STATE OF NORTH CAROLINA CORPORATION COMMISSION IN RE APPLICATION WESTERN UNION TELEGRAPH COMPANY. ORDER. LEE, Chairman: It appearing to the Corporation Commission of North Carolina that Congress has passed an Act by which the control of the Postmaster-General of the United States over the telegraph systems of the country will cease on July 31, 1919, and effective August 1, 1919, the operation of telegraph lines will revert back to the owners thereof; and it also appearing that the Postmaster-General, during the continuance of his control over the wire systems of the country, made a thorough investigation of the cost of operation and established rates which he himself states "are barely sufficient to meet the cost of operation," and this Commission desiring to enable the telegraph companies to meet such operating costs and knowing full well that the rates existing in this State prior to the war are insufficient; it is therefore, ORDERED, That the telegraph companies doing business in the State of North Carolina are hereby authorized to continue to charge as rates between all points within the State of North Carolina on and after August 1, 1919, the rates heretofore established and promulgated by the said Postmaster-General of the United States. This July 29, 1919. NORTH STATE TELEPHONE COMPANY TO THE COMMISSION— INCREASE IN RATES, HIGH POINT. SCHEDULE OF RATES. Business phone, special line. $3.00 Business phone, duplex line. 2.50 (The above rates to advance an additional fifty cents when new system is in operation.) Residence phone, special line.. 2.00 Residence phone, 4-party selective.. 1.50 (The above rates for regular service in suburbs outside exchange area are to be 25c higher for party lines and 50c higher for special lines.) Desk telephone sets, additional.... Extension sets (desks or wall type): Residence Business Extension bells.. Extra user. Rural phones, 8-party selective.. Effective August 1, 1919. This July 29, 1919. .25 .50 .75 .25 .50 1.50 PIEDMONT TELEPHONE AND TELEGRAPH COMPANY TO THE COMMISSION-RATES FOR TOWN OF SHELBY. The following schedule of rates to be charged by said company for Shelby local telephone exchange service, i. e. for service with all exchange stations connection with the Shelby exchange switchboard, under its usual rules and regulations: (a) After the completion of said improvements and until 600 common battery stations are connected with the said Shelby exchange the rates for the following classes of service shall not exceed: Unlimited special line, business stations. $3.00 per month 2.50 per month 2.00 per month 1.50 per month (b) After 600 common battery stations are connected with said exchange and until 1,000 common battery stations are connected therewith, the rates for the following classes of service shall not exceed: Unlimited special line, business stations.. $3.50 per month 3.00 per month 1.50 per month (c) After 1,000 common battery stations are connected with said exchange, the rates charged by said company for Shelby local exchange telephone service shall not exceed the rates charged by it for the same class of service in other cities and towns in the State of North Carolina of similar size and operating under similar conditions. Approved August 14, 1919. R. O. SELF, Clerk. FRANKLIN LIGHT AND POWER COMPANY TO THE COMMISSIONAPPLICATION TO INCREASE RATES FOR LIGHT AND POWER IN FRANKLIN. Residence Rate 12c. K. W. H. regardless of amount used in any one month. Minimum rate $1.50 per month. Commercial Rate. For the first 25 K. W. H., per month. Power or Motor. For the next 100 K. W. H., per month. First 100 K. W. H., per month.. Next 400 K. W. H., per month. All over 500.K. W. H., per month Minimum rate $1.00 per H. P. per month but the amount charged will be at least $2.00 per month regardless of the size of motor. All motors of 2 H. P. or over will be classed under power rate. All motors under the power rate can be used at all hours of the 24 except between the hours of sundown and 11 P. M. and cannot be used between these hours. Approved August 15, 1919. 12c. 8c. 6c. 8c. 7c. 5c. BLACK MOUNTAIN TELEPHONE COMPANY TO THE COMMISSIONAPPLICATION FOR INCREASE IN TELEPHONE AND CURRENT RATES IN BLACK MOUNTAIN. Following rates approved: Desk telephones: Residence.. Business Increase not to be applied to wall phones. This the 15th day of August, 1919. $2.00 per month 2.50 per month RE ASHEVILLE POWER AND LIGHT COMPANY, APPLICATION FOR AUTHORITY TO INCREASE STREET CAR FARES ON ITS LINES IN THE CITY OF ASHEVILLE AND SUBURBS FROM FIVE TO SIX CENTS, WITH CONTINUATION OF TWO AND A HALF CENTS FARE FOR SCHOOL CHILDREN. Petition filed August 1, 1919. ORDER. Hearing at office of Commission in Raleigh September 5, 1919. Appearances: Julius C. Martin for petitioner; Thos. J. Harkins and George Pennell for the City of Asheville. MAXWELL, Commissioner: The material facts set out in the petition are: 1. That the value of its street railway property is $1,063,998.61, based upon the inventoried replacement value placed upon it by Ford, Bacon & Davis, appraisal engineers, of New York, in 1912, when the property was acquired by its present owners, plus additional capital put into it since that time. 2. That while it has delayed asking for an increased fare, while other street railway companies in the State have gone to seven cents, in the hope that it might be able to continue successfully to operate the five cents fare, that it finds by reason of inadequate depreciation reserve in the past, and by continually increasing operating expenses, it will not be able to do so. 3. That its rate of return upon the 1912 basis of value of its property was only 3.92 per cent for the year ending May 31, 1919, and that with six cents fare it will be not more than 5.53 per cent the next year. 4. That it has had to meet, beginning June 1, of this year, a third increase, since June 1, 1916, in pay of employees, which last increase will add twenty-five thousand dollars to its operating expenses for the next year. The scale paid trainmen in 1913 was 19 to 25 cents per hour; 1916, 21 to 27; 1918, 31 to 37; June 1, 1919, 38 to 44 cents per hour. Two cents per hour of the last increase was made contingent for its continuance upon authority to increase fares to six cents. Statement of operating statistics tending to support these contentions were filed with the petition. Copy of these papers were served upon the Mayor and Board of Commissioners of the City of Asheville, who filed answer resisting the petition, and asked for time to have an audit made of the books of the company. This was granted and an order made by the Corporation Commission for the petitioning company to submit its books and records to such investigation. Mr. Geo. G. Scott, Certified Public Accountant, of Charlotte, North Carolina, made the investigation for the City of Asheville. The differences shown by the audit, material to this investigation, consist of three items: The accountant took the annual period ending June 30, 1919, instead of year ending May 31, 1919, which showed $1,803.18 additional operating revenue, and found that two items of contingent expense-taxes and injuries and damages-had been reserved in excess of actual payment to the amount of $9,173.27 for both items combined. Adding these items to its profits, and reserving the amount of depreciation set out in its petition, we would have a net return for the year ending June 30, 1919, of 4.99 per cent upon the 1912 basis of value of its property, plus additions, with an additional operating expense of $25,000 for increased wages to be taken care of for the coming year. Based upon past experience, there are only two uncertain elements of fact in the case before us-the value of the property on which it is entitled to earn a return, and the amount of depreciation that should be set aside annually to maintain the property. The petitioner alleges that it set out the 1912 basis of value not because it represented the proper basis for this purpose, but because it considered that upon that conservative basis it would be entitled to the increase asked for. It is common knowledge that replacement value is materially greater now than in 1912, and perhaps a hundred per cent greater. Its property will be valued for taxation with reference to present value rather than with reference to any period in the past, and unquestionably its depreciation must be calculated with reference to replacement values rather than original cost, as the purpose of depreciation is to provide a fund sufficient to replace the several elements making up the property as they become unserviceable and inefficient from use, age or obsolescence. The company has been setting up a depreciation account of $35,000 annually, since it acquired this property in 1912, for its combined properties of street railway, light, and power and gas properties, of which only $17,000 would allocate to the street railway property on a gross earnings basis. It must be evident that this is inadequate. Its general manager testified that much larger amounts would be required in the near future to restore and maintain former condition of the property and to meet impending demands of the City of Asheville for track changes and improvements on its streets, and that five per cent of the 1912 basis of value of its property, plus improvements, or $53,199.93, is a moderate amount for this purpose. Depreciation of property is a real, and not a fanciful thing, and depreciation accounts should serve a more useful purpose than to be set up in operating statements to justify rate increases. Such amount as is reasonably necessary to meet actual depreciation in the property of a public service company should be set aside from its earnings annually for this purpose, and such amounts as are set up in operating statements to justify rate increases should be set aside as a trust fund, with interest accruing to it, so that the public service may not be impaired by delay in replacing unserviceable property, nor be made more expensive by additions to capitalization, upon which return is demanded, for such replacements. Prescribing rates to be charged by a public service company is one of the grave responsibilities of sovereignty. It involves, on the one hand, responsibility for rates that will permit adequate wages, efficient service, and preserve without impairment capital invested in these necessary enterprises, and such rates of return as will be persuasive to additional capital as the convenience of the public requires additional facilities and service, and on the other hand, the responsibility for determining that the public is not overcharged for such service. The Commission is not provided with disinterested engineering assistance for determining in the most satisfactory way, the doubtful engineering questions presented. It cannot, however, shut itself in from general information of the precarious character of street railway investments; that sixteen per cent of the street railway mileage in the country has either been abandoned or is operated by bankrupt companies, and that the purchasing power of a nickel has been deserted by about all its former friends except mint tablets, chiclets and chewing gum. Whether it have a return engagement resides in the breast of the Oracle. If earnings above amount allowed for depreciation be not excessive, and if the amount allowed for depreciation be properly protected for return to the service of street railway patrons without addition to capitalization, little injury can result, and if experience demonstrates there is any, it can be removed. It is therefore ORDERED, That the Asheville Power and Light Company, from and after the effective date of this order, allocate to its street railway department a proportion of its depreciation fund upon the basis of relation of gross earnings of its street railway, electric light and power and gas business for the year 1918; that the sum of $53,199.93 annually be set aside from the earnings of its street railway business and added to this depreciation account, and that the interest from so much of said fund as is not properly expended for replacement of depreciable property be credited to such fund. It is further ORDERED, That from and after October 1, 1919, the Asheville Power and Light Company be authorized to charge six (6) cents for passengers other than school children, and two and one-half cents for school children, for transportation of passengers over its lines in the City of Asheville and suburbs. September 25, 1919. CONCORD TELEPHONE COMPANY TO THE COMMISSION-APPLICATION FOR INCREASED RATES IN CONCORD, CHINA GROVE, KANNAPOLIS, AND MOUNT PLEASANT. CONCORD TELEPHONE COMPANY TO THE COMMISSION-APPLICATION FOR INCREASE IN RATES. The Concord Telephone Company having filed application with the Corporation Commission, asking for an increase in its rates; it is ORDERED, That application is hereby granted and the said Concord Telephone Company is allowed to increase its rates, effective October 1, 1919, as stated and specified in application dated August 28, 1919, which application is now on file in office of the Corporation Commission. By order of the Commission: This the 24th day of October, 1919. R. O. SELF, Clerk. |