*1 1922. Vol. CO CO o State v. Public Serv. ex THE et al. PUBLIC ex rel. MARY B. CASE STATE KAN MISSOURI, OF
SERVICE COMMISSION et al., CITY LIGHT & COMPANY SAS POWER Appellants. April One, 6,
Division 1923. 1. JOINT ELECTRIC AND STEAM-HEATING- PLANT: Going Intangible Separate Finding by apportion- Value: Commission. In ing joint steam-heating operating expenses tbe and valuation of electric-lighting determining purpose and for the of rates electricity, for steam heat Service Commission and Public is required separate finding to make a the statute going-concern intangible value, where such value cannot be accurately separated apart physical stated itself from the and property. case the and value of In such value of busi- gross going amount, prac- ness an indivisible and the value is is tically inseparable. particularly ruling And should be .this going-concern there is Of value. where no evidence Findings Appellate Commission: Novo in -: Trial De Court. 2. findings binding are the Public Service Commission findings Supreme Court, any more than are the a chancellor equity. in a suit party attacking -: -: Burden. The is on the 8. burden public utility fixed Public the State Service rates for Com- satisfactory proof, show, by mission clear are unreasonable or unldwful. Going Unprofitable : Value: -: Years. Where the
4. busi- joint steam-heating electric-light plant was not ness years prior unprofitable in under the rates which were 1915 and 1918, during years unprofitable years great owing fuel, increase the cost of was a loss there showing material, there no evidence labor and practicable, something is not feasible or basis on normal business value, attempt lawfully going may an allowed apportion operat- the valuation and Commission Public Service determining proper expenses purpose ing rates for for the steam electricity. heat and case, Depreciation. In evidence in -:-: view the Commission, Public Service deter- be ruled it cannot steam-heating plant, mining electric and value of the . COURT OF SUPREME MISSOURI. rel. Case v. Public Serv. Comm. ex presumably depreciation. being valuation to consider Its failed much, showing proper, on the tlie record valid lawfully point into consideration been taken which could have *2 valuation, justified its it cannot be and so taken have if clearly satisfactorily it or established its valua- ruled that is tion was either unlawful unreasonable.' Operating Expenses Apportioning to -: Value and. Different 6. rigid determining Services: Rule. can be fixed and rule for There no joint operating expenses proportion a steam- the of value and of by electric-lighting plant and that should be borne the public problem different services. in all cases to two such is portion determine what of the entire is used and is use- case, particular each service. In this ful in in which Public apportioned steam-heating Service Commission business eighty-five per electric-lighting and to the business fifteen cent, plant primarily and shows the evidence heating plant principally and a and little used and little but useful production electricity, for the and'that commission followed portion assigning to each the rule business that of the total correspond properties that value of the will to extent employment business, in that its allocation is not disturbed. by -: -: 7. -: Each Case Determined Its Own Facts. determining proper apportionment expense of steam- heating production plant electricity serving in a combined and consumers, adopted, heat to no hard-and-fast rule can be but the apportionment upon in each case must determined its own circumstances, usually widely and facts which are variant from fifty-fifty may A of other allocation in those causes. one case be fair another. Higher -: -: Their 8. Rates Than Value. About hun- two fifty buildings dred and consumers obtained heat for their from company’s the lighting down-town installed to furnish both electric- service; buildings equipped steam-heat all house-piping with their own and radiators suitable for steam- heating; minority of boilers, them were without furnaces and majority but a had their own boilers and furnaces and could be by simply starting fires, heated, and hence as to them the value steam-heating service and the reasonableness of the rates competition by consumers; were determinable hands of Commission, competitive the Public Service in view of this ele- ment, company fixed rates which would enable the to earn 2.92 investment, jurisdiction cent on their and it retained in order might ultimately by fix different rates if an actual test operation high unfair; showed that rates were too several 1922. TEEM, OCTOBEE Yol.
State ex reí. v. Public Serv. rates, buildings supplied large heat at less hut themselves with expensive large dis- investment in a no them there was as to factors, important system tributing such as value of and other occupied plants buildings grounds by portions their convenience, greater cleanliness were not the element of estimating Held, production first, of heat. cost of included subject exceptional in that the rates to com- are case is consumers, and, petition second, the facts do not in the hands clearly were unrea- the rates show that fixed higher is worth. than the service sonable and Subject Change: Tested Ex- -: --: -: Bates perience. method determine the is no reasonable- There better utility consumers, charged by public rates, fixed to be ness Commission, depend for their fairness the Public Service contingencies, many than test actual ex- variant operation; perience and an order of the com- after are rates, fixing which is not final and which tentative reserves mission any time, upon right modify the rates at its own motion *3 complaint company, either consumers or the cannot or order or establish an unreasonable unreasonable said to be . rates.
Appeal P. from Jackson Circuit Court.—Eon. Willard Judge.
Hall, Eeveksed. Lindsay aud Bruer James'D.
L. H. Public Serv- Lucas, Commission; H. G. John William ice Lucas appellants. for other Ludwick Graves holding (1) The court that the erred rates charges commission for steam fixed heat specify not or unreasonable unauthorized did physical property. separately value said The com- property mission did find used and useful compliance purposes steam-heating in full with Telephone Bell law. State ex S. Co. v. Pub. W. Serv. -Case, 233 W. Minn 230 Commission, 430; Eate U. S. Smyth 1511; 465, L. Ed. 169 IT. S. Ames, S. 57 v. 352, holding (2) 42 L. Ed. The court erred 819, make said order, did otherwise, 298 Mo.—20
306 SUPREME COURT OP MISSOURI.
State ex rel.
v.
Public
Serv.
findings
npon
writing'
of fact in
and file
all matters
which,
concerning
evidence was
it,
before
introduced
bearing
which constitute
elements
on the value of
required by
Public Service
Commission
(3)
Act. It did so find, voluminous in detail.
court
holding
erred
Commission made an erroneous
steam-heating
allocation as between electric
service
joint plant
property constituting
service of the
Thirteenth Street and Baltimore
It
Avenue.
did not malee
sup-
finding
an erroneous allocation and the
is without
port in
law.
ex
rel. S.
Bell Tele-
W.
phone
v. Publ.
Co.
533
Commission,
430;
S. W.
Smyth
Minn. Rate
230
Case,
U. S.
57 L.
352,
1511;
Ed.
v.
169
L.
Ames,
465,
U. S.
Ed.
847;
819,
Decatur
Light
Railway &
Co., P. U. R.
Northern
1920B, 711, 717;
Railway
Pac.
Co. North
Dakota, 236 U.
S.
59 L.
Ed. 735;
P.
Potomac Elec.
Co. v. Pub.
U.
Util. Com. P.
R. 1920C, 331; Interstate Commerce Com. v. Union P.
Railway
Light
Co.,
541;
U. S.
re
&
In
Southern Ill.
Power
P.
Co.,
240;
U. R.
In
1921A,
re Central Ill.
Co., P.
R.
545;
U.
1921A,
re Public Service
P.
Com.,
Virginia Ry.
R.U.
1921B; 438; In re
Power
&
P.
Co.,
(4)
U. R. 1921C, 193.
holding
The court
erred
operat-
commission'made an erroneous allocation of
ing expenses,
as between electric service and
joint service at at Thirteenth Street and Balti-
more Avenue.
It
did
an
make
erroneous allocation
operating expenses.
(5)
cited above.
Cases
*4
holding
court erred in
that the commission
maxi-
fixed
mum rates for
service which
un-
were and are
just, unreasonable and excessive. There
such
is' no
charge in
rehearing,
the motion
-nor
evi-
is there
support
dence to
supra;
same
the record. See cases
City
State ex rel.
of
236
Hannibal,
858;
S. W.
ex
State
rel. Wabash v. Pub. Serv. Com.,
timore allocated question of the court to determine ice. It is not for above. Cases fact as valuation. cited North, Lathrop[, Mor- & Scarritt, Jones, Secldon respondents. & row, Fox Moore questions (1) of In so far the determination trial court writ of review, involved fact was way equity any and was bound acted as a court findings Q. B. & Railroad commission. C. 333; Mo. Lusk v. Commission, 226 Co. v. Pub. Serv. Light Co. Power State ex rel. Atkinson, 116; 268 Mo. & rel; K.M. 645; Mo. State ex 272 Comm., v. Publ. Serv. Ry. State 193; Mo. Com., & T. Co. Public 277 v. Service Light Comm., Pub. Co. v. ex rel. Power & Ozark Ry. Public v. ex St. L. S. F. Co. 531; 287 Mo. State (2.) 242 Comm., S. W. 938. The Commission’s Service plain order violates the mandate the Public Service (a) made Commission has Act. having bearing findings upon all of fact matters property. 212 Water Knoxville v. Co., City 42 1; Q-alveston, Electric Co. U. S. v. Galveston Sup. Rep. Carthage, Telehone 235 351; Home Co. Ct. v. Springfield Co. Gas Electric v. 231 644; Barker, Mo. & Spring- v. Public Commission 331; Fed. Service Public v. field 291 Ill. Utilities Commission Co., 209; Muskogee Light 37; & Fed. Gas & 268 Co., R. Wichita 734; Pac. Contra Costa State, Elec. Co. 186 Water v. Puget City 323; Cal. Elec- v. 159 Oakland, Co. Sound Ry. 75; 65 v. Wash. Cumber- Commission, tric Railroad Rapids 637; Fed. Louisville, Tel. v. Cedar land Co. 187 Light Rapids, 144 Marshall Iowa, 426; Gas Co. v. Cedar Joseph 415; re Kansas v. Mo. P. S. C. Gas 3Co., St. City Elec. P. Ill to 118. Co., Mo. S. C. Telephone necessarily Co. Home excessive. valuation is Joseph Carthage, Mo. v. Gas 644; Marshall St. *5 308 COURT OF SUPREME MISSOURI. rel. v. Public
State ex
0.,
P.
403. The commission has
3 Mo.
failed
S.
Co.,
property.”
Havre De Grace
“ascertain the value
Bridge
Perryville
Towers,
319;
103 Atl.
State
Co. v.
Building
Savage,
714;
v.
65
ex
Nebr.
State ex rel.
rel.
Có.
(3)
Oregon
Light
Power
110;
&
P. U. R.
Co.,
1918 B, 86,
Railway Light
In Re Decatur
&
705;
P. U. R. 1920
Co.,
B,
Springfield
In Re
&Gas Electric
P.
Co., U. R.
A,
1920
Light
446; Re Central Illinois
Co., P. U. R. 1921 A,
In
Company,
545;
Re Merchants Heat
R.
&
P. U.
558;
1919
Re
F,
Northern Indiana Gas &
Co..,
Electric
Fargo
P.
R.
Light,
567;
U.
1919 F,
v. Union
&Heat
(4)
P.
fixing
Power
R. 1920
Co., U.
A, 764.
The order
ignored
rates is unlawful
the because
legal principle
violated
that rates
ex-
must not
ceed the value
service to the
consumer. Lusk
Atkinson, Mo.
268
109,117; ex Watts v. Public
Service Commission, 269 Mo. 525; State ex rel. Tele-
phone Co. v. Public Service
233
Commission,
425;
S. W.
Smythe v.
Turnpike
169
Ames,
U. S.
547;
Co. v.
Sandford, 164 U. S. 596; Railroad v. Minnesota, 186 U.
257;
S.
M. K.
T.& Railroad v. Interstate Commerce
Puget
Commission,
SMALL, Comity. proceeding lower The of Jackson Court Public Utilities Com- an order to review court was Light City fixing the Kansas rates mission, charge Company might consumers for steam- its &Power heating service. Mary B. petition by Mrs. for review
The was filed including the heat-consumers, about 70 other Case and city City. of Kansas set was aside,
The order of the commission and Company appealed duly from the action & Power dated order aside was The so set of the circuit court. September electricity, for 1919. It fixed rates also Light & Power steam-heat, furnished said well as complained Company, of, but electrical rates were brought nor circuit court for review. before said only City Light Company Kansas & Power
The City supplies electricity and inhabitants, Kansas but also furnishes steam heat to a small area city. heating The steam for district of said business plants, purposes was from four three small furnished Eighth respectively and Walnut at and located ones streets and at 1023 Avenue. Ninth and Grand Walnut plants exclusively heating plants small and These supplied about the steam-heat furnished one-third of large .company. or at other, was joint Avenue. It steam- Thirteenth and Baltimore was supplied plant, it heat electric from was about heat two-thirds steam furnished customers company. plant the from At said steam boilers engines “prime through passed movers” was first generate electricity, after was for used purpose flow exhaust steam was is—the allowed —that COURT SUPREME OF MISSOURI.
State ex rel. Case Public Comm'. system heating pipes used for and was into the heating purposes. substantially electricity, Bnt no de- time same was made none, unless there for all the exhaust steam in mand use service. apportioning the valuation joint plant
operating expenses determining electricity, al- for steam heat rates chargeable eighty-five per properly located cent as electricity. to steam This and fifteen heat, apportionment un- was in with substantial accord disputed evidence as to units in steam *7 per each little than cent heat service, a less fifteen the of plant being by produced joint in units all the steam the making electricity, eighty- in and more than little heating. five cent for grounds upon which the lower aside court set
the order, commission’s That the valuation were: and expense joint plant apportioned of the should have been equally to the heating electrical and the service service, fifty per that is, cent to each service; allocated that also, finding the of the property commission of the value of the lump separately was in a sum, did the state items of the amounts thereof considered arriving the commission in at its total valuation, heating that unjust the rates fixed were and excessive. general As their respondents contention in this court, in emphasize state their brief: “We wish-to that here question we Judge did not ques- before Hall, nor are we tioning figures here, found the commission as to physical value of property, different units of the figures nor the found the commission as to the invest- ment company of the in the prop- different units of the erty. question What do we form of the order made (which comply commission does not with statute), principles applied and the by the commis- sion in determining property, valuation of the the allocation operating ex- penses as between the two services. also We assert Vol. 1922.
State ex Public ignored service the value of the has consumer.” as to Company’s Power & joint plant: joint plant, A. the use character
As to Light Company, superintendent testi- E. Bettis, purpose for the “It constructed fied, substance: was pos- supplying districts heat to the downtown conveying It was not constructed heat. sible limits electricity. adjacent, auxiliary furnishing to the an purpose primarily, fur- It for the constructed, was nishing economical to 1907. It isn’t considered heat, you pressures it on transmit heat transmit low-pressure system four or thousand much over five Bal- than a mile. When the an less feet. It covers area plant elec- no constructed, there was Avenue timore was space building apparatus in and no whatever, trical any. regular put mechanical It consisted of ordinary plant. heating apparatus goes We an with practically Twelfth no below business had In 1911 a new addition made Street.
fifty made Another increase was increase. . . . The and also combination hut not to the users, was a benefit the steam electrical *8 electrical business. because it wasn’t consumers, put in that loca- We would never machines [electrical] tion.” secretary Light Company, Blackwell,
H. Gr. generated in substance: steam we testified, “All the through generators, plant passed the electrical that is system pressure heating to lower and is delivered produced through gener- these the mains. There is from energy, engines ating de- a of electrical certain amount pendent upon goes out amount of steam that large quantity If the a consumers. consumers demand produce today, such as as a will, result, steam, comparatively large electricity. if a amount of But, SUPREME COURT OF MISSOURI. v. Public Serv. Comm. ex goes day, fairly steam that out to
is a warm through generators produce a cor- will the consumers electricity. respondingly amount These units small machinery; replace put to the old were in there were any specially hut not economical in units, sense, built designed operate to a certain amount of steam were on primarily reducing to act valves hour, kilowatt high relatively pressure to to distribu- a low reduce pressure.” tion president Company, tes-;
Mr. Porter, going titled: to to “We use the exhaust steam by-product lighting. furnish heat to electric Well, nothing it turned out that there was to that we didn’t it, gain anything particularly, following along developed Company that idea the General Electric these turbines in order to furnish exhaust at the steam, and electricity same time make a certain amount in con- junction plant. economy with this class of of those engines was so low that better not in- have been consequence, you stalled, as a when come to start your engine get any service out of it is regulated engine ordinarily, is, the use —that regulated by require. you the amount of steam that On day, they might an extreme cold able furnish electricity, certain ordinary amount of day, but you you can’t start make it. It costs too much to make it. you “Q. you always other words, mean don’t
operate capacity all the time? A. You you can’t do it, because can’t use the steam. You can’t afford to you use the units because it cost about fifteen cents a kilowatt for current to run ten them, fifteen cents. It would be out of reason.
“Q. paying You today, are you, aren’t two and half cents for you buy current that Long from the Build- ing Bryant Building? A. a few of Yes, sir, buildings.” those small
Speaking operation in view of the actual results, *9 Yol. Serv. Comm. ex rel. v. Public plant electricity produced joint at the the Porter said
Mr. by-product. was considered in the steam used heat units the actual view of engineer purpose, commission testified
each operating proper allocation of the values and expense property use devoted rate-making to-wit: thirteen ratio, also be the same should per eighty-seveñ cent to the electrical service, heating. cent to joint plant:
Respondents’ evidence as to engineer respond- expert for the Baldwin, Mr. proper apportionment, ratio said: to ents, as “ + my usually divid- as is done in made ing' division somewhat property by taking demand maximum usually The demand is to divide basis. maximum used money property to amount takes value—the property put by maximum determined demand into required. property use usual The of that is used very- thing operating expenses, similar to divide property. you dividing a took a water- water-works If property works to divide the fire aiid triéd services means domestic services of the use part you get chargeable almost no of it fire would I know that services; and the commission is familiar big part with the fact that is en- investment due applied tirely fire I have method to this service. property. equipment generating The at that require capacity. in- certain boiler facts are that the put enough capacity generating be to tentions should use all capacity, of the boiler so that all of the steam could prime through genera- movers that drive be tors. way operate This is the in which to most economical >that several witnesses have testified al- so ready. capacity then the boiler should If true, probably fifty service, between each if divided equal importance. engineers commission’s are of (no, charged only eight per cent tliir- and six-tenths have *10 SUPREME COURT OF MISSOURI. State reí. ex Public Comm.' per ont) teen cent it elec- 'worked the investment to the fifty go fifty. simply applied tric service. I to about I centage per commis- instead of the cent, used figure engineers, and sion’s have at a different arrived might naturally. be There is also another basis gross formerly used, which was was the give approximately forty-sev- revenue basis, which would fifty-three per light, very en cent to heat and to cent fifty per close division.” to this Respondents testimony of also read evidence the president Kealy, Light Company, in Mr. former year a case before relationship commission in 1915, as to light His between the heat service. testimony was as follows: relationship, your judg Kealy,
“Q. What Mr. plant ought to ment, does bear, to bear, plant City1? lighting the electric absolutely an A. Kansas It is just ap adjunct, essential much so pliance department ap Light Company. pliance department profit, gener sometimes make a but ally theory appliances has a but the loss, on which are promote they electricity. sold is that the use of Now very largest light some of the electric consumers that through we have and customers load factor whose producing selling whole electricity cost is lowered, only possible owing have heating company. been to the steam- secure, to
I refer to the fact that we all have large They hotels the down-town district. have up plants. shut their boiler the Coates Baltimore, House, Muehlebach, New several the Sexton. others, They electricity buying are all only and would done have provided we could furnish them live steam for heat ing. ‘ they provided “Q. In other words, have their plants you own electricity unless could have furnished them both heating. only A. Not that, but three already of them had their own but dismantled them. you say
“Q. So to the commission, that the heat- Vol. Serv. Comm. v. Public ex rel. Case
s plant”? lighting’ adjunct ing favorable is a come didn’t only list here. have a I bnt I that, A. Not glad Judge, submit prepared go will I this, into se- have been who customers later —of live cured'solely serve them able to we were because although heating, are few customers steam for require, power amount amount number, twenty- electricity they require, over I well, think, *11 mis- another There is total business. cent of our five might prevail impression what from that take. The heating company morning, somebody that the said this ago, money. years losing last, Year before two been had they approxi- put heating with in the a turbine mately capacity, turbine, and that the kilowats 3,000 generated being energy utilized is turbine, Light Company paying Company, Light the the Heating Company price energy be- a fair for that the self-supporting, this so that we find comes than more past year heating company, over and above all the operating expenses surplus about has taxes, a think it is. $113,000,1 the it burden but a benefit to is not a
“Q. Then, Light Company? absolutely A. It is a benefit Company. engineers Light think of the commission I sixty per seventy roughly cent of found that cent— Heating in what is known investment, as Com- solely pany, no whatever, had relation to but energy. manufacturing [In be- used in case electric charged property solely fore all commission us electricity . for to the electric . . service.] say pay- Company Heating You have been
“Q. ing expenses years; doing in the last two been has by charging electricity, a cent for its and a-half right, yes, hasn’t it? A. That sir.” The commission order in us, the case before referring Kealy’s testimony to Mr. in the former case, says: appears foregoing, heating- “It from adjunct necessary business is as conducted to the elec- profit tric business, and so conducted source was a 316' OF SUPREME COURT MISSOURI. ex rel. Case Public Serv. Comm. year 1915, under the old rates for
to the defendant upon heating, crediting income from basis generated electricity in Table No. 1, sums indicated plant.” Avenue at the Baltimore proceeding Kealy 1915 in testified, Mr. electricity alone involved. In March, rates for down in that 1917, the handed for its decision fixing electricity the rates case, the future fixing company’s the valuation Light [In whole. re K. C. Electric 5 Mo. S. C. Co., 20.] P. investigation steam heat rates were not under changed. Kealy’s testimony were not Mr. was offered Light Company in that case to show that steam-heating plant Light was not a burden on the Com- pany existing. under the conditions then The commis- in its testimony sion decision in that case considered this in that view. appellant City June, 1917, case, Kansas covering Company, & Power tariff filed new August Shortly
steam-heat rates to take effect respondents afterwards, in this case intervened be- *12 question fore the commission to of the reasonableness the by set company. out rate the new tariff filed the Upon hearing parties, a full of the the commission made February, an order in holding 1918, new tariff filed by company unreasonably high, establishing but higher than rates, maximum the rates in effect before filing Light Company, tariff. new Neither nor the consumers, asked for a review But order. this May, Company 1918, filed new which tariffs, suspended by pending hearing, the commission application June, 1918, formal to the commission was made it for an increase in rate for both electric current and steam heat. hearing, After a full at different the commis- times;
sion September decided the case on 27, two 1919, dissenting. commissioners This proceeding is the now before for us consideration.
As to the apportionment valuation of the Yol.
State ex rel. v. Public Serv. joint expense commission in says: apportionment reference “With assailed, order engineers joint state: property commission’s nse, Wyandotte plants 1308 Baltimore and at ‘The boiler steam-heating generate for for is steam which used energy. general, generation of electric only operated prime there are when suffi- movers is heating all for service to consume steam cient demand system. heating the demand into the When exhausted supplied live direct from is with steam bail- less, is it prime heating in- exhaust movers header. ers emergency. atmosphere only in case an Now heating pulpases, being' for used all of the exhaust properly the chargeable service to electric is the heat supplied to the of heat the amount difference between prime rejected by mov- prime amount and the movers system. supplied Atten- output to the thence ers and to the fact that electrical is tion directed by-product. Wyandotte station is a the Baltimore and ap- is a assumed; fact, This condition is joint property portionment is fact.’ based is $123,905, final is fifteen cent, The apportioned result department, electric out total of a figures joint property of These are exclusive $823,725. engines, wiring, generators, switch-board department. chargeable obviously all to the electric are use be . . . The actual conditions of should the basis depart- dividing between the electrical heating department. operating Actual con- ment and the engineers, used ditions were apportionment. making their method of basis engineers apportionment ad- Engineering’ ‘Steam Power Gebhart Plant vocated page paragraph. page (4 Ed.) [Should 327], *13 supplied ‘Most the heat to the author states: of where through rejected engine the exhaust; varies the is engines sixty-five per ninety- best cent in of to from the types. poorer per all in the If five cent exhaust heating manufacturing purposes, the heat for is used MISSOURI. COUNT OF SUPREME Public Serv.
State ex beat the between power the difference chargeable is to being ac- property rejected.’ This supplied and of generation transformation and tually the for used apparatus the housing for used of and for heat commis- heat, generation transformation of and logical apportion engineers to that it was assumed sion rendering jointly service property used department of heating basis to the and electrical amount total each heat used the amount of these generated. . believe all of However, we . . heat (that and tests, actual measurements is, results one of heat each service, the amount heating per eighty-seven for one-half cent and showed per electricity, for cent and and one-half twelve and heating eighty-nine and and cent other two-tenths ap- light) eight-tenths that an show ten and property eighty-five per portionment cent of equitable peculiar heating under the conditions is fair apportionment way in no This con- under consideration. precedent where conditions for other cases, stitutes might materially company . . . different. only making equitable an that it interested states is department between customers of steam decision department; electrical is, customers equitably charges be- has distribute its endeavored electricity; users of the users tween steam and that if these rates are diminished as to the rates either, correspondingly must be the other. . . increased as to . appears It full consideration all the evidence present company’s this case the fair value of (exclusive property property of of the Standard Light Company) rendering- Electric used and useful in public August considering- service to the as at 31, 1918, going including- said as a over- concern, all charges head tangible all other elements of value, intangible, of which $9,300,000, $8,000,000is the department, value of the electric $1,300,000 is the department. heating- . . . department expenses operating- failed to malee $222,- *14 Vol. 1922.
State ex rel. v. Public Serv. Comm. Case eight during by the first $198,186.88 1917, 558.84 during months the last four 1918, $98,507.98 months of year during of the calendar 1918; $296,694.87 of dur- fact that directed to the 1918. Attention is further periods heating ing suffi- of were the revenues none these expense . The . alone. . cient to even meet the fuel compared slump earnings in 1918, in the tremendous fuel, of costs 1917, with those due to increased is which-follows, . . Table materials. . V. labor and rev- of of amount calculation shows basis of the including, expenses, necessary pay operating to enue per This depreciation, on $1,437,816. cent and seven présent figure fixed the fair $1,300,000, consists plus August additions amount as at 31, 1918, reported by company 31, December to $137,816.00 steam-heating . . . business Heretofore, borne this been has been carried a loss loss, has light power com- either consumers or pany. distinctly inequitable This condition is which possible. just must eliminated as soon as stated, As revenue, heating department operating necessary expenses, including depreciation per on seven cent theoretical is It would $1,437,816, $693,465.93. take a per heating increase in more than rates of one hundred produce cent certain of consumers to classes practical appears revenuebut as a such matter, single large cus- increase would result loss consequently produce neces- tomers, sary opin- revenue. commission is therefore of the adopt following heating ion that it is advisable to . schedules at this time. . . It is estimated that produced by total revenue the above schedules approximately will amount to $635,000 annum, will leave available for return the difference between this (expenses), amount and $593,000 $42,000, ’’ equivalent to a return 2.92 $1,437,816. necessary I. “going Not or state value” itemize separately in order the commission: COURT OF MISSOURI. SUPREME Public Serv.
State ex reí. 1913, Commission Law, of Public Service Section 78 provides being 1919, Revised Statutes Section follows: power ascer- have the
“1. shall The commission gas corporation, every tain tbe value of the *15 corporation corporation electrical and water in every judgment Going this State and fact whichin its Value. any may bearing value. on such have or does find- shall make file its 2. The commission .... upon writing concerning which ings all matters fact before which it, been introduced shall have bearing judgment on the value of the have its corporation, gas affected.” etc., respondents finding of the com contend separately it mission in this case is void because did not “going state the it allowed concern” or amount “intangible finding which value,” shows it considered fixing property. place, the value of the In the first “intangible “going we do not think that the concern” or plant accurately value” of a of this character could be separated apart physical and stated from itself upon property. point passing value of the Appleton Co. Water Works 154 Railroad Commission, l. c. 148, Wis. that court said: “The fundamental diffi attempt culty with the to set a definite sum meas going attémpt ure of is that it is an value divide thing practically which inis its nature indivisible. The plant gross value of the and business is an indivisible adding amount. separate It up is not obtained a number of comprehensive taking items, but view of each and property, tangible all the elements of intangible, including property rights, considering separate them things, not inseparable parts all, but as ’’ entity. of one harmonious finding, complained The form of of in this case, has long been followed our Public Utilities Commission, upon and is foregoing ruling by based Supreme Court of Wisconsin. Ry. [In re Mo. So. P. 3 Mo. Co., S. C. l. c. 40; In re Citizens C, Gas Co., S, 221.] P. 12 Mo. Yol. 298]
State ex rel. Case v. Public Serv. Comm. com- there was no evidence before the Furthermore, “intangible “going value” concern” or mission as physical separately from the considered consequently the statute cited value of the only findings requires con- of fact all matters cerning shall been introduced before which evidence have intangible apply “going not concern” liberally The act must he construed this case. may of the commission he end that the orders avoided. 127 of the Service Commission Act,
Section
Public
provides:
10538),
(R.
sec.
Laws
S.
“A sub-
requirements
compliance
Act
stantial
with the
of this
give
shall
sufficient to
effect to all
orders,
rules,
regulations
acts and
of the commission and
shall
inoperative, illegal
any
or void for
omis-
he declared
respect
pro-
sion of a technical nature in
thereto. The
liberally
visions of this act
shall he
with
construed
*16
public
view to the
efficient
and sub-
welfare,
facilities
patrons
public
justice
stantial
between
and
utilities.”
II. Trial in this court
novo:
is de
'
parties
agreed by
it is
both
contro-
Moreover,
this
versy,
proceeding
and
is well established
that the
law,
appeal
in
court
review
in the circuit court and
this
on
an
the Public Utilities
under
Commission,
order of
is
provisions
equitable proceed-
an
of the Utilities Act,
ings,
proceeding
is
not a
law, and,
therefore,
in
triable de
this court.
this
Hence,
novo
court would
by
sep-
findings
not be
been
fact,
bound
had
arately
by
made
the Public
Commission,
Utilities
as
equity proceedings,
by
court is not bound
find-
ings
general
special,
either
or
of the chancellor
fact,
333;
below.
v. Pub. Service
266 Mo.
[Railroad
Comm.,
Ry.
116;
Mo.
Co. v.
Atkinson,
Lusk v.
268
State ex rel.
645;
Pub.
272 Mo.
State ex
Power
Comm.,
Service
rel.
522;
Co.
Mo.
Comm.,
v. Pub.
287
State ex
Service
Ry.
v. Public
Comm.,
Co.
Service
298 COURT OP SUPREME MISSOURI.
State ex rel. v. Public Serv. Supreme Illinois Court of the decision Springfield Gas Co., Commission v. Public Service holding respondents by other cases cited Ill. 209, separate findings al of fact as to elements be otherwise made, lowed commission should finding of commission considered void and should be re-hearing, point, not in be are cause remanded proceedings under states the cause, the statute those and were not triable before the were at law commission equity appeal de in an novo as as review, case, this State. respondents: prpof upon
III. The burden provides: Section Revised “All Statutes 1919, . . . . rates . . fixed shall be 10535'provides: prima-facie lawful.” Section all “In proceedings arising trials, suits actions, under provisions chapter growing of this out of the exercise authority powers granted herein to the com- proof party the burden of shall mission, ad- verse such ... commission to show clear and satisfactory . . . order com- complained mission of is unreasonable or unlawful as may case be.” have, therefore,
We Division con Banc, statutory provisions strued and enforced these re quired party attacking an order of fixing proof rates bear the burden of and to show satisfactory clear evidence that the rates attacked might were unreasonable or unlawful be contended. [State ex rel. Harrisonville v. Pub. Service Comm., 236 *17 S. W. 852; State ex rel. Co. Tel. v. Pub. Service Comm., 233 seq.] S. 425, W. l. c. 430 et same doctrine was Ry. in announced State ex Wabash Co. v. Pub. Serv ice Comm., 271 Mo. l. c. 159. 323 1922.
Yol. ex reí. v. Public “Going was allowable: Value” IY. in “going respondents value” claim no that
Tlie “physical” “hare-bones” value of addition heating plant commission law conld allowed he fully, or three for that two because the showed losing company’s years had been a business before authority unprofitable following in cite one, support proposition: Mo. Marshall v. Gas. Co., company distributed case, P. l. 415. In C. c. S. gas, each been unsuccessful natural and its business had year prior years. that, held for the ten “going no concern.” it had value as a therefore, Here, unprofitable up it is not been shown business had unprofitable which in 1915, under the same rates 1916, 1917 and The business at a was conducted years great in those account loss on increase “the cost labor fuel, materials,” found commission and shown evidence. The evidence did not was not show business a normal basis practicable a feasible or or that the business, demand City heat, the business district of had fallen Kansas any inor off, manner think, therefore, decreased. We something lawfully this case, could have been allowed “going general It value.” within falls rule on subject. In Des Moines Gas Co. v. Des c. Moines, S.U. l. Supreme said: United States Court “Going going-concern value or value, the value is, which inheres where its business is established, distinguished yet from one has establish subject buiness, has been the much discussion rate- making cases before the courts and . . commissions. . That there is an element of value in an assembled and plant, doing money, established earning business and over one not thus advanced, self-evident. ele This ment right, value is a be con should determining sidered in property, the value of the right which the owner has a to make a fair return, when privately although same is owned, public dedicated *18 324 SUPREME COURT OF MISSOURI. v. Public Comm.
State ex Serv. Case are: Denver v. effect Denver uso.” To Union the same Rapids 246 Cedar Gas Co. 178; U. S. Cedar Co., Water Rapids, 655; Omaha v. Omaha 218 U. S. Water Co., U. S. 180. the
V. The record does show commission failed depreciation: to consider fixing
Respondents the claim that the August plant at on $1,300,000 31, value of the depreciation. claim for This no allowance 1918, made engineer. testimony of the commission’s on the is based August reproduction new value on the He testified that depreciated That he this valua- was 31,1918, $1,303,846. three, August one- 1918, at 31, 1914 until tion from leaving per per de- a net less annum, value, half cent engineer, preciation, testified, The $994,875. however, depreciated judgment he that in his it should not that years preceding the the two much, because for three paid the had not been consumers rate had such company property. return on its He a reasonable simply phys- was that his valuation further testified any without value considera- ical value “hare-laones” (which intangible going-con- include tion value) was for the cern which he said commission to add repro- valuation of his to do so. if determined prop- engineer the value of cost, dution included erty previously 31, 1914, on December determined engineers, which was after al- $664,814, lowing cent one-half annum five three and years depreciation. showed that the val- was 19Í4, uation on December made 31, basis average constituting prop- of the materials cost years. previous erty during five Mr. as- Morrow, engineer, testified to the valuation sistant who of Decem- prop- condition 31,1914, ber also testified ninety per erty par. of the trial the time company’s president, Mr. Porter, testified the value 1918, was on December $1,712,971.00 Another witness basis values. on'the then Vol.
State ex rel. v. Public original company about tliat cost was testified depreciated one-half he at three $1,800,000, per *19 depreciation, which he and less the annum, property we the As $1,333-,449. he valued at allowed, com- the valuation have makes of the seen, statute prima-facie and reasonable valid, lawful, mission and respondents contrary on easts the burden show satisfactory by evidence” in record. “clear and presumption al- is, therefore, did proper depreciation. order low sum Its for shows fixing it considered all evidence in the case in value. figured
If de- could have so, preciation engineer, by the full sum estimated Mr. its Harrop, adopted the or and valuation of Mr. Porter, adopted depreciation plaintiffs’ the valuation and property witness, Bettis, and still found the value of the more than $1,300,000. itOr, have could allowed reason- going depreciated property able sum and value, for. only suggested proper ten cent, would be Mr. reproduction Morrow, or considered that the esti- cost engineers, mated one-half of-which was based prices average during years pre- materials five ceding December should 31,1914, be increased, somewhat on account of the well fact known that such materials were much more valuable in 1918 than before the war. being presumptively showing valuation of the commission proper, valid record facts which lawfully could have been considered and taken into the justify account to the valuation of the there commission, no is clear and evidence that satisfaetorv eithei was illegal or unreasonable and it must be allowed to stand. satisfactorily
VI. Not shown that Commission's al- joint plant location was erroneous: We are not adopted convinced that the commission wrong determining rule ratio for proportion operating expenses COURT OE SUPREME MISSOURI. v. Public Serv.
State ex rel. Case re heat electrical services borne should he be there could In snch cases, spectively. obviously without all cases, rule applicable rigid a fixed and The problem circumstances. particular to the reference portion property what is to determine all cases two different jointly used property thereof, ease service particular and useful public services, used Rate subject of inquiry. are the whose rates [Minnesota l. c. Ames, 169 U. S. 352; 230 U. S. Smyth Cases, 466-7.] l. c. where U. S. Case, In the Minnesota Rate business, state and interstate a railroad used both operation expense it was expressly held in order to ascertain value of the jointly divid business, rate for should reasonable state in receipts from state gross ed proportion *20 gross-income condemning terstate business —thus in the witness suggested by Baldwin, method of allocation practically and which he said produced division, same case, On adopted him. result as the fifty value the allocation of the the other the court hand, ruled correspond of should used jointly property each court extent of its use for service. The at said, Hughes opinion: Mr. page 461, Justice rendering be rates are it would seem controversy, “When to find a basis for division the total necessary of a must and this property independently revenue, be property. found the use that is made of the That assigned pro there be to each is, business, should portion of the which will total value busi correspond employment to the extent of its ness.” adopted the case at think bar, we the division
the commission follows tire announced by above rule Hughes. Mr. Justice
The evidence at shows, plant Thirteenth and Baltimore Avenue for originally was built solely purpose larger buildings heat to the in the furnishing business district of Kansas owners City, because the would take light electric from the Light Company Yol. Sery. Comm. v. Public
State ex rel. Case n unless no made It steam-heat. secure could also light electricity. furnished which was electric Light Company supplied from building was plant heating number for than its other sources n years plant heating established. was after heard, case was At the time the in this evidence years purchased, Light Company for number of had roughly speaking, perhaps the elec- three-fourths tricity supplied Rail- from the Street to its consumers large generating way Company, electric which hád plant northern River in the on the hanks of the Missouri pro- part City. one-fourth was of Kansas The other electric half its Central cured more than from Avenue plant balance Kaw, located on the hanks of the plant ques- mostly joint heating electric from the tion at Thirteenth Baltimore. years trial before shows some enlarged heating
the Thirteenth Baltimore was engines prime procured and new and electrical boilers by which steam movers therein all the installed produced being heating purposes before used for produce prime electricity in such movers lighting power purposes. That the steam was producing electricity used for the exhaust could unless purposes, heating the same time be used ordinary only could be done in cold weather. That weather there to not sufficient steam used for generate electricity quantities. in substantial use To *21 plant producing electricity for without at alone, using purposes, same heating time all exhaust for steam electricity produced would make the so cost from ten per expense cents to fifteen cents kilowatt. That this was prohibitive, purchased, because electric current could be electricity and purchased, most of its less was for per than two and one-half cents be could kilowatt, and produced plant in an efficient properly electric located, joint plant for still question less. So that the was, principally primarily, heating fact, plant a and but COURT MISSOURI. SUPREME OF
State, v. Public ex rel. production electricity, as of or useful for the little used heating. compared for usefulness with use company that was that the true, It is there very hearing’ under construction at time had the. large plant in electrical the east on the Missouri bottoms probably sufficiently might be that this River, and years completed peak-load for or five for the four care energy required by company of electric at times peak- help for season, winter ánd that care such plant fully completed, the until the east load joint bottoms was might plant, at Thirteenth and Baltimore Avenue, stand-by plant. be pense emerg’ency or ex- as But the electricity making seen, we therein, have as great largely as so to neutralize its be benefit as stand-by emergency plant. plant joint
Indeed, evidence shows was practical plant a operated an failure, considered be electric electricity only using without the exhaust purposes. steam for It was a commercial possibility operated. when so It is located near heart City the business district of Kansas without switch high-priced nearby on facilities, land without a river cheap to furnish abundant condensing water for en- gines. The evidence shows, the commission, stated exclusively that at properly an electrical located equipped, electricity produced could be with fifteen or twenty pounds per of steam kilowatt, it would whereas, require pounds fifty of steam kilowatt at this plant.
The record electricity shows the rates for fixed same time the rates heat were fixed, the same basis allocation joint plant, only said is, fifteen expense operating charged value and to the electri- charge cal Any consumers service. increased therefore increasing electric service would result the rate to the electrical We think, consumers. would not just require pay them to the increased rates made necessary by operating high-priced this inefficient and *22 Yol. 329 1922.
State ex reí. Public production joint electricity, for ex- when the being steam-heating. haust is plant heating where it is located should be for busi- supplies ness near the business district, which with because, the heat, ported shows, steam cannot be trans-
more than four or five feet for thousand purposes. plants production Whereas, for the of elec- cheap may tricity as economical as to which be, as public and electric consumers are entitled, should be they reasonably City, can in located, when as Kansas be, large cheap in stream and on suburbs, they land railroad where can have near terminal abundant supplies obtaining switch their coal and facilities engines. operating condensing abundant water for being this time case As the at the was shows, record preparing Company this was meet tried, just public and electric consumers demand and had large very electric under construction a located twenty-eight about acres of land on the Missouri River City. in in bottoms Kansas east All we considered, the circumstances hold that just complained fair as accurate, allocation reasonably possible or attainable. It be should not disturbed. Rulings other in
VII. commissions other cases not decisive:
Respondents’ the alloca insist that learned counsel rulings complained support tion other has no public in direct utilities and that it is commissions, ruling conflict with the of the New York Commission Lockport Light, Inof re Heat & Co., case Power P. C, true, U. R. It that case commis rejected theory adopted sion allocation our compromise commission in the case at bar and ruled as a urged, fifty-fifty of the different theories that a division adopted proper, court below case. in that But, case there factor was another COURT SUPREME OF MISSOURI. *23 v. Public Comm.
State ex rel. Serv. which, theory expert whose McClellan, this case, adopted, Lock- into consideration. The took Niagara purchased electricity port Company from a its company. provided contract Falls electric electricity might be off at 1:00 a. m. 5:00 taken and a.. joint necessary any day. to have it was So that m., plant supply all'of customers in Lock- in to readiness Niagara port day every between those should hours right Company electricity, to On off as it do. cut had ap- Mr. McClellan estimated that account fact, this thirty per operating proximately ex- cent the total per- penses charged electricity seventy to and should operated plant cent carry heat. That if the was to steam electricity, peak-load, he demanded report place in de- in his it was another said difficult to company money, forty per would save the termine charged against the service electric for that should be compromised purpose. by dividing the Therefore he expenses equally operating between electric service electricity steam heat. McClellan also- considered by-product only when all was made the exhaust steam if (See heating. pages R. 699, demanded 697 P. U. C). Comm, In Re of Northern Pub. Service P. Illinois, U. R. 1921 B, held two-thirds of operation joint expense hot-water and electric where the exhaust steam heat was properly allocated to service water, was . electricity. one-third to P. R. 1921 Co., A, Re Central Ill. U. l. c. steam-heating the allocation of and electric
550-1, plant according maximum steam demand of was expressed power, boiler heat and utilities electric forty-two per charged cent was with the result that electricity. fifty-eight per heat cent to Ry. Light& R. 1920 In Re Decatur P. U. Co., B, 705, proper apportionment determining that, ruled expenseAf production in steam-heat a combined serving hard-and-fast electric heat no consumers, Yol. OCTOBER TERM,
State ex rel. Case v. Public adopted, rule but each case its own could be turns agree. ruling To this we circumstances.
A commission cases are cited number of other respective widely they their variant but are counsel, guide case. in this facts and no rule for us afford fixed carefully opinion herein Our commission its order and rulings above noted, considered of other commissions they circum- not rule case in the concluded did just allocation stances this record. and fair That the engineers adopted, was the ratio which their supported by authority quoted which was the text-book opinion. in their *24 £‘ certainly by It is not satisfac shown, clear and tory evidence,” error. There fore, we cannot its determination. disturb complained VIII. It is not shown that the order higher unreasonable than estabHshed or rates their value to the consumers:
Respondents strenuously contend that al- the rates greater were unreasonable and the lowed than service greater was worth to the heat consumers, and that a rate although company than that cannot be the allowed, would thereby required any profit, be to do business without even at a loss.
The evidence shows there hun- about two were fifty gathered dred It heat-consumers. is also to be majority from evidence that less than a con- of these were sumers without furnaces and boilers of their own, or would have to install furnaces their boilers build- ings supply themselves with heat. All of them were fully equipped house-piping with their own and radiators steam-heating. suitable The evidence tends to show majority that the the consumers also had own their buildings furnaces and boilers and could heat their own by simply starting they preferred their if fires, so, do pay rather than the increased rate fixed commis- sion. So that consumer, service as well as the reasonableness of such deter- rates, were competition minable hands of the consumers OF SUPREME COURT MISSOURI. Public Serv. Comm. ex rel. recognized by commission, It was both themselves. respond- complained Mr. Baldwin, of and in the order expert, rates which that the ents’ regulating subject might com- efficientand fix would petition by testified Mr. Baldwin heat consumers. which was that the table rates which he had fixed and rates than the which was less in evidence and offered ultimately adopted by the commission, which were assumption that the consumers would fixed go price him on the higher pay using’private plants, than rather bach to utility than those contained his schedule, would lose business. competitive element commission, in view this problem, com- would fixed rates which enable the ninety-two
pany to but hundredth two and secure profit one-half investment —not annum on its public ordinarily utility to a com- allowed —because heat consumers mission considered pay company yield fair usual rates sufficient to patron- they their but withdraw could, return, would, furnish, higher ag’e pay rather than heat, their own in the the commission. rate than that fixed order of them-, ability of the heat consumers In view regulate they pay service for the to thus rates selves utility not exist -when the receive, which does *25 gas, practical monopoly, such tele- electric, water, as graph, telephone company, or railroad the reasonableness accurately be most and satisfac- of the rates fixed can torily by by permitting com- the rates fixed the tested in as remain force for a reasonable so mission to time, pay such consumers demonstrate whether the plants. of own or revert use their rates subject exceptional This that the rates are case competition consumers, to efficient the the hands of any price commodity rates or same as are the competition. where there is fair efficient and by provided In this the commission as case, order, its follows: City & Power 6.
“Ordered: That Kansas Company keep of total shall and correct records its true 1922. Yol. Public Serv. Comm. rel. Case v. ex both, expenses operating electric
gross of and income reports with departments quarterly file and setting by duly secretary, its verified commission, operating expenses, fully income and such forth day begin November, reports first of with shall said com- by ordered until otherwise continue 1919, and mission. fully retain That the commission
“Ordered: subject-matter parties this of jurisdiction together the commission, before the evidence cause may therein, other evidence as be offered such with any or purpose making this order, modification of just any may supplemental at time deem order it herein, proper.” By provisions, virtue above any parties, any could at own motion, actual, complained been in of had time after the rates appeared by experience, operation, have tested actual such if thereof, for a modification before the commission higher they experience should unreasonable show were In the consumer. effect, than were worth to finally but test rates. fixed, were rates Eng. Pub. In State ex rel. Watts Co. v. the case of c. it 534-5-6, 269 Mo. l. was held that there Comm., Service way the reasonableness was no better to determine depend many and commission which fixed rates contingencies, they shall than a test after such varied operation, Public that an order have been which is not final and which re Utilities Commission right any modify in case it time, should serves prove be this could not unreasonable, case, said establish unreasonable order or to an unreasonable apply con as well rates. doctrine when the This should the rate fixed when commission, sumers attack company public especially, attacks when utilities it— position compete are themselves the consumers utility, as here. with the ease, the rates established *26 go operation final order not into until the
did date COURT SUPREME OF MISSOURI. ex Case v. Public Serv. Comm. previously establishing the rates established them, by having February, been order of the commission question made order in force'until continued September and therefore the record does 27,1919, operation. cannot the result their and show actual tend- there was case It is evidence true, buildings prove large supplied ing them- that several neighbors adjoining immediately selves and their them just substantially or than street, across rates less those fixed important the commission here. inBut all such cases, problem.
factors were In all left out large such ex- there was no investment in cases, pensive distributing system, allowance no made any portion such for the cases value of the plants buildings grounds occupied, any al- such greater lowance for the convenience and cleanliness of tahing the'company. any heat from al- Nor was there large lowance for the which the loss condensation, company through carrying sustained the steam pos- distributing system, much more extended than was private supplied plants only these them- sessed adjoining one selves and or two of their immediate or neighbors. proof
The burden of under is, the statute, respondents satisfactory to show clear and complained that the order of established rates which were provided higher unreasonable, were as therein than respondents their value consumers. have This point against failed to do, we must rule this them. judgment The result is, of the lower court is reversed, the cause is with remanded directions judgment court to said render herein for the defendants appellants Lindsay, below and here. Brown CG., sitting. opinion by foregoing PER CURIAM: The Small, adopted opinion
isC., as the of the court. J., Graves, P. Ragland, and Woodson, J., concur; T. 'James Blair and JJ., concur in result.
