Perth Amboy evening news. [volume] (Perth Amboy, N.J.) 1903-1959, 1924-12-31
SOUTH JERSEY
BOOST GRANTED
But Plea of N. Y. Telephone
Company Serving North
Jersey Is Denied
HAD EXHAUSTIVE STUDY
BY Utility Board on Value and
Earnings of Company
Before Decision

TRENTON. Dec 31-Increased
rates averaging sixteen per cent.
were granted to the Delaware and
Atlantic Telegraph and Telephone
Company. which serves Trenton and
South Jersey. by the Board of Pub
lie Utility Commissioners today. The
new rates are effective tomorrow.
An advance schedule of charges
asked by the New York Telephone
Company which serves North Jersey.
was denied.
The rate decisions are the result
of an exhaustive study of the values
and earnings of the two companies,
undertaken by the board following
the filing of the increased rate sched-
ule last March. In order that the
proposed increase might be fully in
vestigated operation of the proposed
new schedule was suspended.
In a case of this kind the law
places upon the com pany the burden
of proof showing the suggested in
creases are just and reasonable. In
an effort to prove the reasonableness
of the increase voluminous expert
testimony was produced at numerous
hearings.
James G.. Wray, consulting engi-
neer and a recognized authority on
telephone utilities, was retained by
the board as an expert TO assist in
the investigation. AS a result of this
probe the New York Telephone Cons
pany admitted that its proposed val
uation should be reduced approx
mately $6,000.00O. This resulted in
a reduction of about $500. 900 in the
amount the company claimed should
be allowed as yearly reutrn.
An important disclosure In con-
nection with the investigation was
the fact that the. New York Tele-
phone Company has accumulated
under the existing rates reserve of
approximately $4.S00,00 in excess
of that needed for the purpose.
In considering increases In rates
proposed by the Delaware and At
lantic Companies, the board found
that conditions were not the same.
1t did not appear that the Delaware
and Atlantic companies had accum-
ulated an excessive reserve for de-
probation as in the case of the New
York company. Consideration also
was given to the fact that the Della
ware and Atlantic company operates
in a territory which does not pre-
sent as profitable field for telephone
northern part of the state. 1t was
found that the return of the Della
ware and Atlantic company is ana
has been much less than that of the
New York company.
AS with the New York company
an exhaustive analysis was made and
the testimony relating to the value
of the property of the Delaware and
Atlantic company. A value claim
appropriating $24,000,000 was re-
duced by the company to SCI. 400. 900
following criticism by the boards
expert.
One of the problems which the
Board had to meet was the payment
made to the American Telephone
and Telegraph Company. the parent
organization of the New York Tele-
phone Company and the Delaware
and Atlantic Company under what is
known as the license contract"
In the course of the hearing 1t
appeared that this contract required
the payment annually of four and
one half per cent. of the gross in
come of the two companies. For
the year 1928 the New York Tele-
phone Company paid to the Amer
ican Company $S50.000. 1t was
ments for 1924 would be $685., 900.
This Item was found to be one of the
largest operating expenses of the
New York Company. 1t covers tele-
phone instruments, use of patents
and other services rendered by the
parent organization.
1t was the opinion of the Board
that while these services were valu-
able the evidence adduced failed to
establish that the payment of fou
and one half per cent. of the COM
pany's gross receipts was reasonable
and proper. The Board held that
the company failed to prove that in
creased rates involving continued
payment were just.
The Boards disapproval of the
increases proposed did not rest en-
tirely. however, on the failure of the
company to prove the reasonable
ness of the four and one half per
cent. charge. The testimony as to
the value of company's property is
discussed at length in the decision
and is the subject of a thorough
analysis.