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LETTER OF TRANSMITTAL.
To His Excellency, FRIEND W. RICHARDSON,
In conformity with the provisions of section 12 of the Public Utilities Act, herewith is transmitted the report of the Railroad Commission of the State of California for the fiscal period beginning July 1, 1922, and ending June 30, 1923.
Due to the tremendous growth and development of the State of California, there has been a concurrent increase in the activities of every division of the Railroad Commission. This is reflected in the fact that the Commission rendered 1653 decisions during the last fiscal period, as against 1444 during the preceding fiscal year. Formal applications numbered 1170, as compared with 1034 the year before, and forma complaints numbered 148, against 146 the previous year.
In the matter of informal complaints, a sure index of the growth of the state, and increasing demands for service, the record showed a very marked increase, there being 5493, as against 4950 the year before. The Commission instituted 29 proceedings during the fiscal year, or one more than during the previous fiscal period. It held 1074 hearings and 248 meetings to dispose of this great volume of work.
The amount of work performed by the Reporting Department in reporting the matters heard by the Commission gives some conception of extent of these hearings. The transcripts covered 109,311 folios, or a total of 10,931,100 words transcribed.
The great increase in the number of both formal and informal proceedings imposed a corresponding burden upon the various departments of the Commission, especially the secretary's department, which receives and keeps an accurate record of all applications and complaints, and the action of the Commission thereon, and handles correspondence, publication of decisions and orders of the Commission, and the annual report.
During 1922-1923 the Department of Finance and Accounts reviewed 148 applications for permission to issue stocks, bonds, notes or other evidences of indebtedness. These applications involved securities amounting to $151,046,555.91. Of the applications, eight were filed by steam railroads; three by electric railroads; seventeen by automobile, stage and truck operators; fifty-eight by gas and electric companies; twenty-eight by water companies; sixteen by telephone and telegraph companies; eight by carriers by water; and ten by warehouse companies.
The largest amount involved in any one application was the application of the Spring Valley Water Company for permission to issue and sell $22,000,000 of bonds.
In addition to this work the Department of Finance and Accounts promulgated a new system of accounts for electric corporations having annual
revenues of $250,000 or more, and undertook the revision of the uniform system of accounts for gas companies having annual revenues of $250,000 or more. A uniform system of accounts for carriers on the inland waters of the state was also prepared and placed in operation.
The outstanding feature of the year so far as the Commission is concerned is the remarkable strength and vitality of all California public utilities, which in the face of a steadily maintained attitude by the Commission to reflect declining costs in the rates of all public utilities subject to its jurisdiction, showed an increase of more than $4,000,000 in their net operating revenue over the previous year's income.
The importance of California in the public utility field is indicated by the fact that the gross revenue of these utilities for service within the state is estimated at in excess of $453,000,000 for the period under review.
Rate reductions ordered by the Commission during the last fiscal period resulted in a reduction of the income of California utilities, based on 1922 revenues, of more than $8,160,000. These consisted of gas and electric rate reductions aggregating $5,100,000; freight and passenger rates, $3,000,000; water rates, $60,000.
In addition to these reductions by the Commission, the Interstate Commerce Commission placed in effect July 1, 1922, a 10 per cent reduction in all freight rates, amounting to a loss of revenue, based on 1922 income, of $11,277,000, or one-half of the increase allowed on August 26, 1920. This action of the federal body contributed toward keeping down the number of applications by shippers to the Railroad Commission for rate reductions.
When it is taken into consideration that the cost of maintaining the Commission during the fiscal year under review was but $516,706.78, it will be seen readily that this outlay was returned to the people of California many fold in reduced cost of public utility service, due to the regulation of those utilities in the public interest.
The Commission has taken a large part in a number of major proceedings involving transportation problems before the Interstate Commerce Commission, the importance of which to California can not be overestimated. Notable among these proceedings were the Southern PacificCentral Pacific unmerger proceedings, which were finally determined in conformity with the stand taken by the Railroad Commission; the American Railway Express rate case, and federal proceedings for the consolidation of railroads, and the evaluation of railroads.
FINANCIAL CONDITION OF UTILITIES. There has been a continued improvement during 1922 of the net earnings and credit of public utility corporations, taken as a whole. The increase in net earnings has been the result of increased business and increased investment, rather than rate increases authorized by the Commission during the year. Rates in general have during 1922 been revised downward.
Public utilities filing reports with the Railroad Commission rendered during the calendar year of 1922 service for which they charged $818,244,553.28 as compared with $792,492,772.85 for 1921, the increase being $25,751,780.43. The operating expenses, according to reports filed with the Commission, have increased only $2,660,103.61, that is, from $600,316,356.69 in 1921 to $602,976,460.30 in 1922. The net operating