Evening star., 1932-04-07
81 Separate instructions Are
Requested in Petltioning
D. C. Supreme Bench.
OBJECT Is ELIMINATION
OF DELAYS IN VALUATION
Litigation Would Be Confined to
Questions of Fact-TIibunals
to Act as Legislatures.

filed in District supreme CouII d P%i
tion for instructions as to valuation OF
the properties of public utilities IN the
District. The petition and the accom-
panying brief occupy 80 printed pages.
Fiftv-rven separate instructions are
asked for. In each case the instruction
under consideration is reinforced by
SEPARATE treatise ORA wing for authority
upon every decision on the Suplect III
the Supreme Court of the United States'
the lower courts, and, in some cases
where the points have not come up for
judicial determination, upon decisions
0f the Interstate Commerce Con is
sim and other administrative bodles.
The petition is intended to remove
from valuation proceedings the delays
Incidental to the litigation, which has
attended every effort of the commission
~ date TO establish a value for pubic
,;tilitv. If the court will set the rules,
then the commission will follow them
in arriving at the valuations, and the
onlv litigation likely to arise out OF
future valuations will be upon queStlo9s
of fact, whether the commission olo
actually follow the instruction In a
narticlllar matter Such litigation. with
the nrInclDleS Oh law oOtN4CA 49,
is expected to be easier to dlspose OF.
Act as Legislatures.
The rules set by the courts, too, Will
be set by courts acting as LEGISLATURES,
under section 81 of the public dtlllties
ac+ and as legislative acts they may pe
suhseouently changed by acts OF Con-
gress The fact that in appeais from
the commission the courts OF the D!s,
trict sit as legislative and not as 1uolclai
bodies was settled by the Supreme Ooult
of the United States in the Fotonlac
Flectric Power valuation case known
A. Kei1er V potomac Electric Power Coz.
THE rulings asked for are to the erect
+het. The present value Of the properly
valued should be considered IN oe-
terming the compensation 10 WhlcIl
utility is entitled; in arriving at a nnai
value. however, the comm1sSlon is not
+o ha hound bv mechanical rIles, Dut
must exercise its honest judgment alter
fair consideration of the several ele-
ments of value: conSidera ticn must also
be given to the original cost OF tne
rro5crty. the investment in the prop
erty. as we'll as the reproduction cost oi
tn property.
The rate base should include only
rro1a,tv used and useful, and must ex-
clude abandoned property. Depreclatlon
must be deducted from both original
cost and reproduction cost in determin-
ing the final value, and the deprecla-
ton must be calculated on the stralgh@
line" method by an actual inspection
of the units in place and calcuiatlon OF
their probable remaining service nVes.
Obsolescence should be considered ass
in determining questions OF deprecla-
ton.
Working Capital Allowance.
A reasonable allowance must be made
FOR working capital Capitalization Is
not a proper guide or measure OF Valus.
nor is Capitalization Of earnings proper
method of ascertaining value.
The element of good will shall be LETT
out Ct the value, and SO must any
franchise value" save money actually
spent for acquiring franchise. Ihere
must be some allowance for going-
concern value, but none for the cost OF
developing business.
No specific allowance must be mace
for the favorable location OF a utility
nor for any contracts possessed by the
utility nor for the cost OF financing.
The brief accompanying the petltioh
saws. in part: In applying for the spe-
cific instructions set forth in thls peu-
tion, it is the desire OF the commission
to obtain certain standards Whlcn, II
properly used. will permit the ascertain
ment of a value which would be laWlul
and valid under the law OF the Iano
as a measure of the consututlonally
protected property OF any utility IN
cases involving the reasonaplenesS ol
rates. The presentation of the petition
bv no means comedies the acquiescence
Of the commission in the necessity OF
redetermining cost of reproduction OF
auy other element of value each time
a rate is modified, nor in filing TINS
petition does the commission concede
that any determination of value Is es-
sential to consideration of proper rate
schedule. The commission is SatlSnec
that a number Of more practicable
methods are available OF testing the
profit of a utility, but believes that II
is essential that it be informed as tc
the tests which would be considered
and applied by court on appeal from
the commissions order when conflSca-
ton is alleged"
Delays Are FOreseen.
In another place the brief states:
"Unless the commission is afforded
some clarihcation of the methods and
principles to be applied, 1t will be
obliged to obtain evidence for use un-
Ger MANY ulkE1SC anu GOtllIiCblilS IAlSO-
ries of valuation This action would be
exceedingly detrimental to the public
interest. 1t would require an unjusti-
fable expenditure of public funds and
would greatly prolong the valuation OF
the properties Of the several utilities
that have been named as defendants In
this proceeding. Such delay would un-
duly postpone the date of any effective
review of rates charged by the utilities
involved and would hamper the com.
mission IN the Just and reasonable per.
formance Of its duties under the public
utilities act"
The defendants named are the Wash
ingtCn Railway &, Electric Co. the Cap
ital Traction Co. the Washington
Rapid Transit Co. the Washington Ga
Light Co, and the Georgetown Ga
lght CO
The bnef is the result of man
months work on thu part Of William A
FUbafu special assistant 10 the corpo
ration ruu1f on utilities matters.
o. BE- agned by M Roberts Corpom
u1n Counsel William W Bride and y
, Lehman special counsel
V0lTURES PLAN MERGER