Ellsworth American., 1921-04-20
NEW WATER RATES
PUBLIC UTILITIES COMMISSION
MAKES REPORT.
Rates Increased, but Not TO Extent
Asked by Company-Pricc Tor
HNdrantS Doubled.

OF EIlSNOlIH water Idtt9' ll't'l VI ~
fore il last November. The commls-
sion grants an increase OF rates Iof
domestic and commercial uses OF APP
uroximately 20 per cent but more
than doubles the cost to the city lof
fire hvdrantS, street-Sprinkfng puf-
poses and drinking fountains, or
from $4,000 to $4,3S0, and also pro
yides that the company may charge
the city any excess Of the S2,9SS.6O
tax assessed against the water plant
last year.
The increase to the general pubic
is not as much as asked for by the
company. The commission also cut
down the companys estimated value
of the plant from $163, 965 or $780,
965 less depreciation, to ll3,5oo.
The new schedule of rates fixed by
the commission is printed IN full be
low. For purposes or comparison,
The American also prints the table or
present rates and the rates asked for
by the company.
The commission, in its report,
after reviewing the various steps in
the hearings, going back to 1915,
says:
We shall not undertake to go into
detail with reference to Professor An
derson's very elaborate report or to the
very extensive report submitted by our
own forces. Professor Andersons
original valuation was sub
mitted on October 90, 1917, and was
based upon average figures over the
fve-year period ending in 1915. His
conclusion was that the reproduction
new cost of the property devoted to
water service, including all overheads,
was $163,965, and that the reproduction
cost of the same less depreciation was
$136,214. Our engineering force has
recast Professor Anderson's figures,
using the fve-year period ended in
1917, for the reason that we have used
that period in practically ali of our
valuations, as being more representa-
tive than the five-year period ended in
1915. In it's earlier decision the COM
mission fixed the fair value of the
property other than going concern
value at $96139. Our engineer has in
creased this amount in accordance with
the revised figures obtained by using
the five-year period ended in 1917, and
not including going concern value ar
rives at a figure of reproduction less
depreciation of $113, 306 as the fair
value of the property of the respondent
company devoted to water service. eX-
elusive of going concern value. With
reference to going concern value, Pro
fessor Anderson submits several sug-
gestions as to the method of determin-
ing such value. While we have given
each consideration, we are not able to
entirely adopt any of them. Going
concern value may or may not exist in
a given property. In many instances
it is difficult to accurately determine
the amount which should be allowed
even though convinced that some
amount is shown to be necessary.
Ordinarily, this commission would
favor the method of determining what
amount. if any. during the formative
period of the company, it failed to
earn a just return upon the fair value
of its property. In this case the water
company, during it's formative period,
was not owned or controlled by the
present respondent, and we have not
had presented to us any evidence to in
dicate whether during that period
there was or was not any such failure
to earn a fair return. Such evidence
as was presented indicates that at the
time the present respondent became
possessed of the property, rights and
franchises of the old water company
an agreed price therefor was paid, and
there does not seem to be any room
for doubt that all elements of value
including any going concern value,
must have been considered by the sell
ers and the purchasers in arriving at a
price and the amount paid by the
present respondent included and alb
sorbed any going concern value which
may have existed. 1t follows that
from the time of the acquisition of the
property by the present company, the
latter was entitled to a return upon
the fair value of all its property. if the
same could be obtained at reasonable
rates, and included in this fair value
should be any going concern value, if
the same could be shown to exist. in
addition to the value of the physical
property and other oVerheads. The
commission is unable to find anything
in the evidence to warrant the in
clusion of any amount as going con-
Germ value, and we therefore fix and
determine fair value of the respon-
dents property devoted to this public
use as the above sum of $113,306.
At reasonable rates can the company
obtain its operating expenses taxes
depreciation and a fair return upon
this value? The company's report for
the year ended December 81. 1920
shows that its entire operating revenue
was $11 ,170.44 and it's entire operating
expenses $14,407.39, leaving a deficit of
S3,236.95. We have gone, carefully over
the report of the respondents operat-
ing expenses and find therein nothing
to criticize, and do not see and have
not had our attention called to any
economies to be practiced in reduction
or such operating expenses. 1t follows
that either the company must con-
tinue to face a deficit or it must OBJ
tam more revenue. Looking at its
schedule of rates for both private and
public service, we conclude that there
can be some reasonable increases in
both. These increases, however. can
not be sufficient to yield any sub
stantial return upon any value of the
property and still be reasonable rates.
We cannot lose sight of the fact that