The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1914-01-30
OFFICIALS MAY ASK
THAT |, H, & P. BOND
ISSUE Be RESC|NDEO
Robbins and Bond to Confer
With Commission Next
Week.
ESTABLISHES BASIS
FOR RATE MAKING
Duncan Says He Had No
Time to Investigate Plant
Valuation.

Mayor Robbins and City Attorney
Bond will go to indianapolis next
week to consult with the state public
service commission In regard to the
$a5o,ooo bond issue Of the Richmond
Light, Heat and Power company. 1t
their belief is substantiated in the
course of the conference that author
izatlon Of the bond issue places ficti-
tious valuation on the plant of the To-
car corporation, useful to it in fu-
ture efforts to secure rate increases,
the commission will be asked to re-
scind its order.
A series of questions relating to the
bond issue were asked Judge Duncan
of the commission yesterday by Pal
ladium representative, and his an
swers. though conflicting, support the
contention that the commission by its
action on the bond issue has recog-
nized that sS50,000 is the minimum
valuation of the plant. this without
taking the trouble to have an inven-
tory of the local L. H & P. plant ta-
ken for the purpose of establishing its
real valuation.
Duncan Contradicts Himself.
To the question: Does the bond is
sue form a basis of computation for
rate making" Judge Duncan replied:
mo it does mot but in the next
breath he said. I'VE granted the re-
quest of the Richmond company be-
cause we did not have time to investi-
gate for what purposes the money
derived from the old bond issue and
the half a million notes, which the
HonI iS fo ,tCol
for"
City officials will argue with the
commission that by authorizing the
$3.50 900 bond issue it has esta blished
basis for rate making because rates
are based on plant valuations. and the
commission has placed a minimum val
uation of $S50,00O on the local plant
because it is not legal for the commits
sion to authorize bond issue in eX-
cess of the valuation OF any utility
plant.
That this is a fact is established
by the admission made by Judge Dun
can when he replied to the question
"Nhy does a public service corpora
tion have to secure permission of the
commission before it can issue any
stocks or bonds?"
Ouncan's Answer.
To this Judge Duncan answered.
"This is required to keep public ser
vice corporations from issuing more
stocks and bonds than their plants are
actually worth. and to prevent eXces-
sive loans
Immediately after making this state
ment Judge Duncan said the commits
sion had never authorized a bond is
Sue in excess of plant valuation, So,
1t is reasoned by city officials, the
commission must recognize that the
J.. II. & p. valuation is at least $780,
600
Judge Duncan also said that the
commission did not state when it au-
thorzed the bond issue that these
bonds would have no bearing on the
valuation of the property but, he add
ed, the commission would not take in
to consideration stocks and bonds
when the plants valuation was deter
mined by the commission experts.
Officials PerpIexed.
Just hom the commission can avoid
considering the new bond issue as an
item of valuation is mystery to To-
cal city officials, who, in presenting
their side Of the case. again fall back
on the argument that the sS5O.GoO bond
issue must represent the commission $
estimate of the l.. H. & P. valuation
because if such was not the case the
commission would be without author
ity in ordering the floating of such an
issue.
The bond issue question is one of
the most complicated city officials
have been called upon to deal with,
but they are firmly convinced that
their position is the only sound one
and they are confident that if the
commission does not rescind it's bond
issue order it will make a serious mis-
take and establish dangerous prece-