Milford chronicle., 1953-09-25
Phone Co. Has Filed
appeal On Rate Rule
Given By PSC
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gross revenues of approximately
$SOO,00O.
The Commission erred in taking
the fiscal year ended April 80, 1858,
as a test period from which to de-
termine what prospective annual
revenues, expenses and net earn
ings of the company would be un-
der the rates in effect August 81,
the proposed rates, and the rates
ordered by the Commission.
The Commission erred in adopt
ing States Exhibit No. as being
fair and reasonable computation
f prospective revenues, expenses
and net earnings of the company
based on the test period. Particu-
larly, since the COmmisisOn's find
ing is unsupported by substantial
evidence and is contrary to undis-
puted evidence that net earnings
of the company for the test period
exceed its prospective net earnings.
Also, because the Commission fail
ed to include as an expense of the
company the full annual outlay for
wage costs resulting from a gem
eral wage increase of November,
1852. Also, because the Commits
sion failed to eliminate from the
amount accrued from federal taxes
on the States Exhibit No. 2 the
effect of tax refund received dur
ing the test year which was ap-
plicable to the prior period and
was not a recurring item. Also,
because the Commission failed to
include charitable contributions
made by the company as an item
of business expense.
The Commission erred in making
an adjustment to the cOmpany's
book provision for federal income
taxes as an adjustment to the COM
pany's net operating income; in
computing the allowance for the
expense of income tax by attribut-
ing to the company a deduction for
interest paid which is in excess of
the amount of interest actually
paid and to be paid; and in failing
to include as an expense the full
amount Of the cOmpany's income
tax liability.
The Commission erred in not
taking the fiscal year ended Oc-
tOber 81 as the test period to show
what prospective revenues, eX-
penses and net earnings of the COM
pany would be under the rates in
effect August 81, the proposed rates
and the rates ordered by the Com
mission.
The Commission erred in not
adopting Section Three of Com
pany's Exhibit No. as being a
fair and reasonable computation
of the prospective revenues, ex-
penses and net earnings under the
rates effective August 81 and un-
der the proposed rates and as be-
ing a fair and reasonable basis for
determining the prospective reve-
nues, expenses and net earnings
of the company under the rates
ordered by the Commission.
The Commission erred in con-
Guiding no allowance for cash
working capital should be included
in the cOmpany's rate base.
The Commission erred in deter
mining that the fair value of the
telephone plant, materials and sup
plies devoted to service in Della
ware-the rate base-was $22000.-
600; the rate base was grossly in
adequate and the finding is not
supported by substantial evidence
and is contrary to the evidence;
the Commission found the fair val
ue in respect of the property re-
lated to the test period ended April
so; the Commission failed to find
the fair value related to the test
period ending October 81; the Com
mission gave improper significance
to original or book cost of the COM
pany's plant and the reserve for
depletion carried on the COmpany's
books; the Commission gave i'm
proper and grossly inadequate sig
nificance, and failed to give fair
and proper significance to repro
ductiOn cost of the plant at pres
ent price levels and the amount of
depreciation actually existin 9
therein.
The Commission erred in not
finding the fair value of the tele-
phone plant, materials and sup
plies to be in excess of $4,000, ,OOO
Although other appeals have been
filed from decisions of the Public
Service Commission, created by the
1949 General Assembly. this is the
first one based on rates.
The new rates permitted by the
Commission went into effect Sep
tember 10 and are reflected in cur
rent telephone bills.