Opinion
No. 23893
Decided June 21, 1933.
Public Utilities Commission — Increased natural gas rates — Section 614-20, General Code — New schedules stricken from files — Gate rate — General administrative expense — Annual depreciation and expense — Taxes — Preorganization expense — Distribution line equipment — General overhead — Financing cost — Going concern value — Working capital.
ERROR to the Public Utilities Commission.
This matter comes to this court from the Public Utilities Commission upon petition in error of the Dayton Power Light Company. A brief summary of the claims is as follows:
On June 17, 1929, the Dayton Power Light Company filed with the Public Utilities Commission new schedules of rates and charges for the cities of Sidney, Washington C. H., Troy, Piqua, and certain villages, which schedules increased the rates for natural gas over what had previously been charged. Under the provisions of the Pence Law, Section 614-20, General Code (110 Ohio Laws, 366), said company gave bond pending the hearing by the commission as to the reasonableness of the new schedules.
Hearings were had from time to time, and on November 3, 1932, the commission ordered that said new schedules be stricken from its files and that the power and light company cease charging and collecting the rates therein contained; that such company be required within thirty days to refund to each consumer the difference (with interest thereon at 6 per cent. from the date of payment of such charge to the date of refund) between the charges imposed and collected under the new schedules, under the authority of the bond given, and the rates and charges which would have obtained under the prior rates and prices which were sought to be superseded by the new schedules; and that any money not claimed should be paid to the county treasurer of the proper county where such municipalities are located, and the commission retained jurisdiction for the purpose of such audits as might be necessary in respect thereto.
Plaintiff in error makes many allegations of error in the order of the commission, claiming deprivation of its property without due process of law, and denial of equal protection of the laws; that the charges which it may collect under the order of November 3, 1932, are confiscatory and insufficient to yield such company reasonable compensation for the natural gas service rendered and to be rendered by it; that said rates to be charged do not give due regard to the value of the company's property actually used and useful for supplying natural gas service to such municipalities and their inhabitants; that said orders do not give due regard to the city gateway contracts existing between the Dayton Company and the Ohio Fuel Gas Company, whereunder the Dayton Company receives its supply of natural gas, and that they violate Section 10, Article I, of the United States Constitution, by impairing the obligation of such contracts, and are erroneous.
It also claims that said finding is repugnant to the power given to Congress to regulate commerce among the several states, in that an attempt is made to regulate the price for natural gas to be paid by the Ohio Fuel Gas Company to the United Fuel Gas Company for natural gas produced in West Virginia and Kentucky and transported in interstate commerce from points in the state of West Virginia to the several gateways of the municipalities, where it is delivered by the Ohio Fuel Gas Company to the Dayton Power Light Company.
Plaintiff in error also claims that the commission erred in fixing the price of natural gas at the gateways of the municipalities at 39 cents per thousand feet, instead of 45 cents per thousand, the price which the Dayton Company is obligated to pay under its contracts with the Ohio Fuel Gas Company.
Other allegations relate to the valuations fixed upon various items of the plaintiff in error's property, and findings relating thereto which were made by the Public Utilities Commission.
A statement of the chief differences between the claims of the plaintiff in error and those of the defendant in error would be, in substance, as follows:
(1) The difference in the rate allowed by the commission for the purchase of natural gas, known as the gate rate, which is 39 cents, instead of the contract price with the Ohio Fuel Gas Company claimed by the plaintiff in error, which is 45 cents.
(2) The commission allowed about $6,000 less than the company claim on general administrative expense, the entire difference being the service fee of the Columbia Engineering Management Corporation, another wholly owned subsidiary of the Columbia system. The commission found 56.6 per cent. of these management fees were justified on the basis of value received.
(3) Annual depreciation and allowance. The Dayton Company claimed 4 per cent. on engineering testimony (Ford, Bacon and Davis), the allowance made by the commission in the sum of $13,721 representing 2 per cent. of the total depreciable plant of the Dayton Company allocable to this territory.
(4) Differences are also claimed as to taxes.
(5) Preorganization expense.
(6) Distribution line equipment, the entire difference being due to the commission disallowing the cost of paving over mains which were laid before the paving was put in place. Des Moines Gas Co. v. City of Des Moines, 238 U.S. 153, 35 S.Ct., 811, 59 L.Ed., 1244; Newark Natural Gas Fuel Co. v. City of Newark, 92 Ohio St. 393, 111 N.E. 150.
(7) As to general overheads, the commission allowed 14 per cent., being the same as allowed the Ohio Fuel Gas Company in the Columbus case, and is more than that allowed in the Columbus Gas Fuel Company case.
(8) As to cost of financing, the company claimed 4 per cent. of value of physical property. The commission in this matter claimed to have followed the decision in the case of Wabash Valley Electric Co. v. Young, 287 U.S. 488, 53 S.Ct., 234, 77 L.Ed., 348, decided by the Supreme Court of the United States on January 9, 1933; also the case of the Portsmouth Gas Co. v. Publlic Utilities Commission, 119 Ohio St. 24, 162 N.E. 106.
(9) As to going concern value, the commission took the view that the burden was on the company in this matter, and found failure of proof in that behalf.
(10) As to working capital, the commission allowed $61,880. The company claimed $83,200. The commission allowed one and one-half months' operating expense, plus one month's gas purchase, $38,755, plus materials and supplies equaling $5,218. The working capital then being summarized as $17,907 for one year's operating expense, excluding gas purchase and allowance for depreciation, $38,755 for one month's gas purchase, $5,218 for materials and supplies, making the allowance for working capital $61,880.
The foregoing are the chief differences between the claims of the plaintiff in error, the Dayton Power Light Company, and the defendant in error, the Public Utilities Commission of Ohio. Other questions are presented, but these are the most important ones and it is unnecessary to give specific mention of other claims in greater detail.
Mr. Edwin P. Matthews, Mr. John E. Mullin, Mr. Charles P. Pfarrer and Mr. Chester J. Gerkin, for plaintiff in error.
Mr. John W. Bricker, attorney general, and Mr. Thomas J. Herbert, for defendant in error.
The principles of law necessary to the decision of this case have been considered in the case of the Columbus Gas Fuel Company v. Public Utilities Commission of Ohio, ante, 109, this day decided by this court. These two cases are closely allied and interrelated and much of the record in the Dayton case was stipulated from the record in the Columbus case.
Applying the reasoning and conclusions of law announced in the Columbus case to the instant case we find no error in the conclusions of the Public Utilities Commission, and that the conclusions of fact found by the commission are justified by the evidence. Our conclusion, therefore, is that the findings of the Public Utilities Commission are neither unreasonable nor unlawful, and the same are hereby affirmed.
Order affirmed.
WEYGANDT, C.J., DAY, ALLEN, STEPHENSON and MATTHIAS, JJ., concur.
BEVIS, J., not participating.