The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1916-05-20
THE p. e. p. co. VALUATION


ported to the Public Utilities Com
mission Of the District that, in their
judgment after detailed study, the
physical properties of the Potomac
Electric Power Company could be re-
produced for $9,965, 900; but the
properties as they stand today are
not worth this much because there
is an aggregate depreciation Of
1887, 745.16; leaving the net pres
ent physical value $s,12y,342.92.
This on a corporation whose capt.
talization is $4,000 900; divided be-
tween 100000 bonds and $6,OOO,-
900 stock.
1t is explained that this appraisal
is merely tentative. 1t has not been
adopted officially by the Public Utili-
ties Commission. Under the law,
that body must hold hearings at
which the Potomac company will be
given opportunity to examine the ap-
praisal, enter exceptions and objec-
tions, and be heard as to all reasons
why it disagrees with the appraisal
as now standing.
For these hearings, the commits
sion has named Jyne rs as the date.
Experience of other communities in
dicates the probability that the cor
poration will make a general attack
on the valuation, attempting to show
that it is entirely too low; that there
will be efforts to commit the commits
sion to errors of discretion on the
basis of which the courts may later
be induced to reject the findings;
that especial ingenuity will be de-
voted to squeezing in some recogni-
ton Of intangible, franchise, and GO
ing-concern values additional to the
physical property.
The courts are now pretty we'll
committed, under the rule laid down
in the Des Moines gas case, to the
rejection of these various elements.
1t is apparent that a company which
holds no term franchise has no fran
chise value. AS to going-concern
value, which in one stage of judicial
attitude toward these questions was
a greatly mooted question commonly
giving the company the advantage,
the courts have more recently indi-
Gated the view that going-concern
value cannot be admitted, because it
is merely based on the privilege of
making charges. If half the value
of a corporation represents the privi-
lege of charging excessive rates, and
if that half, so based, is entitled to
protection as a vested right, then
obviously there would be no chance
to reduce the rates. The very pur-
pose Of all public regulative acts is
to insure justice to the consumer in
the matter Of rates: consequently
going-concern value has to be elimi-
mated. With it goes about all there
is of those misty and inchoate ele-
ments formerly classed as "intangi-
bles." The "intangibles" have been
getting more and more intangible as
the Supreme Court of the United
States has travelled along the road
toward establishment of final rule
regarding them.
1t is, of course, realized THAT this
appraisal of the Potomac company is
only a beginning. There will be
long hearings; then an order by the
commission and the issuance of a
new schedule of rates. In this in
stance there can be little doubt that
much lower rates will be ordered, be-
cause the private rates in this town
are scandalously excessive, as com
pared to those of other towns. After
the new schedule is ordered into eff
feet there will presumably be an
appeal by the company to the courts,
an injunction, and a long trial.
Here will come up for decision the
question whether the courts shall
open the details of the valuation, and
inquire into its fairness; or whether
it will decide to ACCEPT the discretion
of the authorized commission. The
latter-day disposition of the Supreme
Court of the United States has beer
to accept the discretion of the ad.
ministrative body in such cases, and
to decline to go behind the face OF
their findings. This, of course, while
the common-sense view of the mat.
ter, is complicated by the constitu'
tional inhibition against taking
property without due process. The
establishment of an unreasonably
low valuation would be taking prop
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