The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1923-12-18
PLANT COST OF
ELECTRICC0.
ISREP0RTED
Engineer For Railroad Com
mission Gives Construction
Cost at $4O9,O42.W
BASIS is sou GH T
Petitioners to Maintain
Agreed Valuation Should
Stick For Rate-Making

The hearing before the state rail-
road commission in the Hughes Elec-
trio Company case this morning de-
vcloped chiefly on the testimony
of E. H. Morris, engineer for the
railroad commission, as to values OF
the plant.
While the petitioners representa-
tives are standing pat on their de-
mand that the value agreed to by
the electric company in 1921 be con-
sidered as the basis for rate making,
with additions since then, the COM
pany has endeavored to fix a new
valuation. The agreed valuation was
about $400,00O, while the company
experts testified to reproduction
cost of upwards of 100000.
Mr. Morris gave first the con-
struction cost valuation he made as
of May !, 1921, which was 1856, ,484.-
90, which he said did not include
cash working capital. The depre-
ciated value on this basis he gave
as $300,988.85. The construction
cost was presumA to represent the
money that actually went into build
ing the plant, he said.
Bringing his figures down to date,
he said, he placed the grand total
construction cost as of November /,
1923, at $409,O42.OO and deprecated
value at $353,236.OO. This, he said,
included additions made since the
1921 figure.
Change In Figures
Mr.. Morris testified as to the al
location of the utility property as
between steam heat and electric
units. In 1921 he had divided this
on u $3.50 basis, he said, while now
he placed the property used for cleo
trio purposes at 60 percent and that
for steam heat purposes at 40 per-
cent. One of the complaints which
resulted in the present hearing was
from steam heat raisers, who de-
clared the rates were far too great.
Asked if he thought his figures
were correct, Mr.. Morris said that
many Of the records of the Hughes
Electric Company bearing on the
actual cost of early construction had
been destroyed, but that it was pos
sible to find out about when the
units were built and to obtain prices
prevailing at that time.
> With regard to- an arbitrary al
lowance for construction costs, he
said he figured IL percent, while
the utility's experts figured Is per-
cent. Each recommended working
capital of about $4,000.
Asked if he brought his records to
date on reproduction cost basis,
the chief engineer said that he had
done SO. He estimated the cost Of
reproduction as of October l, 1923,
at between $63O,0OO and $685., 900 and
the reproduction cost, less deprecia-
tion, at between $535,0O and $780,
900. This did not include going
value but included cash working cap
ital allowance.
Price Trends
Asked concerning price trends, Mr..
Morris said that there had been
drop of SO points under the con-
struction record method of figuring
material costs in the last month, and
that prices had fluctuated since the
after-the-war peak. Prices, he said,
were higher Ahan in 1922.
City Attorney Young. questioned
Morris considerably on the matter
of ALLEGATION Of the steam heat and
electric producing property of the
company.
There was some discussion with
regard to the Hughes Electric Com
pany's furnishing service to the
Northern Pacific shops at Mandan,
with the evident intention Of petit
TONERS to endeavor to find out if
this juice was being furnished to the
railroad at such low price that
Bismarck consumers were. penalized
and questions were directed by the
utility attorneys which indicated
they would endeavor to show that
the service was benefit to Bis
marck consumers. Detailed informa-
tion on this point was not presented
by Mr.. Morris. The hearing con-
tinued this afternoon.
Thesfies DISGUISED
Much OF the testimony of Mr..
Haganagh yesterday afternoon dealt
with the history Of rate making,
court decisions and views of various
public utility commissions. He dis,
cussed the theory Of valuation of a
property on the cost Of reproduction
as differed from the original cost, or
money actually interested in the
plant. He held that the valuation
must be the cost Of reproduction, or
present fais value less depreciation.
The pre-war standards of prices, he
urged. are history now, and price
levels are on new basis. e1he in
crement in dollars al between the
sbst of materials putt into the plant |
by the company in pre-war time and
the present cost Of doing similar |
work must be given the utility. he
contSnded. =
{, In. response to cross-examination,
he said prices on 5 October 1, 1928,
when the valuation claimed by the
company Is figured and prices on
tco1finnsd ~ Pare ~ !