Newport Home Water Co. v. Public Service Commission

Citations

• 76 Pa. Super. 386
• 1921 Pa. Super. LEXIS 159

Syllabus

<p>Public Service Commission — Water companies — Valuation for rate-mahing purposes — Property used and useful — Depreciation— Failure to provide fund.</p> <p>An order of the Public Service Commission determining the valuation of a water company for rate-making purposes at $51,538 is not confiscatory, where the reproduction cost new, less accrued depreciation, and after making deductions for property not used or useful, equals that amount.</p> <p>In the determination of a valuation for rate-making purposes it is proper to deduct the value of a reservoir and wells which were not used and useful in the public service.</p> <p>In determining the fair value of a water company for rate-making purposes, different methods may be used in computing the losses in early years, during the development period of the business, for the purpose of capitalization, and as an aid to judgment in deciding whether or not such early losses should be capitalized. Whatever method is adopted, however, it is necessary, in order to arrive at any satisfactory conclusion, that there must be some evidence as to the operating expenses and gross revenues of the company during the years of the development of the business. Where there is testimony submitted that the original plant was completed within six months, and that there was no evidence on which to found a confident assertion that the business of the company was not profitable from the beginning, there is nothing to warrant a finding that the company is entitled to an allowance, as capital, for any loss sustained by it, during the period of development of its business.</p> <p>A public service company is entitled to see that, from the earnings, the value of the property invested is kept unimpaired, so that at the end of any given term of years the original investment remains as it was in the beginning. If, however, a company fails to perform this plain duty and to exact sufficient returns to keep the investment uninjured, whether this is the resu