Court Opinion

ID: 9663563
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:42:45.488769+00
Date Added: 2024-06-11T18:14:51.787047
License: Public Domain

Fairchild, J.
(concurring). 1. With respect to the partial exclusion of the net investment cost in the Cold Springs shops and yards. I would prefer that the court not express approval in advance of a plan of adjustment which the commission has not yet considered. At this point, it seems sufficient to point out that there is no substantial evidence that it is feasible to devote parts of the facility to other purposes nor that it is imprudent to use it rather than to build or buy a different one.
2. With respect to the reserve fund for payment of liability for injury and damage. The liability of the company arising from any one incident in an amount between $100,000 and $1,000,000 is covered by insurance. The company also maintains a cash fund designated “Injuries and Damage Reserve Fund” in which a percentage of revenue is regularly deposited. This fund has provided more than enough money to settle all liability claims up to the time of this proceeding. The provisions for this fund are not in controversy. Starting-in 1955, however, the company began to accrue an additional reserve equal to one half of one per cent of its revenues and *397considered to be a provision against liability between $25,000 and $100,000. This reserve has been built up to $299,592. Accruals to this reserve were charged as expense. It would follow that if this charge were not a proper expense item, the income for those years was larger than reflected by the books, and an addition to surplus would result. The commission contends, however, that since this reserve was intended for losses, it should now be used for that purpose. The commission decided that four years was a fair period over which to spread the use of this reserve. In so doing the commission would require the company to reflect $74,898 less expense each year by drawing upon a reserve which the commission, in effect, holds should have been surplus. The commission’s determination that the provision by liability insurance for the largest losses plus the deposits in the Injuries and Damage Reserve Fund are sufficient appears to be based on substantial evidence and within the discretion of the commission. Prospectively the commission can properly reject the accrual to the additional reserve as an item of expense in computing the anticipated return. The commission cannot, however, require that surplus earned in the past be devoted to an artificial reduction in expense in the future. Wisconsin Telephone Co. v. Public Service Comm. (1939), 232 Wis. 274, 303, 287 N. W. 122, 287 N. W. 593.
I am authorized to state that Mr. Justice Currie joins in this opinion.