Arizona republican., 1920-11-24
EXPERT DEFINES REASON FUR GAS
 RATE INCREASE
Pacific Gas and Electric Company Opens Hearing Before Commission By Technical Explanation of Causes Necessitating Higher Schedules


 Higher Schedules
 Offering testimony largely of a | technical nature in support of the ap- | plication of the Pacific Gas and Elec- tric company for an increase in its gas rates, H. L. Aller appeared before the corporation commission yesterday in behalf of the company. MT. Aller based his arguments for the increase amounting to 50 cents per 100 feet of gas, on higher cost of labor, fuel oil taxes and increased expense due to ex- pansion of the working fund
 MT. Aller offered direct testimony all morning while the afternoon was given over to cross examination of the wit ness by W. J. Huddle, rate expert en- gagged by the city of Phoenix to look after the consumers interests. which will be continued at 10:30 o'clock this morning. While it was believed that the hearing could be completed within short time MT. Huddle and J. E.. Nelson, assistant city attorney, asked for continuance that they might go over the testimony in detail before presenting thelr case.
 We cannot say what we will go into when the case is called tomorrow" said MT Nelson last evening. aBe- go into the evidence offered by MT. Aller."
 Discusses Depreciation
 The first points taken up by Mir. Aller were the matter of depreciation of reserve and the matter of minimum return on investment. MT. Aller in this connection presented the testi- mony offered in former case, the ap- | plication of the Arizona Gas, Electric Light and Power company for author ity to increase its allowable rate of return and reserve charges. The com mission has not yet ruled on this ap- plication, but the decision. it Is under stood. will govern the commissions ruling in the present case.
 The hearing was well advertised and civic organizations sent representa- tives. while number of gas consumers also were present at the morning ses- sion, but the technicalities frightened them away before the hearing was far advanced.
 MT. Huddle and MT. Nelson appeared for the city, c. M. Candy for the at torney generals office, and Ben Fer RuSOn TOT Lu0 COEpOIdl1Ou COiiiAAASSAoAA- The hearing was conducted by Amos A. Betts, chairman of the commission, and D. F. Johnson, member.
 High Replacement Cost l Replacement cost since 1915. when the commission allowed the basis for fixing rates, has greatly advanced, stated MT. Aller. The depreciation cost, he said was greater than the amount set aside to meet 1t, and in order to survive, the company was making its application for an increase. All clements entering into the produc- tion of gas since 1915 had increased an average of S1 per cent. while for power and gas the increase in costs had been 66 per cent, he testified. He urged that it was necessary to I grant a higher allowable rate Of re- turn in view of the fact that on ac- count of it's remoteness from large fl nancial centers the cost of money if greater than in the East. MT. Allel testified that the company had put 1T $500, ,O00 in Phoenix in the past two wears. and in the next three years i expected to spend s1,500,000 in expan. sion. Under cross examination 1t wa: shown that the amounts were uset and proposed to be used by the com pany covered both gas and electric light features.
 ssTo draw the money we must have { return or other means of industry vii secure the capital which we need t continue our operations" said MT. Al Ter. 'aThe earning power Of pupli' utilities must be advanced to induc' capital to invest"
 Money Hard to Get
 In stating that the corporations wer in inc markets for money, he quote' the various rates of interest belnl naid and offered on public utilities an national bonds. The cost of procurlnl money he said, was 50 per cent greate Ethan in 1915 and declared it unfair t give the consumer a value of 100 cent
 on the dollar when the purchas1n mower was reduced to 50 cents.
 In advocating a large working cap ;taI MT AIler pointed out that Phoeni was remote from the large eenters 0 supply. making 1t essential that larg
 stores of materials be kept on hand
 He stated that the present workln capital was S94, ,000, one-seventh of tn company's total capitalization. Nr Aller emphasized the cost of fut cil stating that the price in Californi f was S2.15. Yesterday, he said. he re < ceived an offer from Texas, the pric being reduced to $2, but the freight ( 63 cents more per barrel than ths shipped from the coast would not re 4 duce the cost to the company. He was asked if the offer migf 4 not be an indication that the price E oil was coming down, but he said ths 6 the Texas price might not control th 4 California. field. He stated that th z ctty. county and state taxes in 191 2 was s2S,419.5S, while in 1920 the taxe M l