Evening star., 1933-05-24

Utility rates throughout the country,
according to press comment, may be
affected by the decision Of the United
States Supreme Court. sustaining re-
duction in the rate for natural gas In
Los Angeles, as ordered by the State
Utilities Commission. It is viewed as
recognition of the fact that such rates,
recently, have been high in view Of
other factors in business.
"The decision is regarded as being
of far-reaching importance" says the
Indianapolis News, and that paper
makes the comment: Apparently it
puts to an end the theory that utility
corporations lead a sort of charmed
existence, exempt from the ordinary
vicissitudes of life, and that complaint
of 'confscatiun can be successfully
made in the Federal courts against
any attempt to base rates on reasonable
valuations Of property. The public has
Chief Justice Hughes in the course of
the courts opinion This sentence may
be said to contain the essence of con-
futation Of a theory apparently long
popular among utility company attor-
neys and promoters. In times of rising
prices and valuations it was the prac-
tice of utility companies to claim all
the advantages for them then of max
ing reproduction value the basis of
calculation Of fair returns. Now that the
trend of reproduction values has taken
strong turn in the other direction,
efforts of the public to have this taken
into consideration have been resisted" !"
'"The court emphasizes that it sits
not as a board of revision over the
judgments of regulatory commissions.
but only to enforce constitutional
rights" according to the Newark Eve
ming News, and that paper presents
the summary of the decisicn: Value
for rate-making purposes is a matter
of judgment. not formula; both repro
duction cost and historical cost are
relevant facts. Going value is not a
fanciful or conjectural percentage, but
O recognition by the regulatory COM
mission of an element Of value over
and above physical value. Rate Of re-
turn depends upon many factors, but,
principally, should be high enough to
permit the company to continue to do
business. Regulatory commissions may
now go ahead more definitely than they
ever have in the past in fixing rates.
The last word of the country's highest
court gives the public none the worst
of it.
THE court adheres," says the New
York Sun, "to the principles expounded
in the Indianapolis water case. where
it asserted that the weight to be given
to actual cost, to historical cost and to
cost of reproduction is to be determined
in the light Of the facts of the particu-
lar case. The court said the determi-
nation Of present value was not an
end in itself Its purpose Is to afford
ground for prediction to make possible
an intelligent forecast of values in
order that the validity of rates for the
future may be determined. Estimates
for tomorrow, as the court said in the
Southwestern Bell Telephone case, can
not ignore prices of today.
'The decision forecasts a reduction in
utility rates throughout the country"
in the opinion of the Santa Monica
Evening Outlook, which points out that
cent months that utility rates were
the only charges included in the living
expense of the public generally which
have not been reduced" The Danbury
calls it "a victory for the
California Commission" and in har-
mony with "a widespread movement
for the reduction of gas and electric
rates" The Asbury Park Evening Press
gives the analysis Of the existing move
ment: when wages, reproduction
costs and the price of materials have
fallen tremendously 1t Is but logical
that the utilities can maintain a rea-
sonable profit after they have reduced
their income Other States win pos
sibly follow the lead Of California, now
that the Supreme Court has shown the
way and establish their public utility
rates on q reasonable basis. The con-
sumner does not mind paying . profit to
butthe cannot understand why
be stould ~ - much now 70 main-