New-York tribune., 1922-03-04
Commission Decides ON
Third RcductiOnin Year
Effective ON April /;
Will Save $3,OOO,OOO
Seven PC. Drop in
Toll in Country
Action Taken After State-
Wide Inquiry Shows a
Profit Can BE Made
From q star Correspondent


ALBANY, March 3.-Beginning Anril
! telephone subscribers in New York
City will receive a reduction Of about
per cent in their telephone bills,
while those outside greater New York
will pay approximately Z per cent less
than they do to-day.
This was ordered to-day in de-
clsion handed down by the Public Serv-
Ice Commission ordering the New York
Telephone Company to put revised
rate schedule in effect at the expira-
ton of this month. The order will
mean saving of about s3,oo0,oo0 a
year to telephone users in the state.
The rate reduction was ordered by
the commission on the basis of the
data it has gathered so far in it's state
wide investigation of the telephone
company. The new rates will remain
effective until the inquiry has been
completed. The action of the commits
sion touches a pin to the balloon in
f1ated by those who have opposed the
commissions plan for a probe into the
company's affairs to determine rates
on statewide valuation rather than
on local area basis. Political capital
has been made out Of the Public Serv-
ice Commissions stand on telephone
rate matters, and it has been charged
that telephone. trolley and gas rates
approved by the commission in SYRIA
cuse was to some extent responsible
for the election of Democratic Mayor
in Governor Miller's home town.
Censured for Reserve
In reaching its decision the commits
sion finds that the telephone company,
in view of the downward trend Of
prices, is not entitled to charge rates
it was allowed at the peak Of che high
cost Of materials and labor. The com
pany also is censured for piling up
what the commission terms an "cxces-
sivc depreciation reserve"
The commissions order provides that
the telephone company, or any munici-
pality. may apply for a modification
of the order. This is the third reduc-
ton in telephone rates ordered by the
April by Governor Miller. 1t made a
10 per cent reduction in New York City
rates last June and a substantial re-
duction in the Buffalo rates last No.
vember. The total increases granted
duMrg the war period amounted to
about % per cent, netting the telephone
company an additional annual yield of
about $18,000,O00.
The evidence already submitted in
this case has been carefully considered. i"
says the decision, "and it appears to the
satisfaction Of the commission that
public interest requires certain reduc-
tions and readjustments in the rate
schedules of the New York Telephone
Company Not only on account of the
downward price trend of all materials,
the decreasing cost Of money, the daily
readjustments in the labor market, the
effort toward economy manifested by
all private business enterprises, but
also because the commission is con-
vlnced that the sums set aside for an
nual expenses of depreciation are large
ly in excess Of what is necessary, and
IN consequence the accumulated depre-
citation reserve is increasing more rap
idly than conditions warrant.
The company's depreciation reserve
apportoned to New York State now
fixed capital in New York State, includ-
ing land and intangible items, is s229,-
427,813, producing a ratio of more than
80 per cent. But when this company
was brought under the supervision Of
the Public Service Commission twelve
years ago the ratio of it's depreciation
reserve to fixed capital was only l0.7
per cent. In other words, there has
been accumulated through charges to
revenue since 1910 more than $16,0O0,-
900 of depreciation moneys that should
have been set aside out of revenue
prior to 1910, and is now presumably
included in the company's surplus. 1t
must be clear that depreciation rates
which have enabled the company in
twelve years to make up a depreciation
deficiency of $15,O00,00O have been too
high and should be reduced.
$2,8OO,OOO Difference in Estimate
"The company estimates the neces-
sary expense of depreciation for 1922
to be S12,9o0,ooo. On the facts pre-
sented, we believe $1O,0O0,o0o is suf-
ticient.
"The company also estimates that its
publicity and advertising expenses for
1922 should be 100000. But advertis-
ing in order to justify rate increases
tcontInuod % next pase)