'. L. 144] rate-base so established is certainly conservative, as the valuation carries no reflection of the high prices which obtained during the period of the World War following the day certain, and must be materially lower than the base which we would have to establish under the law were the valuation of this property to be made now. The following calculation will be used to arrive at our valuation of the telephone property in Norwalk, Ohio, in this proceeding: Reproduction value of telephone property in Norwalk, Ohio, as of December 27, 1917, less working capital and mate rials and supplies.... Net additions, December 27, 1917, to July 1, 1923.. $231,467 19 16,040 16 $247,507 35 $210,036 13 For accrued depreciation, deduct 15 per cent.... Present, or rate-making value, July 1, 1923.. 19,339 10 $229,375 23 The company's witnesses based their calculations on a present value of $299,000, which figure we cannot accept in view of our adjustment, as above, of the former valu tion to the present, and obtained on the basis of the present rates a net return of 1.02 per cent., and an estimated net annual return under the proposed rates of 1.59 per cent. After the establishment of the valuation of the property, a proceeding of this character must be wholly determined upon estimates and probabilities. The Commission recognizes the fact that the company, with its long experience and trained experts, is in position to present estimates which should very closely approximate what will be the actual experience of the future and will, therefore, save in those instances where we find it necessary to substitute our judgment for the judgment of the officials of the company, adopt them in our determination of this matter. Before proceeding with the consideration of the probable revenues and expenses, we deem it necessary to take up the matter of the annual allowance for the depreciation reserve account and, while the company contends for a yearly allowance of 7.126 per cent. of the reproductive value of its property, we are of the opinion, and find, that a reasonable annual allowance on this account will be 5 per cent. of the present value of the property. From the record and with the valuation herein before determined and the aforesaid allowance for the depreciation charge, we find that the company's experience for the period of one year in the city of Norwalk, Ohio, under its present schedule of rates will be as follows: Depreciation, 5 per cent. of present value, $229,375.23.... 11,468 75 $11,685 41 Income tax, 122 per cent.. 1,433 60 NET RETURN ON PROPERTY $10,251 81 or an annual return of 4.4 per cent., which is hardly sufficient to attract the new capital necessary to enable the company to meet the demands of its subscribers for those improvements in and additions to its facilities which will insure the continuity of this indispensable service. On the same basis we apply the proposed rates to the Norwalk business of the company for a period of one year: Total revenues under old rates..... $62,406 82 Additional revenues under new rates... 19,630 08 $82,036 90 Expenses, less depreciation and income tax.... $39,252 66 Wage increases under proposed rates. 10,313 64 49,566 30 BALANCE $32,470 60 Depreciation, 5 per cent. of present value, $229,374.23..... 11,468 75 $21,001 85 Income tax, 122 per cent... BALANCE FOR RETURN ON PROPERTY.. 2,625 00 $18,376 85 [0 C. L. 144] a sum equal to 8 per cent. of the aforesaid present value, a rate of return which is not excessive and unreasonable, nor greater than the company is entitled to earn upon its said property so devoted to and used and useful for the convenience of the public in the furnishing of local exchange telephonic service in the Norwalk, Ohio, exchange area. An order will enter accordingly. ORDER. This day, after full hearing, due notice of the time and place of which was given to all parties in interest, this matter came on in pursuance of the inquiry, heretofore begun upon the complaint and protest of the city of Norwalk, Ohio, et al., to determine the reasonableness of the proposed increased rates, charges and rentals for furnishing local exchange service in the Norwalk, Ohio, exchange area, provided and set forth in the Schedule, P. U. C. O. No. 2, published and filed to become effective November 1, 1923, by The Local Telephone Company; the record made at said hearing; the independent inquiry and investigation by this Commission, and the stipulation formally presented by the parties. The Commission, being fully advised in the premises, and having this day made and filed in writing its findings of fact herein, hereby further finds that the respondent, The Local Telephone Company, has sustained the burden of proof imposed by statute and has shown the proposed rates, charges and rentals for local exchange service in its Norwalk, Ohio, exchange area set forth and provided in said Schedule P. U. C. O. No. 2 to be not unjust or unreasonable and not such as will provide it an excessive rate of return upon its property devoted to and used and useful for the convenience of the public in the furnishing of local exchange service in said Norwalk, Ohio, exchange area. It is, therefore, ordered, That the order of this Commission suspending the going into effect of the proposed Schedule P. U. C. O. No. 2 of The Local Telephone Company for local exchange service in its Norwalk, Ohio, exchange area, be, and hereby it is, rescinded, effective December 1, 1923, and that authority be, and hereby it is, granted said The Local Telephone Company to correct the effective date of said schedule to conform hereto by interlining said schedule in red ink, and, by agreement of the city of Norwalk, Ohio, and said The Local Telephone Company, It is hereby further ordered, That said The Local Telephone Company be, and hereby it is, notified, directed and required: (1) Within the period of thirty months from the twenty-third day of November, 1923, to erect a new building in Norwalk, Ohio, of fireresisting material, adequate for its needs, to safeguard the continuity of telephone service to the public, and install therein a modern type of central office equipment, and (2) Remove its overhead construction in the city of Norwalk, Ohio, within the territory bounded by the following named streets: On the north by Monroe Street; On the east by Woodlawn and Milan Avenues; On the south by Seminary Street, and On the west by Case Avenue and Church Street, as set out in a certain grant of underground rights, recently granted to said The Local Telephone Company by the council of the city of Norwalk, Ohio. Dated at Columbus, Ohio, this twenty-eighth day of November, 1923. [Ohi OKLAHOMA. Corporation Commission. RIPLEY AUTOMATIC TELEPHONE COMPANY v. YALE TELEPHONE COMPANY. Cause No. 5177-Order No. 2301. Decided November 27, 1923. Evasion of Former Order Found and Ordered Discontinued - Granting of Special Privileges Condemned. ORDER. On the eleventh day of June, 1923, George C. Youngblood, owner and manager of the Ripley Automatic Telephone Company, operating an exchange in the town of Ripley, Oklahoma, filed his formal complaint alleging contempt of the Commission's order in Cause No. 4744, specifically, and a disobedience of the public necessity law contained in Chapter 4, Article 1, Section 317, of the Corporation Commission Laws of Oklahoma, in general, by the Yale Telephone Company of Yale, Oklahoma. After due notice as provided by law to all parties concerned, this matter came on for hearing and was heard on July 30, 1923, with George C. Youngblood representing the Ripley Automatic Telephone Company and L. W. Scherer representing the Yale Telephone Company. The evidence in this case shows: 1. That the Ripley Automatic Telephone Company owns and operates a toll line from Ripley to the town of Signet (Ingalls) which connects with the lines of the Southwestern Bell Telephone Company at Ripley, and also rural lines. extending into the Signet community. 2. That the Ripley company is operating in this field under the priority right of the public necessity law. 3. That the Yale Telephone Company built a toll line. into the Signet community from Yale, claiming a distinc |