The people's voice. [volume] (Helena, Mont.) 1939-1969, 1944-06-09
Manhattan


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the water works by the mayor anc
two of the town councilmen with their
own private business by refusing to
re ;eive any evidence on them, under
a ruling by Matson. Their fallacious
argument was that it was a criminal
matter to be determined by the courts
alone. This is not true; their Grim.
inal guilt should and undoubtedly will
be determined by the courts, but the
commission should refuse to permit
the amounts involved in such illegal
contracts to be entered as legitimate
operating expenses of the utility. I'm
| der the law such contracts are illegel,
and the town officials participating in
them are liable to Imprisonment in
the penitentiary, removal from office,
and debarment from ever holding pub
lie office in Montana again. Counsel
for the complainant pointed this out
at great length to the commission dur
ing the hearing, in objecting to Mat
sons uncalled for ruling.
Permits 1870 Return
Most sensational point of the Mid
dleton-MatsonY Young decision is their
justification of a return of 1870 on the
original investment made by the town
Readers should remember that this is
publicly owned water system; that
it actually belongs to the people them
selves. And according to the major
ity opinion, they must compel them
selves to milk themselves to the tune
of 1870 on their own investment. The
commission admits that the present
net value after depreciation of the
system is $27,97709, and that the aver
age yearly net revenue after expenses
is $3,596.54, which means a return of
more than 1870 on the figures they
argue are correct, and which therefore
would justify a reduction of 500 in
the rates now assessed the people, #
we use the figures of the commissions
own engineer, and allow a SO return.
But the majority findings use So
called reproduction cost, on which to
base their figures, and which their
own engineer admitted was based on
price induces and labor costs at least
800 higher than those that prevailed
at the time the plant was built and
the investment was made. With even
these inflated figures, the utility is
making more than fair return of
go, which should not be allowed to
a publicly owned plant. The books of
the utility as testified by the commits
sionss own auditor show the original
cost of the system to be $4,000, which
at the depreciation set by their engi-
neer, would leave a present value of
$22,275, leaving the utilitys return on
that value 1870, or approximately 60%
more than it ought to be. Any I'M
engineer would ridicule the
low rate of depreciation of about 10
fixed by the commission, as
even privately owned utility's of this |
type fix their depreciation at about |
40, which would mean that the town |
is actually making 1870 on it's invest |
ment out of the hides of the con-
sumers. The majority gives no con-
sideration to deducting the value of
the large pump, which their own en-
gineer found not to be used or useful
in the operation of the utility. 1t is
obvious that they were determined to
stand by and protect these local po-
litical bosses and racketeers, regard
less of political utilization.
Overrules U. S. Supreme Court
This decision is most vicious from
the point of view of the method to
determine the rate base of a utility,
because it is founded on reproduction
cost less depreciation, which the
United States supreme court has
condemned as sole method
Of determining a base for rate fixing.
The opinion invites all utilities to
practice the most gross discrimination
n shutting off delinquent customers,
and take pains to point out that their
Rule G-12 really has no effect at all
n protecting a publicly owned utility
rom uncalled for delinquencies,
which could ruin such system. That
here were improper charges against
he water fund, the commission adj
nits, but says it doesn't have to do
anything about ii because it thinks
he town marshal ought to get more
Jay out of the water fund, which it
has no right to determine.
Then in a moment of unguarded liber-