L. 149]

in evidence. The total revenues for that period were shown to be $18,548.51. The total telephone operating expenses for the same period, including depreciation, were $15,682.20, leaving available for return upon the investment the sum of $2,866.31. The average plant in service and general equipment for the period January 1, to December 31, 1923, was found to be $39,998.98. Adding to this figure working capital found reasonable in the amount of $1,263.97, the amount upon which the company is entitled to earn a return is $41,262.95. The present net revenue therefore gives the company a return of 6.95 per cent. upon its investment.

The accounting department of the Commission made a full and complete investigation of the operating revenues and expenses of the Northwestern Bell Telephone Company in the State of North Dakota in the summer of 1923 for the purpose of determining the results of operations in the State as a whole. At that time the company was required to show operating results by exchanges. Subsequently, the Commission has brought the figures down to date and has carefully checked the operating statements filed at the time of the hearing.

By reason of the fact that the service switching rates at Park River, a city to the west of Grafton, are $4.80 per year, the petitioners feel that they should not be required to pay $6.00. It is apparent that petitioners have not considered or that they are not familiar with some of the elements that must be given consideration in determining and fixing service switching rates. If rate comparisons are to be made, cities should be selected where service and operating conditions are the same, or substantially so. The type of equipment in use at exchanges in North Dakota varies with the size of the exchange and the number of persons who are to be served. As illustrative of this, Grafton has more than twice the population of Park River. A greater number of persons are served from the Grafton exchange, consequently the type of equipment is different and the investment much greater. Since one of the elements to be

considered in rate-making is the value of the service, and the value of telephone service is measured in part by the number of persons a subscriber may talk to, it is well to note that 26 rural companies are connected with the Grafton exchange, and may be reached without extra charge by petitioners, whereas only a small number of rural lines are connected at Park River.

The service switching rates of the Northwestern Bell Telephone Company in North Dakota range from $4.80 net per year to $7.20 net per year. As stated by petitioners, the rates at Grafton and other exchanges were approximately $3.00 per year in 1913, or prior to the war. During the period of federal control, when the telephone lines were operated by the Postmaster General, the rates were increased to the present level. When the lines were returned to the owners, the rates so established were filed with the Commission and have been continually in effect. In other proceedings the Commission has made, or caused to be made, exhaustive studies to determine the cost of furnishing switching service. Such studies involved the making of peg counts for seven consecutive days. The actual cost of switching service at several exchanges, some of which are smaller than the Grafton exchange, was found to be approximately $6.00 per year. In fact, our experience has been that switching rates of $4.80 and $6.00 per year annually covers the cost of furnishing the service, depending upon the size of the exchange.

The Commission is not unmindful of the fact that depressing conditions have prevailed among the farmers, not only in North Dakota but in agricultural communities generally. This is a matter of common knowledge, as many agencies are now endeavoring to provide a remedy. However, we do not believe that a slight reduction in telephone switching charges would materially change the situation as far as the petitioners are concerned. If the prayer of the petitioners were granted, obviously it would be necessary to reduce the rates to all connecting companies at Grafton, which would reduce the revenues of the Northwestern Bell

[N. D.

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Telephone Company substantially, and the evidence is conclusive that the rates are not providing an unreasonable return.

A comparison of the operating statements for the years 1922 and 1923 shows that the net revenues of the telephone company have increased during the latter period. For the year 1922, the percentage of return on the investment was 2.51, whereas the return for the last year was 6.95. This would indicate that conditions are improving and that in the future some adjustments may properly be made.

Having carefully considered all of the testimony in this proceeding, the Commission is of the opinion, and finds, that the service switching rates of the Northwestern Bell Telephone Company, at Grafton, North Dakota, are reasonable and that the petition of the Grafton Rural Telephone Company for a decrease in the service switching charges should be denied without prejudice, and it is so ordered.

Dated at Bismarck, North Dakota, this ninth day of April, 1924.

OHIO.

The Public Utilities Commission.

In re APPLICATION OF THE ST. MARYS TELEPHONE COMPANY FOR CONSENT AND AUTHORITY TO ISSUE AND DISPOSE OF COMMON CAPITAL STOCK.

No. 2979.

Decided April 16, 1924.

Issue of Stock Authorized.

ORDER.

This day, it appearing to the Commission from the verified allegations in said application and the sworn statements and exhibits filed in connection therewith, and other documentary evidence submitted, that the taking of oral testimony herein is unnecessary, this matter came on for consideration upon the application of The St. Marys Telephone Company, a corporation duly organized and existing under and by virtue of the laws of the State of Ohio, asking the consent and authority of the Commission to issue and dispose of its common capital stock of the par value of $15,000, the proceeds arising from the sale thereof to be applied toward the reimbursement of its treasury for the uncapitalized, capital expenditures therefrom to January 1, 1923.

The Commission, being fully advised in the premises, finds from the pleadings and exhibits filed herein and its independent inquiry and investigation thereupon:

That, within the five years next preceding the date of the filing of the application herein and to and including the thirty-first day of December, 1922, the applicant actually expended from its treasury for the construction of additions, extensions and improvements to its facilities not heretofore capitalized or authorized to be capitalized by order of this Commission, the sum of $22,694.84, none of which was obtained or procured by the issue of stock, bonds, notes or other evidences of indebtedness, and

L. 149]

That the issue of applicant's common capital stock of the par value of $15,000 is reasonably required and the money to be procured thereby, necessary for the reimbursement of its treasury on account of said uncapitalized, capital expenditures therefrom,

and is satisfied that consent and authority for the issue and disposition of said capital stock should be granted.

It is, therefore, ordered, That said The St. Marys Telephone Company be, and hereby it is, authorized to issue its common capital stock of the par value of $15,000, and that said capital stock be sold for the highest price obtainable but not less than the par value thereof.

It is further ordered, That the proceeds arising from the sale of said common capital stock be, by the applicant, devoted to and used for the following purpose, and no other, to wit:

The reimbursement, to the extent of such proceeds, of its treasury for the sum of $22,694.84, none of which was obtained by this issue of stock, bonds, notes or other evidences of indebtedness, actually expended therefrom, within the period of five years next preceding the date of the filing of the application herein and to and including the thirty-first day of December, 1922, for the construction of additions, extensions and improvements to its facilities not heretofore capitalized or authorized to be capitalized by order of this Commission.

It is further ordered, That the applicant make verified report to this Commission of the issue and disposition of said capital stock and the expenditure of the proceeds thereof pursuant to the terms and conditions of this order. Dated at Columbus, Ohio, this sixteenth day of April, 1924.

In re JOINT APPLICATION OF THE CONVOY TELEPHONE COMPANY AND THE CONVOY HOME TELEPHONE COMPANY.

No. 2999.

Decided April 16, 1924.

Transfer of Property Authorized.

ORDER.

This day, after due notice to all parties in interest, and it appearing from the verified allegations in said applica