Perth Amboy evening news., 1921-07-28
FULL DECISION
IN FARE FIGHT
Report of Utility Board Gives
Reasons for Refusing Ten
Cent Car Fare

TBy Evening News Correspondent
TRENTON. July 2S:-The full
printed decision of the State Board
of Public Utility Commissioners in
the ten cen fare application of the
Public Service Railway Company
was issued by the board today. The
bare ruling of the board allowing
the company to charge two cents for
each transfer but refusing any in
crease over the present seven cent
fare was handed down July IA. The
two cent transfer rate takes effect
Thursday of next week. The COM
plete report makes a closely print
ed pamphlet of e~ighty-one pages.
The report states that the finding
of the board was based on the fol-
lowing conclusions:
That the value of the property of
the company used in the public serv-
ice is $S2,000,000
That the operating expenses of the
company, including taxes and depre-
citation, will not exceed 21,70S,00
That q return Of $~5,S42,500 is a
fair return upon the above valuation.
That such return will give to the
company a rate of Slightly over sew
en- per cent. upon such valuation.
That the total requirements of the
company, including the said return
of $5.S42, 500, will be $27,550,641.
That the increase in the charge
for a transfer from one to two cents
will produce an additional income of
approximately $4,000 a year to the
company.
That such increase in the charge
for transfers, together with the re-
duction in cost of operation and
wages and the other adjustments in
operating expenses as found by the
board, will produce a sufficient W
nue. to enable the company to meet
all its requirements for operating eX-
penses, taxes and depreciation and
will afford n reasonable return upon
the value of the property used as
found by the board.
The report is devoted very largely
to explaining how the board reached
the valuation of $4,000, 600. Three
estimates of the physical cost of the
were before the board.
intangibles and everything
else except pure physical costs.
These were as follows:
Ford, Bason & Davis. .$70,000,000
Cooley ............. 100000
Wolff 72,779,345
IHe tOtdl FOlu, DdcoH ~ laws
including intangibles. ETC.,
of the Public Service Rail-
Company, maintained that for
rate-making purposes the property
be valued at 100000, 600.
The board calls this absurd, and
Assume that the board allowed
the company to collect a fare high
enough to pay operating expenses
and a 7 per cent return upon q
value of 5000, 600, 900. this would
$4,000, 900 available for
on it's stock and to pay
charges on guaranteed stock
and rentals on underlying COM
panies, amounting to approximately
$3.50, 600. Deducting this from the
$14,O0 900, leaves approximately
$S,S50,ooO with which to pay divi,
dend on its outstanding capital
stock, or about IS per cent. Such
a return would be grossly excessive"
Taking the Ford. Bacon & Davis
valuation of $70,000,0 600 as a start
ing point, the board deducts there
from depreciation and adds to the
resultant, appreciation, going value
and working capital. In dealing with
the accrued depreciation the board
followed the rule laid down by it in
the Passaic Gas case which is held
to be in accordance with the ruling
of the United States supreme court.
From all the evidence the board de-
termined that the amount to be de-
Quoted from accrued depreciation
from costs new of all the street rail-
way properties other lands was
$13,500,000.
Then an addition was made of
$4,000 900 for appreciation. This
was based upon the general upward
trend of prices and the present day
prices. 1t was shown that the addi-
tons made to the properties since
January l, 1916, have been at the
actual full wartime cost. The al
lovance of the board for going
value was ~$12.000;000. The allow
ance for working capital was ST.
$780, 900.
Passing to the consideration of
operating expenses and taxes, the
report shows that the board assumed
that the number of passengers to be
carried during the year beginning
school fares, 100000 transfer
fares on the two-cent basis, 10000
0 ,, or a total of all fares of AL
$50, 900. Adding the company's es-
tirsate of $666,000 revenue from
other than passenger service. the
board finds the foregoing figures will
produce a gross revenue for the year
of $27, 604,100. The cost of furnish
ing the service is estimated at S27.-
550,641 gross, including depreciation,
taxes and an allowance of $5,S42, 500
for return on the value of the prop
erty. This leaves a surplus of $685.
459. AS already stated, the board
says it thinks the return of $5,S42,-
500 is sufficient.