The Richmond Virginian. (Richmond, Va.) 1910-1920, 1920-04-04

At the public hearing before the
commission the applicant company
placed on the stand Dabney II. Maury.
engineer, who. as a member OF board
Of appraisers, employed jointly by the
city Of Roanoke and the Roanoke
Water company the applicants pre-
deeecessor) made an inventory and APP
prAtsal Of the value OF the eompanys
property as of July /. 1918.
In reaching the valuation the board
OF appraisers used the reproduction
cost method-that is, based its calcu
lation on what il would cost at prices
of July !, 1918, to reconstruct the
company's plant, based on average unit
prices OF the flve-yea period proceed
ing that date. plus certain intangible
items. such as water right interest on
water rights and going value. and
plus the value Of real estate and the
interest on real estate investments
The total fair value by the board Of
appraisers was 1,139,03S Collins ex-
hihit Is, page la, In his evidence in
this case Mr.. Maury. who had been tie
representative of the city of Roanoke
on the board OF appraisers, stated
page AZ OF Transcript that in his
judgment certain of these values then
arrived AT were too high and he made
deductions of s30.5ss In real estate
value, OF $4,000 in the value OF water
rights, s43.50o in going value and
S9059 interest. which deductions. pre-
scented in this instance by the COM
pany's witness, are accepted by the
commi ssfon-
After deducting the sum OF these
items. which is s143.147. we arrive. as
did Mr.. Maury, at a value of July /.
1913, OF so95.8s1 This is subject to
the accrued depreciation from July l.
1918. to March /. 1920 of s34.72s
(Maury exhibit !, page 100 making the
value Of the old plant on the latter
date ss61,127 To this should be added
the cost Of additions since July I. 1918.
at their actual csst to the company
partly at war price,, which on the
basis Of 10 per cerN. decrease over
prewar prices, the average figured by
Mr. Maury. would amount to s179.066.
Deducting one per cent per annum
depreciation on these wartime pur-
chases for an average of three and a
half years amounting to s6.26731, we
find net additions to value since July
/, 1918. amount to s172.7eS.6s, which
added to the fair value as Of July /.
1913. less depreciation to March /,
1920. gives us a fair value for rate
making purposes as of March /, 1920.
OF s1,t33,925.69. IN tabulated form the
results are as follows:
Fair Valuation
Fair value as of July l. 1918, $685.
8s1.
Depreciation on same to March /,
1920, s34.736.
Value OF old plant ON March /. 1920,
sss1.127.
Additions since July l, 1913 at pre-
war unit prices $fo5.333.
Plus 70 per cent ratio of increased
costs, $73,733.
Cost of additions to company per Mr..
Maury's figures. sf79os6.
Less / per cent per annum deprecia-
ton for average OF az years $s,2e7 81.
Net additions to value S172,7es.e9.
Fair value as OF March /. 1920, ST.
l33.s25.es
In the brief submitted by the com
pany and the city there is much dis
cussion of a proper method of valua-
ton OF the property OF public utilities
for rate making purposes. The COM
pany contends for a strict reproduc-
ton value, quoting court decisions up
holding that theory. In the main lead
ing decisions have held that in fixing
rates il is proper to take into CON
sideration every element, including re-
production value, investment cost
value and special circumstances sur
rounding the individual case at bar
However fair and equitable may
have been Reproduction cost basis CAL
culatcd in years just prior to the world
war especially when it took into &C