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Wis As the plant value at June 30, 1923, appeared reasonable and as we have no reason to doubt the correctness of the reported net additions since that date, we shall accept the book value of $130,900.93 as a rate base for purposes of this case.
The operating revenues and expenses for the six months' period ended June 30, 1923, as submitted by the applicant are as follows:
Operating Revenues :
Operating Expenses :
Repairs, aerial system.....
TOTAL OPERATING EXPENSES..
BALANCE AVAILABLE FOR DEPRECIATION AND RETURN...
C. L. 147]
On the basis of the above statement of operating revenues and expenses, it appears that the applicant's net revenue available for depreciation and return is at the annual rate of $9,775.
The applicant contends, however, that the expenses for the first six months of the year 1923 are not representative of present normal operating expenses, as the changes in the outside plant which have been made since then and the improvement which has been made in the central office will add to the operating expenses.
The following increased expenses are claimed by the company.
200 00 1,000 00 240 00
634 63 1,800 00
908 00 1,037 18
From the testimony submitted at the liearing and from additional data furnished subsequent to the hearing, we conclude that the company's claim relative to the first six items should be allowed, as the changed conditions will necessitate these increases in expenses. The last two items, however, are subject to some question. The item of $908 for repairs on additional plant investment was estimated by the company by applying 4 per cent. to the total depreciable plant investment and deducting twice the actual expenses during the first six months. The increase in taxes was estimated by applying the State tax rate of 217, per cent. to the estimated increase in gross revenues which the proposed rates would produce and by applying the federal income tax rate of 1214, per cent. to an estimated increase of $5,000 in the income taxable under the federal income tax law.
As the company in the past has not experienced a combined labor and material cost for repairs of equipment of much more than 4 per cent. of the property and plant value, and as we have already allowed an increase of $1,800 in operating expenses to cover the salary of a new employee, we believe that no further allowance should be made for repairs of equipment.
The estimate for increased taxes is dependent entirely upon the rates authorized, and we shall make our own computation of the increase in taxes when we are determining the revenues which the company should have.
On the basis of the operating expenses for the six months' period ended June 30, 1923, and allowing for the increased expenses which we consider the company will experience, we find the annual revenue requirement before providing for taxes, depreciation, or return on the investment, to be $26,506.55. An allowance of 13 per cent. of the property and plant value for depreciation and return on the investment would add $16,900 to the above figure which, with an allowance of $1,600 for state and federal taxes, would make the total revenue requirement about $45,000. The toll and miscellaneous revenues on the basis of the revenues for the first six months of 1923 will provide approximately $6,175 per annum, leaving $38,825 to be provided by exchange earnings.
Using the subscriber data furnished by the company as of November 22, 1923, we have an estimated revenue of $38,931 under the rates which are shown in the following table:
As the above rates do not produce an excessive revenue and as the rates in themselves are reasonable, we believe that they should be authorized.
( Wis It is, therefore, ordered, That the Rhinelander Telephone Company be, and hereby is, authorized to discontinue its present schedule and to place in effect the following rates:
Per Month Gross Net $3 75 $3 50 3 25 3 00
Rural party line station within 6 miles of central office
Net Per Month
Private Branch Exchanges :
and signals, battery included.....
* Additional charge for each one-eighth mile of line or fraction thereof on stations located outside of building in which main station is installed, 40 cents net per month.
+ Additional charge for each one-eighth mile of line or fraction thereof on stations located outside of building in which switchboard is installed, 40 cents net per month.