account
ant employed by the board.