Evening star., 1921-11-07
COURT REVERSES OPINION
UNFOLDING VALUE FIXED
ON POTOMAC ELECTRIC CO.
Appellate justices
Hold 1916 Costs
AS a Basis.
$500, 900 FUND
MAY BE FREED

Chief Justice Smyth,
Makes Dissenting
Opinion in Case.
The Court of Appeals of the District
of Columbia today reversed the opin-
ion of the late Justice Gould, which
had upheld the valuation placed BY
the Public Utilities Commission or
the property OF the Potomac Electric
Power Company.
The opinion was rendered by Justice
Robb and concurred in by Justice Van
orsdel. Chief Justice Smyth hled :,
dissenting opinion.
The majority opinion holds that the
present cost of reproduction is one o.
the necessary elements to be consid-
cred along with other relevant facts
in fixing the fair and reasonable value
of the property. 1t maintains that the
commission should have rendered it,
valuation as of December 81. 1916.
and not as of the date Of July /, 1919.
There was evidence, the court holds.
to show an increase in values and tn
commission should decide how nue.
in fairness, it should add to the earI!,-
valuation. The commission decline
20 consider reproduction cost.
Failed, Says Dissenting Judge.
The dissenting opinion points n';'
that the power company has faile4
to show the commissions valuatins
was Inadequate. unreasonable or un-
lawful" The cniei justice declares
allowed as it did no. come from any
investment Of the company, but re-
suits soIaly from the world war.
" hich has demoraliZed market condi-
unreliable. If any increase is to be
allowed. he holds that the majority
opinion should have indicated how
much. as he thinks the commission
entitled to the courts view In that
regard.
Unless this opinion should be re-
versed on appeal to the United States
supreme Court, the Potomac Electric
Power Company Will be entitled TO
the use of a fund of more than 81.
100000 which has accumulated under
an order of Justice Gould in 1S1.
i requiring the company to impound
| cents out of each l0-cent collection
/ from the consumer. This order WAS
anne nded twice, SO that the company
! recently has been required only to
| impCund 1i2 cents. ..-
+ Two Questions Considered.
! Justice Robb in the course of his
! opinion says: Under our view Of the
case it is necessary to consider but
two questions at this time, the first
! of which is as to the scope OF the
courts jurisdiction under the statute
The statute here under ccnstdera-
. tion gives to the finding of the CON-
mission prima facieN effect, for. 1T iis
terms places the burden upon the
challenger or excertant of showing by
clear and satisfactory evidence that
the IindiLGs %tFc s.nadeunate. unrea-
sciable or unlawful Put where as
, here the decision is challenged on the
ground that il IS based upon a mis-
/ take in law, or that X is wholly. un-
supported by evidence as to amount
| to an arbitrary exercise of power, il
| is the duty Of the court under the rule
announced by the Supreme Court to
exercise its own independent judg-
ment as to both law and facts SO far
as it is necessary to determine the
question.
Relates to Alleged Errors.
j THE second question relates 10 al
| legged errors in the rule adopted by
! the commission in finding present val
ues. The commission found the fair
| 1914, to be s10,250,000. The uncon-
4; tradicted evidence showed that be-
/ tween that date and December 81
k1916. the time of said valuation there
| had been sharp rise in values. Ap-
| pellants contend that the commission
as matter of law in reaching con-
| clusion as to- the fair value OF their
property on December 81. 1916. should
| have taken into consideration the in
! creased value of that property a.
shown by the evidence between the
earlier and the later dates. This the
! commission declined to do. but taking
; for a basis the fair value Of the prop
! erty as of July /, 1914, the commits
sion added net additional expenditures
/ on the property subsequent to that
! date and they entirely ignored the
. evidence as to the increase in the
value Of the property forming the
basis of the valuation of July /, 1914.
"The trial court was Of the view
! that the rule adopted by the commits
! sion was correct. We are unable to
! concur in that}view.
Rate Base Principal Object.
"The principal object of valuation
Of cost is to provide rate base and
the statute clearly contemplates that
| the commission shall ascertain til.
value as of the time of said valuation
and not as OF some anterior date. II
has been ruled many times that there
must be a fair return to a public
utility upon the reasonable value OF
the property at the time it 10 being
! used for the public :.
! l.
sion, in effect, declined to find the
! present value of the property because
(, not satisfied as to how long existing
conditions would continue. In aSsum-
ing this position the commission must
! have overlooked paragraph nine oi
/ the statute. authorizing it, at an!
time, of its own initiative to make q
revaluation of the property OF any
| public utility.
| Holds Commission Responsible.
| S"As conditions changed and values
were substantially affected, it would
have been the further duty Of the
commission to exercise it's discretion
and revalue the property. The COM
| ditions existing were worldwide.
| and, while their duration and future
| effect were problematic. there was no
immediate prospect OF q return to
normal conditions. 1t may be sug.
gested. although the point was not
raised in the opinion of the commits
sion, that practical difficulties would
have been encountered in an attempt
| to ascertain the increase in value Of
December 81, 1916. But there was
substantial evidence before the COM
i mission as to the rise in values. and
| a brief investigation would have en-
abled the commission to determins.
with substantial accuracy. how much
| in. fairness should be added to the
earlier valuation.
much reliance was placed by the
trial court upon the language of for
mer Justice Hughes. as referee in the
case of Brooklyn Borough Gas Com
pany against public service commits
sion. But we find nothing in the re-
port as we read it justifying the &C.
tion Of the commission here In en-
ttrely ignoring the evidence as to
value at the time the finding actually
was made. The contention there WA
that the rates should be based -ules
. - Con ti,1I,ed on NpaeA q .Coilrun Il