The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1924-07-31

filed new request for lower rates.
An injunction was obtained against
the commission on Dec. 2S, 1922, the
case fought through to the supreme
court, decision made, and the case
then heard by the commission last
December and on February II, 1924.
At the outset of the opinion, which
is lengthy and in which the rail
road commission, it is understood,
sought to lay down the latest law
and rules governing public utilities,
the commission takes up the con-
tention of city and petitioners at
torneys that the stipulated value
Of the property, totalling 100000,
should stand for rate-making pur-
poses. The railroad commission
held that, since it reopened the case
on it's own motion, the value which
the company once agreed to was not
binding.
Total valuations by engineers for
the company and the commission
are cited as follows: Company. cost
of reproduction, $6S9,l29; commits
sion, present value, $532,l9l.
With Regard to Value
The railroad commission, with re-
gard to value, decided:
"Havihg carefully considered all
the testimony pertaining to valua-
ton, giving consideration to con-
struction cost, to prices of labor
and materials at the time Of the in
quiry, reproduction cost new less de-
probation, and to all over relevant
facts, the Commission is of the opin-
ion and finds that the present fair
value of the property of the Hughes
Electric Company, for ratemaking
purposes, consisting of electric and
steam heating utilities, is the sum
of $4,000, which includes reason
able allowance for working capital
and going value. Of this amount,
$362,202 is electric property and
$l36,s07 steam heating property"
Regarding rate of return it says:
Gin the original proceeding the
Commission found that the utility
was entitled to return of 3 per-
cent upon the fair value of it's prop
erty. We have uniformly held that
each case should be governed by
the facts and circumstances sur
rounding it. We find that the
Hughes Electric Company is rend-
ering efficient service and that a
rate of return of az cents, plus
Federal income taxes, will be and
is reasonable" The allowance of
Chairman Milhollan, brings the
rate of return to about 81 percent.
The railroad commission disagreed
as to the method of accounting Of
the Hughes Electric Company re-
garding the depreciation reserve set
up-to cover lessened value of
property through use. The commits
sion says:
"In the case now under consider
alton situation has been disclosed
which We must take notice of. While
the utility has set up a depreciation
reserve fund and credited certain
amounts to this fund annually, the
books and records of the company
disclose that only in one instance
was charge ever made against this
fund. and this amounted to- only
$27.81. If property has been retired
and new units replaced, it has been
covered by direct charge to oper-
ations. This is clearly contrary to
the spirit of the law pertaining to
depreciation and should the practice
of the company be continued the de-
probation reserve would within few
years equal the value of the depre-
ciable property"
Reserve too High
The utility, according to the COM
mission, credited $26,614.93 to de-
probation in one year when it should
have credited but $12,158.3O. The
utility, the commission found, had
on Dec. 81, 1922, balance of $685.
573.58 in its reserve account. Hold
ing that the charges for dcprecia-
ton were excessive, the commission
ordered reduction, stating $5,667.16
per year would be adequate.
"The manner in which the utility
AoS oSS uP q pOA SIOu VI AtS oCCOuhto
is open to severe criticism and a
complete adjustment Of its books
should be made in order to reflect
the true conditions" the commits
sion's order reads.
Regarding, cost, of operation and
income the commission found: Total
operating revenues for gear ending
Nov. 80, 1922, was 1924, 25S.86 and
operating expenses was s$151,7
leaving $72,521.O3 surplus for the
year to meet interest on investment,
etc. The amount charged to operat-
ing expenses included $9,95S.49 fed
eral income tax, which it was con-
tended by complaints was an i'm
proper charge to operating expenses.
Legal expenses in some degree
were found excessive by the rail
road commissions, It Z, found parti-
cularly that large sums charged as
legal expenses in attacking the
reasonablenese and propriety of
charges for Workmen's Compensa-
ton Insurance was unfair to tax
payers and we do not believe it
can be defended in law or equity"
Regarding officers salaries the
commission held that it could sub
stitute its judgment for the COM
pany. The principal salary increase
objected to was an increase from
az OOO tn SIC. 600 per wear for T.. A..