Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1921-12-15
ASSERTS RATE
HIKES BASED ON
FIXED CHARGES
sFOrmer Member of Public
Service Commission Opens
Controversy.
EUTILITY MERGER IS UP

Charges that the public service COM
mission had considered rate increases on
the basis of the fixed charges of utilities
rather than on the basis Of property
values as the law requires was made to-
day By Fred Bates johnson, former
member of the commission and now at
torney for the city Of KOkOmo in the
hearing of the petition of the Indiana
Electric Corporation for permission to
purchase seven Indiana public utility
CtantS, now before the commission.
The question of the relation of the
price to be paid by the corporation for
the various properties to the rates that
viii be charged for service supplied by
these companies was before the commits
sion. Paul P. Haynes, another former
member of the commission, and now at
torney for the electric corporation, had
made the statement that rates would de-
pend on the value Of the property and
not on the fixed charges of the utilities.
He declared it would not make any differ
ence what disposition would be made Of
the return on the property.
CLAIMS RATES ASKED
ON FIXED CHARGES.
Theoretically rates are based on value,
yet you know that in any particular case
/ where there is an excess of funded OBJ
e
rates on fixed charges" Mr.. Johnson de-
clsred.
Commissioner Glenn Van Auken replied
with considerable apparent indignation
that there never was such a case and
ichallenged Mr.. johnson to name one. Carl
II. Mote, former secretary of the commits
sion and an attorney for the corporation,
declared he had heard Of only one re
quest Of this kind, and they didn't get
away with It."
Mr.. johnson said he hesitated to nan
any utility in connection with such a
case.
THAT the rates are not based on
property values msy not show on the
face Of the commissions order he said
''The commission would not consciously
permit one property in a combination 10
earn excess revenues to pay the debts OF
another property in the same organiza-
ton but there would be ex psrte pressure
TO ch5-ge values Of obligations"
JOHNSON REFERS
TO PRESSURE.
The attorneys for the corporation de
manded to know If he meant that the
commissioners could be "cajoled' into
violating the law.
Mr.. Johnson replied that pressure had
been brought TO GEAR in some cases to
change methods Of valutiOns SO as to
make them higher.
The companies involved In the proposed
purchase and sale are the Merchants Heat
and Light Company Of indianapolis. the
Indiana Railways and Light Company Of
KOkomO, the Elkhart Gas and Fuel Com
pany, the Valparaiso Light and Heat
Company, the Wabash Valley Electric
Company, the Putnam Electric Company
and the Cayuga Electric Company.
Most Of the hearing concerned the
question Of rates as based on the securi-
ties to be issued for the purchase Of the
property which would be obligations
against the property The corporations
wish 20 issue about S1S.5OO,OOO in securi-
ties. Joseph H. Brewer, president Of
the Indiana Electric Corporation and Of
the American Utilities Company, the lat
ter concern owning most Of the cOmpa.
MES involved, was on the stand. Re
peated efforts on the part of attorneys
for the opposition 10 the merger TO de
termine how many securities are 10 be
issued for each property proved futile
Mr.. Brewer repeatedly replied that the
securities are to be issued IN q lump
sum and there is no way OF telling what
proportion each concern must bear. Most
of the questions concerned this phase Of
the hearing as It applied 10 the Elkhart
Gas and Fuel Company.
FIGURES OF COST AND
VALUATION PRESENTED.
The attorneys had prepared figures to
show that the utilities cost a total Of
approximately $, 600 while the corpor-
alton places their ralue at SlS.726,O 900. The
figures were divided as follows:
Merchants Heat and Light Company,
cost 100000; valued at SI1 900, 900; In
diana Railways and Light Company, cost
$2,500,OO0, valued at S4.J0O,OOO Elkhart
Gas and Fuel Company, cost 500 900,
valued at 500, 900; Valparaiso Light and
Heat Company. cost $4,000, valued
$:s27, coo; Wabash Valley Electric ON
parry, Putnam Electric Company and Cay
uga Electric Company, combined, cost
5000, 600, valued at $500 900.
Those opposed to the merger sought to
prove that the corporation does not have
options on land in the coal fields along the
Wabash River for a gigantic central
power plant as the petition says. Joseph
II. Brewer, head of the corporation, re-
fused to tell where the options were,
how many he had or to give any other
information concerning it on the grounds
it would jeOpardize tie interests Of the