3. Engineering and superintendence.
15. An allowance of 5 per cent for engineering and superintendence
was made by the Commission in arriving at the reproduction cost new
of an electric railway company's property. Re Washington & M. R.
Co. (D. C.) 558.
16. In arriving at the reproduction cost new of an electric railway
property a 15 per cent allowance by the Commission for contractor's
profit was based on the cost of both labor and materials where materials
were furnished by the contractor, and on the cost of labor alone where
the materials were purchased and delivered by the company.
Washington & M. R. Co. (D. C.) 558.
17. The sums of $3,350 for organization expense and $14,000 for
contractor's profit were allowed by the Commission, in the valuation
of a gas company's property for capitalization purposes, where the
total value fixed was $160,240. Re Ocean County Gas Co. (N. J.)
601.
5. Interest during construction.
18. An allowance of 8 per cent instead of 6 per cent for interest dur-
ing construction for one half of the estimated period will not be made
on the assumption that 8 per cent is the usual rate on loans at the
place at which the utility is located, where it appears that 6 per cent
is the legal rate for interest, in the absence of agreement, and the
general rule adopted by engineers and followed by the Commission in
a number of cases is to allow but 6 per cent. Columbia v. Watts
Engineering Co. (Mo.) 921.
19. An allowance of 3 per cent for interest during construction was
made by the Commission in arriving at the reproduction cost new of an
electric railway company's property, it being assumed that funds would
be borrowed only as needed and hence that interest would be paid on
only half the full amount for the time of construction. Re Washington
& M. R. Co. (D. C.) 558.
6. Taxes during construction.
20. An allowance of 1.5 per cent for taxes during a ten months'
period of construction was held liberal, where it appeared that taxes
at the rate of 3.55 per cent were assessed on a valuation of from 35
to 40 per cent of the actual value. Columbia v. Watts Engineering Co.
(Mo.) 921.
7. Taxes and assessments.
21. Pavement assessments against railway companies, including
amounts still unpaid, should be included in the valuation of its prop-
erty for rate-making purposes. Ft. Scott Gas & Electric Co. v. Ft.
Scott (Kan.) 481.
8. Costs of securing special contract.
22. The costs connected with the securing of a contract by a taxicab
company with a terminal company were excluded by the Commission in
arriving at the value of the company's property. Re Terminal Taxi-
cab Co. (D. C.) 546.
23. The sum of $4,000 for cost of obtaining franchise and law ex-
penditures during construction was included by the Commission in
the valuation of a gas company's property for capitalization purposes,
where the total value fixed was $160.240. Re Ocean County Gas Co.
(N. J.) 601.
24. The sum of $17,835 for overhead charges in connection with
development, including interest during construction, was allowed by
the Commission, in the valuation of a gas company's property, for
capitalization purposes, where the total value fixed was $160,240. Re
Ocean County Gas Co. (N. J.) 601.
10. Percentages allowed for overhead expenses.
25. An allowance of 1 per cent of the amount invested in the plant
by the stockholders was made by the Commission to cover legal and
organization expenses and omissions and contingencies in arriving at the
value of a taxicab company's property. Re Terminal Taxicab Co.
(D. C.) 546.
26. An allowance of 3 per cent for legal, organization, and insurance
expenses, and omissions and contingencies, was made by the Commission
in arriving at the reproduction cost new of an electric railway com-
pany's property. Re Washington & M. R. Co. (D. C.) 558.
27. Percentage allowances for overhead charges should be figured on
the depreciated value of an electric railway company's property in de-
termining cost of reproduction new less depreciation, for the reason that
such values depreciate with the property. Re Washington & M. R.
Co. (D. C.) 558.
28. An allowance of 7.5 per cent overhead expenses on the value of
a gas company's land, and 12.5 per cent on the value of the buildings,
equipment, holders, and distribution system, was held fair and rea-
sonable, both to the company and to the public. Columbia v. Watts
Engineering Co. (Mo.) 921.
29. An increase of 15 per cent over the sum of the various items
previously allowed in an appraisal by the Commission for overhead
expenses was granted, it appearing from the present knowledge of the
Commission that the former estimate was too small. Beloit v. Beloit
Water, Gas & Electric Co. (Wis.) 1005.
b. Discount on bonds and stocks.
30. Bond discount is the money expended by the company for the
purpose of obtaining money with which to construct the plant. Pub-
lic Service Commission ex rel. Seattle v. Seattle Lighting Co. (Wash.)
31. The rule that a company is entitled to a reasonable return upon
the fair value of property used and useful in the operation of the
plant at the time of valuation does not apply to bond discount, and
this item should not be allowed in a valuation for rate-making purposes.
Public Service Commission ex rel. Seattle v. Seattle Lighting Co.
(Wash.) 135.
32. Discounts on capital stock should be excluded from any considera-
tion as property and set aside in an account which shall be amortized
by assessments upon stockholders or from the return on the property
under the principles prescribed by the Interstate Commerce Commission
which are required by the organic act of the District of Columbia Com-
mission to be followed where practicable. Re Terminal Taxicab Co.
(D. C.) 546.
33. In the valuation of the property of a gas company for rate-
making purposes, an allowance was made to cover all expenditures
made by the company for payment over mains and services, where
removed or replaced by it. Salinas City v. Coast Valleys Gas & Elec-
tric Co. (Cal.) 460.
34. The Commission is not justified in accepting the value placed
upon land of a public service company by one of its engineers, where
his conclusions were based solely upon consultation with certain real
estate men who afterwards testified under oath to a much higher
value. Columbia v. Watts Engineering Co. (Mo.) 921.
35. Working capital includes stores and supplies. Public Service
Commission ex rel. Seattle v. Seattle Lighting Co. (Wash.) 135.
36. The sum of $10,000 for working capital was included by the
Commission in the valuation of a gas company's property for capitali-
zation purposes, where the total value fixed was $160,240. Re Ocean
County Gas Co. (N. J.) 601.
37. A claim by a taxicab company for an allowance of working capi-
tal on account of the cost of certain 4 per cent bonds deposited as se-
curity for the faithful performance of its contract with a terminal
company was allowed by the Commission in arriving at the fair value
of the company's property. Re Terminal Taxicab Co. (D. C.) 546.
38. One half of the sum paid in advance by a taxicab company for
licenses was included by the Commission in its allowance of working
capital in arriving at the value of the company's property, where it ap-
peared that the company distributed this item by charging an equal
portion thereof to expenses monthly. Re Terminal Taxicab Co. (D.
C.) 546.
39. One half of the sum paid in advance by a taxicab company for
insurance was included by the Commission in its allowance of working
capital in arriving at the value of the company's property, where it ap-
peared that the company distributed this item by charging an equal
portion thereof to expenses monthly. Re Terminal Taxicab Co. (D. C.)
546.
40. A claim for an allowance of working capital on account of notes
receivable was excluded by the Commission in arriving at the value of a
taxicab company's property, on the ground that it was not a continuing
item and would practically disappear at the end of the calendar year.
Re Terminal Taxicab Co. (D. C.) 546.
41. Only a very small amount of working capital should be allowed
as accounts receivable in the valuation of a utility's property, since ac-
counts receivable at different periods are offset by accounts payable, and
regulations may be made prescribing the time and conditions of pay-
ment for services. Re Terminal Taxicab Co. (D. C.) 546.
42. An item of merchandise and supplies should not be included in
the valuation of the property of a public service company, for rate-
making purposes, where it represents property for sale to the public.
Ft. Scott Gas & Electric Co. v. Ft. Scott (Kan.) 481.
43. A reasonable amount for working capital should be allowed in the
valuation of a utility's property, which should include the material and
supplies which experience has shown to be necessary to be kept on hand
and enough cash to pay expenses until the collection of receipts provides
a sufficiency. Re Terminal Taxicab Co. (D. C.) 546.
44. In the valuation of the property of a lighting company for rate-
making purposes, the Commission in fixing the allowance for working
capital eliminated from the amount of $150,328.79 invested in stores
and supplies, the sum of $41,679 invested in lamps, goods, and ap-
pliances. Public Service Commission ex rel. Seattle v. Seattle Light-
ing Co. (Wash.) 135.
45. An allowance of $50,000 as working capital, in addition to the
sum of $108,649.79 invested in stores and supplies, was held to be
sufficient where the operating expenses of the company were approxi-
mately $50,000 a month. Public Service Commission ex rel. Seattle
v. Seattle Lighting Co. (Wash.) 135.
46. The sum of $8,670.74, including $3,286.44 for stores and sup-
plies, was held a sufficient allowance of working capital for an electric
railway and light company, the value of whose physical property was
placed by the Commission, at $107,686.04, in a valuation to determine
the amount of securities to be issued. Re Omaha & L. R. & Light Co.
(Neb.) 416.
47. In findings of fact as to the reproduction cost of a scenic rail-
way, a classification of hotels, restaurant facilities, and other acces-
sories as nonoperating property is justifiable, although such property
is essential to the business, since the practice is proper from an audit-
ing and accounting standpoint, and the question whether such prop-
erty should be value in a rate inquiry is not under consideration. Re
Mill Valley & Mt. T. Scenic Ry. Co. (Cal.) 43.
48. A coal-gas plant not held as a reserve or for break-down service
in connection with the operation of a water-gas plant, cannot be in-
cluded in the valuation of a gas company's property on the theory
that conditions as to the price of oil, etc., may so change as to make
a return to coal gas profitable and the gas equipment useful. Columbia
v. Watts Engineering Co. (Mo.) 921.
49. Property abandoned and which is no longer used or useful for
the service should not be included under the head of obsolescence in the
valuation of the property of a public service company for rate-making
purposes. Ft. Scott Gas & Electric Co. v. Ft. Scott (Kan.) 481.
50. Certain automobiles of a taxicab company for which no sale could
be found, even at junk-value prices, and which had been dismantled at a
small cost, were excluded by the Commission from a valuation of the
company's property made in compliance with the public utilities act,
where it appeared that the reserve that had been maintained to offset de-
preciation on the automobiles was in excess of their original cost and
the cost to dismantle, and this amount had been invested in other
property of the company included in the valuation. Re Terminal Taxi-
cab Co. (D. C.) 546.
3. Investment in excess of present needs.
51. The Commission refused to eliminate from the valuation of the
property of a lighting company for rate-making purposes, extensions
made at its request, on the theory that such extensions were made in
advance of the necessity of the population. Public Service Commis-
sion ex rel. Seattle v. Seattle Lighting Co. (Wash.) 135.
VII. Intangible property.
52. The element of "good will" should not be capitalized in a rate-
making valuation, since such a procedure would have the inconsistent
result of charging customers higher rates because of their very patron-
age.
Re Terminal Taxicab Co. (D. C.) 546.
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