Opinion ID: 2391146
Heading Depth: 1
Heading Rank: 8

Heading: Materials and Supplies.

Text: Included in the questions involved in this appeal in the rate base category is the Company's contention that the Board erred in reducing its claimed allowance for materials and supplies by $716,000. The Board reached its conclusion in this respect, inter alia, by discrediting the total amount so claimed by the Company on the grounds of delay in payments, of the fact reusable materials are carried in this account at current prices new, and of the fact that an allowance of three months' requirements would be generous. The Company contends that these are not valid reasons to support the disallowance. It argues that this is a matter of internal management with which the Board may not interfere. It has been held that a public utility board has no power to dictate policy for a utility company unless the latter's policy is inimical to public interest. See Elyria Tel. Co. v. Public Utilities Commission, 158 Ohio St. 441, 110 N.E.2d 59, 63 ( Sup. Ct. 1953). Compare Passaic, etc., Water Co. v. Board of Public Utility Comm., 5 N.J. Misc. 1078, 1081-1082 ( Sup. Ct. 1927), affirmed 104 N.J.L. 666 ( E. & A. 1928). However, it has been held that the time within which the property of this category will be used is very important in determining whether this property (held for future use) should be included in the rate base, and the test is whether the time for using the property in question is so near that it may properly be held to have the quality of working capital. Petition of New England Tel. & Tel. Co., 115 Vt. 494, 66 A. 2 d 135, 142-143 ( Sup. Ct. 1949). Cf. 2 Pond, Public Utilities (1932), sec. 567, p. 1040. This appears to be a reasonable test and to have been applied by the Board in this case. There is a presumption in favor of the validity of the action of the Board since its exercise of the rate-making power involves a broad measure of legislative discretion. Agencies to whom this legislative power has been delegated are free, within the ambit of their statutory authority, to make the pragmatic adjustments which may be called for by particular circumstances. Atlantic City Sewerage Co. v. Bd. Pub. Utility Comm'rs., supra (128 N.J.L., at p. 368). We find no abuse of discretion on the part of the Board in this respect. Further, we find that the Company's own evidence on this facet of the rate base calculations called for an allowance of $2,524,500. The Board allowed $2,600,000. In summary, we determine that the Board studiously analyzed all the evidence relative to rate base and the component elements thereof. Its conclusion as applied to the facts before it has evidential support, and viewed in its entirety produces no arbitrary result. The emphasis placed by the Company on the allegation that reproduction cost was ignored is not so. The reproduction cost evidence substantiates the original cost figure as to plant additions effected in the post-war period. Both proposed rate-base methods involved consideration of the same evidence. As the Board found, Mr. Cook based his fair value estimate on both original and reproduction cost. It was a matter of legislative judgment delegated to the Board acting within that sphere to assay the fitting weight to be accorded all the evidence.
The questions involved in this appeal under this category relate principally to expenses. The Company contests disallowances of several expense items, arguing that amounts actually paid must be allowed unless there is an abuse of discretion on the part of the Company's officers. The Board relied upon the rule that it is not permitted to take the Company's books of account at face value. See the Public Service Coordinated Transport case, supra (5 N.J., at p. 218-219).