The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1921-12-28

20 per cent on $133,-
-ol'Z9 -------- 22,50O.OO
$185,57S.G3
Cost of financing, etc.
10 per cent. 1S55- Qe
$204,136.49
All Of the above items, which ag-
gregate about $204,OOO.OO. mako
total true actual cash investment
entitled to a rate under the rules
or commissions and courts. In
stead or the statement made by the
president Of the Southern Gas and
Electric Corporation, $50, 900. 90
roughly. 1t must be remembered
that this is the minimum base upon
which a minimum rate of return
should be allowed, obtained by the
valuation on the principle Of actual
investment and development cost.
This method Of procedure has been
repudiated i'm the Denver case by
the supreme Court of the United
States. and the Federal Courts have
generally held since that decision.
that the correct valuation is pres
ent reproduction cost less actual
depreciation and that in 90 per cent
OF the cases decided subsequently,
10 the Denver Water Works case.
the reproduction cost less deprecia-
ton has equalled or exceeded 6-lO
per cent Of the historical construc-
ton and development cost as above
given. therefore, if the company
be forced to resort to the Federal
Courts, in order to prevent further
confiscation OF its property, the
rate base will certainly exceed
S25O,O 600, and the minimum rate of
return will at least equal and
probably exceed eight per cent upon
that valuation. In the Lincoln Gas
and Electric COmpany's case, $50
u. S. 256, a G per cent return in n
large city was held confiscatory.
This suggestion is not intended
ms threat that the Sumter Gas and
Power Company intends to resort
to Federal Court, either desires il
or courts it. It's eight years of
operation in your community
should be guarantee that il has
valued and still values public good
will and the cooperation of its
patrons and the city authorities as
OF more value that the enforcing of
its legal rights in full. 1t is ONLY
mentioned. to show that i'm the
matter of ascertaining a present
base upon which TO allow a return.
1t is again willing in the interest
or the community, and particularly
or Its patrons, to make sacrifices
and concessions which as a matter
or law 1T is not obligated or re-
quired to do. See the San Antonio
case decided April 21st. 1921.
From the foregoing, your Honor
and the Couucil will see that we
cannot under any possibility accept
at rate base the figures suggested
by the Accountant, Mr.. Respess.
We are willing, however, to accept
the rate per thousand for gas sug-
Sested by Mr.. Respess as tenn
porary adjustment, with the under
standing that your Honor and the
Council and counsel of our Com
pany will set a time, with or with
out the City Attorney as you may
prefer, and using the data furnish
ed by Mr.. Respess, apply to the
facts by him determined establish
ed principles Of law and so reach a
basis upon which the s per cent
return is to be allowed. The Com
pany will enter into q stipulation
that when said rate suggested by
MIR. Respess earns in excess of the
agreed return on the rate base so
fixed, the charge for gas per
thousand shall automatically be de-
creased. You will appreciate from
Mr.. Respess' report that even upon
the valuation of S139,S65.9l, we are
earning at present rates no return
whatsoever and that, therefore, i'm
mediate relief is necessary. Will
you, therefore, after considering
Mr.. Respess' report and this letter
of which we are sending n copy
to Mr.. RespeSs, wire us at our ey-
pense how soon it will be convent
you, to the end that the gross in
! justice to which the company is
now being subjected may at least in
| part be corrected in accordance
with those principles of give and
take and fair play, which you were
yourself good enough to suggest.
You will recall that we express
ed willingness to temporarily
continue operation at Il rate Of
$1.65, not because we thought this
was fair, but we felt that. ii would
at least enable us to continue to
operate until the unfairneSs OF it
was demonstrated and your sense
of justice caused you to correct the
same. With the data now in hand,
n faircr rate per thousand can with
all propriety now be fixed, even
without awaiting a further con-
! ference with representatives of
the Gas Company.
Pursuing the precedent already
established, we are sending n copy
of this letter To the ITEM.
Very truly yours.
/ poi | TIT