| N.Y. App. Div. | Jul 6, 1923
The relator operates street railroad systems in different cities of the State and contiguous territory. It applied to the Public Service Commission for permission to charge more than six cents a passenger on that portion of its Unes operating in the city of Utica and surrounding villages, there being approximately sixty miles of trackage affected by this proceeding. The application was denied. The relator contends that the denial of the application amounts to confiscation.
The Commission arrived at a rate base of $2,864,000. In reference to this rate base the Commission states: “ On the basis of the 1920 income the company would fall short of the amount required for an 8 per cent return on investment and adequate provision for depreciation by the sum of $196,631.” After making various adjustments and deductions from this latter amount based on estimated savings in wages, materials and supplies, depending largely on correct prophecies as to the future, it finds that there will be an annual deficit of $58,721, which it leaves the relator to overcome in some undefined manner. It then states: “ It must be understood that even if the company should fail to make up this deficit of $58,721 it would still be earning at the 6c fare approximately 6% on its investment and on previous deficiencies in earnings.” From the foregoing synopsis of the situation it is apparent that the Commission has not extended any liberality to the relator.
In arriving at the rate base the Commission fixed the value of the road and equipment at $3,500,472, and from this deducted for depreciation $1,335,721. The former amount was substantially the actual cost to the relator prior to the year 1915 or in other-words the pre-war cost. The Commission says that the city (of Utica) “ has submitted evidence of the actual cost of the railway property used in rendering service in the Utica district and proved that the normal reproduction cost (pre-war) would not exceed the actual cost.” The relator submitted evidence of much greater value during the war and after the war, all of which manifestly was ignored. The Commission has clearly fallen into the error pointed out by this court in People ex rel. Iroquois Natural Gas Co. v. Pub. Serv. Comm. (194 A.D. 578" court="N.Y. App. Div." date_filed="1921-01-22" href="https://app.midpage.ai/document/people-ex-rel-iroquois-natural-gas-co-v-public-service-commission-5259537?utm_source=webapp" opinion_id="5259537">194 App. Div. 578). All of the evidence should be considered in its entirety. Different elements
In fixing the rate base the Commission disallowed certain overhead expenses claimed by the relator to have been incurred in constructing, organizing and developing the sixty miles of trackage involved except as to the amount of $40,000 allowed fdr organization and development. These expenses were itemized by the relator as preliminary, legal, administration and engineering expenses. It has been customary to include in the rate base something for these expenses but the amount is largely theoretical and must be determined by the Commission with reference to the facts in each particular case. Generally speaking it is a question of fact for the Commission to determine. It is somewhat difficult to place pecuniary value on these elements. In this case the property of the relator was built up gradually and not as an entirety and the Commission states that the necessary engineering, legal and administration services in connection with the construction were furnished by the regular staff of the company whose salaries were charged to operating expenses. Undoubtedly this feature should
The determination should be annulled, with fifty dollars costs and disbursements, and the proceeding remitted to the Commission for further consideration.
All concur.
Determination annulled, with fifty dollars costs and disbursements, and proceeding remitted to the Commission for further consideration.