Boise Artesian Water Co. v. Public Utilities Commission

• Decision Date: 28 April 1925
• Citation: 40 Idaho 690,236 P. 525
• Parties: BOISE ARTESIAN WATER COMPANY, a Corporation, Appellant, v. THE PUBLIC UTILITIES COMMISSION OF THE STATE OF IDAHO and J. M. THOMPSON, W. H. GIBSON and F. C. GRAVES, Commissioners Thereof, and BOISE CITY, a Municipal Corporation, Intervenor and Adverse Party, Respondents
• Court: Idaho Supreme Court

236 P. 525

40 Idaho 690

BOISE ARTESIAN WATER COMPANY, a Corporation, Appellant, v. THE PUBLIC UTILITIES COMMISSION OF THE STATE OF IDAHO and J. M. THOMPSON, W. H. GIBSON and F. C. GRAVES, Commissioners Thereof, and BOISE CITY, a Municipal Corporation, Intervenor and Adverse Party, Respondents

Supreme Court of Idaho

April 28, 1925

PUBLIC UTILITY - ORDER - RIGHT OF APPEAL - VALUATION FOR RATE MAKING-ESTIMATES OF VALUE-METHOD OF VALUAAION-REPRODUCTION VALUE-PRUDENT INVESTMENT THEORY-PROPERTY NOT USED AND USEFUL - OVERHEADS - INTEREST DURING CONSTRUCTION - WORKING CAPITAL-VALUE OF FRANCHISE-GOING CONCERN VALUE-TENTATIVE VALUE OF SUBSEQUENT ADDITIONS.

1. After the commission has acted on a motion for a rehearing thereof an appeal may be taken from an order of the Public Utilities Commission fixing the value of the property of a utility for rate making purposes.

2. On an appeal from an order of the Public Utilities Commission fixing the value of the property of a utility for rate making purposes it is the duty of the court to determine whether the commission regularly pursued its authority.

3. The property of a public utility should be valued for rate making purposes as of the date of the inquiry.

4. The commission is not limited in the valuation of the property of a utility for rate making purposes to any one rule or principle of valuation, but should give due weight to evidence of the cost of reproducing a new plant of equal capacity, etc., and, in addition carefully consider all other evidence bearing on cost and value, in all their phases and relations, to the end that the value found to exist will be determined from a careful consideration of all existing facts, conditions and circumstances.

5. A Public Utilities Commission is not justified in determining the value of the property of a public utility solely according to the so-called prudent investment theory.

6. The action of the Public Utilities Commission in refusing to make an allowance, in a valuation proceeding, to cover a steam-pumping plant will not be set aside where it appears that such plant is nonoperative property and no longer necessary to serve the public.

7. If the evidence shows that there is in a public utility a value in excess of the cost or value of the labor and materials entering into its construction, a reasonable amount should be allowed therefor; and where it is not possible to produce better evidence of such excess value, an allowance may be made on the estimates of engineers.

8. The sum necessary for the working capital of a utility is addressed to the sound discretion of the Public Utilities Commission, and in the absence of an abuse of discretion such an allowance will not be set aside.

9. That certain expenses have been incurred in building up the business may be considered by the commission as one of the elements of value. The fact that it is a going concern, in successful operation, should be considered in estimating the value of the physical property and assets, but the commission should not attempt to calculate or segregate any specific theoretical value which might attach to the plant or system merely by reason of the fact that it is a going concern.

10. The amount spent in litigation over a franchise is not conclusive as to the value to be allowed for the franchise in the valuation of a utility for rate-making.

11. A court will not inquire into the validity of an order of a Public Utilities Commission, giving to certain of the property of a utility a tentative value, where the order expressly permits the introduction of further evidence relating to such value, and the commission reserves the right to increase the amount tentatively fixed.

APPEAL from an order of the Public Utilities Commission. Order set aside.

Order set aside.

Hawley & Hawley, for Appellant.

The commission did not value the appellant's property as of the date of the inquiry. It also failed to recognize or even give fair consideration to reproduction value. (Smyth v Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819; Des Moines Water Co. v. City of Des Moines, 192 F. 193; Cumberland Tel. & Tel. Co. v. City of Louisville, 187 F. 637; Wilcox v. Consolidated Gas Co., 212 U.S 19, 15 Ann. Cas. 1034, 29 S.Ct. 192, 53 L.Ed. 382, 48 L. R A., N. S., 1134; P. U. R. 1924B, 163; Cedar Rapids Gaslight Co. v. City of Cedar Rapids, 144 Iowa 426, 138 Am. St. 299, 120 N.W. 966, 48 L. R. A., N. S., 1025, 223 U.S 655, 32 S.Ct. 389, 56 L.Ed. 594; San Diego Land & Town Co. v. National City, 174 U.S. 739, 19 S.Ct. 804, 43 L.Ed. 1154; San Diego Land & Town Co. v. Jasper, 189 U.S. 439, 23 S.Ct. 571, 48 L.Ed. 892; Spring Valley Waterworks v. San Francisco, 192 F. 137; Richman v Consolidated Gas Co., 114 A.D. 216, 100 N.Y.S. 81; Pocatello Water Co. v. Standley, 7 Idaho 155, 61 P. 518; Denver v. Denver Union Water Co., 246 U.S. 178, 38 S.Ct. 278, 62 L.Ed. 649; Gloucester Water Supply Co. v. Gloucester, 179 Mass. 365, 60 N.E. 977; Kennebec Water District v. Waterville, 97 Me. 185, 54 A. 6, 18, 60 L. R. A. 856; City of Knoxville v. Knoxville Water Co., 212 U.S. 1, 9, 29 S.Ct. 148, 53 L.Ed. 371; New York & Queens Gas Co. v. Prendergast, P. U. R. 1924B, 138; Georgia Ry. & Power Co. v. Railway Commission, 262 U.S. 625, 43 S.Ct. 680, 67 L.Ed. 1144; Missouri ex rel. S.W. Bell Telephone Co. v. Public Service Commission, 262 U.S. 276, 43 S.Ct. 544, 67 L.Ed. 981, P. U. R. 1923C, 193; Bluefield Water Works & Improvement Co. v. Public Service Commission, 262 U.S. 679, 43 S.Ct. 675, 67 L.Ed. 1176, 1181; Monroe Gaslight & Fuel Co. v. Michigan Public Utilities Commission, 292 F. 139; Murray v. Public Utilities Commission, 27 Idaho 603, 150 P. 47, L. R. A. 1916F, 756; City of Coeur d' Alene v. Public Utilities Commission, 29 Idaho 508, 160 P. 751; Minnesota Rate Cases, 230 U.S. 352, Ann. Cas. 1916A, 18, 33 S.Ct. 729, 57 L.Ed. 1511, 48 L. R. A., N. S., 1151; Elizabethtown Gaslight Co. v. Board of Pub. Utility Commrs., 95 N. J. 18, 111 A. 729, P. U. R. 1920F, 1001; Lincoln Gas & E. L. Co. v. Lincoln, 250 U.S. 256, 39 S.Ct. 454, 63 L.Ed. 968; Des Moines Gas Co. v. Des Moines, 238 U.S. 153, 35 S.Ct. 811, 59 L.Ed. 1244, P. U. R. 1915D, 577; Galveston Electric Co. v. Galveston, 258 U.S. 388, 42 S.Ct. 351, 66 L.Ed. 678; Charleston v. Public Service Com. (W. Va.), 120 S.E. 398, P. U. R. 1924B, 601; Mobile Gas Co. v. Patterson, 293 F. 208, P. U. R. 1924B, 644; Foster v. Kellogg Power & Water Co., P. U. R. 1923D, 586; Re Indianapolis Water Co., P. U. R. 1924B, 306; Potomac Electric Power Co. v. Public Utilities Com., 276 F. 327; Re Mountain States T. & T. Co. (Ida.), P. U. R. 1921B, 739; Re Consumers Co., P. U. R. 1923A, 418; Re Kootenai Power Co., P. U. R. 1923A, 764; Re Idaho Power Co., P. U. R. 1923B, 52.)

The commission erred in eliminating the steam-pumping plant, equipment, etc., from the valuation, and this omission was an unwarranted interference with managerial powers. ( Missouri ex rel. Southern Bell Tel. Co. v. Public Service Com., 262 U.S. 276-312, 43 S.Ct. 544, 67 L.Ed. 981; Havre de Grace & Perryville Bridge Co. v. Towers, 132 Md. 16, 103 A. 319; Interstate Commerce Com. v. Chicago G. W. R. Co., 209 U.S. 108, 28 S.Ct. 493, 52 L.Ed. 705; Chicago, M. & St. P. R. R. Co. v. Wisconsin, 238 U.S. 491, 35 S.Ct. 869, 59 L.Ed. 1423, L. R. A. 1916A, 1133, P. U. R. 1915D, 706; Consolidated Gas Co. v. Newton (N. Y.), P. U. R. 1920F, 483; Re Kenelworth Co. (Ill.), P. U. R. 1921D, 95; Meade Coal Co. v. Appalachian Power Co. (W. Va.), P. U. R. 1923E, 221, 229; Lisbon Light & Power Co. (N. H.), P. U. R. 1923E, 400; Re Kennebec Water District (Me.), P. U. R. 1922D, 545; Columbus Gaslight Co. v. Public Service Com. (Ind.), 140 N.E. 538, P. U. R. 1923E, 603; General Necessities Corp. v. Detroit Edison Co. (Mich.), P. U. R. 1923E, 845; Interstate Commerce Com. v. Chicago Great Western Ry. Co., 209 U.S. 108, 28 S.Ct. 493, 52 L.Ed. 705.)

Field and general overhead property values exist in the appellant's property and the proof was ample to justify an allowance therefor. It was manifest error to deny these elements. (Cedar Rapids Gaslight Co. v. City of Cedar Rapids, 144 Iowa 426, 138 Am. St. 299, 120 N.W. 966, 48 L. R. A., N. S., 1025, note, p. 1037; Milwaukee v. Milwaukee Elec. R. & L. Co., 10 R. C. L. 1; Re Indianapolis Water Co., supra; Monroe Gaslight & Fuel Co. v. Michigan Public Utilities Com., 292 F. 139, P. U. R. 1923E, 661; Re Idaho Power Co., P. U. R. 1923B, 52; People v. Public Service Com., 202 A.D. 576, 195 N.Y.S. 174, P. U. R. 1922E, 675; Re Kootenai Power Co., supra; Des Moines Gas Co. v. City of Des Moines, supra; Re Consumers Co., supra; Re Boston & Idaho Company, 9 P. U. C. I. 70; Re Grangeville etc. Co., P. U. R. 1922D, 519; Re Mountain States T. & T. Co., 8 P. U. C. I. 41; Re Wood River Power Co., P. U. R. 1921B, 531.)

Interest during construction value existed in the appellant's property and the proof was ample to justify an allowance therefor. (Waynesburg v. Waynesburg Water Co., P. U. R. 1922D, 47; Pioneer Tel. & Tel. Co. v. Westenharer, 29 Okla. 429, 118 P. 354, 38 L. R. A., N. S., 1209; Hill v. Antigo Water Co., 3 Wis. R. C. R. 623; Re Colorado Springs Light, Heat & Power Co., P. U. R. 1917F, 385; Re Boston & Idaho Gold Dredging Co. (Ida.), P. U. R. 1921E, 843; Re Wood River Power Co. (Ida.), supra; Re Mountain States Tel. & Tel. Co. (Ida.), supra; Re Pocatello Gas & Power Co. (Ida.), P. U. R. 1923C, 25; Re Idaho Power Co. (Ida.), supra.)

Proper allowance was not made for the going concern value existing in the appellant's property. (Re Indianapolis Water Co. (Ind.), supra; Des Moines Gas Co. v Des Moines, supra; Galveston Elec. Co. v. Galveston, supra; Minneapolis v. Rand, 285 F. 818; Application of Campbell, Idaho P. U. C., 8th Ann. Rep. 126; Grangeville Elec. Light & Power Co.,...