Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1922-04-14
State Commission Declines
Reproduction Theory
as Basis for Figures.
RAILWAY PROPERTIES
NOT IN CALCULATION
Opinion in Company's Case Is
Handed Down by Alex.
andcr Forward,
WATER RIGHTS CAPITALIZED
sum of si'e.Oo0 Added on This Ac-
count. Against S8OO. 900 Asked
by Concern.

!, Light and power property OF the
virginia Railway and Power Com
rany is valued at Sis,ol9,3es.si. ac-
cord'nG To an order entered yestcr-
day by the State Corporation Com
mission. Again the commission de-
cilncd the reproduction theory as q
basis for the valuation.
The new valuation was made by
the commission following rchcar-
Ing from decision returned In
March, 1871, with which the com
rany showed dissatisfaction As a
net result the sum Of Sl4Oo 600 -
added TO the figures arrived al in
the former case, which was az prop.
tr'y as OF June, 10. 1920. The addi.
lions represent new property added
since that date and certain water
power rights which the company had
failed to include in lis claims In the
former case No rates for clec,r!s
service are involved In tho valuation
Other Properties No, Included.
. Street railway properties are not
included in the valuation ngurcs.
The Richmond Petersburg inter,r.an
line. which was valued separately las,
Z included.
~ Reproduction values. with the ex-
Samplc OF the fluctuations o. the las,
few years, are not fair or sound
basis for valuation. in the opinion
OF commissioner Alexander Forward.
who warned that the theory of re.
production cost as the time service
is given the public will ris, Ike
Banauo's ghost. TO plague the dream
OF utilities, commissions and courts"
In an opinion handed down with
Abe order Commissioner AiexaSlar
Forward says that. In view OF ,h,.
declining price leycls. the commits
sion adhcr"S To It's former opinions
that such basis is no, fair now to
the public, and may soon not be fair
. to the company. thus being too un-
certain "a n guide. However. in the
light OF the recent decision of the
supreme Court OF Appeals In the
Petersburg Gas Company case, the
commission is obliged to give greater
consideration than heretofore 10
present-day price levels. and accord
.agly has allowed appreciation In
values af prewar property. on a
basis Of per cent per annum COM
pounded from 1914 to 1921.
"Rise Like Hanquos Ghost"
Pointing out that the Supreme
Court. in the Petersburg gas case.
did not specify any date at which
unit prices should be taken in de-
termining reproduction values. Com
missioner Forward says in the
opinion:
=, During the world war there was
a rapidly advancing price level Be
ginning the latter part of 1920. there
has been gradually declining price
level. 1t may he that In the very
near future regulatory bodies Will
be confronted with proposals from
consumers TO reduce rates by estab-
fishing reproduction values at that
time on unit price level lower than
that upon which large sums were
invested during the high price period
Tor extensions and eniargements OF
utility property. 1t might happen
that valuation then reached on
the strict reproduction theory would
represent sums materially less than
the amounts honestly and prudent,y
Invested in the public service. Per-
haps. then, tho theory OF reproduc-
tion cost at the time service is given
10 the public Will rise. like Banouo's
ghost to plague the dreams OF utIl!-
ties. commissions and courts"
The subject of accrued deprecja-
ton is discussed at some length.
Tho Supreme Court. In the Peters,
burg case. said there should be- a
. deduction for observed depreciation
Tho commission points out Tho, -,
servation cannot always be used. and
that some other method is necessary
In fixing depreciation on unobscrv-
able property. Therefore the deduc-
ton OF l6 per cent, arrived at In the
former case. is adhered to.
Commissioner Forward, in his
opinion. discusses in great detail the
!. Continued on Page I6. Col. 31
!, Washington Easter Excursion Anru