Omaha daily bee., 1920-12-17
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New York Accountant Testi-
fies in Hearing That Income
Does Not Yield Fair Re-
turn on Investment.
Mayor Questions Report

The city council was told yester-
day afternoon, during the hearing of
the application of the Nebraska Pow
er Co. for increased light and power
rates, that this company was being
starved to death.
w. J. Henderson Of New York.
expert accountant with H. c. Hop
son Co., made that statement and
then proceeded to give demoustra-
tion of his statistical exhibits, copies
of which were handed to the mayor
and each city commissioner. Mr..
Henderson testified during the en-
tire morning session and resumed
his task in the afternoon, encounter
ing rigid examination by the city
officials and Others who are inter
ested in the hearing.
Fell Short on Returns.
During the afternoon session Mr..
Henderson presented statements of
operations for period Of nine
months from January to Septem-
Der 80 of this year. During last
January, he asserted, the company
received net income equivalent to
a fair return on a valuation of only
SIS, l60,392. against a valuation OF
$15,o34,0S5, to which the ]. G. White
Co. of New York testified earlier
in the hearing. On the same basis
Of valuation, the witness added that
during September the company
earned no return, Notwithstanding
that improvements have been made
this year to the extent of $l,0O0,00O.
Assuming the same valuation, Mr..
Henderson stated that during the
nine months in question the COM
pany fell short $964,35o of earning
q fair return on value of its prop
erty, and carrying that showing to
the end of this year, the amour.
would be S1,285,812, basing his re-
turn at 9 per cent.
This shows that additional rev.
enues of nearly $1,300,00O arc need
ed and the trend since last Janu-
ary has been steadily downward"
he said.
Expenses Increase.
Applying the figures to the cost
OF the property. as shown in his
own reports to the council. Mr.. Hem
derson stated that on a basis of 9
per cent return, the company should
have earned $40S, 1856 additional dur
ing the first nine months of this
year. to have received fair return,
according to his contention. He also
declared that during last July the
operating cxpcnsesywese $8, Goo more
than during last January, notwith-
standing that the income was less
during the former month. He said
the company's records showed an
unbroken trend of increased ex-
teInber 80.
Mayor Smith offered statements
which had been rendered by the
co1nIHny to the city council, show
ing monthly operations during 1919,
and he raised the question of
whether the net monthly earnings
this year have not been more than
during 1919. Mr.. Henderson re-
piled that the mayors figures were
not comparable with those offered
at this hearing.
Raise in Rates Necessary.
II wish to state that the figures
| have offered in my exhibit show
that during the first nine months of
this year, rate increase was nee
essary to yield additional revenues
of $408,736, this being 9 Per cent
on the cost of the property" said
Mr.. Henderson.
Most of the time of the hearing
yesterday was spent in going into
technical details of accounting meth
DDS and exchange Of opinions as to
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