The news scimitar. (Memphis, Tenn.) 1907-1926, 1920-10-13
MAYOR EXPLAINS
PROPOSAL FOR
GAS RATE BOOST

u7U MIL UUUUI
Mayor Paine issued another state
ment in reference to the proposed
agreement between the city admin
istration and the Memphis Gas and
Electric company, in which he de-
clares that the Memphis consumers
of gas and electricity will not he
called upon to pay double in
crease
The proposed increase, the mayor
says, is to be indorsed by the city
solely upon the agreement of the gas
company to resume full service and
the appointment of r. G.. Proutt. as
local representative of the state
utilities commission
The city Of Memphis is concerned
in the matter only to the extent OF
having the citizens of Memphis fur
| nished with gas and electric service.
His statement goes into some detail
concerning the manner in which the
$450,000 in receivers certificates il
paid and points out that it does not
fall as a direct tax upon the con-
sumer, but Is paid out of the guar
anteed return which the state conn
mission will assure the company upon
completion of the appraisal. The
mayors statement follows:
AS has been repeatedly stated,
the city administration has concerned
itself in the affairs of the Memphis
Gas and Electric company with the
sole purpose of providing adequate
service for the people of Memphis.
There seems to exist some misunder-
standing as to just what proposal
the city administration has made,
looking toward that end. with a
special reference TO the issuance nf
receivers certificates, and their re.
| payment.
"As a matter Of fact. the issuance
Of the reGeiyeGs' certificates w. i'm no
fway f~iated 70 tfre increase III rates
and the people of Memphis will not
be called upon to pay an increased
rate and also pay these receivers
certificates. Such a statement is not
correct. The charges to be paid by
the Memphis public, under the pres
ent plan of operation of the utilities
commission of Tennessee. are arrived
at as follows
THE state utilities commission ar
ranges to have an appraisal of the
physical valuation of the property
made, and when this valuation has
been determined the utilities com
mission fixes a rate of return for the
owners of the company, based upon
this fixed physical valuation. regard
less of the amount of bonds. reCeiv-
ers' certificates or outstanding stock.
Assuming. for instance, that tn"
physical valuation of the Memphis
Gas and Electric company will bc
fixed at ten million dollars, and th3t
the utilities commission allows rate
of return of 6 per cent thereon, II
means that the sum of 100000 an
nually. will be set aside for the
owners of the company. This amount
can be used by them in the payment
of bond interest or receivers GER
tifiCates. In arriving at the amount
of return for the owners of the com
pany it is immaterial to the people
of Memphis whether the outstanding
obligations of the company in tht'
way of bonds, stock and receivers
certificates are $5,OOO,000, or SIS, ,000.- =
900. for the Memphis public using gas
and electricity will only pay n re
turn upon the physical valuation OF
the plant. In addition to this amount
so set aside as a return upon the IN
vestment. the operating expenses aud
taxes are ascertained, II fund known
as renewal and replacement fund -
set aside, and a Charge for gas and
electricity is arrived at by adfing
the amount to be paid the owners
above mentioned, in the way ot "
return on the physical valuation, p!"S
the operating expenses ana taxes,
plus renewal and replacement tund
Thus. it will be seen that the users
of gas and electricity in Memphis do
not pay any Increased rate for the
purpose of retiring specifically these
receivers certificates, and the rate
is not influenced In the least by the
issuance of these certificates. ON
the contrary. the city administrator
insisted upon the issuance of TeceiV-
erS' certificates, or upon the intro
duCtiOn OF neW capital in some OtheF
way, into the company for IN" pur-
pose OF providing the means through
which additional equipment neceS-
sary foV the giving Of adequate seTE'
ice 10 Memphis uScTS could Oe est
tained."
Following pIblicati"n Of the
MAYORS statement Tuesday lOvick
- Miles. counsel fuT tn" reCeivSE'
~ The gas company issued u state
ment IN which he declared that the
ma yOr's statement did NOT aSfet eN-
actly with the understanding the Ear
company had with the CIty IN Te1er'
eNcN 20 the matter
Mr.. Miles rs we'll as fraNN ;, AZ"
gin and ). !. Rainier, T"cEtEEr~, are
0VInOsed tO the appointment OF g.
pruutt ~ AnS capacity thHt WHY p'ace
hitn aL0ve che receivers appointed
bv the Couft. Their plan ~ that AT.
PFoutt consult SSith sheIn in reference
10 the operatioN Uk the plant and that
upon has Dissatisfaction Eith atf1H
tIat thC state commission Sh0uM,
uIAn hearing. suspend tht tenpbraFs
rate Increase
The sntsvs matter Wall be thrt s'IR.l
Oue At q putAc heaTinE ~ OC!oCk
NednGetlaN in She counsel chamber tO
whiCh Interested indtEidUals and CAEtc
h,.ii.s are USGFd 20 attend.
Mr. Miles declared Wednesday thar
he had nuthinE tU add - nts pTGs
vimIs statement and he tOintSd oVt
that IN aHy event tire matter wdlId
i,H only temporary as hE expects the
nnr,rnisai a tu be CON DiEteh ana tns
rcrnanent rate fi%ed nv th@~ stats
commission within thc neEt bh uays.
rlisrltsslrg the rate increase Mf.
,f,Ice reiterated mis- statement made
some time ago that rather SHAn nave
prolonged hearing h"fofe IN" stat"
commission with che City tlShtlnb
such a proposal that the gas COM