ant company; and the Commission having heard the arguments of counsel for the respective parties, and the Commission being fully advised in the premises, does now find the fact to be:

First: That the city of Seattle is a municipal corporation of the first class, duly organized and existing under and by virtue of the laws of the state of Washington.

Second: That the defendant company is a public service corporation, engaged in the manufacture, production, and distribution and sale of gas within the city limits of the city of Seattle.

Third: That said defendant company is engaged in the sale of merchandise in connection with the transaction of its business and in the advertisement thereof by the sale of gas stoves and fixtures.

Fourth: That it is not true that said company makes the sale of its merchandise a part of its bill for gas, or that it refuses to sell gas to persons who have refused or neglected to pay for merchandise. If such practices were followed by the defendant company, it would be forbidden by the Commission.

Fifth That the defendant company and the city have stipulated and agreed to reduce the minimum charge of 50 cents imposed by said company to 25 cents, and that such charge as so reduced is fair, just, and reasonable.

No evidence of any other rules, regulations, or practices of said company has been presented by said city or by any other person, showing, or tending to show, that any of the rules, regulations, and practices of said company are unjust, unfair, or unreasonable.

Counsel representing the city of Seattle stated before the Commission in response to a question submitted by the chairman that there was no evidence which showed or tended to show that the rates charged by the defendant company were unjust, unreasonable, or unfair, or that would justify the reduction of said rates in any particular, and the Commission so finds.

The defendant company at the request of the Commission has made extensions in the city of Seattle, which were complained of by the said city as being in advance of the necessity of the population, and has requested the Commission not to consider the expenditures of money covering such extensions in the valuation of the property of said defendant company. The Commission is of the opinion, and finds, that the company is entitled to have said property valued as a basis of its fair value for rate purposes.

Valuation. In the valuation of the property for rate-making purposes defendant company contends for the following items of valuation:

Reproduction Cost. The estimated cost of reproduction as found by Mr. Burroughs and Mr. Lea is approximately the same, and the Commission finds and allows the sum of $7,532,787 as cost of reproduction.

Working Capital. Defendant company has asked the sum of $290,000.00 for working capital. Working capital includes stores and supplies. Mr. Burroughs has eliminated from his estimate of working capital the sum of $41,679 invested by the company in lamps, goods, and appliances, on the theory that such supplies should not be considered as an element in the valuation for rate-making purposes. Mr. Lea has included this item. The total stores and supplies owned by the company at the date of this valuation is the sum of $150,328.79. The Commission eliminates from the foregoing the sum of $41,679, as suggested by Mr. Burroughs on his testimony, leaving the stores and supplies as an element for rate making in the sum of $108,649. 79. The operating expenses of the company are approximately $50,000 per month, and it is our opinion that to allow in addition to the stores and supplies kept by the company the sum of $50,000 as working capital will be a sufficient amount to meet the needs and necessities of the company. The total working capital, including stores and supplies as allowed by the Commission, will therefore be the sum of $158,649.79.

Bond Discount. Bond discount is the money expended by the company for the purpose of obtaining money with which to construct the plant. The rule of valuation laid down by the courts is 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 the valuation. The Commission is of the opinion that the money expended for the purpose of obtaining money

with which to construct the plant does not come within the rule laid down by the court. This Commission is bound by the rules laid down by the supreme court, and this rule having been so frequently stated by the different courts in valuation proceedings, we consider that it is binding upon us in the valuation of property for rate-making purposes. Both the Commission's expert and Mr. Lea testified that bond discount should not be allowed (tr. p. 122). We therefore follow the rule laid down by this Commission in the case of Browne v. Pacific Northwest Traction Co. Cause 1539, reported in Commission's leaflet number 38, American Telephone & Telegraph Co. at page 746.

Franchise Value. The defendant company introduced as "exhibit F," page 229 of the transcript, a letter from the assessor of King county, stating the assessed value of the franchise for the years 1907 to 1914 inclusive, and introduced in evidence its tax receipts. This was the only evidence offered on the subject of franchise value. The weight of authority as laid down by courts and Commissions is against the allowance of franchise value as a basis for rate-making purposes, and even if the foregoing evidence could be held sufficient to establish such value the Commission would disallow it.

Going Concern Value. The claim made by the defendant company for "going concern value," as estimated by Mr. Lea, is disallowed. Mr. Lea disclaims any right on the part of the defendant company to "going concern value" as an element for valuation for rate-making purposes. He said:

"In the rate-making value, the item of going value is replaced by the item of development cost. It is clear that while the item of going value would be of direct interest to those having to do with the sale or purchase or financing of the company, it is not an item necessarily of interest to those having to do with the determination of the proper selling price of gas."

We therefore exclude the items of "bond discount," "franchise value," and "going concern value," and reduce "working capital" to the sum of $158,649.79.

Development Cost. The item of development cost is allowed by the Commission in the sum of $1,594,096.

Depreciation. Mr. Lea finds the sum of $753,370 for depreciation; Mr. Burroughs the sum of $495,970 and the Commission

finds the amount to be allowed for depreciation in this case as the sum of $548,170.

The Commission finds, after having considered all of the items of valuation provided by our statute, the sum of $9,126,883 to be the fair value of defendant's property for rate-making purposes. This is reducing the amount contended for by the defendant company in the sum of $3,518,191.

The Commission will make and enter findings of fact covering all matters concerning which it is directed by statute to inquire into, and concerning all matters regarding which evidence has been introduced in the above-numbered causes 1600 and 1601, tending to show the value of the property used by the company for the public convenience, and will make and enter findings of fact in the above-numbered causes 1600 and 1601, and will thereupon enter an order in the foregoing causes.

The Public Service Commission of Washington, by C. A. Reynolds, Chairman; Arthur A. Lewis, Commissioner; Frank R. Spinning, Commissioner.

Note. As to the propriety of permitting a gas company to fix a minimum charge, see Re Wildwood, A. & H. B. Gas Co. P. U. R. 1915A, 342 and note, p. 347.

For right of a public service corporation to anticipate future needs in the construction or extension of its plant, see Potee v. Brooklyn & C. B. Light & Water Co. P. U. R. 1915A, 42, and note, p. 49.

Minimum clearances of railroads and street railways in future construction and reconstruction in the state of Illinois are governed by the rules and regulations of the Commission prescribed in conference ruling No. 17.

[February 19, 1915.]

ORDER prescribing rules relating to minimum clearances of railroads and street railways.

By the Commission: The State Public Utilities Commission of Illinois having on its own motion investigated the subject of clearances on railroads as affecting safety of operation, with a view to prescribing the minimum amount of clearances which shall govern in future construction; and the Commission being fully advised in the premises:

It is therefore ordered that the "rules relating to minimum clearances of railroads and street railroads in future construction or reconstruction," which are hereinafter set forth, be approved and adopted, and that no railroad or street railroad shall hereafter be constructed or reconstructed in this state, nor shall any building or other structure be hereafter constructed or reconstructed adjacent to any railroad or street railroad, so that the vertical and horizontal clearances are less than the prescribed minimum contained in said rules, unless permission shall first have been received from this Commission to vary the same.

RULES RELATING TO MINIMUM CLEARANCES OF RAILROADS AND STREET RAILROADS IN FUTURE CONSTRUCTION OR RECON

STRUCTION.

Vertical Clearances.

"Railroads"-Steam Type. 1. Except as hereinafter provided, no through truss bridge shall be constructed in any track, nor shall any bridge or other structure be constructed across any track over which freight or passenger cars are operated, having a vertical clearance less than 22 feet above the top of rail for a lateral distance of 5 feet from the center line of track. From a point 5 feet horizontally distant from the center line of track and 22 feet above the top of the rail, the clearance lines may extend downward at an angle to points which are 8 feet 6 inches distant on each side of the center line of the track, and 17 feet above the top of rail.

2. At passenger stations and coach yards where passenger equipment only is handled, vertical clearances may be less than 22 feet.

3. Overhead loading platforms spanning tracks over which freight cars are handled for icing or other loading purposes may have a vertical clearance less than 22 feet, when such platforms