The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-07-22
COURT RULING
TRIUMPH FOR
WATER USERS
Slash in Rates Upheld by
Federal Judges in
Utility Case.
ORDER PROPERTY AUDIT
Six Per Cent Is Declared
Fair Return on In
VeStment.

Most significant victory for utility
patrons in the history of public
service commission control in In
diana was recorded late Thursday
in federal court, when three judges
denied the Indianapolis Water
Company'S suit to block enforce
ment of reduced water rates.
Of particular significance in the
ruling was the fact that the three
judge court held that per cent is
a fair return on the company's
valuation, said to be the first time
a federal court ever has upheld a
return so low for a utility.
The hearing was presided over by
Judge Evan A. Evans, Chicago.
circuit court of appeals; Judge
Robert G. Baltzell, southern IN
diana district, and Thomas w. Slick.
northern Indiana district.
Their ruling will retain in effect
Commissioner Harry K. Cuthbert-
sons order reducing the minimum
monthly rate to $1.08 from $3.50
and the $65, 900 reduction in hydrant
rental granted the city.
Audit to Follow
The reduced rates were ordered in
effect until completion of an audit
and appraisal of the water COM
pany'S property, which will be fol-
lowed by new rate hearing before
the commission.
Evans advised the appraisal be
completed in time to permit setting
of a final rate schedule before Jan.
1. 1893.
He also advised water company
officials that if future receipts do
not conform to estimates on which
the ruling was based, the company
might appeal again to the court
without prejudice.
In announcing the decision, Evans
pointed out three determinate
issues in the case: What is a fair
value of property used in supplying
water to Indianapolis? What would
be fair rate of return on the in
vestment? Will the present rates
produce this fair return?
Reaches Valuation Figure
The court declared it impossible
to determine exactly a fair valua-
ton, but added that on the SHOW
ing made here, we believe it to be
SCI ,250,00O."
This figure, he said, was arrived
at by taking the $19,000,000 valua-
ton set by the supreme court as of
Jan. /, 1925, adding depreciation
costs, lower reproduction costs and
net additions to the prop
erty.
There is a difference between
fair rate of return and a confsca-
tory rate, and We feel that a 6 per
cent return is not con1scatory," Ev-
ans said.
Water companies, because of the
nature of their product, and the
fact that water is a necessity, do
not suffer fiuctuation in revenues
as often is possible in the case of
other utilities"
Credit to CuthbertsOn
Credit for the victory of utility
patrons belongs to CuthbertSon who
fought the entire matter almost
single-handed.
Through the water rate decision,
the way is paved for immediate re-
duction of other high utility rates.
The court upheld the emergency
rate reduction plan and a per
cent return under present condi-
tons. 1t also accepted something
besides company figures as evidence
of valuation, the company having
fought for a $26O00,00O valuation
and higher rate of return.
Emergency rate reduction was up
held in principle in the Vincennes
Water Company case, but the 20
per cent cut was held confiscatory.