Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1915-01-02
More Renson for Exrcrt Help

THERE is one very excellent recommends
ton in the report on the electric light
and power situation in Richmond that SUI
perintendent Trafford, of the municipal light
ing plant. has made to the Administrative
Board That is that at the hearing before
the State Corporation Commission on the Vir-
gnia Railway and Power Companys applca-
ton to revise its rate schedules, the city
should be represented.
The city government which is representa-
tive Of the whole people, is vitality concerned
in this issue If the Virginia Railway and
Power Company is charging the people of
Richmond for electric light and current more
than it ought to charge, that injustice should
be remedied Mr.. Trafford makes correct
and exact statement when he says that 1.-The
tendency of modern thought and judicial de-
cisions is that public service corporation, in
the performance of Il public and not private
service, rendering service by virtue Of pub
lie grant. should be limited in its charges to
such rates as will produce fair return OH
Its legitimate investment and no more
Mr.. Trailord, who is evidently a student
of such questions ought to know however,
that Legitimate investment" in this connec-
ton is not held by public service commissions
or the courts to be synonymous with physical
value Physical value is one but only one
OF several elements always considered in such
cases in determining what Legitimate invest
mcnt" actually represents.
For example, the courts and commissions
make invariably an allowance for organza-
ton expenses, which represents the money
expended in forming the company, obtaining
its charter and paving necessary attorneys
ices. They make also, in cases where ii is
justified by the facts allowance for
bond discount. 1t is a commonplace in
finance that the bonds Of a new enterprise
and sometimes of an old one--can rarely
be sold at par. In order to provide for cx-
tensions is to
discount. That discount is taken into con-
sderation when Legitimate investment" is
pelhg determined. 1t is customary also to
allow for the value public utility corpora
ton has as a going concern" and in some
cases, where franchises have been paid for
and are taxed, for the value of these fran
chises
Moreover such courts and commissions do
not fall into Mr. Traffords error and assume
that assessment for taxation equals value
In the absence OF evidence to the contrary
they would assume, probably, that the same
ratio OF assessment TO value obtains in taxa
ton OF the real estate and physical equip
ment Of an electric lighting company as in
the case OF similar property owned by an in
dlvidual or private corporation AS a mat
ter OF fact, the assessment really represents
between 65 and 20 per cent OF the physical
value
These matters, it is to be assumed will
all DC taken into consideration by the Cor
poration Commission when it passes on the
company's application for rate revision They
are, indeed, very difficult problems, and the
commission should have the city govern
mentS help in solving them Justly to all
concerned. Especially should the public. in
teresi be safeguarded jealousy-and that is
duty official Richmond might well under
take.
All of which gets back. as The Times Dis
patch has said several times to the necessity
OF expert assistance in dealing with these
questions which are involved combinations
OF engineering, accounting and finance