Ohio Utilities Co v. Public Utilities Commission of Ohio 20 21, 1925
| Decision Date | 02 March 1925 |
| Docket Number | No. 210,210 |
| Citation | 45 S.Ct. 259,267 U.S. 359,69 L.Ed. 656 |
| Parties | OHIO UTILITIES CO. v. PUBLIC UTILITIES COMMISSION OF OHIO. Argued Jan. 20-21, 1925 |
| Court | U.S. Supreme Court |
Messrs. Timothy S. Hogan and J. C. Martin, both of Columbus, Ohio, for plaintiff in error.
Messrs. J. W. Bricker, of Columbus, Ohio, and B. D. Huggins, of Hillsboro, Ohio, for defendant in error.
The Ohio Utilities Company is engaged in supplying gas and electricity for light, heat, and power to various communities in Ohio. In 1920 it filed with the Utilities Commission rate schedules for gas and electrical service in the village of Hillsboro. The rates were protested and the commission ordered a hearing. Pending a decision, the company was allowed to collect the rates in accordance with its schedule upon condition that it would return to its customers any excess over the rates finally fixed, for the due performance of which it furnished a bond. After a hearing and rehearing, the commission reduced the electrical service rates set forth in the company's schedule, and fixed the same for residence and commercial lighting at 12 cents per kilowatt hour for the first 200 hours per month and 10 cents per kilowatt hour for all over 200 hours, and for private garage automobile charging a minimum of $1 per month net. As a basis for these rates, the commission found that the fair value of the physical property of the company, used and useful in the furnishing of electrical service to consumers in Hillsboro, was $138,521, to which allowances were added as follows: Taxes during construction, $1,081; interest during construction, $1,500; to maintain an adequate stock of materials and supplies, $1,071; working capital for carrying on the electrical service in Hillsboro, $2,882—bringing the value of the property, as of August 30, 1920, for rate-making purposes, to the total sum of $145,055. The commission further found that the reasonable operating expenses (including an allowance of $3,000 for taxes) in furnishing such electrical service for a period of one year should be $37,608, and a reasonable annual allowance for depreciation should be $7,252 (being 5 per centum of the value), making a total of $44,860. The commission then found that a reasonable return to the company for the period of one year would be $8,703, and estimated that the rates fixed would produce the aggregate of these two sums, namely, $53,563. Upon error to the state Supreme Court the order of the commission was affirmed. 108 Ohio St. 143, 140 N. E. 497.
The order of the commission is assailed as confiscatory, and therefore in contravention of the Fourteenth Amendment. The specific grounds of complaint in respect of the order, so far as necessary to be stated and considered, are as follows: (1) The value of the property should have been fixed at $154,655.93; (2) under the evidence, the allowance for operating expenses, including taxes, should have been at least $38,744.85; (3) the return to the company should have been on the basis of 8 per cent. upon the value stated in (1), or $12,372 annually.
Property Valuation. An examination of the record shows that the engineers of the commission made an itemized inventory and valuation of the company's property, based on reproduction value less depreciation, from which it appears that the aggregate fair value of the property for rate-making purposes was $154,655.93. This valuation was confirmed by the oral testimony of the engineers; it was acquiesced in by the company, and we find no substantial evidence in the record to the contrary. The commission accepted the valuation of its engineers in all respects except that it rejected or reduced the amount of the following items: Preliminary organization expenses, $5,000, rejected outright;...
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