Salt Lake Telegram | 1936-01-09 | Page 13 | Phone Company Methods for Valuation Hit

PHONE COMPANY METHODS FOR FORI I VALUATION HIT Rate Engineer Gives Opinion During State Hearing An opinion that the Mountain States State Telephone and Telegraph company's estimates of development costs are conjecture piling one as assumption assumption assumption as- as on another was expressed expressed ex ex- pressed by G. G R. R Kenn Kenny rate engineer engineer engineer engi engi- neer at the hearing Thursday in inthe inthe inthe the states state's probe of the firms firm's rate structure The estimates cant can't be supported by facts since no facts exist Mr Kenny charged during examination by John D. D Rice deputy attorney general and counsel for the state public service commission which instituted the inv Investigation Launches Attack Mr Kenny took the stand as aJ a state witness s and after restating qualifications as an expert launched into an attack on methods of the company in computing valuations valuations val val- for rate making The witness specially retained b by bythe bythe the commission testified the company company com corn pany method of determining structural structural structural tural value by means of observed usefulness is wrong and should be ascertained on main usefulness As an illustration Mr Kenny saida said saida a telephone pole could cost 20 in place and have been in service 10 years year Taking a year 20 life for the pole the structural value under his theory would be 50 per cent He said the company by observed usefulness might look Jook at the pole and estimate that its structural value was 97 per cent gone and claim depreciation for that much Method Criticized The company's method of or computing com com- replacement costs also was criticized by Mr Kenn Kenny who said the he firm goes on the theor theory of building anew No company ever destroyed and replaced all its system so it cant can't expect that is replacement cost he ic testified It costs much less to replace currently than the company company company com com- pany estimates Attacking valuation methods from rom another angle Mr Kenny testified tes tes- tes- tes titled tilled valuations valuation based on n an in- in in inspection inspection of ot 10 per per cent of the prop prop prop- ert erty This Is not adequate and the company compan cant can't ask the commission to take such an estimate as a guide he said Technical testimony regarding exhibits occupied the rest of oC the morning session