Salt Lake Telegram | 1934-04-25 | Page 11 | Power Rates Are Defended in Army Case

POWER RATES ARE DEFENDED IN ARMY CASE Company Files Brief Contending Contending Contend Contend- ing Earnings Less ThaI Reasonable The Utah Power and LIght company's com com- corn corn- pany's income has decreased to the the- point where it t is tar far below a reasonable reasonable reason reason- able rate of return on any reasonable value of the he property properly us used cd or useful in the public service it is contended in the company's brief fIled Wednesday Wednes Wednes- day with the pUblic utilities commission commission commis- commis sion in the army case The United States war department Lc Is seeking a 10 per cent reductIon In rates charged for power for army facilities chiefly at Fort Douglas The brief maintains the company's rates are arc not exorbitant as claimed and asserts that even on the deflated value value- of the property as alleged by bythe the he federal trade commission the company is now now earning much less than a reasonable rat rate of return Even In 1931 when prosperity was still known in Utah the worst that can be aid of the defendant is that it approximately 8 3 1 Sper 1 per percent cent before depreciation on the value of its property the brIef stated stat ed and by October 1933 the maximum maxi max mum earning had declined to S 5 4 34 per cent These figures were computed corn com on the worst possible basis that the army could find and made no allowance at- at lowance for current assets going coing value working capital and vario various s other items which courts have held should be Included In a determination tion of oC fair value Gross Revenues Decline The brief points out the federal trade commission states that it does not to go into questions of the fair value of the property and asserts the report makes no allowance for various ither costs which court decisions have held should be included ed in a rate base In answering the army's arguments that because prices have sharply declined de de- dined during the last few years clec rates should decline in proportionate amounts the company made the following observations I 1 Gross revenues of the company declined almost from 1929 to 1933 2 Commodity prices are now steadily advancing in line with President President dent Roosevelt's effort eUort to restore the 1926 comm price levet- levet 3 Commodity prices generally will have to d than 50 per percent percent cent below the 1932 average before they reach the level of domestic electric dee elec- ti-ic ti rates 4 Recent commission decisions in Michigan and Alabama recognize the fact that utility rates do not fluctuate flue flue- violently and are regulated and must be maintained at all times at reasonable levels The company compan discussed its pay pa- ments of service to the Electric Bond and Share com company pan contending the benefits received far outweigh the cost involved It pointed out that under this service contract it receives the best expert assistance in the fields of engineering accounting le- le gal merchandising financing rates and services research which if not secured from the thc Electric Bond and Share would have to be purchased through h other agencies Cites Other ServIces The brief cites numerous other services services ser ser- vices and concludes that among the s was listed an actual dollar savings of during the tenear ten ten- year ear perIod between 1923 and 1932 or oran oran an average of considerably more than a year ear an amount substantially substantially equal to the tees fees paid In the judgment of oC the management management manage manage- ment the brief said the Electric Bond and Share contract is not only worth its cost to the defendant but it itis itis is an essential factor In the efficient economical management and operation operation opera opera- tion of the defendants defendant's property and business The brief contends the records show executive salaries paid b by the company are fully justified by the vast extent of its ils properties and SS tern tem efficiency of its management and high service standard it maintains maintains- It says sas that out of the total operating fig ing expenses o of 1932 the salaries paid to the ten highest paid officers of- of and amount to 3 1 3 2 per cent The brief was presented to the commIssion by George R. R Corey Corey- and A. A C. C Inman attorneys for the power company