INDIANA. Public Service Commission. PETITION OF THE HOME TELEPHONE COMPANY OF BICKNELL, INDIANA, FOR AUTHORITY TO INCREASE RATES, TOLLS AND CHARGES. No. 370. Decided June 19, 1915. - Valuation of Property Made. Increase in Rates Authorized Applicant sought authority to increase its rates at Bicknell. The city of Bicknell intervened. Valuations of the property of the petitioner were made by the engineers of the petitioner, of the city, and of the Commission. The petitioner's engineers valued the property at a figure considerably higher than that found by the Commission's engineers, while the city's engineers valued the property at a figure considerably below that fixed by the Commission's staff. The Commission adopted its engineers' figures for the cost of reproduction new and cost of reproduction new less depreciation of the physical property of the petitioner. Going Value Considered. Petitioner claimed an allowance of $5,587.95 for going value, but the Commission was unable to understand by what power of reasoning this conclusion had been arrived at, there being no showing that any money had been expended in securing new business or that any early losses were sustained before the company was put upon a paying basis. Held: That in order to establish a reason for allowing for going value it must be shown that money has been actually expended in securing new business or that early losses were sustained before the plant could be placed upon a paying basis; that the element of loss or sacrifice must always be present; that on the showing herein, no allowance for going value should be made. Allowance for Working Capital Made. That an allowance of $500, approximately one month's operating expenses, should be made for working capital. C. L. 47] 4 Per Cent. Allowed for Reserve for Depreciation - Treatment of Depreciation Reserve Fund Considered. Held: That an allowance of 4 per cent. should be made for reserve for depreciation; That money in the depreciation reserve fund may be expended for new construction, extensions or additions to the property, but in no event should the money expended from this fund for new construction, expenses or additions be credited to, or considered a part of, the capital account of the utility, but should always be charged against depreciation reserve fund. Discrimination in Favor of Subscribers Owning Equipment Eliminated - Rental of Equipment Authorized. Petitioner was furnishing service to those subscribers outside the city limits who owned their telephone instruments and the telephone lines to the city limits at a switching rate of 25 cents per month. Other subscribers situated beyond the city limits who did not own their instruments and lines were charged $1.00 per month. Held: That those subscribers who owned part of the equipment should be charged the regular party line rate of $1.00 per month, but that the utility might pay each subscriber 50 cents per month as rental for the use of his facilities. Allowance of 8 Per Cent. as Rate of Return Held Reasonable. Held: That 8 per cent. is not an unreasonable amount for a telephone utility to earn upon the fair value of its property used and useful for the business of the public, for the reason that the hazard is much greater in the telephone business than in that of any other utility on account of snow, sleet, lightning and wind storms, causing tremendous losses, at times, to telephone utilities. Schedule of Rates Prescribed Excess Mileage Charge Authorized. The Commission prescribed a schedule of rates sufficient to provide a reasonable sum for operating expenses, taxes, insurance, reserve for depreciation and return on investment, and also authorized the petitioner to make an excess mileage charge. OPINION AND ORDER. The petition in the above entitled cause was filed with the Public Service Commission of Indiana, November 19, 1913, signed, Home Telephone Company, by Charles Phillippi, secretary and manager. The facts, as set out in the petition, are that the petitioner, the Home Telephone Company, is a corporation, duly organized and incorporated under the laws of the State of Indiana; that its principal place of business is in the city of Bicknell, Knox County, Indiana; that it is. a public utility engaged in operating a telephone exchange and plant in Bicknell, Indiana, and surrounding country. That on the first day of January, 1913, it had in effect the following schedule of rates, tolls and charges: Business telephones, individual lines...... $1 50 per month per 'phone Business telephones outside of city based on distance. That the Home Telephone Company owns no toll lines, but has the Central Union toll service. That it applies for authority to increase its rates, tolls and charges for the reason that the total revenues received from said telephone property, under the schedule above set out, is insufficient to enable it to properly maintain its telephone exchange and plant, pay the operating expenses and provide a reasonable depreciation charge. That it applies for authority to establish, charge and collect the following schedule of rates, tolls and charges: Individual business telephone, within city limits. Three-party lines dence, $1.25 each. 1 business, $1.75 each, and 2 resi Each additional 'phone outside city limits. Individual residence telephone, inside city limits. Extension bells. $2.00 per month per 'phone 4.75 per month 4.25 per month 1.50 per month per 'phone 1.25 per month per 'phone .50 per month per 'phone This case was set for hearing on the twenty-sixth day of May, 1914, at Bicknell, Indiana. An answer was filed in general denial by Harry J. Valentine, city attorney. The petitioner asked leave to amend the original petition as to the rates, tolls and charges, and leave was granted to amend. The increase in rates, tolls, and charges, as prayed for in the amended petition, was filed and is in words and figures as follows, to-wit: [Ind. A mileage charge of $10.00 per mile per year in addition to the above rates for main line service on metallic circuits extending beyond city limits, mileage to be measured from city limits to telephone and no charge for mileage to be less than $5.00 per year. The above rates are subject to a discount of 25 cents if paid at the company's office on or before the twelfth day of the current month. The evidence in the hearing at the city of Bicknell disclosed a state of facts substantially as alleged in the petition: That the Home Telephone Company of Bicknell, Knox County, Indiana, is a corporation duly organized under the laws of the State of Indiana, for the purpose of furnishing telephone service to the inhabitants of Bicknell and surrounding country; that the petitioner is the owner of an exchange in the city of Bicknell, Indiana, and has the necessary switchboard, cables, poles, wires, crossarms, insulators, etc., necessary to transmit messages to its patrons; that it has 423 subscribers, of which 86 are individual business lines, and 26 are business party lines, and 277 are residence individual lines, and 37 are residence party lines, and 13 are extension telephones and 7 are extension bells. That on the first day of January, 1913, said subscribers paid said Home Telephone Company the following schedule of rates, tolls and charges: Rental rates, business telephone, city.... $1 50 per month, per 'phone The petitioner introduced some evidence as to the valuation placed upon the telephone company's property by its consulting engineer, Mr. H. B. Crandall. There was some evidence as to operating revenues and operating expense. Later the Commission, pursuant to the authority vested in it by the Shively-Spencer Utility Commission Act, ordered an appraisal made of the Home Telephone Company's property, actually used and useful for the convenience of the public. Such appraisal was made, and a copy of said appraisal was filed with the Home Telephone Company, also a copy was filed with the city clerk of Bicknell, Indiana. On the thirty-first day of December, 1914, the city of Bicknell filed with the Public Service Commission of Indiana, an intervening petition asking that said city be permitted and allowed to become a party to said cause, which petition was granted, and the city of Bicknell was made a party in the case. The city of Bicknell filed exceptions and objections to the valuation made by the Commission's staff of the property of the Home Telephone Company at Bicknell, Indiana. The Home Telephone Company of Bicknell, Indiana, filed exceptions and objections to the valuation made by the Commission's staff of its property, located at Bicknell, Knox County, Indiana. The case came on for final hearing in the office of the Commission, State House, Indianapolis, Indiana, March 14, 1915. On the matter of exchange and plant value, the petitioner offered the testimony of its consulting engineers, Messrs. H. B. Crandall and L. C. Griffith. The city offered the testimony of its consulting engineers, Messrs. Watts and Bissell. Mr. J. K. Johnson, the Commission's engineer, gave testimony as to the value of the property. The appraisals made by the different engineers were offered in evidence. The following table shows the reproduction new value, and the depreciated value of the physical property including engineering, superintendence and interest during construction, of the Commission engineers, the petitioner's engineer, as well as the city's engineers: [Ind. |