Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1913-12-02
DEFENDS CUT IN
PASSA|C GAS RATE
Counsel Quotes Authorities to
Support Utility Boards
Recent Action.
Especial to the Newark start


TRENTON, Dec. Frank n. SOM
mer defended before the Court Of Err
rors and Appeals today the action OF
the public utilities commissioners in
lowering the gas rate in the Passaic
district from 81 thousand to 80 cents.
His argument was that the Public
Service Gas Company was always
subject to the legislative power OF
fixing Just and reasonable" rates and
that the Legislature could do this
through an administrative agency
This theory, he said, was supported
by a preponderance of authorities.
Paterson and Passaic were rep
resented by George L. Record, WHO
argued that no allowance should have
been made for franchise OF for In
tangible value of the company's bust
ness as a going concern In making al
appraisal for determining just rate
Robert II. McCarter. in opposition
contended that the special franchises
could not be ignored.
1T will appear clearly" he said
that to sustain the judgment of the
Supreme Court would be a serious IN
jury not only TO thes appellant. but to
the substantial and permanent inter-
ests of the State itself, because nc
State can prosper where property is
insecure"
In the brief submitted to the court
by Mr.. Sommer. counsel for the Pub
lie Utility Commissioners, 1t was con-
tended that the action of the COM
missioners in segregating the Passaic
| district and fixing the ninety-cent
| rate, was justified. Summarized, the
points made by Mr.. Sommer were as
follows:
1.-THE business of supplying gas
under a grant by the State is of a
public nature. The business of sup
plying gas under a grant by the State
being of public nature the Public
| Service Gas Company and It's lessons,
were, from the beginning, subject to
an obligation imposed by the COM
mon law which confined the rate to
the standard of just and reason
able rate.
1.-The basis of all calculations as to
the justice and reasonableness of the
rate charged in business Of public
nature is, under the common law, the
fair value of the property employed
for the public convenience.
ITO square with the common law
standard of a just and reasonable
rate the rate exacted in business of
public nature must neither yield an
unreasonable return upon a fair
value of the property used for the
public nor be higher than the services
rendered are worth to the public. not
in the aggregate, but as individuals.
n,,I@ n
and It's lessons, engaged in business
of a public nature, were at all times
subject to the legislative power to
prescribe a just and reasonable rate.
either directly or through an admin
istrative agency.
LAS long as the legislative power
to prescribe just and reasonable
rate remained unexercised the pre-
vention of violation of. and the en-
forcement of compliance with, the
common law obligation in specific
cases was a duty resting upon the
| Judiciary.
THE power of the State to regulate
the rates exacted by those engaged II
a business of a public nature is a
power of government, continuing In
its nature, and can only be bargained
away by words of positive grant.
y
"a basic theory as to proper capt.
talization Is essential to the exercise
by an administrative body of the
power conferred upon 1t by statute to
fix just and reasonable rates when
ever it shall determine existing rates
to be unjust or unreasonable.
1.-THE theory adopted by the Board
of Public Utility Commissioners in
the proceeding resulting in the order
to which the wrts of certiorari are
directed, was the fair value of the
property at the present time.
This theory is sound and is sup
ported by preponderence of the au-
thorities.
ION the theory as to proper capt.
talization so adopted, the property
the fair value of which at the pres
ent time Is to be ascertained Is not
the mere physical property but the
physical property characterized by an
attached business.
Stating the proposition in another
way, there Is more to fair value al
the present time than a mere inyen-
tory of the physical property will
show.
In his argument Mr.. McCarter said
that the briefs of counsel for the
Utility Commission and for the cities
of Paterson and Passaic differed bu1
little from the briefs submitted By
them to the Supreme Court, and hav-
ing been answered, for the most part
in the principal brief submitted by
himself and Mr.. Bergen Jointly. there
remained little for him to say.
He asserted that In none Of the nu'
merous authorities cited, in the brief.
for the appellees was there any def
milton of a fair" or reasonable
rate. or was 1t defined what consti
tuted a fair value" or REASONABLE
return
He concentrated his attacks upor
| the position taken by the Utilit.
Commissioners and their counse
chat the value of a commodity, as o.
service to the consumer or part.
| served, may be disregarded In fixini
| a rate, and, second, that the cost o
| reproducing the physical part of |
plant or property used In public serv
| ice, and the actual cost of securing
| its business, constitute evidence o
| its full value for the purpose of rate
making, and that all other evidenc,
of its value may be rejected"
Stevens MuuicinaI Research