The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1921-12-28
The Gas Rate Question
Letter From President of
Sumter Gas & Power Co.,
Discussing Report of
Auditor ReSpess
To the Honorable Mayor and

To the Honorable Mayor and
Council, City of Sumter, Sumter,
S. G.
Gentlemen: Mr.. Respess has
been good enough to send this office
! n copy of the audit he made of the
Sumter Gas and Power Company's
DOCKS. We are prompted to make
these observations nj regard of it:
Page 3. Inventory Gas Work"
Schedule l Omits the following
items
CD Gas in holder and distribu-
tion system.
CD Gas delivered to consumers
during month. readings having end
ed last four or five days of the
month and entered on books as of
October 1st.
Page 4. deduction of item S1O5.-
114.OS, which says, mo cash con-
sideration." There is no magic
about the word "cash." Property
may be as valuable or even more
valuable. And services frequently
have a value beyond a cash price.
There is not decision of q court.
and we challenge the citing of one
which says. that values in a utility
property are solely based on cash
actually invested. On the basis of
the accounting system adopted, q
tract OF land uncultivatible by rea-
son of rocks and boulders scattered
over II which was bought at SIS an
acre, after the expenditure of years
OIL erort by the farmer in convert
ing IT. into fertile. cheaply and
easily cultivated field, rich in pro-
ductiveness, would still be worth
IS an acre.
In view OF the fact that the books
OF the company through an error
reports the $1,000 paid for the
original ten Q0) shares OF 500 as
having been refunded. the companx
accepts and is willing TO be boun
by the erroneous statement, though
the officers of the company have
definite recollection and knowledge
OF the fact that said 81 900 was paid
on account of legal fees i'm con-
nection with services rendered to
and received by the company.
To eliminate the charge for the
franchise is unwarranted and nm.
just. 1t certainly involves both the
time and expense OF visiting Sum-
ter In order TO negotiate with the
civic authorities to secure the
granting of franchise i'm such
form and'upon such terms as to
make possible the financing and
development of the enterprise. AS
matter of fact. the number of
visits involving travelling expenses
aggregated between nine, hundred
and a thousand dollars, exclusive
or the value OF the time required.
The Baltimore Utilities Company.
predecessor OF the Southern Gas
and Electric Corporation, purchas-
ed this franchise, and realizing
when 1t did so that i'm a new enter
prise considerable portion of the
construction and development cost
would have TO be represented by
STOCK accepted therefor. The issue
or $4,000 of stock for the transfer
OF the franchise. in connection with
which travelling expenses alone cost
between nine hundred and q thou.
sand dollars, was small consider
alton. II Is confidently believed
that IL Mr.. Respess had made in
quiry az to this item he would
never have questioned the propriety
or charging it as an investment in
the property.
We come to the items Of cngi-
neering and superintendent and
| organization in respect of which
$94.OOO.O0 stock has been issued.
This represents sundry items entitl-
ed TO substantial and real consider
alton as basis for rate making as
follows. to-wit:
a. The designing Of the plant
and its distribution system, the type
and character of the equipment to
be installed, the. negotiation for the
purchase thereof, and. the actual
superintendence of construction,
including the erection of buildings,
installation of the distribution sys-
tenn, etc, done by representatives,
officers and employees Of the Bal
timore Utilities company. For such
services, a contractors profit of
ten per cent is generally allowed,
and engineering and designing is
usually charged at 7 1-2 per cent,
so that the total investment herein
allowed should be for these items
from II 1-2 per cent TO 20 per cent
as minimum.
b. Again as to organization 4:
this involves Incorporating the
company, examining title of the
real estate. transferring franchise.
passing upon its validity, etc. The
expense in this respect incurred
were paid by the Baltimore Ctili-
ties company and not charged to
the Sumter Gas and Power Com
pany, and stock issued i'm payment
therefor. Not only is the stock
issued in connection herewith
eliminated by the accountant, but
he even disallows actual cash dis
bursements by the Sumter COM
pany itself which appear upon the
books, to the extent Of the diff
ference between $5l,991.67 and
s47,0OO.00 or $4.001.67, for these
actual vouchers were available. and
the elimination of this sum Is who'll
ly tncomprehensible to the officers
or the Sumter Gas and Power Com