Court Opinion

ID: 6283447
Source: CourtListenerOpinion
Date Created: 2022-02-18 16:37:39.220281+00
Date Added: 2024-06-11T09:00:16.169762
License: Public Domain

Dissenting Opinion by
Wright, J.:
I respectfully dissent. It is my view that the order of the Commission is supported by the evidence, and is in compliance with the law.
Some years ago, the Scranton Electric Company constructed a plant for the production of electricity. A by-product of the electricity produced was excess steam, which was sold to various commercial and public consumers. On January 31, 1956, the Pennsylvania Power & Light Company acquired the plant and continued its use for the production of electricity. On September 14, 1956, the 'Scranton Steam Heat Company, hereinafter referred to as appellant, was organized. Appellant is a wholly owned subsidiary of the Pennsylvania Utilities Investment Corporation. On September 26,, 1956, as a result of an arm’s length transaction, appellant purchased a portion of the plant for a total consideration of $250,000.00. The facilities purchased by appellant were no longer useful in the production of electric energy, but had some remaining usefulness in the production of steam for heating purposes. Appellant thereafter requested approval of a sixteen percent rate increase, seeking to persuade the Commission that, when the test year ended on February 28, 1959, the depreciated original cost of its plant, purchased for $250,000.00, ivas $2,002,184.00, and that its depreciated reproduction cost was $5,932,327.00. Appellant contends that the Commission should have *162valued the plant at a level somewhere between these two figures. The Commission arrived at an over-all fair value of $900,000.00, which comprised (a) the arm’s length price actually paid by appellant for its plant seventeen months before the start of the test year, (b) the actual cost of plant since added, (c) organization costs, materials, and supplies, and (d) an additional allowance of seventeen percent of the net total, after depreciation adjustment, for going concern value and the effects of inflation.
My examination of this voluminous record reveals that the Commission did not err, under the particular circumstances, in treating the purchase price as a separate and independent measure of value and according predominant weight to it. Appellant was the first utility created for the sole purpose of furnishing steam heat from facilities originally designed for the production of electric energy — the first utility solely devoting the steam heat facilties to the public service. In effect, appellant applied for authority to exact from its relatively captive patrons an annual return based upon a non-existent original cost, plus yearly depreciation charges by virtue of which appellant would recover this exorbitant sum during its estimate of the plant’s remaining life. In my opinion, the Commission properly concluded that the proposed rates were unreasonable and excessive.