The Bismarck tribune., 1922-05-04
VALUATION OF
WATER COMPANY
PLANT is MADE
Superintendent of St. Paul Wa.
ter Works Places Figure
At Over $5O0,OOO
CITY ENGINEER D1sAGREEs
Hearing Before Railroad Com
mission in Water Cases Be-
ing Closed up Today

mission in Water Cases Be-
ing Closed up Today
The valuation of the plant Of the
Bismarck Water Supply Company is
now at issue before the state railroad
commission hearing the cases, with
valuations put in by engineers for
both petitioners and the company
The case was being closed up today,
and was expected to be finished in
time to permit Attorney Morgan, for
the NAter company. to return to st.
Paul tonight.
In addition to the valuations which
were presented in the previous hear
ing, valuations were presented by j.
T. Kelsey, superintendent of the wa
ter works owned by the City of St.
Paul, T. r. Atkinson, city engineer
and S. j. Hunt, employed by the city
in the case
Mr.. Kelsey's valuation was given
the commission preceding that of Mr..
Atkinson as of 1922 The st. Paul wa
ter superintendent placed the cost Of
reproducing the Bismarck water plant
at $574,63651, |basing costs upon q
five-year average Of prices, 1918 TO
1922, the figure being his estimate Of
what it would cost to reproduce the
plant.
The reproduction value as of April
/, 1922, Mr.. Kelsey said, was $503, ,000
Cost OF New Plant
If the city were to build new plant
equally as good as the present plant
it would cost about 100000 on pres
ent prices, he said, because he had net
allowed in his figures for cost Of
tearing up streets, etc. to lay new
mains but took the prices for the
: mains as laid down. e i
City Engineer Atkinsons valuation
of the plant as of May I, 1922, was
1921, ,701.35 This differed from the
valuation of S. ]. Hunt, employed by
the city in the case, who placed the
value at approximately $250,O0O. The
difference was occasioned chiefly, it
was said by Mr.. Atkinson, by his ac-
tion in charging off for obsolete ma
teral. Hunt later withdrew charge
he had made for meters on the as
sumption, he said, that the company
purchased them.
There was difference in method
which accounted to some extent for
the discrepancy between the valua-
tlons Of engineers for the water COM.
pany and the city. Mr.. Kelsey based
his upon the reproduction cost meth
cd and the city engineer upon the
historical original cost
Court Battle Likely
Whatever the result of the present
ycase is there is likelihood OF it being
tied up in courts. Protests have been
made by utility companies in all parts
of the state upon the historical cost
method Of valuation, it being held
that the commission should base valu-
ations on cost of reproduction meth
cd. used in most states. The commits
sion says it cannot value plants on
any other method than original cost
under the North Dakota laws. In the
Minot electric case, decided a few
days ago. the commission used the
original cost method. It is expected
that this case will be taken into the
courts to decide the proper method
of valuation.
In the hearing yesterday afternoon
City Attorney O'Hare asked that the
report OF Marvick, Mitchell and Peet,.
presented in the last hearing, be made
available to the commission and also
the company's book covering a period
of 1908 to 1909. Mr.. Morgan said the
water company was willing that the
commission have these records as well
as all records OF the company, and
that the books were open to an ac-
countant which the railroad commits
sion might employ.
Accounting Questioned
Mr.. O'Hare questioned Mr.. Poole re-
garding the funds and accounting me-
thods of the company. A book tlgure
for depreciation was set up, Mr. Poole
said, but no cash deduction had been
made for depreciation. Mr. Poole was
asked if he thought expenses OF ad-
ministration of the company, office
help, etc. was reasonable. He replied
that he thought they were IN line
. with expenses of most business houses
of the same size. He also was asked
about interest rates charged by banks
for loaning money ito commercial
houses and individuals.
Mr.. O'Hare presented assessed va
luations of the company, which he said
we're $219OOo in 1918; $21O,O0O in
1920 and $231,O00 in 1921. Mr.. Atkin-
son was questioned by Mr.. O'Hare as
to the method he used in arriving at
his valuation of 1922. He said ne
brought the valuation he made In 1919
down to date by taking changed price
basis and depreciation.
A large part of the testimony and
questioning in the case relates to de-
tailed and intricate methods of 3ac :.
counting and technical problems OF
engineering.