Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1918-02-28
Extra Rates Declared to~be
in Excess Of What is
Reasonable.
ARE
OF IMPORTANCE
Eight Per Cent Return on
Investment Said to be
Fair to Company.

At a special meeting Of the city
council. held last night, the unani-
NOUS opinion was formally expressed
that the 10 per cent surcharge levied
by the Red River Power company
upon local consumers Of gas and cleo
tricity is excessive and greater than
is reasonable, and at the reconfnen-
dation of the committee appointed to
investigate the matter. the city audi
tor was authorized by the council to
submit the issue to the state board of
railroad commissioners for final ac-
ton. ~.
The council meeting followed a
meeting Of the committee held yes.
terday afternoon when the report to
the council was adopted and about 4
O'Clock Acting Mayor Thomas Crit
f1ths issued a call to the aldermen for
a special session last night at s
o'clock.
After a brief discussion the COM
mittee's report was adopted BY the
council, which. in addition, passed
a resolution to facilitate further action
in the matter.
The report of the committee reads
as follows:
To the Honorable Mayor and City
Council, Grand Forks, North Da-
kota.
Gentlemen: we, your special COM
mittee of aldermen and taxpayers APP
pointed by his honor, the mayor, I'M
der authority of a resolution of the
city council adopted December IL,
1917, to investigate and report touch
Ing the rates charged for electricity,
gas and steam by the Red River
Power company and the surcharges
thereon, beg leave to submit the fol-
lowing as a final report:
j. We have received no further in
formation from the Red River Power
Co. since the date of our report to you
dated February 6, 1918, and this re-
port is based upon the information
derived from the response by the
company January IS, 1918, to the let
ter of this committee dated December
20, 1917, with other information de-
rived from other sources. '
2. Your committee believes that a
public utility is entitled to charge
rates which will yield a return upon
the value of it's plant, owe above
reasonable operating expenses and
that such return should be at least as
large and perhaps somewhat larger
than the ordinary level CT interest re-
turns in the community.
3. Your committee believes that
there are two" important controlling
factors to be taken into consideration
in Determining the reasonableness Of
a public utility rate which factors for
lack of a better definition might be
stated as follows:
(a) The value of the plant as a
going concern, and
CD The reasonable expense of OPP
GRAFTON. including taxes.
4. Your committee has not had the
opportunity, time or means to make a
valuation of the plant Of the Red
River Power Co. at Grand Forks, and
the replacement value given by the
Power Co. to your committee includes
the water power and plant at Red
Lake Falls, st. Hilaire and Fisher,
and hence is of no value for the pur-
poses hereof. = ~,
5. Valuations for taxation purposes
are Of little value as a basis for the
determination Of rates. yet taxing
valuations are substantially the only
information received by your commit
tee IN Upon which it must act.
6. In 1913 and 1914 the Grand
Forks plant Of the Red River Power
Co. vas valued by the city engineer,
the state engineer and by tho mana
ger O. the Power Co., each separately;
these valuations were made to the
state tax commission for the purposes
of taxation and represented the best
judgment of the different individuals
acting separately as to the value Of
the plant; these values range from
$307,6o4.75 to 0 1,s67A
Z. Your committee is not satisfied
that there has been any material in
crease in the investment or in the
value of the plant since 1914, the date
Of such valuation; during the year
1917 there was a valuation by Hog
enah and Erickson. a firm of Chicago
engineers, which valuation was made
at the request Of the states tax COM
mission: advance reports have been
given to your committee as to such
valuation, indicating hat such ehgi-
neers will probably value the plant at
approximately %$7S0,703; such infor-
nation SO received by US, however, is
not official nor does your committee
know of the method Of valuation ac-
tually adopted or the particulars
thereof and your committee is far
from satisfied with respect thereto.
To the council the power company
claims a value of $1,742.775.09
8. With the information sin the
possession Of your committee we are
not satisfied that the value Of the
plant is in excess of the sum of
$500, 900.
O.. We have not been furnished with
III "a AAA1tO0 VI OApObb6V6 Va LAC 0lAllN
Forks plant separate and apart from,
the Red Lake Falls, st. Hilaire and
Fisher plants, but we nave .besn as
sured both orally. and in writing by
the officers OF the Power Co. that such
receipts and operating expenses are
negligible by comparison with the
Grand Forks plant and in the figures
given below the receipts Of all plants
are aggregated just as they were given
to the committee by the Power Co.
and the same ia true Of expenses.
We give below q statement (al
furnished by the Power Coz Of the
receipts ana disbursements. Of the
Grand Forks plant (fncluding. as
stated, the Red Lake Falls, Fisher and
st. Hilaife plants) for the years 1913,
1914, 1915, 1915 and IL: months Of
1917, as follows: /,
Receipts-a913,E 3s26.087.30i 1915;
ss37,oss. 40; 1915, S~251,75s.s4: 1915;
32S1,13B.63; IL months ending No.
vember 30, 1877 $~25S.367.s4.
Expenses-1S13, $140.336.32; 1914,
1~143.149.01; 1915; $142. 72e.S7; 1915,
$~16S.736.40; II months sSndtnk NO
veinber SO. 1917, 3~1ss,0Ss.0s.
Net-1813, 466,760.9S; 1914, $685.
933.3s; 1915, 0 a,o2S.s7; 1915, s3iz4,-
400.23; IL months ending November
80, 1917. ~3S0,26e.56.
10. From the net ear Rings ~ Gfvsn
above for each year there must be Dc.
ducted depreciation charge which
Depreciation charge. in the opinion 4ol
Your COMMITTEES, should bs e1Rfoxt.
u ~