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C. L. 147]

of stations and class of service, the present and proposed rates, and the probable net increase in revenue. The evidence relative to operating revenue and estimated operating expense as presented in the report shows the present annual operating revenue to be $2,180, and the present annual operating expense, including taxes and other deductions, to be $2,715, thus resulting in a deficit of $535 under present rates. The estimated increase in revenue by the application of the proposed rates is $888, which would leave $353 available for return on the investment.

The record shows that the operators are receiving a low rate of pay, but that the management of the company has promised them an increase if the proposed rates are approved by the Commission. Therefore, part of the increase realized from the application of the proposed rates will be used in this manner, thus reducing the amount avail able for return on investment under the proposed rates below the amount hereinabove set forth.

Rate Schedule Ill. C. C. 1, filed by the Worden Telephone Company provides for a discount of 25 cents per main line station per month and 15 cents per service station per month for prompt payment of bills. The Commission does not look with favor upon a schedule of this kind, but recognizes that a penalty for failure to pay bills promptly is desirable to facilitate collections. Therefore, a revised schedule of rates has been developed which will produce the same net results, but will provide for a penalty when bills are not paid promptly.

The Commission being fully advised in the premises is of the opinion, and finds:

1. That the fair value of the property of the Worden Telephone Company used and useful in furnishing telephone service at Worden, county of Madison, and vicinity, including every element of value, tangible and intangible, as of October 31, 1923, is $7,600.

2. That a reasonable annual allowance as an item of operating expense to provide a reserve against depreciation is $396, plus 6 per cent. of the net additions to plant which may be made on and after October 31, 1923.

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3. That the present annual operating revenue of the company, including toll and miscellaneous revenue, is $2,180, and that the present annual operating expenses, including depreciation and deductions from gross income, are $2,715, resulting in a deficit of $535.

4. That the application of the proposed net rates as filed by the company will increase the annual operating revenue by $888, thereby resulting in a net annual income of $353, which is approximately 4.6 per cent. return on the fair value of the property.

5. That the proposed net rates shown in Rate Schedule Ill. C. C. 1, of the Worden Telephone Company are not excessive and should be authorized, but that the schedule should be modified and filed as Ill. C. C. 2, as hereinafter ordered.

It is, therefore, ordered by the Illinois Commerce Commission as follows:

Section 1. That Rate Schedule Ill. C. C. 1, of the Worden Telephone Company, be, and the same is hereby, permanently suspended.

Section 2. That the Worden Telephone Company be, and the same is hereby, permitted and authorized to file the following schedule of rates to be designated as Ill. C. C. 2, covering telephone service in the village of Worden, and vicinity, effective January 1, 1924, provided the said schedule of rates is filed with the Commission not later than ten days after the date of service of this order; or effective at any subsequent date, provided the said schedule of rates is filed with the Commission not later than ten days prior to the effective date of the said schedule. The said schedule when filed with the Commission as specified herein, and posted or filed in the office of the public utility, all as required by the Illinois Commerce Commission Act and General Order No. 101,* adopted by the Commission, shall be the legal rates for telephone service in the village of Worden, county of Madison, and vicinity. The rates

See Commission Leaflet No. 131, p. 1029.

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for the following class of service shall be stated in words and figures as follows:

Net Annual Class of Service

Rate Individual line, business station

$24 00 Individual line, residence station..

24 00 Two-party, residence station

18 00 Four-party, residence station

16 80 Rural, residence station

18 00 Switching service station

7 20 NOTE.— A penalty of 25 cents per month will apply on business, residence and rural stations where bills are not paid on or before the fifteenth day of the current month.

A penalty of 15 cents per month will apply on switching stations if bills are not paid on or before the fifteen day of the first month of the current quarter.

It is the intent of this order that all other rates, rules and regulations to be filed in Rate Schedule Ill. C. C. 2, except those specifically changed hereinabove, shall be the same as those shown in Rate Schedule Ill. C. C. 1.

Section 3. That the Worden Telephone Company be, and the same is hereby, ordered to set aside monthly as an operating expense to provide a reserve against depreciation, the amount of $33.00, plus 6 per cent, of the cost of all annual additions that may be made to the plant after October 31, 1923.

Section 4. That all items of expense having to do with the upkeep of the plant shall be treated strictly in accordance with the Uniform System of Accounts for Telephone Companies now in effect by the Commission, particular attention being given to the proper apportionment between maintenance expense and expense due to depreciation of plant and equipment.

By order of the Commission, at Springfield, Illinois, this seventeenth day of January 1924.

[IN.

In re APPLICATION OF THE ILLINOIS SOUTHERN TELEPHONE

COMPANY FOR AN ORDER CONSENTING TO AND APPROVING
AND AUTHORIZING THE ISSUANCE OF STOCK AND BONDS.

Case No. 13723.

Decided January 17, 1924.

Issue of Securities Authorized.

OPINION AND ORDER. Supplemental petition having been filed herein asking for the consent and approval and authorization of the Illinois Commerce Commission to the issuance by the Illinois Southern Telephone Company of $800,000 aggregate principal amount of its first and refunding mortgage, 6.5 per cent. series bonds, and a hearing having been held on said application and the petitioner having presented its evidence in support thereof, and the matter having been duly submitted to the Commission for disposition, it appears :

That the Illinois Southern Telephone Company, the petitioner herein, proposes to assume the outstanding bond issue of the Murphysboro Telephone Company of the aggregate principal amount of $465,000 in part payment of the purchase price of $1,125,000, and that, therefore, it becomes necessary to issue first and refunding mortgage, 6.5 per cent. series bonds in lieu and instead of first mortgage, 6.5 per cent. series gold bonds heretofore authorized to be issued by order* entered herein on December 12, 1923;

That the petitioner now desires the consent and approval and authorization of the Illinois Commerce Commission to the execution and delivery of its first and refunding mortgage or deed of trust, to be dated December 31, 1923, to Chicago Trust Company, of Chicago, Illinois, as trustee, covering all the property now owned or that may hereafter be acquired by said company for the pur

*

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C. L. 147]

pose of securing a maximum issue of $2,000,000 principal amount of first and refunding mortgage bonds, including the proposed present issue of $800,000 principal amount of first and refunding mortgage, 6.5 per cent. series bonds, said mortgage to be executed and delivered in form substantially the same as the copy thereof filed herein as petitioner's Exhibit B;

That the petitioner now desires the consent and approval of the Commission to the issuance of its said $800,000 aggregate principal amount of first and refunding mortgage, 6.5 per cent. series bonds, to be dated December 31, 1923, to mature December 31, 1943, to bear interest at the rate of 6.5 per cent. per annum, payable semi-annually, and to be issued under and pursuant to the terms and conditions of said mortgage, and the petitioner desires to sell or otherwise dispose of said bonds for the purpose of the acquisition of property and for the refunding of the assumed bonds of the Murphysboro Telephone Company, and for the construction, extension or improvement of or addition to its facilities.

The Commission having considered the application and the evidence of record in connection therewith, and being fully advised in the premises, is of the opinion, and finds, that the moneys to be procured by the petitioner from the issuance and sale of its said first and refunding mortgage, 6.5 per cent. series bonds, for which authority is sought, are reasonably required for the purposes hereinafter stated, and that the public will be convenienced thereby; that the use and application of said moneys for said purposes are not in whole or in part reasonably chargeable to operating expenses or to income; and that the prayer of the petitioner for authority to issue $800,000, par value, of its first and refunding mortgage, 6.5 per cent. series bonds, for the aforesaid purposes, and for authority to execute and deliver its first and refunding mortgage or deed of trust, as aforesaid, is reasonable and should be granted, in accordance with the terms and conditions hereinafter provided and authorized.

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