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Public Service Commission

Rates. The company should be required to file without
prejudice a schedule designed to realize an average rate for
gas sold of one dollar and seventy-five cents per 1,000 cubic
feet. (P. 618.)

Aldrich, Walter M., In the matter of the petition of, for a cer-
tificate of public convenience and necessity for the operation of a
motor bus line over certain streets of the city of Norwich, N. Y.,
and the city of Syracuse, N. Y., and through certain villages
and towns between said cities. (Case No. 8091), 286.

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Automobile stage lines. · certificate of public convenience
and necessity. Extensions of the improved highway system
and the betterment of "good roads" already built will con-
tinue for years to come, consequently competition between
motor buses and railroads in the transportation of freight and
passengers will continue and this will be true not only as to
short haul traffic but with an increasing tendency to lengthen
the distance of haul.

This is a period of transition and to require those living at
a distance from fixed railroad stations to journey to the sta-
tions and there await the arrival of trains, rather than to be
allowed to take advantage of buses stopping at the front doors,
merely because this would result in financial loss to the estab-
lished carrier, is not in keeping with ideas of progress.

The operation of motor buses over the state highways is
very destructive and discriminates against the general tax-
payers who pay a large portion of the cost of the highways
while the motor buses are allowed to continue to destroy those
facilities of commerce, to the cost of which they contribute
little or nothing.

The authority of the Commission is limited to deciding
whether the proposed route is demanded by public convenience
and necessity and the word "convenience" is connected with
the word "necessity," not as an additional requirement, but
to modify and qualify what might otherwise be taken as the
strict significance of the word "necessity." In the phrase
"public convenience and necessity" the word "necessity"
means that which is needful, essential, requisite or conducive
to "public convenience." When more convenient and adequate
service is offered to the public it would seem that necessity
requires that such public convenience should be served.

Order granting the certificate prayed for, limited, however,
with regard to carrying local passengers in certain communities.

Bronx Gas and Electric Company, plaintiff, In the matter of the,
v. the Public Service Commission of the state of New York;
William A. Prendergast, William R. Pooley, Charles Van Voorhis,
Oliver C. Semple, and Charles G. Blakeslee, constituting the
Public Service Commission of the state of New York; Charles D.
Newton, attorney-general of the state of New York; Francis D.
Martin, as district attorney of the county of Bronx; the city of

Public Service Commission

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New York; Adolph C. Anderson; Eugene E. Tschudy; Anton
Pirner; Bertram H. Sterzel; Herbert A. Hosmer; Frances Scott;
Charles Hartmann; Otto L. Ackerman; Harold A. Rogers and
Joseph Barcel; defendants. (Opinion by Williams, referee), 329.
Gas companies inadequacy of return statutory rates
held confiscatory. Elimination of contested items. While the
Public Service Commission, in fixing a rate, might take into
consideration the item of "rate case expense,'
""interest on
consumers' deposits," "interest on taxes" and "Federal in-
come tax" and allow the company reimbursement for some or
all of these items, the referee, for the purpose of determining
whether or not the rates charges are confiscatory, has eliminated
all of these items, but without prejudice to the plaintiff else-
where. (Pp. 340, 341.)

Rate base. In ascertaining the "investment the actual
cost is to be taken, as near as that can be determined, and there
should be added to that figure the additions from year to year,
always bearing in mind the deductions for property retired as
no longer useful in the business. The decision is, therefore,
based not upon the present high reproduction cost but upon
the evidence of the plaintiff's actual and unimpaired invest-
ment therein. (Pp. 345, 346.)

Accrued amortization reserve. It is proper to provide for
obsolescence of units out of earnings but from the property of
a gas company adequately maintained in every particular no
depreciation should be deducted in determining the investment
of the stockholders. (P. 363.)

Working capital. All working capital, including amounts
tied up in accounts receivable, is capital actually being em-
ployed in the service of the public and as such is entitled to be
included in the category upon which a return is to be com-
puted. (Pp. 364, 365.)

Rate of return. Under any rate of return which could
possibly be considered adequate, the one dollar rate is con-
fiscatory as to the plaintiff. Because of the fact that an eight
per cent return has commonly been used as a basis by the State
and Federal courts and by the Commission, the findings are
submitted on that basis. (P. 365.)

Award of judgment. It appearing that the plaintiff did not,
from the sale of gas, receive the actual cost of manufacture
and distribution, with a reasonable return upon the investment,
it is entitled to the relief sought in the complaint. (P. 365.)

Brooklyn Edison Company, In the matter of the complaint of C. L.
Dooley Company and Walker Electric Company against, respect-
ing service furnished by the latter company. (Case No. 882),

590.

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Electrical corporations — service connections - Transporta-
tion Corporations Law, § 62. Where an electrical corporation
supplies current to a consumer by means of a sub-service con-
nection from the service of a consumer in adjacent property,
the Commission will not order a separate service connection
where there is no question as to the adequacy of supply of

current.

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Public Service Commission

Section 62 of the Transportation Corporations Law requir-
ing an electrical corporation to give electric service to the
owners or occupant of premises within 100 feet of the wires
of the company does not require that a separate service con-
nection be run from the company's wires direct to every sepa-
rate building or premises.

Brooklyn Union Gas Company, In the matter of rates for gas of
the. (Case No. 79-L), 160.

Gas companies merger recommended-rates established in
connection with merger. A change in the rate to be charged
for gas by companies in the Brooklyn Union System as well as
by the companies in the Consolidated System is in the judg-
ment of the Commission justified by pertinent circumstances,
especially as they will be influenced by the economies and
efficiencies which may be brought about by a united company.
The Commission believes a merger of the companies in the
Brooklyn Union System would be advisable.

Maximum rate fixed at one dollar and fifteen cents per 1,000
cubic feet.

Central Union Gas Company, In the matter of rates for gas of the.
(Case No. 79-Q), 162.

Gas companies rates of companies comprising the Con-
solidated System of companies fixed as a group standard of
gas merger recommended. There are a number of differ-
ences of operating costs, revenues, earnings, and property
investment among the companies comprising the Consolidated
System of companies, which would justify the fixing of rates
for each company independently. However, considerations
both of public policy and necessity justify the fixing of
uniform rates to be charged by these companies as a group
rather than as segregated companies, leaving it to the com-
panies to apply to the Commission for any modification re-
quired by conditions peculiar to any individual company which
may require the differentiation of such company from the
other companies forming the group.

The Commission believes that a complete merger of the com-
panies comprising the Consolidated System should be effected,
and the Commission will, in the furtherance of a public duty,
urge this course upon the companies in the system and endeavor
to bring about the change indicated.

In fixing the schedule of rates the first consideration of the
Commission has been to extend the benefit of the economy
through the substitution of a calorific standard for an illu-
minating standard to all general consumers of the company,
irrespective of the quantity consumed and not to any par-
ticular class of consumers.

Maximum rate of one dollar and fifteen cents per 1.000
cubic feet of gas fixed for all companies comprising the Con-
solidated System of companies.

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Consolidated Gas Company of New York, In the matter of rates
for gas of the. (Case No. 79-G), 162.

(For headnote see Central Union Gas Company case, ante,
page vi.)

Delaware and Hudson Company, In the matter of the complaint
of residents of the town of Windsor, Broome county, against,
asking for additional passenger train service. Petition of the
Delaware and Hudson Company for abrogation of the order of
September 8, 1921. (Case No. 168), 689.

Railroads company relieved from operation of trains under
prior order of Commission. It appearing that the operation
of trains under an order of the Commission has resulted in
financial loss and that the additional trains carried an average
of only 1.76 passengers per day for a period of ten months,
the application by the company for the discontinuance of the
additional trains is granted.

East River Gas Company of Long Island City, In the matter of
rates for gas of the. (Case No. 79-N), 162.

(For headnote see Central Union Gas Company case, ante,
page vi.)

Elmira Water, Light and Railroad Company, In the matter of the
petition (or complaint) of, under sections 71 and 72, Public
Service Commission Law, for permission to increase natural gas
rates in the city of Elmira, town of Elmira, and town of South-
port, Chemung county. (Case No. 167), 1.

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rates rate base

depreciation

Natural gas companies
-going concern value - Federal income tax. Rate base:
Where a company, which formerly manufactured gas but now
obtains a supply of natural gas which it distributes to its
customers, has retained and still uses but a small portion of
one of the buildings formerly used in the manufacture of gas,
and does not retain equipment therein, the value of the build-
ing should not be allowed in making up the rate base on the
ground of its possible usefulness in a future contingency.
(P. 10.)

Consumers should not pay rates for property not presently
concerned in the service rendered, unless (1) conditions exist
pointing to its immediate future use, or, (2) unless the prop-
erty is such that it should be maintained for reasonable emer-
gency or substitute service; and in studving these two exceptions
the economic factor should be carefully considered. (P. 11.)
Depreciation: A public utility is obliged to continue to
render efficient service, and its consumers are entitled to re-
ceive such service. So the cost of depreciation or liability of
renewal should be distributed over the life of the property.
Any other method is unfair alike to the investors and the con-
The company has the right to demand that the rate
or price at which the commodity is sold shall be sufficient to

sumers.

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Public Service Commission

reimburse the company for the cost of this part of its capital
consumed in service, and the consumer has also the right to
demand that this cost be fairly distributed; to the end that
consumers of any instant date, for example, the time of re-
placement, shall not have to pay in rates the entire burden of
replacing any unit, the service of which has been utilized for
the benefit of past consumers. (Pp. 19, 20.)

Going concern value: Where a company makes a claim for
going concern value for the period prior to 1900 when it and
its predecessor companies were not subject to regulation and
therefore at liberty to charge any rates which they could col-
lect, it must be presumed that it did charge rates which would
provide the amounts necessary for depreciation and sufficient
to recoup get going losses. If it did not do so its lack of
business judgment should not now be paid for in rates by
present or future consumers. (P. 26.)

Federal income tax: While Federal income tax must be
taken into consideration in fixing the rate of return, yet the
amount of such tax need not necessarily be allowed as oper-
ating expense in view of the fact that stockholders are exempted
from the payment of the normal tax on corporate dividends.
In this case, however, the income tax is inconsiderable; it will
make no appreciable difference in the rate, and is included as
an item of operating expenses. (P. 34.)

Rates: Based on sales of 370,000,000 cubic feet, it is evi-
dent that a rate of seventy-eight cents per 1,000 cubic feet
will pay a return of approximately 8 per cent, taking into
consideration the company's miscellaneous revenues from sale
of gas appliances, etc. (P. 35.)

Flatbush Gas Company, In the matter of the. (Case No. 79-0),
160.

(For headnote see Brooklyn Union Gas Company case, ante,
page vi.)

Frost, Ralph, In the matter of the application of Thewalt Hib-
bard and, conducting business under the name of the Mallery
Bus Line, for a certificate of public convenience and necessity,
for the operation of a stage route by auto bus or buses, between
the village of Windsor and the city of Binghamton. (Case
No. 879), 377.

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Automobile stage lines certificate of public convenience
and necessity denied· operation of stage line before enact-
ment of statute does not give owners legal standing. The fact
that an automobile stage line was operated before the enact-
ment of the present law requiring a certificate of public con-
venience and necessity does not in itself give the owners any
legal standing. When the law went into effect they came
within the purview thereof only by complying with its pro-
visions. Failure to comply with the law constituted unlawful
operation.