Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1914-02-04
TELLS
Of PROBE PLANS
Of NTER-LSLAND
E. A. Mott Smith Outlines Sys-
tenn to Be Followed in In
vestigating Utilities.

To ascertain just what the Inter
Island Steam Navigation Company
should receive as fair return for the
capital involved in the utility pOr-
ton of it's business will be the first
step taken by the public utilities com
mission toward carrying cut its in
vestigat;on Of that cOmpany'S bust
ness, as pointed out this morning by
r. A. MOtt-SDith, chairman Of the
commission. A program of proc edure.
agreed to by the company and the
commission, already has been adopt
ed, and upon the completion OF nee
essary data the work Of collecting
which was begun yesterday morning,
covering the different sections of the
program. the investigation proper will
be commenced.
"Whilc the commission requires OF
the Inter-lsland an efficient service
it also requires of the public rea-
sonable rate for the maintenance of
the service One Of the prime factors
in the investigation will be to fix a
reasonable return on the cOmpany's in
vestments, whether it means lower
ing or a raising of the present rates,
said Chairman MOtt-Smith.
The general rue adopted by the util-
tiles commission in making such in
vestigations Is to the effect that all
rates which may be charged by utility
companies are based upon a reasORa-
bic return from the utilities portion
Of the business Of the company in
question and it is toward this end
that the commission will work in it's
probe of the Inter-Island. In explain
ing the method of procedure, Mr.. Mott
Smith tCCk as an example a company
with $1.300,000 represented in ships
alone and with other CAPITAL repre-
scented in coal -handling plants, office
buildings and other accessories. Then
putting the Inter-Island in place of this
supposed company, he said:
From this calculation will be ex-
cluded such property as is not ac-
tually involved in the utility business.
This is important because the Inter
Island is in a general business as we'll
as a utility business. For instance,
it maintains a ship chandlery store.
cOal-handling plant and a drydOck, all
of which involve a large amount of
capital Were this capital added to
the capital involved in the utilities
part Of the business, and a fair rate
of return allotted the company, based
on the aggregate, then the amount OF
a fair return on the investment which
the utilities part of the business show
ed would be greatly enlarged.
Hence. it becomes necessary to eX-
clude in this calculation all that part
Of the cOmpany's business which is
not engaged in utilities business, and
base the rate Of a fair return upon
the amount of capital only involved
in the utilities business After fixing
a profitable return on the actual
amount of capital invested in the util-
tiles business, the question of rates
will be taken up and their relation to
this return will be ascertained. This
will he perhaps the biggest undertake
ing of the investigation and probably
the main method Of fixing the rates.
The commission has asked the Inter
Island Company to furnish it with
statement in order that the former
properly may get at the amount OF
capital involved. and also has asked
for the same purpose expense and in
come sheets per vessel during the
year ending December 81. 1913; also
their profit, loss and depreciation &C.
counts.
THE commission first will get the
entire financial status as shown by
the condition Of the lnter-Tsland De-
cember 81. Then there will be sew
eral other heads under which inves-
legations will be made; first, an in
VestigatiOn and regulation of rates,
and second. the condition Of the COM
Dany in its numerous phases The
latter involves the safety, working
hours and wages Of the employees, and
the company has been asked for state
ments of working hours and wages
for the employees Of each steamer, also
the overtime and how each of these is
regulated and fixed Under another
head. the commission will investigate
the manner in which the utilities part
of the company's business has oper.
ated for the safety and accommoda.
ton of the public during the year
This will be by an investigation of
the amount and disbursement of the
income from the utilities part of the
business. One of the principal fac.
tors Of the investigation will be to fix
a reasonable return on the company's
investments whether it means low
ering or a raising of the rates.,