Evening star., 1919-09-05


plants and businesses of respondents.
, THE theory upon which Almert
predicates his costs of development Is
substantially that known as the Al
word method. AS most of the factors
with respect to the developing of the
busines,e es of the assumed hypotheti-
cally reproduced plants are Variaple
and subject entirely to the magma
ton of the estimator, almost any re-
suit within reason may be obtained.
The commission gives little weight
to such claims in the instant cases.
The commissions views on the rela-
ton of development loss of this char
acter to both the historical cost and
cost of reproduction have been set
forth at length in it's decisions in the
valuation cases of the Potomac Eiec-
trio Power Company and the Capital
Traction Company.
Claim for Development Losses.
The companies claims for develop
ment losses in connection with prop
erty that is not now in existence or
no longer used and useful for railway
service have been discussed above in
the historical cost of the property OF
the three companies, and the commits
sion has considered property to the
total amount of s2,042, 1850, rs COM
ing under the head of development
loss In his cost of reproduction Mr..
Alrnert for the companies includes
certain rolling stock which Mr.. Pills
bury excluded from his report. as they
We're no longer used and useful. but
estimated s195,155 as the cost to
reproduce them. The companies con-
, tend that the cost of these cars and
| their equipment should he capitalized
at least until amortiZed in the future.
| lhe commission has included in the
reproduction cost item 0f
operating property an amount repre-
senting the residual or resale value
of these cars. leaving for the Wash
lngton Railway and Electric Company
s188.s6O and for the City and Sub
urban Railway of Washington $506,
to be considered in connection with
development loss.
The commission, after careful re-
view OF the testimony and evidence in
these cases. concludes that it is equi-
table to allow for development costs
as intangible items to be considered
| in connection with the cost of repro
duction elements of fair value the
following sums: For the Washington
Railway and Electric Company,
sl.i 900: for the City and Suburban
railway of Washington, s730,OoO: for
the Georgetown and Tenleytcwn Rail-
way Company, $4,000. which sums
nave been derived from a study of the
historical cost
The commission holds that in no
! ! olher way can equitable consideration
be given to costs of this character in
a reproduction estimate, since inyen-
tory is absent. and the inventory is
and must be the only tangible foun-
cation for a reproduction estimate
In addition to these definite sums the
commission in its finding of fair value
has considered and given due allow
ance Tor other possible items of de-
Velopment losses of every kind and
character which the history of re-
spondent companies indicate were in
Cured
Preliminary Operation Expenses.
Respondents claim preliminary
operation and adaptation expense. as
estimated by Almert, as follows:
Washington Railway and Electric
Company. s750 900: City and Suburban
Railway of Washington, s12, 500, and
Georgetown and Tenleytown Railway
Company, $4,000.
In the reports of commissions en-
sineers. no such allowances were made
as specific individual items although
the reports include in various cost
elements minor allowances only of
similar nature. Such allowances as
summarized for comparison. Such
costs are incurred with the production
OF such property, and would be in
volved in the reproduction thereof
In its finding in the case of the
Capital Traction Company the COM
mission allowed 100000 for similar
items. The commission, after full con-
sideration, concludes that similar
allowance of $4,000 is now proper as
to Washington Railway and Electric
Company. and likewise allowance of
$4,000 and $500, respectively. as to
City and Suburban Railway of Wash
lngton. and Georgetown and TenIey-
town Railway Company.
Reorganization Expenses.
Respondents claim for preorgani-
zatlon expense as to Washington
Railway and Electric Company $50
900. as to City and Suburban Rail
way of Washington sl2.500. and as
to Georgetown and Tennallytown
Railway Company $500; these be-
ing the allowances as estimated bv
Mr.. Almert. and as applying to en-
gineering surveys. reports, estimat es
of construction costs earning, ETC.
and to field and miscellaneous office
expenses, travelling expenses clerk
hire, rent. etc. In addition, respond
ents claim, as estimated By Almert
expense of financing and negotiat ton
only in amount of 100000 as TO
Washington Railway and Electric
Company. $4,000 as to City and
Suburban Railway Of Washington,
and $500 as to Georgetown and
Tennallytown Railway Company
These estimates of Almert's cover re-
ports on cost estimates of construc-
ton and probable return, prepa ration
of mortgage and deed of trust print
ing of prospectuses, stock certificates,
engraving of bonds, advertising, etc
The companies further claim for
legal, organization and franchise ex-
IIy -
and Electric Company. $281, 1,123.26; as
to the City and Suburban Railway of
Washington. $50.701.20, as to the the
Georgetown and Tennallytown Rail-
way Company. s7.513.73. which Mr..
Almert states are necessary expendi-
lures for attorneys fees. general in
corporation expense clerk hire, print
ing, etc, and which he estimates at
2 per cent of the direct physical cost.
1T is recognized by the commission
that a fair allowance for legitimate te
expenses of this nature in connection
with cost of reproduction is proper.
REORGANIZATION expenses were ex-
cluded from the cost of reproduction
. reports of commissions engineers, not
because no such item was intended
to be allowed, but because it was the
intention that this matter should be
| left for Independent consideration by
the commission
"The commission, in it's finding in
the matter of the valuation of the
Potomac Electric Power Company.
said:
"The commission. after full con-
sideration of the evidence in this case
and of allowance by other commits
sions, is of the opinion that $780,
900 is reasonable and sufficient
amount to allow for preliminary ex-
penses prior to construction of a
utility whose reproduction cost is
based upon the theory developed in
this case: this allowance including