Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1919-09-10

1928. with the last three months
| thereof estimated, $264,755. The
accountants for the respondent esti-
mated that the operating expenses
| for the year 1919 would be $780,
! 571. Taking the month of October,
1918, and comparing it with Decem-
! Der, 1915, the wages of motormen
| and conductors show an increase of
| from SO per cent to 100 per cent or
! from 20 and % cents per hour to
| 40 and AZ cents per hour, and that
| the wages of track foremen, labor
ers and repairmen were increased in
amounts ranging from SS per cent to
I125 per cent. The testimony fur
| ther shows that the net operating
revenue of the respondent properly
! applicable to the ayment of return
upon the investment of it's owners
was, for the year 1914, $63,S14; for
the year 1915, '$69,4 ATS; for tile year
! 1916, s72,107; for the Year 1917.
I $79,405, and upon the same estimate
! if scent fares had been charged
during the year 1918, 1t would have
| been for that year S56,965. The ex-
| pert accountants employed by the
respondent testified that they esti-
mated that if the scent fare had
| been continued during the year 1919,
the net operating revenue applicable
to return upon investment would
! have been only $26,713.
Valuation Made
The respondent company employ
ed firm of engineers and account
ants to make a valuation of it's street
railway property for the informa-
| ton of the Commission in determin-
ing the fair value. of that property
for ratemaking purposes.
The respondent company was
formed July ~, 1912. through the
merger and consolidation of several
smaller street railway companies.
The enginCe.S ana accountants of
l'the respondent testified that vouch-
ers, records, books and other data
of these companies that were
merged in 1912 were not preserved
I and that the engineers found it i'm
possible to determine the original
cost of the system. They further
testified, however, that the accounts
and records of the Valley Railways
Company since 1912 were complete
and intact and they made an analysis
of all the vouchers. The engineers
therefore directed their efforts and
attention to a calculation of the re-
production cost of the property. An
inventory OF the physical property
of respondent was made as of Oc-
tober l, 1918. They testified that
by using the costs of material and
labor current as of October /, 1918.
the estimated cost of reproducing
the property now would be $3,032,-
099, and that by using the average
cost of material and labor prevailing
during the fvt-year period from
1912 to 1916, both inclusive, the
estimated reproduction cost would
be S1,S3S,S7S. The complainants
did not introduce any evidence with
rnG 70 6 4 -,
property. 1t was further shown
that none of the estimates mentioned
above contained any allowance or
item for going concern value.
'At the argument counsel for re-
spondent contended that under all
the evidence the Commission should
fix the fair value of respondents 8
property for ratemaking purposes
at not less than $2.500,000, and that
in fixing the fair value of the prop
erty nothing should be deducted on
account of accrued depreciation and
that the respondent should be al
lowed an annual return of per cent
on whatever value might be fixed
by the Commission.
Valuation Declined
we cannot agree with these
propositions. The Commission will
be guided in determining the fair
value OF the property by the opinion
of the Supreme Court in the case of
Ben Avon Borough VS.. Ohio Valley
Water Company, $50 Pa. 2S9, in
which the following language was
used:
The ascertainment of the fair
value of the property for ratemak-
ing purposes is not a matter of
formulas, but is a matter which
calls for the exercise OF a sound
and reasonable judgment under a
proper consideration of all relevant
facts. The Commission is no' hornd
to adopt any one method to the ex-
clusion of all Others. II may I,.ne
into consideration various methods
and use its judgment as to the ex-
tent to which either shall be en-
ployed. The original cost of the
property is not to be taken as con-
trolling, for there may have been
extravaganza in purchasing or bad
mana cement and, on the other hand,
there may have been an actual in
crease in value since the original
purchase or construction. Then
again the reproduction cost less de-
probation may not give the present
fair value OF an old property, for it
may not now be desirable to produce
the old type of plant. Improved
machinery and better methods of
operating machinery may have come
into vogue which would make it true