The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-05-01
SUPREME COURT
ALTERS UTILITY
RATE-MAKINC
u. S. juriStS Launch New
Deal for Power Firm
Regulation.
BY RUTH FNNEY
Times Special Writer

WASHINGTON, May 1.-The
United States Supreme court
launched a new deal of its own to-
day, for public utility regulation.
Laying down the principle that
elaborate calculations which are at
war with realities are of no avail"
it has radically altered the trend of
supervised ate-making.
Its decisions in the Illinois Bell
Telephone and Dayton Power and
Light cases give state utility COM
missions a new lease on life. They
mean millions of dollars to rate
payers in all parts of the country.
If regulation falls into the new
pattern quickly enough they may
check the present tendency toward
yardstick regulation and establish
ment of public enterprises.
These. briefly, are the revolutions
airy points in the courts decisions.
IS Per Cent Return OK.
1t finds, in the Dayton Power and
Light Case. that 65 per cent is a
large enough rate of return for
utility companies. A few years ago,
in the Baltimore Street Railway
case, it said that anything below
IA per cent was con1scatory.
1t discovers that charges to
operating expenses may be as i'm
portant as valuations of property"
in rate making, and that by charg-
ing too much to depreciation-an
operating eXpenSe-utilitv COM
panies have actually been forcing
rate payers to contribute new
capital to them. to buy additional
plant and equipment on which the
utility then expects a return.
1t examines carefully charges
made by interstate holding com
panies for service to subsidiaries,
and in both cases finds they are too
high and reduces them.
Finally, and most fundamentally
important, it decides that actual
experience of a company operating
under reduced rates means more
than complicated calculations about
fair return on property values.
Finding that the Illinois Bell Tel
ephone Company has increased its
capital stock steadily, has paid in
tereSt on its debts and per cent
dividends on it's stock. has almost
doubled its fixed capital reserves,
has increased its surplus and I'M
divided profits from $5,600000 to
3.767 900 and has doubled its fixed
capital, the court concludes that re-
gardleSs of statistical walls from
the company it has not been operat-
ing under confiScatory rates.
$1S,OOO,OOO to Be Returned
Chicago telephone users get
$18,0O0000 at once by the decision.
The Illinois Bell Telephone Com
pay has collected that much in
excess of the rates the supreme
court allows during the ten years
the case has been pending.
Dayton gas users get 100000 on
the same basis.
Dayton Power and Light Com
pany is subsidiary of Columbia
Gas and Electric. one of the large
J. P. Morgan utility units. 1t buys
its gas from two other companies in
the same holding company group,
Ohio Fuel Gas Company and United
Fuel Gas Company, paying As cents
per thousand cubic feet. The court
found that 80 cents was enough.
The federal trade commission re-
ported some time ago that Columbia
Gas and Electric, in a recent year,
collected $8.1287OO from its common
stock in Ohio fuel gas and $3,600,000
from its United Fuel Gas stock.
Labor Warns Employers
Labors warning that working
hours must be reduced through use
of forceful methods if necessary"
comes just as the United States
here for its annual session report
ing many beneficial results from
NRA.
President Roosevelt has refused
to address the chamber, breaking a
precedent of several years standing.
His decision may mean that he feels
it is useless to appeal again to en-
ployers for voluntary reductions of
hours sufficient 10 reabsorb part or
all of the 100000 persons still I'M
On the other hand, there has
been no indication that he has al
tered his opposition to the COM
pulsOrv thirtV-hOur week bill Presi-
dent William Green of the A. F. of
L. discussed this with him just be-
fore issuing his statement.